8-K

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): July 28, 2003

ALLMERICA FINANCIAL CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	1-13754	04-3263626
(State or other jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer 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)

Item 7. Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Exhibits.

The following exhibits are furnished herewith.

Exhibit 99.1	Press Release, dated July 28, 2003, announcing the Company’s financial results for the quarter ended June 30, 2003.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended June 30, 2003.

Item 9. Regulation FD Disclosure (Information Provided Under Item 12 – Results of Operations and Financial Condition).

The following information contained in Item 9 is being furnished under Item 12 – Results of Operations and Financial Condition in accordance with interim guidance issued by the SEC in Release No. 33-8216. Such information, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.

On July 28, 2003, Allmerica Financial Corporation issued a press release announcing its financial results for the quarter ended June 30, 2003. The release is furnished as Exhibit 99.1 hereto. Additionally, on July 28, 2003, the Company made available on its website financial information contained in its Statistical Supplement for the period ended June 30, 2003. The supplement is furnished as Exhibit 99.2 hereto.

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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 Registrant
By:	/s/    EDWARD J. PARRY III
	Edward J. Parry III Executive Officer of the Chairman, Chief Financial Officer and Principal Accounting Officer

Date: July 28, 2003

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Exhibit Index

Exhibit 99.1	Press Release, dated July 28, 2003, announcing the Company’s financial results for the quarter ended June 30, 2003.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended June 30, 2003.

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EX-99.1

Exhibit 99.1

ALLMERICA FINANCIAL CORPORATION REPORTS SECOND

QUARTER NET INCOME OF $0.46 PER SHARE

WORCESTER, Mass., July 28, 2003—Allmerica Financial Corporation (NYSE: AFC) today reported net income for the second quarter of $24.4 million, or $0.46 per share, compared to a net loss of $55.5 million, or $1.05 per share in the second quarter of 2002.

“We are pleased with our second quarter results and the further improvements in the capital position of our life insurance companies” said Edward J. Parry, III, President of Allmerica’s Asset Accumulation Company and Allmerica Financial Corporation’s Chief Financial Officer.

Robert P. Restrepo, Jr., President of Allmerica’s Property and Casualty Companies added, “Our core earnings in the second quarter were solid and reflect our efforts to improve underwriting results. However, our reported earnings for the quarter were negatively impacted by the arbitration ruling we announced earlier in the quarter relating to business we exited in 1996.”

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The following table illustrates net income (loss) and certain other items:

	Quarter ended June 30 (In millions, except per share data)
	2003						2002
	$			Per Share			$			Per Share
Net income (loss)	$	24.4		$	0.46		$	(55.5	)	$	(1.05	)
Net income (loss) includes the following items (net of taxes):
Net realized investment gains (losses), net of taxes and deferred acquisition cost amortization	$	6.6		$	0.13		$	(38.5	)	$	(0.73	)
Gain from retirement of trust instruments supported by funding obligations		0.3			—			—			—
Restructuring costs		(0.8	)		(0.01	)		—			—
(Losses) gains on derivative instruments		(0.4	)		(0.01	)		9.1			0.17
Other items		—			—			1.6			0.03
Total of included items	$	5.7		$	0.11		$	(27.8	)	$	(0.53	)

Segment Results

Allmerica Financial conducts business in three operating segments: Property and Casualty, Allmerica Financial Services, and Asset Management. Property and Casualty markets property and casualty insurance products on a regional basis through The Hanover Insurance Company and Citizens Insurance Company of America. Allmerica Financial Services manages a portfolio of proprietary life insurance and annuity products previously issued through Allmerica’s two life insurance subsidiaries, and markets non-proprietary insurance and retirement savings products and services primarily to individuals through VeraVest Investments, Inc., a registered broker-dealer. The Asset Management segment markets investment management services to institutions, pension funds, and other organizations through Opus Investment Management, Inc., and manages a portfolio of guaranteed investment contracts issued through one of Allmerica’s life insurance subsidiaries.

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The following table shows segment income, which is presented consistent with the manner in which management evaluates results and is in accordance with Statement of Financial Accounting Standards No. 131, “Disclosures About Segments of an Enterprise and Related Information”. Segment income represents income before income taxes and minority interest and excludes the items listed in the net income table above.

	Quarter ended June 30 (In Millions)
	2003			2002
Property and Casualty	$	20.6		$	51.6
Allmerica Financial Services		18.4			(113.8	)
Asset Management		2.5			5.1
Corporate		(18.5	)		(15.2	)
Total Segment Income (Loss)(1)	$	23.0		$	(72.3	)

(1) See reconciliation from segment income (loss) to net income (loss) at the end of this document.

Property and Casualty

Property and Casualty segment income was $20.6 million in the second quarter of 2003, as compared to $51.6 million in the second quarter of 2002. Earnings were lower in the quarter due principally to a pre-tax charge of $23.0 million resulting from a recent adverse arbitration decision related to an insurance pool we exited in 1996. In addition, pre-tax catastrophe losses were higher in the current quarter when compared to the second quarter of 2002, when catastrophe losses were unusually low.

Property and Casualty highlights:

• Net premiums written were $571.0 million in the second quarter of 2003, compared to $572.1 million in the second quarter of 2002.

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• Net premiums earned were $561.8 million in the second quarter of 2003, compared to $570.6 million in the second quarter of 2002.

• Pre-tax catastrophe losses were $21.2 million in the second quarter of 2003, versus $8.6 million in the comparable period one year earlier.

• The following table summarizes the components of the statutory combined ratio for the Property and Casualty segment:

	Quarter ended June 30
	2003		2002
Losses*	69.1	%	64.4	%
Loss adjustment expenses	8.2	%	8.9	%
Policy acquisition and other underwriting expense	29.4	%	28.2	%
Policyholders’ dividends	0.1	%	0.1	%
Combined Ratio	106.8	%	101.6	%

* Loss ratio excluding the adverse arbitration ruling was 65.0% in 2003.

Allmerica Financial Services

Allmerica Financial Services reported segment income of $18.4 million in the second quarter of 2003, as compared to a segment loss of $113.8 million in the second quarter of 2002. Segment results in the second quarter of 2002 were materially impacted by a $141.9 million pre-tax write-off of deferred acquisition costs. Segment income in the current quarter was positively impacted by improved equity market conditions, which reduced the amortization of deferred acquisition costs.

Allmerica Financial Services highlights:

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• The Risk Based Capital (RBC) ratio of Allmerica Financial Life Insurance and Annuity Company, Allmerica’s lead life insurance company, increased to 344 percent at June 30, 2003, up from 266 percent at March 31, 2003 and 244 percent at December 31, 2002.

• Total adjusted statutory capital for the combined life insurance subsidiaries at June 30, 2003 increased to $535.6 million, up from $472.3 million at March 31, 2003 and $481.9 million at December 31, 2002.

• In the second quarter, individual annuity redemptions were $552.5 million, compared to approximately $1.0 billion in the first quarter of 2003 and approximately $1.3 billion in the fourth quarter of 2002.

Asset Management

Asset Management’s second quarter segment income was $2.5 million, compared to $5.1 million in the same period in the prior year. Income declined primarily due to fewer outstanding guaranteed investment contracts.

Corporate

Corporate segment net expenses were $18.5 million in the second quarter of 2003, compared to $15.2 million in the comparable period in 2002, principally due to higher fringe benefit costs, primarily pension related, and lower net investment income.

Investment Results

Net investment income was $117.4 million for the second quarter of 2003, compared to $149.6

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million in the same period in 2002. In the current quarter, net investment income decreased primarily due to lower invested assets resulting from surrenders in the general account, a reduction in outstanding guaranteed investment contracts and the sale of the Company’s fixed universal life insurance block of business.

Second quarter 2003 pre-tax net realized investment gains were $13.2 million, compared to $63.8 million of pre-tax net realized investment losses in 2002. In the current quarter, pre-tax net realized investment gains were principally related to gains of $29.0 million on the sale of certain fixed income and equity securities, and gains on derivative instruments of $2.0 million, partially offset by realized losses of $19.5 million due to impairments of fixed income securities. In the second quarter of 2002, pre-tax net realized investment losses related primarily to impairments on certain fixed income and equity securities and losses from derivative instruments.

Sale of Below Investment Grade Fixed-Income Securities

During the second quarter of 2003, the Company sold approximately $270.0 million par value of below investment grade fixed-income securities. As a result this action, at June 30, 2003 the Company’s holdings of below investment grade fixed-income securities were reduced to 6.2 percent of the fixed income portfolio and 5.7 percent of total invested assets; from 10.0 percent and 9.2 percent, respectively, at the end of the first quarter of 2003.

Balance Sheet and Other

Shareholders’ equity was $2.2 billion, or $41.96 per share at June 30, 2003, compared to $2.1 billion, or $39.12 per share at December 31, 2002. Excluding accumulated other comprehensive income, book value was $41.07 per share at the close of the second quarter, compared to $39.83 per share at December 31, 2002.

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Total assets were $25.2 billion at June 30, 2003, compared to $26.6 billion at year-end 2002. Separate account assets were $11.7 billion at June 30, 2003, versus $12.3 billion at December 31, 2002. The declines in total and separate account assets were principally the result of surrenders of individual variable annuities as well as the sale of the Company’s fixed universal life insurance block of business.

Life Insurance Company Statutory Capital Position

The Risk Based Capital (RBC) ratio of Allmerica Financial Life Insurance and Annuity Company, Allmerica’s lead life insurance company, increased to 344 percent at June 30, 2003, from 266 percent at March 31, 2003, and 244 percent at December 31, 2002 principally due to the sale of below investment grade securities and increases in equity market values. RBC is a regulatory method of measuring the minimum amount of capital appropriate for an insurance company. Total adjusted statutory capital at June 30, 2003 increased to $535.6 million for the combined life insurance subsidiaries, from $472.3 million at March 31, 2003, and from $481.9 million at December 31, 2002, principally due to the improvement in equity market values. Statutory capital is the measure of capital utilized by insurance industry regulators.

Allmerica Financial Corporation will host a conference call to discuss the Company’s second quarter results on Tuesday, July 29^th at 10:00 a.m. Eastern Time. Interested investors and others can listen to the call through Allmerica’s web site, located at http://www.allmerica.com. Web-cast participants should go to the web site 15 minutes early to register, download, and install any necessary audio software. A re-broadcast of the conference call will be available on this web site two hours after the call.

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Allmerica Financial Corporation’s Second Quarter Earnings Press Release and Statistical Supplement are also available in the Financial News section at http://www.allmerica.com.

Certain statements in this release may be considered to be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Use of the words “believes”, “anticipates”, “expects” and similar expressions is intended to identify forward-looking statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance, and actual results could differ materially. Investors are directed to consider the risks and uncertainties in our business that may affect future performance and that are discussed in readily available documents, including the Company’s annual report and other documents filed by Allmerica with the Securities and Exchange Commission and which are also available at http://www.allmerica.com under “Financial News”. These uncertainties include the possibility of adverse catastrophe experience and severe weather, adverse loss development and adverse trends in mortality and morbidity, changes in the stock and financial markets, changes from assumed surrender activities and assumed stock market returns, adverse selection in surrender patterns, investment impairments, heightened competition, adverse state and federal legislation or regulation, financial ratings actions, and various other factors, including the effect of the Company’s restructuring actions.

Allmerica Financial Corporation is the holding company for a diversified group of insurance and financial services companies headquartered in Worcester, Massachusetts.

CONTACTS:	Investors:	Media:
	Henry P. St. Cyr	Michael F. Buckley
	(508) 855-2959	(508) 855-3099
	hstcyr@allmerica.com	mibuckley@allmerica.com
AF-12
07/28/03

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ALLMERICA FINANCIAL CORPORATION

(In millions, except per share data)

	Quarter ended June 30
	2003		2002
Net income (loss)	$	24.4	$	(55.5	)
Net income (loss) per share(1)	$	0.46	$	(1.05	)
Weighted average shares		53.0		52.9

The following is a reconciliation from segment income (loss) to net income (loss)⁽²⁾:

	Quarter ended June 30
	2003			2002
Property and Casualty	$	20.6		$	51.6
Allmerica Financial Services		18.4			(113.8	)
Asset Management		2.5			5.1
Corporate		(18.5	)		(15.2	)
Total segment income (loss)		23.0			(72.3	)
Federal income tax (expense) benefit on segment income		(0.3	)		48.6
Minority interest on preferred dividends		(4.0	)		(4.0	)
Total segment income (loss) after federal income taxes and minority interest		18.7			(27.7	)
Net realized investment gains (losses), net of taxes and deferred acquisition cost amortization		6.6			(38.5	)
Gain from retirement of trust instruments supported by funding agreement obligations, net of taxes		0.3			—
(Losses) gains on derivative instruments, net of taxes		(0.4	)		9.1
Restructuring costs		(0.8	)		—
Other items		—			1.6
Net income (loss)	$	24.4		$	(55.5	)

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Net income (loss) includes the following items (net of taxes) by segment:

	Quarter ended June 30, 2003
	Property & Casualty			Allmerica Financial Services			Asset Management			Corporate			Total
Net realized investment gains (losses), net of taxes and deferred acquisition cost amortization	$	1.5		$	(1.4	)	$	6.6		$	(0.1	)	$	6.6
Gain from retirement of trust instruments supported by funding obligations		—			—			0.3			—			0.3
(Losses) gains on derivative instruments		—			—			(0.4	)		—			(0.4	)
Restructuring costs		—			(0.8	)		—			—			(0.8	)
	Quarter ended June 30, 2002
	Property & Casualty			Allmerica Financial Services			Asset Management			Corporate			Total
Net realized investment gains (losses), net of taxes and deferred acquisition cost amortization	$	(2.3	)	$	(19.7	)	$	(17.7	)	$	1.2		$	(38.5	)
(Losses) gains on derivative instruments		—			—			9.1			—			9.1
Other items		—			1.6			—			—			1.6

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(1) Basic net income (loss) per share was $0.46 and $(1.05) for the quarters ended June 30, 2003 and 2002, respectively. Per share data for the quarter ended June 30, 2002 represents basic loss per share due to antidilution.

(2) In accordance with Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information, the separate financial information of each segment is presented consistent with the way results are regularly evaluated by the chief operating decision makers in deciding how to allocate resources and in assessing performance. Management evaluates the results of the aforementioned segments based on a pre-tax and pre-minority interest basis. Segment income (loss) is determined by adjusting net income for net realized investment gains and losses including certain gains or losses on derivative instruments, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Also, segment income (loss) excludes net gains and losses on disposals of businesses, discontinued operations, restructuring and reorganization costs, extraordinary items, the cumulative effect of accounting changes and certain other items.

All figures reported are unaudited.

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EX-99.2

Exhibit 99.2

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
Balance Sheet Highlights	5
Property and Casualty
Condensed Income Statements	6
Statutory Underwriting Profit/(Loss), reconciled to GAAP	7
Selected Statutory Product Information	8
Allmerica Financial Services
Condensed Income Statements	9
Segment Income By Product Line	10-11
Selected Financial Information-Variable Annuities	12
Future Policy Benefits and Account Balances	13
Asset Management
Condensed Income Statements and Supplemental Information	14
Corporate
Condensed Income Statements	15
Investment Results
Net Investment Income	16
Aging of Gross Unrealized Losses on Securities Available for Sale	17
Credit Quality of Fixed Maturities	18
Historical Financial Highlights	19-21
Other Information
Corporate Information	Inside back cover
Market and Dividend Information
Industry Ratings

ALLMERICA FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

	Quarter ended June 30							Six Months ended June 30
(In millions, except per share data)	2003			2002			% Change	2003			2002			% Change
RECONCILIATION FROM SEGMENT
INCOME TO NET INCOME
Segment income (1)	$	23.0		$	(72.3	)	N/M	$	55.0		$	(14.9	)	N/M
Federal income taxes on segment income		(0.3	)		48.6		N/M		(4.6	)		40.6		N/M
Minority interest:
Distributions on mandatorily redeemable preferred securities of a subsidiary trust, net of taxes		(4.0	)		(4.0	)	—		(8.0	)		(8.0	)	—
Net realized investment gains (losses), net of taxes and amortization		6.6			(38.5	)	N/M		14.6			(42.9	)	N/M
(Losses) gains on derivative instruments, net of taxes		(0.4	)		9.1		N/M		0.6			19.7		(97.0	)
Restructuring costs, net of taxes		(0.8	)		—		N/M		(3.0	)		—		N/M
Gain from retirement of trust instruments supported by funding obligations, net of taxes		0.3			—		N/M		3.3			—		N/M
Sales practice litigation, net of taxes		—			1.6		N/M		—			1.6		N/M
Income from sale of universal life business, net of taxes		—			—		—		3.6			—		N/M
Income before effect of accounting change		24.4			(55.5	)	N/M		61.5			(3.9	)	N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		—		—			(3.7	)	N/M
Net income	$	24.4		$	(55.5	)	N/M	$	61.5		$	(7.6	)	N/M
PER SHARE DATA (DILUTED)
Segment income (1)	$	0.43		$	(1.37	)	N/M	$	1.04		$	(0.28	)	N/M
Federal income taxes on segment income		—			0.93		N/M		(0.09	)		0.76		N/M
Minority interest:
Distributions on mandatorily redeemable preferred securities of a subsidiary trust, net of taxes		(0.08	)		(0.08	)	—		(0.15	)		(0.15	)	—
Net realized investment gains (losses), net of taxes and amortization		0.13			(0.73	)	N/M		0.28			(0.80	)	N/M
(Losses) gains on derivative instruments, net of taxes		(0.01	)		0.17		N/M		0.01			0.37		(97.3	)
Restructuring costs, net of taxes		(0.01	)		—		N/M		(0.06	)		—		N/M
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			—		—		0.06			—		N/M
Sales practice litigation, net of taxes		—			0.03		N/M		—			0.03		N/M
Income from sale of universal life business, net of taxes		—			—		—		0.07			—		N/M
Income before effect of accounting change		0.46			(1.05	)	N/M		1.16			(0.07	)	N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		—		—			(0.07	)	N/M
Net income	$	0.46		$	(1.05	)	N/M	$	1.16		$	(0.14	)	N/M

	June 30 2003			December 31 2002			% Change
BALANCE SHEET
Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	901.3		$	830.3		8.6
Allmerica Financial Life Insurance and Annuity Company (consolidated)	$	535.6		$	481.9		11.1
First Allmerica Financial Life Insurance Company	$	199.2		$	200.0		(0.4	)
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	1,512.5		$	1,400.9		8.0
Allmerica Financial Life Insurance and Annuity Company (consolidated)		1,244.1			1,197.9		3.9
AFC Holding Company and other		(531.0	)		(526.6	)	0.8
Total shareholders’ equity	$	2,225.6		$	2,072.2		7.4
Book value per share
The Hanover Insurance Company (consolidated)	$	28.52		$	26.39		8.1
Allmerica Financial Life Insurance and Annuity Company (consolidated)		23.46			22.64		3.6
AFC Holding Company and other		(10.02	)		(9.91	)	1.1
Total book value per share	$	41.96		$	39.12		7.3
Book value per share, excluding accumulated other comprehensive income	$	41.07		$	39.83		3.1
Shares outstanding (2)		53.0			52.9
Stock price	$	17.99		$	10.10		78.1
Price/book value per share		0.4	x		0.3	x	0.1	x
Debt/equity		9.0	%		9.6	%	(0.6	) pts
Debt/total capital		7.3	%		7.8	%	(0.5	) pts
Debt plus preferred securities of a subsidiary trust/total capital		18.3	%		19.4	%	(1.1	) pts

(1) Represents income or loss of the Company’s three operating segments: Property and Casualty, Allmerica Financial Services and Asset Management. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision makers in deciding how to allocate resources and in assessing performance. In addition, segment income or loss reflects those results related to the Corporate segment, which consists of income and expenses related to invested assets, corporate debt, preferred securities of a subsidiary trust and corporate overhead expenses. Corporate overhead expenses reflect costs not attributable to a particular segment, such as those related to certain officers and directors, technology, finance, human resources and legal.

(2) Shares outstanding do not include common stock equivalents.

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ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENTS

	Quarter ended June 30								Six Months ended June 30
(In millions, except per share data)	2003			2002			% Change		2003			2002			% Change
REVENUES
Premiums	$	568.4		$	577.4		(1.6	)	$	1,143.6		$	1,160.0		(1.4	)
Universal life and investment product policy fees		76.6			98.8		(22.5	)		166.9			194.8		(14.3	)
Net investment income		117.4			149.6		(21.5	)		236.1			300.1		(21.3	)
Net realized investment gains (losses)		13.2			(63.8	)	N/M			26.4			(76.1	)	N/M
Other income		46.9			36.4		28.8			99.3			68.9		44.1
Total revenues		822.5			798.4		3.0			1,672.3			1,647.7		1.5
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		497.6			517.1		(3.8	)		984.3			1,053.5		(6.6	)
Policy acquisition expenses		142.2			258.8		(45.1	)		313.5			370.3		(15.3	)
Gain from retirement of trust instruments supported by funding obligations		(0.3	)		—		N/M			(5.0	)		—		N/M
Income from sale of universal life business		—			—		—			(5.5	)		—		N/M
Losses (gains) on derivative instruments		0.6			(14.1	)	N/M			(0.9	)		(30.4	)	(97.0	)
Restructuring costs		1.3			—		N/M			4.6			—		N/M
Other operating expenses		150.2			149.7		0.3			301.8			302.3		(0.2	)
Total benefits, losses and expenses		791.6			911.5		(13.2	)		1,592.8			1,695.7		(6.1	)
Income before federal income taxes		30.9			(113.1	)	N/M			79.5			(48.0	)	N/M
Federal income tax expense (benefit)		2.5			(61.6	)	N/M			10.0			(52.1	)	N/M
Income before minority interest and cumulative effect of change in accounting principle		28.4			(51.5	)	N/M			69.5			4.1		N/M
Minority interest:
Distributions on mandatorily redeemable preferred securities of a subsidiary trust		(4.0	)		(4.0	)	—			(8.0	)		(8.0	)	—
Income before cumulative effect of change in accounting principle		24.4			(55.5	)	N/M			61.5			(3.9	)	N/M
Cumulative effect of change in accounting principle		—			—		—			—			(3.7	)	N/M
Net income	$	24.4		$	(55.5	)	N/M		$	61.5		$	(7.6	)	N/M
PER SHARE DATA (DILUTED) (2)
Income before cumulative effect of change in accounting principle	$	0.46		$	(1.05	)	N/M		$	1.16		$	(0.07	)	N/M
Cumulative effect of change in accounting principle		—			—		—			—			(0.07	)	N/M
Net income (1)	$	0.46		$	(1.05	)	N/M		$	1.16		$	(0.14	)	N/M
Weighted average shares outstanding		53.0			52.9					53.0			52.8

(1) Basic net income per share was $0.46 and $(1.05) for the quarters ended June 30, 2003 and 2002, respectively and $1.16 and $(0.14) for the six months ended June 30, 2003 and 2002, respectively.

(2) Excludes 0.4 million shares for the quarter and six months ended June 30, 2002 due to antidilution.

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ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	June 30 2003			December 31 2002			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $7,121.9 and $7,715.9)	$	7,578.4		$	8,003.1		(5.3	)
Equity securities, at fair value (cost of $17.1 and $49.1)		21.3			52.8		(59.7	)
Mortgage loans		237.9			259.8		(8.4	)
Policy loans		276.7			361.4		(23.4	)
Other long-term investments		104.7			129.7		(19.3	)
Total investments		8,219.0			8,806.8		(6.7	)
Cash and cash equivalents		351.5			389.8		(9.8	)
Accrued investment income		121.3			138.3		(12.3	)
Premiums, accounts, and notes receivable, net		513.2			564.7		(9.1	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		2,096.0			2,075.8		1.0
Deferred policy acquistion costs		1,155.2			1,242.2		(7.0	)
Deferred federal income tax asset		386.0			413.2		(6.6	)
Goodwill		131.2			131.2		—
Other assets		480.8			473.5		1.5
Separate account assets		11,719.0			12,343.4		(5.1	)
Total assets	$	25,173.2		$	26,578.9		(5.3	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	3,624.1		$	3,900.1		(7.1	)
Outstanding claims, losses and loss adjustment expenses		3,052.5			3,066.5		(0.5	)
Unearned premiums		1,046.3			1,047.0		(0.1	)
Contractholder deposit funds and other policy liabilities		829.9			772.8		7.4
Total policy liabilities and accruals		8,552.8			8,786.4		(2.7	)
Expenses and taxes payable		955.3			1,115.5		(14.4	)
Reinsurance premiums payable		94.6			559.1		(83.1	)
Trust instruments supported by funding obligations		1,126.4			1,202.8		(6.4	)
Long-term debt		199.5			199.5		—
Separate account liabilities		11,719.0			12,343.4		(5.1	)
Total liabilities		22,647.6			24,206.7		(6.4	)
MINORITY INTEREST
Mandatorily redeemable preferred securities of a subsidiary trust		300.0			300.0		—
SHAREHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; authorized 20.0 million shares; issued none		—			—		—
Common stock, par value $.01 per share; authorized 300.0 million shares; issued 60.4 million shares		0.6			0.6		—
Additional paid-in capital		1,773.4			1,768.4		0.3
Accumulated other comprehensive income (loss)		47.3			(37.4	)	N/M
Retained earnings		807.7			746.2		8.2
Treasury stock at cost (7.4 and 7.5 million shares)		(403.4	)		(405.6	)	(0.5	)
Total shareholders’ equity		2,225.6			2,072.2		7.4
Total liabilities and shareholders’ equity	$	25,173.2		$	26,578.9		(5.3	)

3

ALLMERICA FINANCIAL CORPORATION

SEGMENT RESULTS

INCOME STATEMENT HIGHLIGHTS

	Quarter ended June 30								Six Months ended June 30
(In millions)	2003			2002			% Change		2003			2002			% Change
SEGMENT REVENUES (1)
Property and Casualty	$	615.3		$	626.7		(1.8	)	$	1,224.3		$	1,241.4		(1.4	)
Allmerica Financial Services		174.4			204.8		(14.8	)		382.4			419.7		(8.9	)
Asset Management		22.2			31.8		(30.2	)		44.3			64.0		(30.8	)
Corporate		0.5			1.5		(66.7	)		1.0			3.2		(68.8	)
Eliminations and other		(3.1	)		(2.6	)	19.2			(6.1	)		(4.5	)	35.6
Total segment revenues	$	809.3		$	862.2		(6.1	)	$	1,645.9		$	1,723.8		(4.5	)
SEGMENT INCOME (2)
Property and Casualty	$	20.6		$	51.6		(60.1	)	$	64.8		$	90.6		(28.5	)
Allmerica Financial Services		18.4			(113.8	)	N/M			20.8			(84.1	)	N/M
Asset Management		2.5			5.1		(51.0	)		5.0			10.2		(51.0	)
Corporate		(18.5	)		(15.2	)	21.7			(35.6	)		(31.6	)	12.7
Total segment income (loss) before federal income taxes and minority interest	$	23.0		$	(72.3	)	N/M		$	55.0		$	(14.9	)	N/M

	Year ended December 31
(In millions)	2002			2001			2000			1999			1998
SEGMENT REVENUES (1)
Property and Casualty	$	2,498.7		$	2,454.8		$	2,307.7		$	2,189.4		$	2,222.1
Allmerica Financial Services		854.7			826.5			867.2			808.3			725.6
Asset Management		127.2			155.2			149.2			150.5			121.7
Corporate		5.0			6.7			6.3			6.0			12.9
Eliminations and other		(10.3	)		(7.5	)		(7.0	)		(5.9	)		(7.6	)
Total segment revenues	$	3,475.3		$	3,435.7		$	3,323.4		$	3,148.3		$	3,074.7
SEGMENT INCOME (2)
Property and Casualty	$	184.3		$	93.5		$	190.0		$	199.6		$	149.6
Allmerica Financial Services		(625.0	)		143.0			222.8			205.5			169.0
Asset Management		24.4			20.7			22.5			23.5			23.7
Corporate		(63.5	)		(63.8	)		(60.8	)		(59.3	)		(50.9	)
Total segment income (loss) before federal income taxes and minority interest	$	(479.8	)	$	193.4		$	374.5		$	369.3		$	291.4

(1) Represents revenues generated by the Company’s three operating segments, as well as the Corporate segment.

(2) Represents income or loss of the Company’s three operating segments: Property and Casualty, Allmerica Financial Services and Asset Management. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision makers in deciding how to allocate resources and in assessing performance. In addition, segment income or loss reflects those results related to the Corporate segment, which consists of income and expenses related to invested assets, corporate debt, preferred securities of a subsidiary trust and corporate overhead expenses. Corporate overhead expenses reflect costs not attributable to a particular segment, such as those related to certain officers and directors, technology, finance, human resources and legal.

4

ALLMERICA FINANCIAL CORPORATION

SEGMENT RESULTS

BALANCE SHEET HIGHLIGHTS

	June 30, 2003
(In millions)	Property and Casualty		Allmerica Financial Services		Asset Management		Corporate(1)			Total
Cash and investments	$	3,780.8	$	3,428.7	$	1,312.7	$	48.3		$	8,570.5
Reinsurance receivables		1,142.0		954.0		—		—			2,096.0
Deferred policy acquistion costs		220.3		934.9		—		—			1,155.2
Separate account assets		—		11,719.0		—		—			11,719.0
Other assets		1,041.5		615.1		19.6		(43.7	)		1,632.5
Total assets	$	6,184.6	$	17,651.7	$	1,332.3	$	4.6		$	25,173.2
Policy liabilities and accruals:
Future policy benefits	$	112.4	$	3,511.7	$	—	$	—		$	3,624.1
Outstanding claims, losses and loss adjustment expenses		3,020.3		32.2		—		—			3,052.5
Unearned premiums		1,044.5		1.8		—		—			1,046.3
Contractholder deposit funds and other policy liabilities		33.3		589.3		207.3		—			829.9
Total policy liabilities and accruals	$	4,210.5	$	4,135.0	$	207.3	$	—		$	8,552.8
Trust instruments supported by funding obligations	$	—	$	—	$	1,126.4	$	—		$	1,126.4
Separate account liabilities	$	—	$	11,719.0	$	—	$	—		$	11,719.0
	December 31, 2002
	Property and Casualty		Allmerica Financial Services		Asset Management		Corporate(1)			Total
Cash and investments	$	3,604.7	$	4,160.2	$	1,368.3	$	63.4		$	9,196.6
Reinsurance receivables		1,101.0		974.8		—		—			2,075.8
Deferred policy acquistion costs		215.1		1,027.1		—		—			1,242.2
Separate account assets		—		12,343.4		—		—			12,343.4
Other assets		1,135.3		466.1		191.5		(72.0	)		1,720.9
Total assets	$	6,056.1	$	18,971.6	$	1,559.8	$	(8.6	)	$	26,578.9
Policy liabilities and accruals:
Future policy benefits	$	106.5	$	3,793.6	$	—	$	—		$	3,900.1
Outstanding claims, losses and loss adjustment expenses		3,035.9		30.6		—		—			3,066.5
Unearned premiums		1,045.2		1.8		—		—			1,047.0
Contractholder deposit funds and other policy liabilities		14.2		550.5		208.1		—			772.8
Total policy liabilities and accruals	$	4,201.8	$	4,376.5	$	208.1	$	—		$	8,786.4
Trust instruments supported by funding obligations	$	—	$	—	$	1,202.8	$	—		$	1,202.8
Separate account liabilities	$	—	$	12,343.4	$	—	$	—		$	12,343.4

(1) Total assets include corporate eliminations of $(47.7) million and $(78.9) million at June 30, 2003 and December 31, 2002, respectively.

5

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENT

	Quarter ended June 30								Six Months ended June 30
(In millions)	2003			2002			% Change		2003			2002		% Change
REVENUES
Net premiums written	$	571.0		$	572.1		(0.2	)	$	1,121.5		$	1,127.0	(0.5	)
Change in unearned premiums, net of prepaid reinsurance premiums		(9.2	)		(1.5	)	N/M			(5.5	)		1.7	N/M
Net premiums earned		561.8			570.6		(1.5	)		1,116.0			1,128.7	(1.1	)
Net investment income		46.5			50.8		(8.5	)		91.8			102.6	(10.5	)
Other income		7.0			5.3		32.1			16.5			10.1	63.4
Total segment revenue		615.3			626.7		(1.8	)		1,224.3			1,241.4	(1.4	)
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses (1)		435.2			419.5		3.7			840.4			840.6	—
Policy acquisition expenses		113.1			105.9		6.8			224.9			210.5	6.8
Other operating expenses		46.4			49.7		(6.6	)		94.2			99.7	(5.5	)
Total losses and operating expenses		594.7			575.1		3.4			1,159.5			1,150.8	0.8
Segment income before federal income taxes	$	20.6		$	51.6		(60.1	)	$	64.8		$	90.6	(28.5	)

(1) Policy benefits, claims, losses and loss adjustment expenses for the quarter and six months ended June 30, 2003 include a $23.0 million charge resulting from the recent adverse arbitration decision related to an insurance pool in which one of Allmerica Financial Corporation’s subsidiaries, The Hanover Insurance Company, was formerly a participant.

6

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING PROFIT/(LOSS), RECONCILED TO GAAP

	Quarter ended June 30								Six Months ended June 30
(In millions)	2003			2002			% Change		2003			2002			% Change
Net premiums earned	$	561.8		$	571.2		(1.6	)	$	1,115.7		$	1,128.6		(1.1	)
Policy benefits, claims, losses and loss adjustment expenses (1)		434.4			418.3		3.8			838.5			840.3		(0.2	)
Policy acquisition and other underwriting expenses		168.1			161.4		4.2			329.4			319.5		3.1
Policyholders’ dividends		0.5			0.5		—			1.6			1.1		45.5
Underwriting loss	$	(41.2	)	$	(9.0	)	N/M		$	(53.8	)	$	(32.3	)	66.6
Net investment income		46.5			50.8		(8.5	)		91.8			102.6		(10.5	)
Other income and expenses, net		5.5			4.2		31.0			13.6			7.6		78.9
Net deferred acquisition costs		5.1			4.0		27.5			5.4			6.2		(12.9	)
Other Statutory to GAAP adjustments		4.7			1.6		N/M			7.8			6.5		20.0
Segment income before federal income taxes—GAAP Basis	$	20.6		$	51.6		(60.1	)	$	64.8		$	90.6		(28.5	)
PRETAX CATASTROPHE LOSSES	$	21.2		$	8.6		N/M		$	32.4		$	19.8		63.6

(1) Policy benefits, claims, losses and loss adjustment expenses for the quarter and six months ended June 30, 2003 include a $23.0 million charge resulting from the recent adverse arbitration decision related to an insurance pool in which one of Allmerica Financial Corporation’s subsidiaries, The Hanover Insurance Company, was formerly a participant.

7

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

SELECTED STATUTORY PRODUCT INFORMATION

	Quarter ended June 30								Six Months ended June 30
(In millions, except ratios)	2003			2002			% Change		2003			2002			% Change
NET PREMIUMS WRITTEN
Personal automobile	$	267.9		$	267.2		0.3		$	551.3		$	552.4		(0.2	)
Homeowners		102.5			94.4		8.6			173.0			159.9		8.2
Other personal		12.1			12.5		(3.2	)		20.3			21.1		(3.8	)
Total personal lines		382.5			374.1		2.2			744.6			733.4		1.5
Workers’ compensation		32.2			37.4		(13.9	)		71.2			79.4		(10.3	)
Commercial automobile		45.3			49.0		(7.6	)		89.5			100.5		(10.9	)
Commercial multiple peril		86.9			84.3		3.1			170.3			164.0		3.8
Other commercial		24.1			27.9		(13.6	)		45.6			49.6		(8.1	)
Total commercial lines		188.5			198.6		(5.1	)		376.6			393.5		(4.3	)
Total	$	571.0		$	572.7		(0.3	)	$	1,121.2		$	1,126.9		(0.5	)
NET PREMIUMS EARNED
Personal automobile	$	269.4		$	269.3		—		$	540.5		$	523.8		3.2
Homeowners		91.5			81.3		12.5			177.2			159.7		11.0
Other personal		10.7			10.9		(1.8	)		21.3			21.8		(2.3	)
Total personal lines		371.6			361.5		2.8			739.0			705.3		4.8
Workers’ compensation		34.3			44.7		(23.3	)		70.8			90.6		(21.9	)
Commercial automobile		47.2			54.7		(13.7	)		93.3			112.0		(16.7	)
Commercial multiple peril		84.1			83.7		0.5			163.8			168.3		(2.7	)
Other commercial		24.6			26.6		(7.5	)		48.8			52.4		(6.9	)
Total commercial lines		190.2			209.7		(9.3	)		376.7			423.3		(11.0	)
Total	$	561.8		$	571.2		(1.6	)	$	1,115.7		$	1,128.6		(1.1	)
POLICY BENEFITS, CLAIMS AND LOSSES
Personal automobile	$	198.8		$	184.1		8.0		$	408.2		$	369.6		10.4
Homeowners		63.0			52.1		20.9			118.0			103.6		13.9
Other personal		3.2			5.0		(36.0	)		6.8			10.7		(36.4	)
Total personal lines		265.0			241.2		9.9			533.0			483.9		10.1
Workers’ compensation		24.6			37.3		(34.0	)		49.2			72.0		(31.7	)
Commercial automobile		26.4			36.6		(27.9	)		49.5			72.2		(31.4	)
Commercial multiple peril		42.0			42.3		(0.7	)		81.4			94.4		(13.8	)
Other commercial (1)		30.4			10.3		N/M			33.6			17.2		95.3
Total commercial lines		123.4			126.5		(2.5	)		213.7			255.8		(16.5	)
Total	$	388.4		$	367.7		5.6		$	746.7		$	739.7		0.9
LOSS ADJUSTMENT EXPENSES	$	46.0		$	50.6		(9.1	)	$	91.8		$	100.6		(8.7	)
RATIOS
LOSSES
Personal automobile		73.8	%		68.4	%	5.4	pts		75.5	%		70.6	%	4.9	pts
Homeowners		68.9	%		64.1	%	4.8	pts		66.6	%		64.9	%	1.7	pts
Other personal		29.9	%		45.9	%	(16.0	) pts		31.9	%		49.1	%	(17.2	) pts
Total personal lines		71.3	%		66.7	%	4.6	pts		72.1	%		68.6	%	3.5	pts
Workers’ compensation		71.7	%		83.4	%	(11.7	) pts		69.5	%		79.5	%	(10.0	) pts
Commercial automobile		55.9	%		66.9	%	(11.0	) pts		53.1	%		64.5	%	(11.4	) pts
Commercial multiple peril		49.9	%		50.5	%	(0.6	) pts		49.7	%		56.1	%	(6.4	) pts
Other commercial (1)		123.6	%		38.7	%	84.9	pts		68.9	%		32.8	%	36.1	pts
Total commercial lines		64.9	%		60.3	%	4.6	pts		56.7	%		60.4	%	(3.7	) pts
Total		69.1	%		64.4	%	4.7	pts		66.9	%		65.5	%	1.4	pts
LOSS ADJUSTMENT EXPENSES		8.2	%		8.9	%	(0.7	) pts		8.2	%		8.9	%	(0.7	) pts
POLICY ACQUISITION AND OTHER UNDERWRITING EXPENSES		29.4	%		28.2	%	1.2	pts		29.4	%		28.4	%	1.0	pts
POLICYHOLDERS’ DIVIDENDS		0.1	%		0.1	%	—	pts		0.1	%		0.1	%	—	pts
COMBINED		106.8	%		101.6	%	5.2	pts		104.6	%		102.9	%	1.7	pts

(1) Policy benefits, claims, and losses for the quarter and six months ended June 30, 2003 include a $23.0 million charge resulting from the recent adverse arbitration decision related to an insurance pool in which one of Allmerica Financial Corporation’s subsidiaries, The Hanover Insurance Company, was formerly a participant.

8

ALLMERICA FINANCIAL CORPORATION

ALLMERICA FINANCIAL SERVICES

CONDENSED INCOME STATEMENTS

	Quarter ended June 30							Six Months ended June 30
(In millions)	2003		2002			% Change		2003		2002			% Change
REVENUES
Premiums	$	6.6	$	6.8		(2.9	)	$	27.6	$	31.3		(11.8	)
Fees:
Fees from surrenders		14.6		8.9		64.0			41.0		15.9		N/M
Other proprietary product fees		62.0		89.9		(31.0	)		125.9		178.9		(29.6	)
Net investment income		52.5		72.7		(27.8	)		105.7		143.4		(26.3	)
Brokerage and investment management income (1)		29.0		18.7		55.1			61.5		36.8		67.1
Other income		9.7		7.8		24.4			20.7		13.4		54.5
Total segment revenue		174.4		204.8		(14.8	)		382.4		419.7		(8.9	)
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		61.9		97.7		(36.6	)		136.3		204.9		(33.5	)
Policy acquisition expenses		24.4		156.4		(84.4	)		84.2		168.0		(49.9	)
Brokerage and investment management variable expenses (1)		19.4		12.2		59.0			41.6		24.0		73.3
Other operating expenses		50.3		52.3		(3.8	)		99.5		106.9		(6.9	)
Total policy benefits, claims and operating expenses		156.0		318.6		(51.0	)		361.6		503.8		(28.2	)
Segment income before federal income taxes	$	18.4	$	(113.8	)	N/M		$	20.8	$	(84.1	)	N/M

(1) Brokerage and investment management income primarily reflects fees earned from the distribution of non-proprietary insurance and investment products as well as the management of assets for proprietary products. Variable expenses related to this business primarily consist of commissions and subadvisory fees.

9

ALLMERICA FINANCIAL CORPORATION

ALLMERICA FINANCIAL SERVICES

SEGMENT INCOME BY PRODUCT LINE

	Quarter ended June 30, 2003
(In millions)	Individual Annuities			Variable Universal Life (2)		Other Insurance (3)		Total Insurance			VeraVest Distribution		Total
REVENUES
Premiums	$	—		$	—	$	6.6	$	6.6		$	—	$	6.6
Fees:
Fees from surrenders		11.2			3.4		—		14.6			—		14.6
Other proprietary product fees		38.9			22.7		0.4		62.0			—		62.0
Net investment income		15.4			3.7		33.2		52.3			0.2		52.5
Brokerage and investment management income (1)		4.9			0.9		0.1		5.9			23.1		29.0
Other income		2.2			0.6		5.7		8.5			1.2		9.7
Total segment revenue		72.6			31.3		46.0		149.9			24.5		174.4
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		25.6			9.6		26.7		61.9			—		61.9
Policy acquisition expenses		19.2			4.4		0.8		24.4			—		24.4
Variable operating expenses		8.8			0.7		0.5		10.0			15.5		25.5
		53.6			14.7		28.0		96.3			15.5		111.8
Segment income before other operating expenses	$	19.0		$	16.6	$	18.0	$	53.6		$	9.0		62.6
Other operating expenses (4)														44.2
Segment income before federal income taxes													$	18.4
	Quarter ended June 30, 2002
	Individual Annuities			Variable Universal Life (2)		Other Insurance (3)		Total Insurance			VeraVest Distribution		Total
REVENUES
Premiums	$	—		$	—	$	6.8	$	6.8		$	—	$	6.8
Fees:
Fees from surrenders		6.8			1.8		0.3		8.9			—		8.9
Other proprietary product fees		47.9			26.5		15.5		89.9			—		89.9
Net investment income		20.5			2.8		49.4		72.7			—		72.7
Brokerage and investment management income (1)		7.2			1.4		0.4		9.0			9.7		18.7
Other income		3.3			0.2		3.5		7.0			0.8		7.8
Total segment revenue		85.7			32.7		75.9		194.3			10.5		204.8
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		42.8			10.9		44.0		97.7			—		97.7
Policy acquisition expenses		139.6			13.0		3.8		156.4			—		156.4
Variable operating expenses		9.5			2.6		1.3		13.4			8.1		21.5
		191.9			26.5		49.1		267.5			8.1		275.6
Segment income before other operating expenses	$	(106.2	)	$	6.2	$	26.8	$	(73.2	)	$	2.4		(70.8	)
Other operating expenses (4)														43.0
Segment income before federal income taxes													$	(113.8	)

(1) Brokerage and investment management income primarily reflects fees earned from the distribution of non-proprietary insurance and investment products as well as the management of assets for proprietary products. Variable expenses related to this business primarily consist of commissions and subadvisory fees.

(2) Variable universal life includes group variable universal life business.

(3) Other insurance includes results from the closed block, universal life, traditional life, yearly renewable term life, individual health and other insurance and group retirement products.

(4) Includes insurance and VeraVest distribution operating expenses.

10

ALLMERICA FINANCIAL CORPORATION

ALLMERICA FINANCIAL SERVICES

SEGMENT INCOME BY PRODUCT LINE

	Six Months ended June 30, 2003
(In millions)	Individual Annuities			Variable Universal Life (2)		Other Insurance (3)		Total Insurance			VeraVest Distribution		Total
REVENUES
Premiums	$	—		$	—	$	27.6	$	27.6		$	—	$	27.6
Fees:
Fees from surrenders		33.5			7.5		—		41.0			—		41.0
Other proprietary product fees		77.3			47.0		1.6		125.9			—		125.9
Net investment income		31.8			7.5		66.2		105.5			0.2		105.7
Brokerage and investment management income (1)		10.2			2.0		0.2		12.4			49.1		61.5
Other income		4.3			3.1		11.0		18.4			2.3		20.7
Total segment revenue		157.1			67.1		106.6		330.8			51.6		382.4
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		53.2			19.0		64.1		136.3			—		136.3
Policy acquisition expenses		72.0			11.7		0.5		84.2			—		84.2
Variable operating expenses		16.4			2.0		1.0		19.4			34.7		54.1
		141.6			32.7		65.6		239.9			34.7		274.6
Segment income before other operating expenses	$	15.5		$	34.4	$	41.0	$	90.9		$	16.9		107.8
Other operating expenses (4)														87.0
Segment income before federal income taxes													$	20.8
	Six Months ended June 30, 2002
	Individual Annuities			Variable Universal Life (2)		Other Insurance (3)		Total Insurance			VeraVest Distribution		Total
REVENUES
Premiums	$	—		$	—	$	31.3	$	31.3		$	—	$	31.3
Fees:
Fees from surrenders		11.8			3.6		0.5		15.9			—		15.9
Other proprietary product fees		94.8			52.1		32.0		178.9			—		178.9
Net investment income		41.1			5.4		96.8		143.3			0.1		143.4
Brokerage and investment management income (1)		14.7			2.7		0.9		18.3			18.5		36.8
Other income		4.3			0.3		7.0		11.6			1.8		13.4
Total segment revenue		166.7			64.1		168.5		399.3			20.4		419.7
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		78.6			23.0		103.3		204.9			—		204.9
Policy acquisition expenses		145.1			16.1		6.8		168.0			—		168.0
Variable operating expenses		19.2			7.1		1.5		27.8			15.8		43.6
		242.9			46.2		111.6		400.7			15.8		416.5
Segment income before other operating expenses	$	(76.2	)	$	17.9	$	56.9	$	(1.4	)	$	4.6		3.2
Other operating expenses (4)														87.3
Segment income before federal income taxes													$	(84.1	)

(1) Brokerage and investment management income primarily reflects fees earned from the distribution of non-proprietary insurance and investment products as well as the management of assets for proprietary products. Variable expenses related to this business primarily consist of commissions and subadvisory fees.

(2) Variable universal life includes group variable universal life business.

(3) Other insurance includes results from the closed block, universal life, traditional life, yearly renewable term life, individual health and other insurance and group retirement products.

(4) Includes insurance and VeraVest distribution operating expenses.

11

ALLMERICA FINANCIAL CORPORATION

ALLMERICA FINANCIAL SERVICES

SELECTED FINANCIAL INFORMATION—VARIABLE ANNUITIES

	Quarter ended
(In millions)	June 30 2003		March 31 2003		December 31 2002
VARIABLE INDIVIDUAL ANNUITIES—REDEMPTIONS BY DISTRIBUTION CHANNEL (1)
Agency	$	259.4	$	430.4	$	415.3
Select		130.7		267.8		441.3
Partner		162.4		292.2		426.8
	$	552.5	$	990.4	$	1,283.4

	June 30 2003		December 31 2002		% Change
VARIABLE INDIVIDUAL ANNUITIES—ACCOUNT VALUES BY DISTRIBUTION CHANNEL
Agency	$	4,303.5	$	4,623.6	(6.9)
Select		2,799.0		2,995.3	(6.6)
Partner		4,381.3		4,507.2	(2.8)
	$	11,483.8	$	12,126.1	(5.3)
NET AMOUNT AT RISK BY DISTRIBUTION CHANNEL
Agency	$	1,414.0	$	1,854.8	(23.8)
Select		794.4		1,037.3	(23.4)
Partner		1,376.0		1,720.3	(20.0)
	$	3,584.4	$	4,612.4	(22.3)
VARIABLE ANNUITY DEFERRED ACQUISITION COST ASSET BY DISTRIBUTION CHANNEL
Agency	$	271.0	$	290.7	(6.8)
Select		210.1		270.1	(22.2)
Partner		216.9		217.4	(0.2)
	$	698.0	$	778.2	(10.3)

(1) Includes both full policy and partial policy surrenders, withdrawals and death benefits (to the extent equal to account value).

12

ALLMERICA FINANCIAL CORPORATION

ALLMERICA FINANCIAL SERVICES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES

(In millions)	June 30 2003		December 31 2002		% Change
GENERAL ACCOUNT RESERVES
Insurance
Traditional life	$	873.3	$	854.2	2.2
Universal life (1)		690.5		703.0	(1.8	)
Variable universal life (2)		220.8		222.9	(0.9	)
Individual health (3)		266.5		265.4	0.4
Total insurance		2,051.1		2,045.5	0.3
Annuities
Individual annuities		1,463.9		1,716.0	(14.7	)
Group annuities		620.0		615.0	0.8
Total annuities		2,083.9		2,331.0	(10.6	)
Total general account reserves	$	4,135.0	$	4,376.5	(5.5	)
SEPARATE ACCOUNT LIABILITIES
Variable individual life	$	965.0	$	977.9	(1.3	)
Variable individual annuities		10,196.6		10,611.9	(3.9	)
Total individual		11,161.6		11,589.8	(3.7	)
Group variable universal life		188.9		349.7	(46.0	)
Group annuities		368.5		403.9	(8.8	)
Total group		557.4		753.6	(26.0	)
Total separate account liabilities	$	11,719.0	$	12,343.4	(5.1	)

	Quarter ended June 30								Six Months ended June 30
	2003			2002			% Change		2003			2002			% Change
SEPARATE ACCOUNT INDIVIDUAL ANNUITIES
Balance at beginning of period	$	9,520.8		$	13,029.9		(26.9	)	$	10,611.9		$	12,834.5		(17.3	)
Direct premiums and deposits		30.2			804.5		(96.2	)		55.0			1,382.3		(96.0	)
Redemptions		(475.1	)		(388.8	)	22.2			(1,269.7	)		(806.2	)	57.5
Market appreciation (depreciation)		1,054.0			(1,262.3	)	N/M			783.8			(1,241.8	)	N/M
Transfers and other		66.7			(36.7	)	N/M			15.6			(22.2	)	N/M
Balance at end of period	$	10,196.6		$	12,146.6		(16.1	)	$	10,196.6		$	12,146.6		(16.1	)

(1) Universal life reserves include reinsured balances of $653.3 million and $681.7 million at June 30, 2003 and December 31, 2002, respectively.

(2) Variable universal life reserves include group variable universal life reserves of $20.0 million and $11.8 million at June 30, 2003 and December 31, 2002, respectively.

(3) Individual health reserves include reinsured balances of $265.2 million and $264.0 million at June 30, 2003 and December 31, 2002, respectively.

13

ALLMERICA FINANCIAL CORPORATION

ASSET MANAGEMENT

CONDENSED INCOME STATEMENTS AND SUPPLEMENTAL INFORMATION

	Quarter ended June 30								Six Months ended June 30
(In millions)	2003			2002			% Change		2003			2002			% Change
INTEREST MARGINS ON GICS
Net investment income	$	18.1		$	24.9		(27.3	)	$	38.0		$	51.4		(26.1	)
Interest credited		(17.3	)		(22.6	)	(23.5	)		(35.9	)		(46.2	)	(22.3	)
Net interest margin		0.8			2.3		(65.2	)		2.1			5.2		(59.6	)
PREMIUM FINANCING BUSINESS
Fees		3.7			3.2		15.6			6.7			5.9		13.6
Operating expenses		(3.2	)		(2.1	)	52.4			(6.1	)		(3.8	)	60.5
Net premium financing business		0.5			1.1		(54.5	)		0.6			2.1		(71.4	)
FEES AND OTHER INCOME
External fees		2.1			2.1		—			4.3			4.0		7.5
Internal fees		1.1			1.7		(35.3	)		2.2			3.0		(26.7	)
Other operating expenses		(2.0	)		(2.1	)	(4.8	)		(4.2	)		(4.1	)	2.4
Segment income before federal income taxes	$	2.5		$	5.1		(51.0	)	$	5.0		$	10.2		(51.0	)

	Six Months ended June 30
	2003			2002			% Change
GIC DEPOSITS
Outstanding GIC deposits, beginning of period	$	1,410.0		$	2,689.7		(47.6	)
Withdrawals during the period		(112.2	)		(656.9	)	(82.9	)
Deposits during the period		—			145.1		N/M
Interest credited during the period		35.9			46.2		(22.3	)
Outstanding GIC deposits, end of period	$	1,333.7		$	2,224.1		(40.0	)

	June 30
	2003			2002
GIC SCHEDULED MATURITIES
2002	$	—		$	98.7
2003		47.4			168.2
2004		126.6			188.8
2005		660.5			807.5
2006+		499.2			669.8
		1,333.7	(1)		1,933.0	(1)
Short term funding agreement balances		—			291.1
	$	1,333.7		$	2,224.1

(1) Includes $4.0 million and $27.5 million of traditional GIC balances for the six months ended June 30, 2003 and 2002, respectively.

14

ALLMERICA FINANCIAL CORPORATION

CORPORATE

CONDENSED INCOME STATEMENTS

	Quarter ended June 30								Six Months ended June 30
(In millions)	2003			2002			% Change		2003			2002			% Change
REVENUES
Net investment income	$	0.5		$	1.5		(66.7	)	$	1.0		$	3.2		(68.8	)
OPERATING EXPENSES
Interest expense		3.8			3.8		—			7.6			7.6		—
Other operating expenses		15.2			12.9		17.8			29.0			27.2		6.6
Total operating expenses		19.0			16.7		13.8			36.6			34.8		5.2
Net segment loss before federal income taxes and minority interest	$	(18.5	)	$	(15.2	)	21.7		$	(35.6	)	$	(31.6	)	12.7

15

ALLMERICA FINANCIAL CORPORATION

NET INVESTMENT INCOME

	Six Months ended June 30, 2003
(In millions, except yields)	Property and Casualty (1)			Yield		Allmerica Financial Services			Yield		Asset Management			Yield		Corporate(2)			Yield		Total			Yield
Fixed maturities	$	94.3		6.18	%	$	84.8		6.06	%	$	38.3		6.55	%	$	0.6		4.65	%	$	218.0		6.19	%
Equity securities		0.3		3.78	%		0.5		3.51	%		—		—			—		—			0.8		3.62	%
Mortgages		3.0		7.32	%		3.6		7.80	%		3.1		8.75	%		0.3		—			10.0		8.20	%
All other		(4.1	)	—			18.3		—			(2.7	)	—			(0.4	)	—			11.1		—
Investment expenses		(1.7	)	—			(1.5	)	—			(0.6	)	—			—		—			(3.8	)	—
Total	$	91.8		5.71	%	$	105.7		6.08	%	$	38.1		6.10	%	$	0.5		2.76	%	$	236.1		5.92	%
	Six Months ended June 30, 2002
	Property and Casualty (1)			Yield		Allmerica Financial Services			Yield		Asset Management			Yield		Corporate(2)			Yield		Total			Yield
Fixed maturities	$	101.5		6.42	%	$	118.6		7.30	%	$	74.9		6.80	%	$	2.7		5.24	%	$	297.7		6.83	%
Equity securities		0.4		3.71	%		0.3		1.47	%		—		—			—		—			0.7		2.31	%
Mortgages		3.5		7.24	%		5.6		9.05	%		3.3		6.95	%		0.3		—			12.7		8.12	%
All other		(1.1	)	—			24.4		—			(25.5	)	—			(0.3	)	—			(2.5	)	—
Investment expenses		(1.7	)	—			(5.5	)	—			(1.3	)	—			—		—			(8.5	)	—
Total	$	102.6		6.08	%	$	143.4		6.86	%	$	51.4		4.42	%	$	2.7		4.70	%	$	300.1		6.01	%

(1) Includes purchase accounting adjustments of $1.7 million and $2.0 million for the six months ended June 30, 2003 and 2002, respectively.

(2) Includes corporate eliminations of $0.5 million for the six months ended June 30, 2003 and 2002.

16

ALLMERICA FINANCIAL CORPORATION

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

	June 30, 2003
	Unrealized Losses						Fair Value
(In millions)	Property and Casualty (1)		Life & Other (2)		Total		Property and Casualty (1)		Life & Other (2)		Total
INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months	$	2.5	$	3.8	$	6.3	$	145.1	$	261.5	$	406.6
7 - 12 months		0.1		—		0.1		0.4		2.8		3.2
Greater than 12 months		1.1		7.5		8.6		23.9		82.8		106.7
Total investment grade fixed maturities		3.7		11.3		15.0		169.4		347.1		516.5
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		0.3		4.8		5.1		4.9		14.4		19.3
7 - 12 months		1.3		2.5		3.8		12.4		30.0		42.4
Greater than 12 months		1.9		7.8		9.7		11.4		27.4		38.8
Total below investment grade fixed maturities		3.5		15.1		18.6		28.7		71.8		100.5
Equity securities		—		0.1		0.1		—		—		—
Total fixed maturities and equity securities	$	7.2	$	26.5	$	33.7	$	198.1	$	418.9	$	617.0
	December 31, 2002
	Unrealized Losses						Fair Value
	Property and Casualty (1)		Life & Other (2)		Total		Property and Casualty (1)		Life & Other (2)		Total
INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months	$	3.6	$	9.8	$	13.4	$	147.7	$	139.5	$	287.2
7 - 12 months		0.5		0.6		1.1		21.3		7.2		28.5
Greater than 12 months		2.9		14.5		17.4		38.0		122.9		160.9
Total investment grade fixed maturities		7.0		24.9		31.9		207.0		269.6		476.6
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		6.3		9.6		15.9		49.8		70.6		120.4
7 - 12 months		4.8		12.6		17.4		40.3		98.8		139.1
Greater than 12 months		9.7		31.4		41.1		42.1		114.0		156.1
Total below investment grade fixed maturities		20.8		53.6		74.4		132.2		283.4		415.6
Equity securities		0.1		0.3		0.4		—		1.1		1.1
Total fixed maturities and equity securities	$	27.9	$	78.8	$	106.7	$	339.2	$	554.1	$	893.3

(1) Property and Casualty includes The Hanover Insurance Company, Citizens Insurance Company of America, and their subsidiaries and excludes discontinued Group Life & Health.

(2) Life & Other includes Allmerica Financial Life Insurance and Annuity Company, First Allmerica Financial Life Insurance Company, Allmerica Financial Corporation (the holding company) and other non-Property and Casualty subsidiaries.

17

ALLMERICA FINANCIAL CORPORATION

CREDIT QUALITY OF FIXED MATURITIES

(In millions)	June 30, 2003
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty (1)		Life & Other (2)		Total		Property and Casualty (1)		Life & Other (2)		Total
1	Aaa/Aa/A	$	2,206.8	$	2,314.1	$	4,520.9	$	2,336.6	$	2,468.3	$	4,804.9
2	Baa		755.6		1,390.0		2,145.6		803.8		1,500.2		2,304.0
3	Ba		75.2		140.6		215.8		79.3		138.1		217.4
4	B		80.6		69.1		149.7		84.5		68.5		153.0
5	Caa and lower		34.5		35.2		69.7		38.4		38.0		76.4
6	In or near default		5.9		14.3		20.2		7.2		15.5		22.7
Total fixed maturities			$3,158.6	$	3,963.3	$	7,121.9	$	3,349.8	$	4,228.6	$	7,578.4

	December 31, 2002
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty (1)		Life & Other (2)		Total		Property and Casualty (1)		Life & Other (2)		Total
1	Aaa/Aa/A	$	2,304.6	$	2,513.7	$	4,818.3	$	2,398.5	$	2,662.9	$	5,061.4
2	Baa		562.2		1,514.6		2,076.8		581.4		1,599.1		2,180.5
3	Ba		133.1		310.3		443.4		129.2		281.4		410.6
4	B		110.2		115.6		225.8		106.6		106.0		212.6
5	Caa and lower		50.6		68.6		119.2		45.0		65.5		110.5
6	In or near default		9.1		23.3		32.4		8.0		19.5		27.5
Total fixed maturities			$3,169.8	$	4,546.1	$	7,715.9	$	3,268.7	$	4,734.4	$	8,003.1

(1) Property and Casualty includes The Hanover Insurance Company, Citizens Insurance Company of America, and their subsidiaries and excludes discontinued Group Life & Health.

(2) Life & Other includes Allmerica Financial Life Insurance and Annuity Company, First Allmerica Financial Life Insurance Company, Allmerica Financial Corporation (the holding company) and other non-Property and Casualty subsidiaries.

18

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	Q2 03			Q1 03			2002			Q4 02			Q3 02			Q2 02			Q1 02
SEGMENT INCOME (LOSS) (1)
Property and Casualty	$	20.6		$	44.2		$	184.3		$	35.2		$	58.5		$	51.6		$	39.0
Allmerica Financial Services		18.4			2.4			(625.0	)		(0.7	)		(540.2	)		(113.8	)		29.7
Asset Management		2.5			2.5			24.4			8.5			5.7			5.1			5.1
Corporate		(18.5	)		(17.1	)		(63.5	)		(14.4	)		(17.5	)		(15.2	)		(16.4	)
Total segment income (loss) before federal income taxes and minority interest	$	23.0		$	32.0		$	(479.8	)	$	28.6		$	(493.5	)	$	(72.3	)	$	57.4
Federal income tax (expense) benefit on segment income (loss)		(0.3	)		(4.3	)		220.4			(2.7	)		182.5			48.6			(8.0	)
Minority interest
Distributions on mandatorily redeemable preferred securities of a subsidiary trust		(4.0	)		(4.0	)		(16.0	)		(4.0	)		(4.0	)		(4.0	)		(4.0	)
Total segment income (loss) after federal income taxes and minority interest		18.7			23.7			(275.4	)		21.9			(315.0	)		(27.7	)		45.4
Net realized investment gains (losses), net of amortization and taxes		6.6			8.0			(89.4	)		(45.8	)		(0.7	)		(38.5	)		(4.4	)
Gain from retirement of trust instruments supported by funding obligations, net of taxes		0.3			3.0			66.7			66.7			—			—			—
Gain (loss) from sale of universal life business, net of taxes		—			3.6			(20.3	)		(20.3	)		—			—			—
Losses (gains) on derivative instruments, net of taxes		(0.4	)		1.0			26.2			6.5			—			9.1			10.6
Restructuring costs, net of taxes		(0.8	)		(2.2	)		(9.6	)		(9.6	)		—			—			—
Other items, net of taxes		—			—			(0.6	)		(4.5	)		2.3			1.6			—
Income (loss) before cumulative effect of accounting change		24.4			37.1			(302.4	)		14.9			(313.4	)		(55.5	)		51.6
Cumulative effect of change in accounting principle, net of taxes		—			—			(3.7	)		—			—			—			(3.7	)
NET INCOME (LOSS)	$	24.4		$	37.1		$	(306.1	)	$	14.9		$	(313.4	)	$	(55.5	)	$	47.9
PER SHARE DATA (DILUTED)
NET INCOME (LOSS)	$	0.46		$	0.70		$	(5.79	)	$	0.28		$	(5.93	)	$	(1.05	)	$	0.90
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		53.0			53.0			52.9			52.9			52.9			52.9			53.1
BALANCE SHEET
Total investments	$	8,219.0		$	8,172.2					$	8,806.8		$	9,816.0		$	9,844.9		$	9,977.2
Separate account assets	$	11,719.0		$	11,016.2					$	12,343.4		$	12,152.9		$	14,054.3		$	15,085.9
Total assets	$	25,173.2		$	24,372.8					$	26,578.9		$	27,528.6		$	29,157.3		$	30,292.2
Total shareholders’ equity	$	2,225.6		$	2,115.9					$	2,072.2		$	2,105.4		$	2,391.7		$	2,384.8
Book value per share	$	41.96		$	39.86					$	39.12		$	39.69		$	45.07		$	44.98
Book value per share, excluding accumulated other comprehensive income	$	41.07		$	40.59					$	39.83		$	39.47		$	45.32		$	46.32

(1) Represents income or loss of the Company’s three operating segments: Property and Casualty, Allmerica Financial Services and Asset Management. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision makers in deciding how to allocate resources and in assessing performance. In addition, segment income or loss reflects those results related to the Corporate segment, which consists of income and expenses related to invested assets, corporate debt, preferred securities of a subsidiary trust and corporate overhead expenses. Corporate overhead expenses reflect costs not attributable to a particular segment, such as those related to certain officers and directors, technology, finance, human resources and legal.

(2) Excludes 0.2 million shares for the year ended December 31, 2002, 0.1 million shares for the quarter ended September 30, 2002 and 0.4 million shares for the quarter ended June 30, 2002 due to antidilution.

19

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	2001			Q4 01			Q3 01			Q2 01			Q1 01			2000			Q4 00			Q3 00			Q2 00			Q1 00
SEGMENT INCOME (LOSS) (1)
Property and Casualty	$	93.5		$	29.0		$	6.8		$	41.5		$	16.2		$	190.0		$	33.6		$	59.4		$	53.9		$	43.1
Allmerica Financial Services		143.0			21.7			34.4			42.6			44.3			222.8			56.2			56.7			55.5			54.4
Asset Management		20.7			4.2			6.1			4.4			6.0			22.5			7.0			5.8			4.6			5.1
Corporate		(63.8	)		(16.3	)		(15.7	)		(15.6	)		(16.2	)		(60.8	)		(20.4	)		(13.7	)		(12.2	)		(14.5	)
Total segment income before federal income taxes and minority interest	$	193.4		$	38.6		$	31.6		$	72.9		$	50.3		$	374.5		$	76.4		$	108.2		$	101.8		$	88.1
Federal income tax benefit (expense) on segment income		(12.9	)		(0.6	)		6.8			(10.0	)		(9.1	)		(57.3	)		8.0			(24.3	)		(23.3	)		(17.7	)
Minority interest
Distributions on mandatorily redeemable preferred securities of a subsidiary trust		(16.0	)		(4.0	)		(4.0	)		(4.0	)		(4.0	)		(16.0	)		(4.0	)		(4.0	)		(4.0	)		(4.0	)
Total segment income after federal income taxes and minority interest		164.5			34.0			34.4			58.9			37.2			301.2			80.4			79.9			74.5			66.4
Net realized investment losses, net of amortization and taxes		(78.8	)		(12.6	)		(2.8	)		(51.0	)		(12.4	)		(87.8	)		(20.5	)		(17.4	)		(13.7	)		(36.2	)
(Losses) gains on derivative instruments, net of taxes		(22.9	)		(24.4	)		(0.4	)		0.3			1.6			—			—			—			—			—
Loss from selected property and casualty exited agencies, policies, groups and programs, net of taxes		(44.4	)		(44.4	)		—			—			—			—			—			—			—			—
Voluntary pool environmental losses, net of taxes		(21.5	)		(21.5	)		—			—			—			—			—			—			—			—
Restructuring costs, net of taxes		(1.8	)		(1.8	)		—			—			—			(13.5	)		(0.3	)		—			(13.2	)		—
Other items, net of taxes		5.0			—			—			5.0			—			—			—			—			—			—
Income (loss) before cumulative effect of accounting change		0.1			(70.7	)		31.2			13.2			26.4			199.9			59.6			62.5			47.6			30.2
Cumulative effect of change in accounting principle, net of taxes		(3.2	)		—			—			—			(3.2	)		—			—			—			—			—
NET (LOSS) INCOME	$	(3.1	)	$	(70.7	)	$	31.2		$	13.2		$	23.2		$	199.9		$	59.6		$	62.5		$	47.6		$	30.2
PER SHARE DATA (DILUTED)
NET (LOSS) INCOME	$	(0.06	)	$	(1.34	)	$	0.59		$	0.25		$	0.44		$	3.70		$	1.11		$	1.16		$	0.88		$	0.56
DIVIDENDS	$	0.25		$	0.25		$	—		$	—		$	—		$	0.25		$	—		$	0.25		$	—		$	—
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		53.1			52.7			53.1			53.1			53.1			54.0			53.8			53.9			54.1			54.3
BALANCE SHEET
Total investments				$	10,326.2		$	10,367.2		$	10,222.1		$	9,676.8					$	9,395.6		$	9,312.5		$	9,043.1		$	8,871.5
Separate account assets				$	14,838.4		$	13,367.0		$	16,095.1		$	15,594.4					$	17,437.4		$	18,660.1		$	18,477.5		$	18,595.5
Total assets				$	30,336.1		$	28,913.8		$	31,437.5		$	30,556.4					$	31,588.0		$	32,634.8		$	32,088.6		$	31,854.1
Total shareholders’ equity				$	2,391.1		$	2,529.8		$	2,502.7		$	2,502.5					$	2,409.1		$	2,357.3		$	2,288.6		$	2,267.7
Book value per share				$	45.19		$	47.83		$	47.39		$	47.44					$	45.74		$	44.24		$	42.98		$	42.27
Book value per share, excluding accumulated other comprehensive income				$	45.44		$	46.98		$	46.52		$	46.23					$	45.84		$	44.92		$	44.17		$	43.13

(1) Represents income or loss of the Company’s three operating segments: Property and Casualty, Allmerica Financial Services and Asset Management. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision makers in deciding how to allocate resources and in assessing performance. In addition, segment income or loss reflects those results related to the Corporate segment, which consists of income and expenses related to invested assets, corporate debt, preferred securities of a subsidiary trust and corporate overhead expenses. Corporate overhead expenses reflect costs not attributable to a particular segment, such as those related to certain officers and directors, technology, finance, human resources and legal.

(2) Excludes 0.3 million shares for the quarter ended December 31, 2001 due to antidilution.

20

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	1999			Q4 99			Q3 99			Q2 99			Q1 99			1998			Q4 98			Q3 98			Q2 98			Q1 98
SEGMENT INCOME (LOSS) (1)
Property and Casualty	$	199.6		$	65.0		$	49.5		$	55.3		$	29.8		$	149.6		$	52.4		$	24.6		$	34.9		$	37.7
Allmerica Financial Services		205.5			54.2			54.7			47.7			48.9			169.0			43.5			39.1			44.2			42.2
Asset Management		23.5			5.3			5.7			6.8			5.7			23.7			6.7			6.9			6.2			3.9
Corporate		(59.3	)		(16.1	)		(13.7	)		(13.5	)		(16.0	)		(50.9	)		(15.3	)		(10.6	)		(12.7	)		(12.3	)
Total segment income before federal income taxes and minority interest	$	369.3		$	108.4		$	96.2		$	96.3		$	68.4		$	291.4		$	87.3		$	60.0		$	72.6		$	71.5
Federal income tax expense on segment income		(72.4	)		(23.6	)		(16.4	)		(19.3	)		(13.1	)		(53.1	)		(13.8	)		(10.7	)		(12.2	)		(16.4	)
Minority interest
Distributions on mandatorily redeemable preferred securities of a subsidiary trust		(16.0	)		(4.0	)		(4.0	)		(4.0	)		(4.0	)		(16.0	)		(4.0	)		(4.0	)		(4.0	)		(4.0	)
Equity in earnings		—			—			—			—			—			(9.8	)		(2.4	)		(1.9	)		(1.7	)		(3.8	)
Total segment income after federal income taxes and minority interest		280.9			80.8			75.8			73.0			51.3			212.5			67.1			43.4			54.7			47.3
Net realized investment gains (losses), net of amortization and taxes		63.0			(13.6	)		(16.7	)		(6.2	)		99.5			28.8			6.4			1.1			4.5			16.8
Sales practice litigation, net of taxes		—			—			—			—			—			(20.2	)		—			(20.2	)		—			—
Restructuring costs, net of taxes		1.2			1.2			—			—			—			(5.8	)		(5.8	)		—			—			—
Other items, net of taxes		—			—			—			—			—			(0.6	)		—			—			—			(0.6	)
Income from continuing operations		345.1			68.4			59.1			66.8			150.8			214.7			67.7			24.3			59.2			63.5
Discontinued operations
Loss from operations of discontinued group life and health business, net of taxes		(18.8	)		—			(15.5	)		(6.6	)		3.3			(13.5	)		(1.8	)		(16.1	)		1.1			3.3
Loss on disposal of group life and health business, net of taxes		(30.5	)		—			(30.5	)		—			—			—			—			—			—			—
NET INCOME	$	295.8		$	68.4		$	13.1		$	60.2		$	154.1		$	201.2		$	65.9		$	8.2		$	60.3		$	66.8
PER SHARE DATA (DILUTED)
INCOME FROM CONTINUING OPERATIONS (2)	$	6.21		$	1.25		$	1.08		$	1.21		$	2.61		$	3.56		$	1.13		$	0.40		$	0.98		$	1.05
NET INCOME	$	5.33		$	1.25		$	0.24		$	1.09		$	2.67		$	3.33		$	1.10		$	0.13		$	1.00		$	1.11
DIVIDENDS	$	0.25		$	—		$	0.25		$	—		$	—		$	0.15		$	—		$	0.05		$	0.05		$	0.05
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)		55.5			54.6			54.7			55.1			57.7			60.3			59.9			60.6			60.5			60.3
BALANCE SHEET
Total investments				$	8,599.0		$	9,004.6		$	9,792.4		$	9,922.1					$	9,818.7		$	9,936.0		$	10,029.0		$	9,684.2
Separate account assets				$	17,629.6		$	15,102.9		$	15,635.9		$	14,329.4					$	13,697.7		$	11,424.9		$	12,260.5		$	11,425.4
Total assets				$	30,769.6		$	29,080.0		$	29,826.4		$	28,461.2					$	27,653.1		$	25,233.5		$	25,816.4		$	24,511.8
Total shareholders’ equity				$	2,240.2		$	2,199.7		$	2,248.7		$	2,387.5					$	2,458.6		$	2,480.3		$	2,539.4		$	2,468.8
Book value per share				$	41.32		$	40.86		$	41.49		$	42.30					$	41.95		$	41.02		$	42.04		$	40.94
Book value per share, excluding accumulated other comprehensive income				$	42.71		$	41.76		$	41.45		$	40.97					$	38.87		$	38.08		$	38.01		$	37.07

(1) Represents income or loss of the Company’s three operating segments: Property and Casualty, Allmerica Financial Services and Asset Management. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision makers in deciding how to allocate resources and in assessing performance. In addition, segment income or loss reflects those results related to the Corporate segment, which consists of income and expenses related to invested assets, corporate debt, preferred securities of a subsidiary trust and corporate overhead expenses. Corporate overhead expenses reflect costs not attributable to a particular segment, such as those related to certain officers and directors, technology, finance, human resources and legal.

(2) Income from continuing operations represents net income before adjustment for the results of the discontinued operations of the Company.

21

CORPORATE OFFICES AND

PRINCIPAL SUBSIDIARIES

Allmerica Financial

440 Lincoln Street

Worcester, MA 01653

The Hanover Insurance Company

440 Lincoln Street

Worcester, MA 01653

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	2003
	Price Range
	High		Low		Dividends Per Share
March 31	$	16.43	$	9.84	—
June 30	$	18.53	$	13.75	—
September 30
December 31
Quarter Ended	2002
	Price Range
	High		Low		Dividends Per Share
March 31	$	45.17	$	40.60	—
June 30	$	50.33	$	44.20	—
September 30	$	45.85	$	12.00	—
December 31	$	11.51	$	7.16	—

INDUSTRY RATINGS AS OF JULY 25, 2003

Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
First Allmerica Financial Life Insurance Company	B-	B+	Ba1
Allmerica Financial Life Insurance and Annuity Company	B-	B+	Ba1
The Hanover Insurance Company	B++	BBB+	Baa2
Citizens Insurance Company of America	B++	—	—
Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s
Allmerica Financial Corporation Senior Debt	bb	BB-	Ba3
Allmerica Financial Corporation Capital Securities	b+	B-	B2
Allmerica Financial Corporation Short Term Debt	AMB-4	B	NP
First Allmerica Financial Life Insurance Company Short Term Debt	—	B	—
First Allmerica Financial Life Insurance Company Short Term Insurance Financial Strength Rating	—	B	NP

TRANSFER AGENT

EquiServe, LP

PO Box 43076

Providence, RI 02940-3076

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

Director, 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 http:// www.Allmerica.com