-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V6vLeKRmg7yyW9pEYDypav63b2iwLWGCqlIb8tInSGMtRtKyJaOrV3YAbkNhdCaf 25FyVKIFjsnGsF7fuvObJw== 0000944695-00-000007.txt : 20000503 0000944695-00-000007.hdr.sgml : 20000503 ACCESSION NUMBER: 0000944695-00-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000331 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLMERICA FINANCIAL CORP CENTRAL INDEX KEY: 0000944695 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 043263626 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13754 FILM NUMBER: 617310 BUSINESS ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01653 BUSINESS PHONE: 5088551000 MAIL ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01653 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): April 27, 2000 ALLMERICA FINANCIAL CORPORATION (Exact name of Registrant as specified in its charter) Delaware 1-13754 04-3263626 (State or other jurisdic- (Commission File Number) (I.R.S.Employer tion of Incorporation) I.D. Number) 440 Lincoln Street, Worcester, Massachusetts 01653 (Address of Principal Executive Offices) (Zip Code) (508) 855-1000 (Registrant's Telephone Number including area code) Page 1 of 29 pages Exhibit Index on page 4 Page 1 Item 5. Other Events. On April 27, 2000, Allmerica Financial Corporation announced its financial results for first quarter 2000. A copy of the press release and accompanying statistical supplements is attached as Exhibit 99 and is incorporated by reference herein. CAUTIONARY STATEMENT FOR THE PURPOSES OF THE `SAFE HARBOR' PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Forward-Looking Statements The Company wishes to caution readers that the following important factors, among others, in some cases have affected and in the future could affect, the Company's actual results and could cause the Company's actual results for 2000 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. When used in the attached press release, words such as "believes", "anticipated", "expects" and similar expressions are intended to identify forward looking statements. See"Important Factors Regarding Forward-Looking Statements" filed as Exhibit 99-2 to the Company's Annual Report on Form 10-K for the period ended December 31, 1999 . Factors that may cause actual results to differ materially from those contemplated or projected, forecast, estimated or budgeted in such forward looking statements include among others, the following possibilities: (i) adverse catastrophe experience and severe weather; (ii) adverse loss development for events the Company insured in prior years or adverse trends in mortality and morbidity; (iii) heightened competition, including the intensification of price competition, the entry of new competitors, and the introduction of new products by new and existing competitors; (iv) adverse state and federal legislation or regulation, including decreases in rates, limitations on premium levels, increases in minimum capital and reserve requirements, benefit mandates, limitations on the ability to manage care and utilization, and tax treatment of insurance and annuity products; as well as continued compliance with state and federal regulations; (v) changes in interest rates causing a reduction of investment income or in the market value of interest rate sensitive investments; (vi) failure to obtain new customers, retain existing customers or reductions in policies in force by existing customers; (vii) higher service, administrative, or general expense due to the need for additional advertising, marketing, administrative or management information systems expenditures; (viii) loss or retirement of key executives; (ix) increases in medical costs, including increases in utilization, costs of medical services, pharmaceuticals, durable medical equipment and other covered items; (x) termination of provider contracts or renegotiations at less cost-effective rates or terms of payment; (xi) changes in the Company's liquidity due to changes in asset and liability matching; (xii) restrictions on insurance underwriting, based on genetic testing and other criteria; (xiii) adverse changes in the ratings obtained from independent rating agencies, such as Moody's, Standard and Poor's, A.M. Best, and Duff & Phelps; (xiv) lower appreciation on and decline in value of managed investments, resulting in reduced variable products, assets and related fees; (xv) possible claims relating to sales practices for insurance products; (xvi) uncertainty related to the Year 2000 issue; (xvii) failure of a reinsurer of the Company's policies to pay its liabilities under reinsurance contracts; (xviii) earlier than expected withdrawals from the Company's general account annuities, GICs, (including funding agreements), and other insurance products; (xix) changes in the mix of assets comprising the Company's investment portfolio and the fluctuation of the market value of such assets; (xx) losses resulting from the Company's participation in certain reinsurance pools; and (xxi) adverse results of regulatory audits related to the Company's prior years' federal income tax filings. Item 7. Financial Statements and Exhibits. Exhibit 99 Press Release dated April 27, 2000, announcing Allmerica Financial Corporation first quarter 2000 financial results. Exhibit 99.1 Allmerica Financial Corporation First Quarter Statistical Supplement. Page 2 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ALLMERICA FINANCIAL CORPORATION By: /S/Edward J. Parry III_______ Edward J. Parry III Vice President and Chief Financial Officer Date: May 2, 2000 Page 3 Exhibit Index Exhibit 99 Press Release dated April 27, 2000, announcing Allmerica Financial Corporation first quarter 2000 financial results. Exhibit 99.1 Allmerica Financial Corporation First Quarter Statistical Supplement. Page 4 EXHIBIT 99 ALLMERICA FINANCIAL CORPORATION REPORTS RECORD FIRST QUARTER OPERATING EARNINGS OF $1.22 PER SHARE WORCESTER, MASS., April 27, 2000 - Allmerica Financial Corporation (NYSE: AFC) today reported record operating earnings from continuing operations for the first quarter of 2000. First quarter highlights: Net operating income per share from continuing operations was $1.22, or $66.4 million, an increase in earnings per share of 37.1 percent compared to $0.89 per share, or $51.3 million in 1999. Net operating income excludes net realized investment gains and losses and other non-recurring gains and charges, net of taxes. Asset Accumulation pre-tax operating earnings were $59.5 million, up 9.0 percent from $54.6 million for the same period in 1999. Variable annuity sales were $821.1 million, up 25.7 percent over the fourth quarter of 1999 and an increase of 14.9 percent over sales in the first quarter of 1999. Risk Management pre-tax operating earnings were $43.1 million, compared to $29.8 million reported in the first quarter of 1999. Net income was $30.2 million, or $0.56 per share compared to $154.1 million, or $2.67 per share in 1999. "Our variable annuity business produced strong growth in the quarter, with sales up nearly 26 percent over the fourth quarter of last year," said John F. O'Brien, president and chief executive officer of Allmerica Financial Corporation. "In Risk Management, we reported higher profits and made good progress toward our stated goals of reducing expenses and achieving premium growth." Segment Results Allmerica Financial operates in two primary businesses: Asset Accumulation and Risk Management. Asset Accumulation markets insurance and retirement savings products and services to individual and institutional clients through Allmerica Financial Services, and investment management services to institutions, pension funds, and other organizations through Allmerica Asset Management, Inc. Risk Management markets property and casualty insurance products on a regional basis through The Hanover Insurance Company and Citizens Insurance Company of America, with distribution channels in Standard Markets, Sponsored Markets and Specialty Markets. Asset Accumulation First quarter pre-tax operating earnings for the Asset Accumulation business increased 9.0 percent to $59.5 million from $54.6 million in 1999. Allmerica Financial Services' pre-tax operating earnings increased to $54.4 million in the quarter, up from $48.9 million in the first quarter of 1999. Allmerica Asset Management's pre-tax operating earnings were $5.1 million, compared to $5.7 million in the same period of the prior year. Asset Accumulation highlights: Variable annuity sales were $821.1 million in 2000, up 25.7 percent over the fourth quarter of 1999, and an increase of 14.9 percent from $714.8 million in the first quarter of 1999. Variable product assets increased to $18.6 billion at March 31, 2000, up 30.1 percent from March 31, 1999. Variable product fees of $85.8 million were up 31.0 percent over the first quarter of 1999. Increased fees are related to variable product asset growth resulting from sales and stock market appreciation. Variable life insurance sales were $27.2 million in the quarter, up 22.5 percent compared to the first quarter of 1999. Risk Management Risk Management pre-tax operating earnings were $43.1 million, compared to $29.8 million for the first quarter of 1999. Property and Casualty highlights: Direct written premiums increased 8.3 percent in the first quarter to $576.3 million compared to $532.2 million in the first quarter of 1999. Pre-tax catastrophe losses were $15.2 million versus $43.7 million in 1999.The statutory expense ratio improved to 26.9 percent in the quarter compared to 28.4 percent for the first quarter of last year and 28.5 percent for the full year in 1999. Corporate Corporate segment net expenses were $14.5 million in the first quarter of 2000, compared to $16.0 million in 1999. Investment Results Net investment income was $142.3 million for the first quarter of 2000, compared to $154.3 million in the same period in 1999. This decrease is due to lower levels of spread-based assets and the timing of share repurchases. First quarter net realized investment losses were $46.8 million, compared to $131.8 million of net realized investment gains in the first quarter of In 2000, realized losses related primarily to the sale of fixed income securities in the property and casualty portfolios to increase yields. In 1999, realized gains related principally to the sale of appreciated equities in the property and casualty investment portfolio. Balance Sheet Shareholders' equity was $2.3 billion, or $42.27 per share at March 31, 2000, compared to $2.2 billion, or $41.32 per share at December 31, 1999. Excluding the impact of SFAS No. 115, book value was $43.13 per share at the close of the first quarter, compared to $42.71 per share at December 31, 1999. Total assets were $31.9 billion at March 31, 2000, up from $30.8 billion at year-end 1999. Separate account assets increased to $18.6 billion at March 31, 2000, up from $17.6 billion at December 31, 1999. Additional Items The company closed the sale of its group life and health insurance operations to Great West Life and Annuity Insurance Company of Denver on March 1, 2000. On March 21, 2000 Allmerica Financial announced an additional $100 million common stock repurchase program. As of April 26, Allmerica Financial had repurchased approximately 6.7 million shares of its common stock for an aggregate cost of approximately $361.2 million. Interim information is unaudited. Allmerica Financial Corporation is the holding company for a diversified Group of insurance and financial services companies headquartered in Worcester, Mass. CONTACTS: Investors Media --------- ----- Henry P. St. Cyr Michael F. Buckley (508) 855-2959 (508) 855-3099 E-mail:hstcyr@allmerica.com E-mail:mibuckley@allmerica.com ALLMERICA FINANCIAL CORPORATION
Quarter ended March 31 (In millions, except per share data) 2000 1999 Net income $ 30.2 $ 154.1 Net income per share $ 0.56 $ 2.67 Weighted average shares 54.3 57.7
The following is a reconciliation from net operating income to net income per share:
Quarter ended PER SHARE DATA (DILUTED) March 31 (In millions, except per share data) 2000 1999 Net operating income $ 1.22 $ 0.89 Net realized (losses) gains on investments, net of taxes, minority interest and amortization (0.66) 1.72 Income from operations of discontinued business, net of taxes 0.00 0.06 ----------------- Net income $ 0.56 $ 2.67 ================= Net operating income excludes net realized gains and losses and other items which management believes are not indicative of overall operating trends, net of taxes and minority interest. Basic net income per share was $0.56 and $2.69 for the quarters ended March 31, 2000 and 1999, respectively.
All figures reported are unaudited and are in accordance with generally accepted accounting principles. Exhibit 99.1 ALLMERICA FINANCIAL CORPORATION STATISTICAL SUPPLEMENT TABLE OF CONTENTS Financial Highlights 1 Consolidated Financial Statements Income Statements 2 Balance Sheets 3 Segment Results Income Statement Highlights 4 Historical Income Statement Highlights 5 Risk Management Condensed Income Statements 6 Statutory Underwriting Profit/(Loss) by Distribution Channel, Reconciled to GAAP 7 Selected Statutory Information by Distribution Channel 8 - 9 Asset Accumulation Allmerica Financial Services Condensed Income Statements 10 Operating Income by Product Line 11 Premiums, Deposits and Other Income 12 Future Policy Benefits and Account Balances 13 Allmerica Asset Management Condensed Income Statements and Supplemental Information 14 Corporate Condensed Income Statements 15 Investment Results Net Investment Income, Including Closed Block 16 Historical Financial Highlights 17 - 19 Other Information Corporate Information Inside back cover Market and Dividend Information Industry Ratings ALLMERICA FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS
Quarter ended March 31 (In millions, except % per share data) 2000 1999 Change RECONCILIATION FROM NET OPERATING INCOME TO NET INCOME Net operating income $ 66.4 $ 51.3 29.4 Net realized investment (losses) gains, net of taxes, minority interest and amortization (36.2) 99.5 N/M ---------------------------- Income from continuing operations 30.2 150.8 (80.0) Income from operations of discontinued business, net of taxes 0.0 3.3 N/M ---------------------------- Net income $ 30.2 $ 154.1 80.4 ============================ PER SHARE DATA (DILUTED) Net operating income $ 1.22 $ 0.89 37.1 Net realized investment (losses) gains, net of taxes, minority interest and amortization (0.66) 1.72 N/M ---------------------------- Income from continuing operations 0.56 2.61 (78.5) Income from operations of discontinued business net of taxes 0.00 0.06 N/M ---------------------------- Net income $ 0.56 $ 2.67 (79.0) ============================
March 31 December 31 % 2000 1999 Change BALANCE SHEET: Shareholders' equity $ 2,267.7 $ 2,240.2 1.2 Statutory surplus: Property and casualty insurance companies $ 1,100.2 $ 1,089.1 1.0 Life and health insurance companies $ 580.2 $ 590.1 (1.7) Book value per share $ 42.27 $ 41.32 2.3 Book value per share, excluding SFAS No. 115 $ 43.13 $ 42.71 1.0 Shares outstanding 53.7 54.2 Stock price $ 51.00 $ 55.63 (8.3) Price/book value per share 1.2 x 1.3 x (0.1) x Debbt/equity 8.8 % 8.9 % (0.1) pts Debt/total capital 7.2 % 7.3 % (0.1) pts Debt plus preferred securities of a subsidiary trust/total capital 18.1 % 18.2 % (0.1) pts Net operating income excludes net realized gains and losses and other items which management believes are not indicative of overall operating trends, net of taxes and minority interest. Shares outstanding do not include common stock equivalents.
N/M - Not Meaningful Page 1 ALLMERICA FINANCIAL CORPORATION CONSOLIDATED INCOME STATEMENTS
Quarter ended March 31 (In millions, except per share data) 2000 1999 % Change REVENUES Premiums $ 497.5 $ 458.3 8.6 Universal life and investment product policy fees 102.5 82.9 23.6 Net investment income 142.3 154.3 (7.8) Net realized investment (losses) gains (46.8) 131.8 N/M Other income 36.7 28.9 27.0 ---------------------------- Total revenues 732.2 856.2 (14.5) ---------------------------- BENEFITS, LOSSES AND EXPENSES Policy benefits, claims, losses and loss adjustment expenses 453.4 443.2 2.3 Policy acquisition expenses 117.1 92.7 26.3 Other operating expenses 120.0 117.8 1.9 ---------------------------- Total benefits, losses and expenses 690.5 653.7 5.6 ---------------------------- Income from continuing operations before federal income taxes 41.7 202.5 (79.4) Federal income tax expense 7.5 47.7 (84.3) ---------------------------- Income from continuing operations before minority interest 34.2 154.8 (77.9) ---------------------------- Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (4.0) (4.0) 0.0 ---------------------------- Income from continuing operations 30.2 150.8 (80.0) Income from operations of discontinued business (less applicable income taxes of $1.7 for the quarter ended March 31, 1999) 0.0 3.3 N/M ---------------------------- Net income $ 30.2 $ 154.1 (80.4) ============================ PER SHARE DATA (DILUTED) Income from continuing operations $ 0.56 $ 2.61 (78.5) ---------------------------- Income from operations of discontinued business (less applicable income taxes of $0.03 for the quarter ended March 31, 1999) 0.00 0.06 N/M ---------------------------- Net income $ 0.56 $ 2.67 (79.0) ============================ Dividends declared to shareholders $ 0.00 $ 0.00 ======== ======== Weighted average shares outstanding 54.3 57.7 ======== ======== Basic net income per share was $0.56 and $2.69 for the quarters ended March 31, 2000 and 1999, respectively.
Page 2 ALLMERICA FINANCIAL CORPORATION CONSOLIDATED BALANCE SHEETS
March 31 December 31 % (In millions, except per share data) 2000 1999 Change ASSETS Investments: Debt securities, at fair value (Amortized cost of $7,342.2 and $7,095.0) $ 7,211.8 $ 6,933.8 4.0 Equity securities, at fair value (Cost of $40.6 and $49.5) 77.7 83.2 (6.6) Mortgage loans 506.6 521.2 (2.8) Policy loans 175.0 170.5 2.6 Real estate and other long-term investments 176.6 180.0 (1.9) ------------------------------- Total investments 8,147.7 7,888.7 3.3 ------------------------------- Cash and cash equivalents 302.7 442.2 (31.5) Accrued investment income 126.8 134.7 (5.9) Premiums, accounts and notes receivable, net 602.1 583.5 3.2 Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums 1,276.7 1,279.9 (0.3) Deferred policy acquisition costs 1,442.2 1,386.8 4.0 Deferred federal income taxes 108.9 141.7 (23.1) Other assets 485.8 510.2 (4.8) Closed Block assets 765.7 772.3 (0.9) Separate account assets 18,595.5 17,629.6 5.5 ------------------------------- Total assets $31,854.1 $30,769.6 3.5 =============================== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Policy liabilities and accruals: Future policy benefits $ 2,726.0 $ 2,825.0 (3.5) Outstanding claims, losses and loss adjustment expenses 2,833.3 2,838.6 (0.2) Unearned premiums 920.7 890.2 3.4 Contractholder deposit funds and other policy liabilities 2,216.1 2,041.0 8.6 ------------------------------- Total policy liabilities and accruals 8,696.1 8,594.8 1.2 ------------------------------- Expenses and taxes payable 773.6 795.5 (2.8) Reinsurance premiums payable 64.3 73.0 (11.9) Trust instruments supported by funding obligations 77.9 50.6 54.0 Short-term debt 48.1 45.0 6.9 Long-term debt 199.5 199.5 0.0 Closed Block liabilities 832.3 842.1 (1.2) Separate account liabilities 18,594.6 17,628.9 5.5 ------------------------------- Total liabilities 29,286.4 28,229.4 3.7 ------------------------------- MINORITY INTEREST Mandatorily redeemable preferred securities of a subsidiary trust 300.0 300.0 0.0 SHAREHOLDERS' EQUITY Preferred stock, par value $.01 per share; authorized 20.0 million shares; issued none 0.0 0.0 0.0 Common stock, par value $.01 per share; authorized 300.0 shares; issued 60.4 million shares 0.6 0.6 0.0 Additional paid-in capital 1,761.5 1,770.5 (0.5) Accumulated other comprehensive income (46.2) (75.3) (38.6) Retained earnings 909.2 882.2 3.1 Treasury stock at cost (6.4 and 6.2 million shares) (357.4) (337.8) 5.8 ------------------------------- Total shareholders' equity 2,267.7 2,240.2 1.2 ------------------------------- Total liabilities and shareholders' equity $31,854.1 $30,769.6 3.5 ===============================
Page 3 ALLMERICA FINANCIAL CORPORATION SEGMENT RESULTS INCOME STATEMENT HIGHLIGHTS
Quarter ended March 31 % (In millions, except per share data) 2000 1999 Change OPERATING REVENUES Risk Management $ 557.5 $ 521.3 6.9 ---------------------------- Asset Accumulation Allmerica Financial Services 192.6 168.2 14.5 Allmerica Asset Management 29.3 34.3 (14.6) ---------------------------- 221.9 202.5 9.6 ---------------------------- Corporate 1.0 1.2 (16.7) Eliminations and other (1.1) (0.6) 83.3 ---------------------------- Total operating revenues $ 779.3 $ 724.4 7.6 ============================ NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 43.1 $ 29.8 44.6 ---------------------------- Asset Accumulation Allmerica Financial Services 54.4 48.9 11.2 Allmerica Asset Management 5.1 5.7 (10.5) ---------------------------- 59.5 54.6 9.0 ---------------------------- Corporate (14.5) (16.0) (9.4) ---------------------------- Total net operating income before federal income taxes and minority interest 88.1 68.4 28.8 Federal income taxes on operating income (17.7) (13.1) 35.1 Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (4.0) (4.0) 0.0 ---------------------------- Consolidated net operating income $ 66.4 $ 51.3 29.4 ============================ Consolidated net operating income per share (diluted) $ 1.22 $ 0.89 37.1 ============================ Weighted average shares outstanding (diluted) 54.3 57.7 =================== Operating revenues exclude net realized gains and losses and other items which management believes are not indicative of overall operating trends. Net operating income excludes net realized gains and losses and other items which management believes are not indicative of overall operating trends, net of taxes and minority interest.
Page 4 ALLMERICA FINANCIAL CORPORATION SEGMENT RESULTS HISTORICAL INCOME STATEMENT HIGHLIGHTS
Year ended December 31 (In millions, except per share data) 1999 1998 1997 1996 1995 OPERATING REVENUES Risk Management $2,189.4 $2,222.1 $2,227.6 $2,160.4 $2,106.3 ------------------------------------------------- Asset Accumulation Allmerica Financial Services 714.8 625.6 610.0 595.0 639.5 Allmerica Asset Management 150.5 121.7 91.1 110.5 157.6 ------------------------------------------------- 865.3 747.3 701.1 705.5 797.1 ------------------------------------------------- Corporate 6.0 12.9 16.1 6.9 (2.4) Eliminations and other (5.9) (7.6) (11.5) (12.7) (4.4) ------------------------------------------------- Total operating revenues $3,054.8 $2,974.7 $2,933.3 $2,860.1 $2,896.6 ================================================ NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 199.6 $ 149.6 $ 174.2 $ 173.1 $ 212.0 ------------------------------------------------- Asset Accumulation Allmerica Financial Services 205.5 169.0 134.6 106.8 60.0 Allmerica Asset Management 23.5 23.7 18.4 11.5 12.2 ------------------------------------------------- 229.0 192.7 153.0 118.3 72.2 ------------------------------------------------- Corporate (59.3) (50.9) (48.0) (58.0) (47.8) ------------------------------------------------- Total net operating income before federal income taxes and minority interest 369.3 291.4 279.2 233.4 236.4 ------------------------------------------------- Federal income taxes on operating income (72.4) (53.1) (63.4) (50.8) (67.4) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (16.0) (16.0) (14.5) 0.0 0.0 Equity in earnings 0.0 (9.8) (37.0) (61.5) (69.2) ------------------------------------------------- Consolidated net operating income $ 280.9 $ 212.5 $ 164.3 $ 121.1 $ 99.8 ================================================= Consolidated net operating income per share (diluted) $ 5.06 $ 3.52 $ 3.00 $ 2.41 $ 1.99 ================================================= Weighted average shares outstanding (diluted) 55.5 60.3 54.8 50.1 50.1 ================================================= Operating revenues exclude net realized gains and losses and other items which management believes are not indicative of overall operating trends. Net operating income excludes net realized gains and losses and other items which management believes are not indicative of overall operating trends, net of taxes and minority interest.
Page 5 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT CONDENSED INCOME STATEMENT
Quarter ended March 31 (In millions) 2000 1999 % Change REVENUES Net premiums written $527.6 $477.2 10.6 Change in unearned premiums, net of prepaid reinsurance premiums (30.6) (19.6) 56.1 ------------------------ Net premiums earned 497.0 457.6 8.6 Net investment income 55.2 58.4 (5.5) Other income 5.3 5.3 0.0 ------------------------ Total operating revenue 557.5 521.3 6.9 ------------------------ LOSSES AND OPERATING EXPENSES Policy benefits, claims, losses and loss adjustment expenses 375.5 353.7 6.2 Policy acquisition expenses 92.1 88.5 4.1 Other operating expenses 46.6 49.3 (5.5) ------------------------ Total losses and operating expenses 514.4 491.5 4.7 ------------------------ Net operating income before taxes 43.1 29.8 44.6 Net realized investment (losses) gains (39.2) 112.8 N/M ------------------------ Net income before taxes $ 3.9 $142.6 (97.3) ========================
The Risk Management Segment manages its products through three distribution channels identified as Standard Markets, Sponsored Markets, and Specialty Markets. Standard Markets sells property & casualty insurance products through independent agents and brokers primarily in the Northeast, Midwest and Southeast United States maintaining a strong regional focus. Sponsored Markets focuses on worksite distribution, which offers discounted property & casualty (auto and homeowners) insurance through employer sponsored programs. This distribution channel also offers products to members of affinity groups and other organizations. Specialty Markets offers specialty or program business nationwide. Page 6 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT STATUTORY UNDERWRITING PROFIT/(LOSS) BY DISTRIBUTION CHANNEL, RECONCILED TO GAAP
(In millions) Quarter ended March 31, 2000 Standard Sponsored Specialty Markets Markets Markets Other Total Net premiums earned $349.7 $140.1 $ 6.6 $ 0.4 $496.8 Policy benefits, claims, losses and loss adjustment expenses 261.9 101.8 6.4 2.3 372.4 Policy acquisition and other underwriting expenses 103.3 36.3 1.5 0.5 141.6 Policyholders' dividends 2.8 0.0 0.0 0.0 2.8 ----------------------------------------------------- Underwriting (loss) profit $(18.3) $ 2.0 $ (1.3) $ (2.4) (20.0) ----------------------------------------------------- Net investment income 55.2 Other income and expenses, net 2.6 Net deferred acquisition costs 4.1 Other Statutory to GAAP adjustments 1.2 ------- Net operating income before taxes and minority interest - GAAP Basis $ 43.1 ======= PRETAX CATASTROPHE LOSSES $ 14.7 $ 0.5 $ 0.0 $ 0.0 $ 15.2 ===================================================== Includes results from certain property and casualty business which the Company has exited.
Quarter ended March 31, 1999 Standard Sponsored Specialty Markets Markets Markets Other Total Net premiums earned $319.0 $121.8 $ 14.1 $ 2.9 $457.8 Policy benefits, claims, losses and loss adjustment expenses 240.9 94.7 9.6 4.0 349.2 Policy acquisition and other underwriting expenses 98.9 32.2 4.6 0.0 135.7 Policyholders' dividends 1.9 0.0 0.0 0.0 1.9 ------------------------------------------------------ Underwriting loss $(22.7) $ (5.1) $ (0.1) $ (1.1) (29.0) ------------------------------------------------------ Net investment income 58.4 Other income and expenses, net 1.9 Net deferred acquisition costs (0.7) Other Statutory to GAAP adjustments (0.8) ------- Net operating income before taxes and minority interest - GAAP Basis $ 29.8 ======= PRETAX CATASTROPHE LOSSES $ 24.5 $ 19.2 $ 0.0 $ 0.0 $ 43.7 ====================================================== Includes results from certain property and casualty business which the Company has exited.
Page 7 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED STATUTORY INFORMATION BY DISTRIBUTION CHANNEL
(In millions, except ratios) Quarter ended March 31, 2000 Standard Sponsored Specialty Markets Markets Markets Other Total NET PREMIUMS WRITTEN Personal automobile $ 127.7 $ 128.5 $ 0.0 $ 0.1 $ 256.3 Homeowners 33.8 21.1 0.0 (0.2) 54.7 Workers' compensation 54.1 0.0 0.4 0.0 54.5 Commercial automobile 52.7 0.0 1.1 0.0 53.8 Commercial multiple peril 75.2 0.0 1.8 (0.1) 76.9 Other property & casualty 25.7 2.0 3.1 0.5 31.3 -------------------------------------------------- Total $ 369.2 $ 151.6 $ 6.4 $ 0.3 $ 527.5 ================================================== NET PREMIUMS EARNED Personal automobile $ 110.6 $ 109.7 $ 0.0 $ 0.1 $ 220.4 Homeowners 39.1 27.8 0.0 (0.1) 66.8 Workers' compensation 50.3 0.0 0.8 0.0 51.1 Commercial automobile 50.1 0.0 0.6 (0.1) 50.6 Commercial multiple peril 71.9 0.0 1.4 (0.1) 73.2 Other property & casualty 27.7 2.6 3.8 0.6 34.7 -------------------------------------------------- Total $ 349.7 $ 140.1 $ 6.6 $ 0.4 $ 496.8 ================================================== POLICY BENEFITS, CLAIMS AND LOSSES Personal automobile $ 72.5 $ 70.8 $ 0.0 $ (0.5) $ 142.8 Homeowners 29.0 21.9 0.0 (0.4) 50.5 Workers' compensation 36.9 0.0 0.9 0.4 38.2 Commercial automobile 29.9 0.0 2.3 (0.2) 32.0 Commercial multiple peril 49.0 0.0 1.4 1.3 51.7 Other property & casualty 11.4 1.1 0.2 1.3 14.0 -------------------------------------------------- Total $ 228.7 $ 93.8 $ 4.8 $ 1.9 $ 329.2 ================================================== LOSS ADJUSTMENT EXPENSES $ 33.2 $ 8.0 $ 1.6 $ 0.4 $ 43.2 ================================================== RATIOS LOSSES Personal automobile 65.6 % 64.5 % 0.0 % N/M 64.8 % Homeowners 74.2 % 78.8 % 0.0 % N/M 75.6 % Workers' compensation 73.4 % 0.0 % 112.5 % N/M 74.8 % Commercial automobile 59.7 % 0.0 % N/M N/M 63.2 % Commercial multiple peril 68.2 % 0.0 % 100.0 % N/M 70.6 % Other property & casualty 41.2 % 42.3 % 5.3 % N/M 40.3 % -------------------------------------------------- Total 65.4 % 67.0 % 72.7 % N/M 66.3 % LOSS ADJUSTMENT EXPENSES 9.5 % 5.7 % 24.2 % N/M 8.7 % POLICY ACQUISITION AND OTHER UNDERWRITING EXPENSES 28.0 % 23.9 % 23.4 % N/M 26.9 % POLICYHOLDERS' DIVIDENDS 0.8 % 0.0 % 0.0 % N/M 0.6 % -------------------------------------------------- COMBINED 103.7 % 96.6 % 120.3 % N/M 102.5 % ==================================================
Page 8 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED STATUTORY INFORMATION BY DISTRIBUTION CHANNEL
(In millions, except ratios) Quarter ended March 31, 1999 Standard Sponsored Specialty Markets Markets Markets Other Total NET PREMIUMS WRITTEN Personal automobile $ 127.0 $ 120.5 $ 0.0 $ (0.2) $ 247.3 Homeowners 24.6 7.0 0.0 0.2 31.8 Workers' compensation 49.9 0.0 2.6 (0.3) 52.2 Commercial automobile 46.9 0.0 2.4 (0.1) 49.2 Commercial multiple peril 63.9 0.0 3.0 0.0 66.9 Other property & casualty 25.8 0.2 3.4 0.8 30.2 ------------------------------------------------- Total $ 338.1 $ 127.7 $ 11.4 $ 0.4 $ 477.6 ================================================= NET PREMIUMS EARNED Personal automobile $ 112.7 $ 108.0 $ 0.0 $ 0.9 $ 221.6 Homeowners 33.6 11.6 0.0 0.6 45.8 Workers' compensation 43.6 0.0 1.9 0.0 45.5 Commercial automobile 44.3 0.0 2.7 0.3 47.3 Commercial multiple peril 59.3 0.0 4.0 0.3 63.6 Other property & casualty 25.5 2.2 5.5 0.8 34.0 ------------------------------------------------- Total $ 319.0 $ 121.8 $ 14.1 $ 2.9 $ 457.8 ================================================= POLICY BENEFITS, CLAIMS AND LOSSES Personal automobile $ 78.7 $ 75.1 $ 0.0 $ (0.2) $ 153.6 Homeowners 22.4 12.3 0.0 0.0 34.7 Workers' compensation 28.4 0.0 (0.8) 1.0 28.6 Commercial automobile 32.5 0.0 2.4 0.1 35.0 Commercial multiple peril 42.7 0.0 2.2 1.2 46.1 Other property & casualty 6.9 1.2 3.9 1.7 13.7 ------------------------------------------------- Total $ 211.6 $ 88.6 $ 7.7 $ 3.8 $ 311.7 ================================================= LOSS ADJUSTMENT EXPENSES $ 29.3 $ 6.1 $ 1.9 $ 0.2 $ 37.5 ================================================= RATIOS LOSSES Personal automobile 69.8 % 69.5 % 0.0 % N/M 69.4 % Homeowners 66.7 % 106.0 % 0.0 % N/M 76.1 % Workers' compensation 65.1 % 0.0 % N/M N/M 63.4 % Commercial automobile 73.4 % 0.0 % 88.9 % N/M 74.0 % Commercial multiple peril 72.0 % 0.0 % 55.0 % N/M 72.3 % Other property & casualty 27.1 % 50.0 % 70.9 % N/M 39.2 % ------------------------------------------------- Total 66.3 % 72.6 % 54.6 % N/M 68.1 % LOSS ADJUSTMENT EXPENSES 9.2 % 5.1 % 13.5 % N/M 8.2 % POLICY ACQUISITION AND OTHER UNDERWRITING EXPENSES 29.3 % 25.2 % 40.4 % N/M 28.4 % POLICYHOLDERS' DIVIDENDS 0.6 % 0.0 % 0.0 % N/M 0.4 % ------------------------------------------------- COMBINED 105.4 % 102.9 % 108.5 % N/M 105.1 % =================================================
Page 9 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES CONDENSED INCOME STATEMENT Quarter ended March 31 (In millions) 2000 1999 % Change REVENUES Premiums $ 0.5 $ 0.7 (28.6) Universal life and investment product policy fees 102.5 82.9 23.6 Net investment income 59.8 63.5 (5.8) Other income 26.3 17.3 52.0 Operating contribution from the Closed Block 3.5 3.8 (7.9) -------------------------- Total operating revenue 192.6 168.2 14.5 -------------------------- POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 55.9 62.9 (11.1) Policy acquisition expenses 25.7 5.6 N/M Other operating expenses 56.6 50.8 11.4 -------------------------- Total policy benefits, claims and operating expenses 138.2 119.3 15.8 -------------------------- Net operating income before taxes 54.4 48.9 11.2 Net realized investment (losses) gains, net of amortization (4.6) 22.0 N/M -------------------------- Net income before taxes $ 49.8 $ 70.9 (29.8) ==========================
Page 10 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES OPERATING INCOME BY PRODUCT LINE
(In millions) Quarter ended March 31, 2000 Variable Group Individual Universal Universal Closed Retirement All Annuities Life Life Block Products Others Total REVENUES Premiums $ 0.0 $ 0.0 $ 0.0 $ 26.0 $ 0.0 $ 0.5 $ 26.5 Universal life and investment product policy fees 57.5 20.6 16.7 0.0 7.7 0.0 102.5 Net investment income 15.5 0.9 19.0 13.2 18.8 5.6 73.0 Other income 9.3 1.4 0.2 0.0 1.6 13.8 26.3 ------------------------------------------------------------------ Total operating revenue 82.3 22.9 35.9 39.2 28.1 19.9 228.3 ------------------------------------------------------------------ POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 18.1 6.8 17.9 34.8 12.3 0.8 90.7 Policy acquisition expenses 18.5 1.5 5.1 0.6 0.6 0.0 26.3 ------------------------------------------------------------------- Total policy benefits, claims, and policy acquisition expenses 36.6 8.3 23.0 35.4 12.9 0.8 117.0 ------------------------------------------------------------------ Operating income before other operating expenses $ 45.7 $ 14.6 $ 12.9 $ 3.8 $ 15.2 $ 19.1 111.3 ========================================================== Other operating expenses 56.9 -------- Net operating income before taxes $ 54.4 ========= Includes defined benefit and defined contribution plan products and services. Includes non-insurance activities and products in runoff (e.g.YRT,DI). Includes other operating expenses from the Closed Block of approximately $0.3 million for the quarter ended March 31, 2000.
(In millions) Quarter ended March 31, 1999 Variable Group Individual Universal Universal Closed Retirement All Annuities Life Life Block Products Others Total REVENUES Premiums $ 0.0 $ 0.0 $ 0.0 $ 27.2 $ 0.0 $ 0.7 $ 27.9 Universal life and investment product policy fees 42.0 17.7 17.4 0.0 5.8 0.0 82.9 Net investment income 16.8 0.2 18.6 13.1 20.3 7.6 76.6 Other income 7.1 1.0 0.3 0.0 1.8 7.1 17.3 ------------------------------------------------------------------ Total operating revenue 65.9 18.9 36.3 40.3 27.9 15.4 204.7 ------------------------------------------------------------------ POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 23.4 6.2 18.9 35.5 12.9 1.5 98.4 Policy acquisition expenses (1.7) 2.1 4.3 0.5 0.9 0.0 6.1 ------------------------------------------------------------------- Total policy benefits, claims, and policy acquisition expenses 21.7 8.3 23.2 36.0 13.8 1.5 104.5 ------------------------------------------------------------------ Operating income before other operating expenses $ 44.2 $ 10.6 $ 13.1 $ 4.3 $ 14.1 $ 13.9 100.2 ========================================================== Other operating expenses 51.3 -------- Net operating income before taxes $ 48.9 ========= Includes defined benefit and defined contribution plan products and services. Includes non-insurance activities and products in runoff (e.g.YRT,DI). Includes other operating expenses from the Closed Block of approximately $0.5 million for the quarter ended March 31, 1999.
Page 11 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES PREMIUMS, DEPOSITS AND OTHER INCOME
Quarter ended March 31 (In millions) 2000 1999 % Change STATUTORY PREMIUMS AND DEPOSITS SUMMARY Insurance Traditional life $ 29.8 $ 31.4 (5.1) Universal life 17.9 16.7 7.2 Variable universal life 51.2 45.3 13.0 Individual health 0.1 0.1 0.0 Group variable universal life 11.5 10.4 10.6 ---------------------------- Total insurance 110.5 103.9 6.4 ---------------------------- Annuities Separate account annuities 678.9 498.6 36.2 General account annuities 138.7 210.3 (34.1) Retirement investment accounts 3.5 5.9 (40.7) ---------------------------- Total individual annuities 821.1 714.8 14.9 Group annuities 168.6 82.1 N/M ---------------------------- Total annuities 989.7 796.9 24.2 ---------------------------- Total premiums and deposits $1,100.2 $ 900.8 22.1 ============================ COMPONENTS Insurance Traditional life New business premium $ 9.7 $ 9.7 0.0 Renewal premium and deposits 20.1 21.7 (7.4) ---------------------------- $ 29.8 $ 31.4 (5.1) ============================ Universal life New business premium $ 0.1 $ 0.2 (50.0) Renewal premium and deposits 17.8 16.5 7.9 ---------------------------- $ 17.9 $ 16.7 7.2 ============================ Variable universal life New business premium $ 27.2 $ 22.2 22.5 Renewal premium and deposits 24.0 23.1 3.9 ---------------------------- $ 51.2 $ 45.3 13.0 ============================ Individual annuities by distribution channel Agency $ 239.9 $ 209.6 14.4 Select 218.8 153.6 42.4 Kemper 262.5 168.8 55.5 Pioneer 50.0 95.3 (47.5) Delaware 45.9 74.3 (38.2) Fulcrum 0.5 7.3 (93.2) Retirement investment accounts 3.5 5.9 (40.7) ---------------------------- $ 821.1 $ 714.8 14.9 ============================ GAAP OTHER INCOME (Excluding Closed Block) Investment management fees $ 11.3 $ 8.8 28.4 Brokerage income 9.9 4.8 N/M Other 5.1 3.7 37.8 ---------------------------- $ 26.3 $ 17.3 52.0 ============================
Page 12 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES FUTURE POLICY BENEFITS AND ACCOUNT BALANCES
March 31 December 31 (In millions) 2000 1999 % Change GENERAL ACCOUNT RESERVES Insurance Traditional life, excluding Closed Block $ 37.1 $ 37.7 (1.6) Universal life 802.5 816.1 (1.7) Variable universal life 140.9 136.3 3.4 Individual health 271.7 273.0 (0.5) Group variable universal life 8.7 10.0 (13.0) ---------------------------- Total insurance 1,260.9 1,273.1 (1.0) ---------------------------- Annuities Individual annuities 1,128.1 1,218.9 (7.4) Group annuities 824.4 870.9 (5.3) ---------------------------- Total annuities 1,952.5 2,089.8 (6.6) ---------------------------- Total general account reserves $ 3,213.4 $ 3,362.9 (4.4) ============================ SEPARATE ACCOUNT LIABILITIES Variable individual life $ 1,307.1 $ 1,244.8 5.0 Variable individual annuities 14,682.9 13,872.6 5.8 ---------------------------- Total individual 15,990.0 15,117.4 5.8 Group variable universal life 275.7 260.5 5.8 Group annuities 2,328.9 2,251.0 3.5 ---------------------------- Total group 2,604.6 2,511.5 3.7 ---------------------------- Total separate account liabilities $18,594.6 $17,628.9 5.5 ============================
Page 13 ALLMERICA FINANCIAL CORPORATION ALLMERICA ASSET MANAGEMENT CONDENSED INCOME STATEMENTS AND SUPPLEMENTAL INFORMATION
Quarter ended March 31 (In millions) 2000 1999 % Change INTEREST MARGINS ON GICS Net investment income $ 26.4 $ 31.4 (15.9) Interest credited 22.4 26.6 (15.8) ------------------------------ Net interest margin 4.0 4.8 (16.7) ------------------------------ OTHER INCOME AND EXPENSES External fees and other income 1.6 1.4 14.3 Internal fees and other income 1.3 1.5 (13.3) Other operating expenses 1.8 2.0 (10.0) ------------------------------ Net operating income before taxes 5.1 5.7 (10.5) Net realized investment losses (3.3) (2.5) 32.0 ------------------------------ Net income before taxes $ 1.8 $ 3.2 (43.8) ==============================
Quarter ended March 31 2000 1999 % Change GIC DEPOSITS Outstanding GIC deposits, beginning of period $ 1,366.6 $ 1,791.8 (23.7) Withdrawals during the period (96.0) (212.1) (54.7) Deposits during the period 331.3 560.0 (40.8) Interest credited during the period 22.4 26.6 (15.8) ---------------------------------- Outstanding GIC deposits, end of period $ 1,624.3 $ 2,166.3 (25.0) ================================== Includes $2.0 million of traditional GIC deposits for the quarter ended March 31, 2000.
March 31 2000 1999 GIC SCHEDULED MATURITIES 1999 $ 0.0 $ 202.3 2000 64.5 79.7 2001 120.0 26.2 2002 231.2 32.9 2003+ 134.6 100.2 ------------------------------ 550.3 441.3 Short term funding agreement balances 1,074.0 1,725.0 -------------------------- $ 1,624.3 $ 2,166.3 ========================== Includes $422.9 million and $100.2 million of long term funding agreement balances for the quarters ended March 31, 2000 and 1999, respectively.
Page 14 ALLMERICA FINANCIAL CORPORATION CORPORATE CONDENSED INCOME STATEMENTS
Quarter ended March 31 (In millions) 2000 1999 % Change REVENUES Net investment income $ 1.0 $ 1.2 (16.7) --------------------------- OPERATING EXPENSES Interest expense 3.8 3.8 0.0 Other operating expenses 11.7 13.4 (12.7) --------------------------- Total operating expenses 15.5 17.2 (9.9) --------------------------- Net operating loss before taxes and minority interest (14.5) (16.0) (9.4) Net realized investment losses (0.1) (0.9) (88.9) --------------------------- Net loss before taxes and minority interest $ (14.6) $(16.9) (13.6) ===========================
Page 15 ALLMERICA FINANCIAL CORPORATION NET INVESTMENT INCOME, INCLUDING CLOSED BLOCK
(In millions, except yields) Quarter ended March 31, 2000 Allmerica Allmerica Risk Financial Asset Management Yield Services Yield Management Yield Corporate Yield Total Yield Fixed maturities $ 54.4 6.69% $ 55.5 8.06% $ 21.4 6.92% $ 0.4 7.65% $131.7 7.25% Equity securities 0.3 3.78% 0.0 0.00% 0.0 0.00% 0.0 0.00% 0.3 1.36% Mortgages 0.0 0.00% 9.4 7.98% 3.5 8.28% 0.0 0.00% 12.9 8.06% All other 1.4 0.00% 10.5 0.00% 2.0 0.00% 0.4 0.00% 14.3 0.00% Investment expenses (0.9) 0.00% (2.4) 0.00% (0.4) 0.00% 0.0 0.00% (3.7)0.00% ------------------------------------------------------------------------------------ Total $ 55.2 6.55% $ 73.0 7.33% $ 26.5 7.34% $ 0.8 5.23% $155.5 7.02% ===================================================================================== Includes purchase accounting adjustments of $1.1 million for the quarter ended March 31, 2000. Includes corporate eliminations of $0.2 million for the quarter ended March 31, 2000.
(In millions, except yields) Quarter ended March 31, 1999 Allmerica Allmerica Risk Financial Asset Management Yield Services Yield Management Yield Corporate Yield Total Yield Fixed maturities $ 56.0 6.59% $ 55.2 8.21% $ 26.8 6.21% $ 0.4 5.78% $138.4 7.06% Equity securities 0.5 1.70% 0.2 1.43% 0.0 0.00% 0.0 0.00% 0.7 1.59% Mortgages 0.0 0.00% 10.6 8.28% 3.7 8.71% 0.0 0.00% 14.3 8.38% All other 2.9 0.00% 12.7 0.00% 1.4 0.00% 0.6 0.00% 17.6 0.00% Investment expenses (1.0) 0.00% (2.1) 0.00% (0.5) 0.00% 0.0 0.00% (3.6)0.00% ----------------------------------------------------------------------------------- Total $ 58.4 6.29% $ 76.6 7.71% $ 31.4 6.51% $ 1.0 3.58% $167.4 6.88% ==================================================================================== Includes purchase accounting adjustments of $1.1 million for the quarter ended March 31, 1999. Includes corporate eliminations of $0.2 million for the quarter ended March 31, 1999.
Page 16 ALLMERICA FINANCIAL CORPORATION HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) Q1 00 1999 Q4 99 Q3 99 Q2 99 Q1 99 NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 43.1 $ 199.6 $ 65.0 $ 49.5 $ 55.3 $ 29.8 ------------------------------------------------------------ Asset Accumulation Allmerica Financial Services 54.4 205.5 54.2 54.7 47.7 48.9 Allmerica Asset Management 5.1 23.5 5.3 5.7 6.8 5.7 ------------------------------------------------------------ 59.5 $ 229.0 59.5 60.4 54.5 54.6 ------------------------------------------------------------ Corporate (14.5)$ (59.3) (16.1) (13.7) (13.5) (16.0) ------------------------------------------------------------ Total net operating income before federal income taxes and minority interest 88.1 369.3 108.4 96.2 96.3 68.4 Federal income taxes on operating income (17.7) (72.4) (23.6) (16.4) (19.3) (13.1) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (4.0) (16.0) (4.0) (4.0) (4.0) (4.0) ----------------------------------------------------------- Consolidated net operating income $ 66.4 $ 280.9 $ 80.8 $ 75.8 $ 73.0 $ 51.3 ============================================================ INCOME FROM CONTINUING OPERATIONS $ 30.2 $ 345.1 $ 68.4 $ 59.1 $ 66.8 $ 150.8 ============================================================ NET INCOME $ 30.2 $ 295.8 $ 68.4 $ 13.1 $ 60.2 $ 154.1 =========================================================== PER SHARE DATA (DILUTED) NET OPERATING INCOME $ 1.22 $ 5.06 $ 1.48 $ 1.39 $ 1.32 $ 0.89 INCOME FROM CONTINUING OPERATIONS $ 0.56 $ 6.21 $ 1.25 $ 1.08 $ 1.21 $ 2.61 NET INCOME $ 0.56 $ 5.33 $ 1.25 $ 0.24 $ 1.09 $ 2.67 DIVIDENDS $ 0.00 $ 0.25 $ 0.00 $ 0.25 $ 0.00 $ 0.00 WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 54.3 55.5 54.6 54.7 55.1 57.7 BALANCE SHEET Total investments $ 8,147.7 $ 7,888.7 $ 8,265.7 $ 9,043.7 $ 9,163.1 Separate account assets $18,595.5 $17,629.6 $15,102.1 $15,635.9 $14,329.4 Total assets $31,854.1 $30,769.6 $29,080.0 $29,826.4 $28,461.2 Total shareholders' equity $ 2,267.7 $ 2,240.2 $ 2,213.2 $ 2,248.7 $ 2,387.5 Book value per share $ 42.27 $ 41.32 $ 40.86 $ 41.49 $ 42.30 Book value per share, excluding SFAS No.115 $ 43.13 $ 42.71 $ 41.76 $ 41.45 $ 40.97 Net operating income excludes net realized gains (losses) and other non- operating items, net of taxes and minority interest.
PAGE 17 ALLMERICA FINANCIAL CORPORATION HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) 1998 Q4 98 Q3 98 Q2 98 Q1 98 1997 Q4 97 Q3 97 Q2 97 Q1 97 NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 149.6 $ 52.4 $ 24.6 $ 34.9 $ 37.7 $ 174.2 $ 54.7 $ 36.1 $ 45.6 $ 37.8 ------------------------------------------------------------------------------------------------- Asset Accumulation Allmerica Financial Services 169.0 43.5 39.1 44.2 42.2 134.6 35.0 37.8 32.0 29.8 Allmerica Asset Management 23.7 6.7 6.9 6.2 3.9 18.4 4.6 5.2 5.4 3.2 ------------------------------------------------------------------------------------------------- 192.7 50.2 46.0 50.4 46.1 153.0 39.6 43.0 37.4 33.0 ------------------------------------------------------------------------------------------------- Corporate (50.9) (15.3) (10.6) (12.7) (12.3) (48.0) (17.2) (11.8) (8.0) (11.0) ------------------------------------------------------------------------------------------------- Total net operating income before federal income taxes and minority interest 291.4 87.3 60.0 72.6 71.5 279.2 77.1 67.3 75.0 59.8 Federal income taxes on operating income (53.1) (13.8) (10.7) (12.2) (16.4) (63.4) (16.7) (16.0) (18.9) (11.8) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (16.0) (4.0) (4.0) (4.0) (4.0) (14.5) (4.0) (4.1) (4.0) (2.4) Equity in earnings (9.8) (2.4) (1.9) (1.7) (3.8) (37.0) (5.4) (0.5) (16.5) (14.6) ------------------------------------------------------------------------------------------------- Consolidated net operating income $ 212.5 $ 67.1 $ 43.4 $ 54.7 $ 47.3 $ 164.3 $ 51.0 $ 46.7 $ 35.6 $ 31.0 ================================================================================================= INCOME FROM CONTINUING OPERATIONS $ 214.7 $ 67.7 $ 24.3 $ 59.2 $ 63.5 $ 192.6 $ 89.6 $ 55.6 $ 33.9 $ 13.5 ================================================================================================ NET INCOME $ 201.2 $ 65.9 $ 8.2 $ 60.3 $ 66.8 $ 209.2 $ 94.9 $ 60.7 $ 37.7 $ 15.9 ================================================================================================ PER SHARE DATA (DILUTED) NET OPERATING INCOME $ 3.52 $ 1.12 $ 0.71$ 0.91 $ 0.78 $ 3.00 $ 0.85 $ 0.80 $ 0.71 $ 0.62 INCOME FROM CONTINUING OPERATIONS $ 3.56 $ 1.13 $ 0.40 $ 0.98 $ 1.05 $ 3.52 $ 1.49 $ 0.95 $ 0.67 $ 0.27 NET INCOME $ 3.33 $ 1.10 $ 0.13 $ 1.00 $ 1.11 $ 3.82 $ 1.58 $ 1.04 $ 0.75 $ 0.32 DIVIDENDS $ 0.15 $ 0.00 $ 0.05 $ 0.05 $ 0.05 $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05 WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 60.3 59.9 60.6 60.5 60.3 54.8 60.2 58.4 50.3 50.2 BALANCE SHEET Total investments $ 9,057.6 $ 9,169.0 $ 9,274.0 $ 8,923.8 $ 8,700.7 $ 8,741.1 $ 8,808.4 $ 8,758.3 Separate account assets $13,697.7 $11,424.9 $12,260.5 $11,425.4 $ 9,755.4 $ 9,233.6 $ 8,036.3 $ 6,705.8 Total assets $27,653.1 $25,233.5 $25,816.4 $24,511.8 $22,549.0 $21,967.2 $20,963.5 $19,625.6 Total shareholders' equity $ 2,458.6 $ 2,480.3 $ 2,539.4 $ 2,468.8 $ 2,381.3 $ 2,263.4 $ 1,782.5 $ 1,672.0 Book value per share $ 41.95 $ 41.02 $ 42.04 $ 40.94 $ 39.71$ 37.74 $ 35.47 $ 33.35 Book value per share, excluding SFAS No.115 $ 38.87 $ 38.08 $ 38.01 $ 37.07 $ 36.08 $ 34.54 $ 32.66 $ 31.97 Net operating income excludes net realized gains (losses) and other non- operating items, net of taxes and minority interest.
PAGE 18 ALLMERICA FINANCIAL CORPORATION HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) 1996 Q4 96 Q3 96 Q2 96 Q1 96 1995 Q4 95 Q3 95 Q2 95 Q1 95 NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 173.1 $ 43.6 $ 63.0 $ 40.0 $ 26.5 $ 212.0 $ 54.6 $ 58.0 $ 51.4 $ 48.0 ------------------------------------------------------------------------------------------------- Asset Accumulation Allmerica Financial Services 106.8 28.2 27.4 28.0 23.2 60.0 15.4 16.0 11.4 17.2 Allmerica Asset Management 11.5 5.4 2.8 2.1 1.2 12.2 3.5 2.5 3.8 2.4 ------------------------------------------------------------------------------------------------- 118.3 33.6 30.2 30.1 24.4 72.2 18.9 18.5 15.2 19.6 ------------------------------------------------------------------------------------------------- Corporate (58.0) (21.8) (10.4) (11.5) (14.3) (47.8) (15.4) (11.7) (9.6) (11.1) ------------------------------------------------------------------------------------------------- Total net operating income before federal income taxes and minority interest 233.4 55.4 82.8 58.6 36.6 236.4 58.1 64.8 57.0 56.5 Federal income taxes on operating income (50.8) (11.2) (21.5) (14.8) (3.3) (67.4) (20.2) (17.8) (14.1) (15.3) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Equity in earnings (61.5) (14.9) (21.7) (13.3) (11.6) (69.2) (15.4) (19.4) (18.3) (16.1) ------------------------------------------------------------------------------------------------- Consolidated net operating income $ 121.1 $ 29.3 $ 39.6 $ 30.5 $ 21.7 $ 99.8 $ 22.5 $ 27.6 $ 24.6 $ 25.1 ================================================================================================ INCOME FROM CONTINUING OPERATIONS $ 164.4 $ 37.4 $ 43.6 $ 39.7 $ 43.7 $ 117.9 $ 34.2 $ 25.6 $ 24.2 $ 33.9 ================================================================================================ NET INCOME $ 181.9 $ 45.3 $ 46.7 $ 42.6 $ 47.3 $ 133.9 $ 40.7 $ 30.1 $ 26.4 $ 36.7 ================================================================================================ PER SHARE DATA (DILUTED) NET OPERATING INCOME $ 2.41 $ 0.58 $ 0.79 $ 0.61 $ 0.43 $ 1.99 $ 0.45 $ 0.55 $ 0.49 $ 0.50 INCOME FROM CONTINUING OPERATIONS $ 3.29 $ 0.76 $ 0.87 $ 0.79 $ 0.87 $ 2.35 $ 0.68 $ 0.51 $ 0.48 $ 0.68 NET INCOME $ 3.63 $ 0.91 $ 0.93 $ 0.85 $ 0.94 $ 2.67 $ 0.81 $ 0.60 $ 0.53 $ 0.73 DIVIDENDS $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.00 $ 0.00 $ 0.00 WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 50.1 50.1 50.1 50.1 50.1 50.1 50.1 50.1 50.1 50.1 BALANCE SHEET Total investments $ 8,993.4 $ 9,247.2 $ 9,439.6 $ 9,479.2 $ 9,430.7 $ 9,898.1 $ 9,9,41.5 $ - Separate account Assets $ 6,233.0 $ 5,586.8 $ 5,197.9 $ 4,761.6 $ 4,348.8 $ 4,076.7 $ 3,659.2 $ - Total assets $18,970.3 $18,728.5 $18,506.1 $18,162.7 $17,757.7 $17,163.8 $16,798.7 $ - Total shareholders' equity $ 1,724.7 $ 1,633.0 $ 1,563.5 $ 1,555.9 $ 1,574.2 $ 1,255.5 $ 1,230.1 $ - Book value per share $ 34.40 $ 32.57 $ 31.20 $ 31.03 $ 31.40 $ 25.04 $ 24.54 $ - Book value per share, excluding SFAS No.115 $ 31.78 $ 30.92 $ 30.04 $ 29.24 $ 28.35 $ 23.23 $ 22.63 $ - Net operating income excludes net realized gains (losses) and other non- operating items, net of taxes and minority interest.
PAGE 19 CORPORATE OFFICES AND PRINCIPAL SUBSIDIARIES Allmerica Financial 440 Lincoln Street Worcester, MA 01653 The Hanover Insurance Company 100 North Parkway Worcester, MA 01605 Citizens Insurance Company of America 645 West Grand River Howell, MI 48843 MARKET AND DIVIDEND INFORMATION The following information shows trading activity for the Company for the periods indicated:
Quarter Ended 2000 Price Range Dividends High Low Per Share March 31 $53.50 $35.31 $0.00 June 30 September 30 December 31
Quarter Ended 1999 Price Range Dividends High Low Per Share March 31 $57.88 $50.19 $0.00 June 30 $62.25 $54.50 $0.00 September 30 $64.44 $47.56 $0.25 December 31 $59.69 $46.50 $0.00
INDUSTRY RATINGS A.M. Standard Duff & Claims Paying Best & Poors Moody's Phelps - ----------------------------------------------------------------------------- First Allmerica Financial Life Insurance Company A AA- A1 AA - ----------------------------------------------------------------------------- Allmerica Financial Life Insurance and Annuity Company A AA- A1 AA - ----------------------------------------------------------------------------- The Hanover Insurance Company A AA- A1 - - ----------------------------------------------------------------------------- Citizens Insurance Company of America A - - - - ----------------------------------------------------------------------------- Standard Duff & Debt Ratings & Poors Moody's Phelps - ----------------------------------------------------------------------------- Allmerica Financial Corporation Senior Debt A- A2 A+ - ----------------------------------------------------------------------------- Allmerica Financial Corporation Capital Securities BBB A2 - - ----------------------------------------------------------------------------- Allmerica Financial Corporation Short Term Debt A1+ P1 - - ----------------------------------------------------------------------------- First Allmerica Financial Life Insurance Company Short Term Debt A1+ P1 - - ----------------------------------------------------------------------------- First Allmerica Financial Life Insurance Company Short Term Insurance Financial Strength Rating - P1 - - ----------------------------------------------------------------------------- TRANSFER AGENT First Chicago Trust Company of New York A Division of EquiServe, LP 525 Washington Boulevard Jersey City, NJ 07303-2512 1-800-317-4454 COMMON STOCK Common stock of Allmerica Financial Corporation is traded on the New York Stock Exchange under the symbol "AFC". INQUIRIES Henry P. St. Cyr, CFA Vice President, Investor Relations (508) 855-2959 hstcyr@Allmerica.com William J. Steglitz, CPA Manager, Investor Relations (508) 855-3883 wsteglitz@Allmerica.com INVESTOR INFORMATION LINE Dial 1-800-407-5222 to receive additional printed information, fax-on-demand services or other prerecorded messages. Please visit our internet site at www.Allmerica.com -----END PRIVACY-ENHANCED MESSAGE-----