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): January 29, 2004

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 January 29, 2004, announcing the Company’s financial results for the quarter ended December 31, 2003.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended December 31, 2003.

Item 12. Results of Operations and Financial Condition.

The following information is being furnished under Item 12 – Results of Operations and Financial Condition. Such information, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

On January 29, 2004, Allmerica Financial Corporation issued a press release announcing its financial results for the quarter ended December 31, 2003. The release is furnished as Exhibit 99.1 hereto. Additionally, on January 29, 2004, the Company made available on its website financial information contained in its Statistical Supplement for the period ended December 31, 2003. The supplement is furnished as Exhibit 99.2 hereto.

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 Registrant
By:	/s/    EDWARD J. PARRY III
	Edward J. Parry III Chief Financial Officer, Executive Vice President, Principal Accounting Officer and Director

Date: January 29, 2004

3

Exhibit Index

Exhibit 99.1	Press Release, dated January 29, 2004 , announcing the Company’s financial results for the quarter ended December 31, 2003.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended December 31, 2003.

4

EX-99.1

Exhibit 99.1

ALLMERICA FINANCIAL CORPORATION REPORTS FOURTH

QUARTER NET INCOME OF $0.26 PER SHARE

WORCESTER, Mass., January 29, 2004—Allmerica Financial Corporation (NYSE: AFC) today reported net income for the fourth quarter of $14.0 million, or $0.26 per share, compared to net income of $14.9 million, or $0.28 per share in the fourth quarter of last year. For the full year, the Company reported net income of $86.9 million, or $1.63 per share, compared to net loss of $306.1 million, or $5.79 per share in 2002.

“The fourth quarter of 2003 marked a turning point for our organization” said Frederick H. Eppinger, Jr., president and chief executive officer of Allmerica. “A.M. Best recognized the effectiveness of our recent restructuring efforts by upgrading our property and casualty financial strength ratings to A- and our life companies to a secure rating of B+. The financial results for the quarter were solid and we now have set the strategic direction of the company based on our recently completed review of operations.” Eppinger added, “We now are well positioned to realize our goal to become a world class regional property and casualty company.”

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 until December 2003, marketed non-proprietary insurance and retirement savings products and services. 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 previously issued through one of Allmerica’s life insurance subsidiaries.

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 excludes the items listed in the table at the end of this document.

	Quarter ended December 31 (In millions)						Year ended December 31 (In millions)
	2003			2002			2003			2002
Property and Casualty	$	40.2		$	35.2		$	143.6		$	184.3
Allmerica Financial Services(1)		11.9			(0.7	)		26.9			(625.0	)
Asset Management		1.1			8.5			11.3			24.4
Corporate		(23.7	)		(20.5	)		(95.5	)		(88.1	)
Total Segment Income (Loss)(1)(2)	$	29.5		$	22.5		$	86.3		$	(504.4	)

(1) Includes a pre-tax $11.0 million asset impairment charge in the third quarter of 2003, as a result of the cessation of broker-dealer operations and charges of $698.3 million in 2002, primarily related to the decision to cease the manufacture and sale of proprietary variable products, as well as the impact of the decline in the equity market throughout 2002.

(2) 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 $40.2 million in the fourth quarter of 2003, up from $35.2 million in the fourth quarter of 2002. Earnings were higher in the quarter due to improved current accident year loss trends, particularly in personal lines, and premium rate increases. Partially offsetting these items was a $16.0 million increase to workers’ compensation reserves and higher operating expenses.

Full-year Property and Casualty segment income was $143.6 million in 2003, compared to $184.3 million in 2002. Catastrophe losses in the current year were $59.4 million compared to $31.3 million in the prior year. Current year segment earnings also include a charge of $21.9 million resulting from an adverse arbitration decision related to a single large property claim within a voluntary insurance pool. The Company exited this pool in 1996. Excluding these items, segment income increased by $9.3 million due primarily to premium rate increases, partially offset by an increase in operating expenses, the impact of the aforementioned increase in workers’ compensation reserves and lower net investment income.

Property and Casualty highlights:

· Net premiums written were $524.0 million in the fourth quarter of 2003, compared to $543.5 million in the fourth quarter of 2002. Full-year net premiums written were $2.2 billion in 2003 and $2.3 billion in 2002.

· Net premiums earned were $563.2 million in the fourth quarter of 2003, compared to $575.0 million in the fourth quarter of 2002. Full-year net premiums earned were $2.2 billion in 2003 and $2.3 billion in 2002.

· In the fourth quarter of 2003, pre-tax catastrophe losses were $10.1 million, compared to $7.5 million in the comparable period one year earlier. Pre-tax catastrophe losses were $59.4 million for the full year, as compared to $31.3 million for all of 2002.

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

	Quarter ended December 31				Year ended December 31
	2003		2002		2003		2002
Losses (excluding catastrophes)	61.7	%	68.2	%	63.0	%(1)	64.4	%
Catastrophe losses	1.8	%	1.3	%	2.7	%	1.4	%
Loss adjustment expenses	7.6	%	7.3	%	8.0	%	8.4	%
Policy acquisition and other underwriting expenses	33.8	%	29.5	%	30.3	%	28.7	%
Policyholders’ dividends	(0.6	)%	0.5	%	—		0.2	%
Combined Ratio	104.3	%	106.8	%	104.0	%(1)	103.1	%

(1) Excluding the effect of an adverse arbitration ruling in the second quarter of 2003 related to an exited voluntary insurance pool, the loss ratio is 62.1 percent and the combined ratio is 103.1 percent.

2

Allmerica Financial Services

Allmerica Financial Services reported segment income of $11.9 million in the fourth quarter of 2003, compared to a net loss of $0.7 million in the fourth quarter of 2002. Results were favorably impacted by the strong equity market performance in the quarter and lower operating expenses related to the decision to exit the life insurance, annuity and broker dealer operations.

Allmerica Financial Services reported segment income of $26.9 million for the full year 2003, compared to a segment loss of $625.0 million in 2002. Prior year results reflect charges related to the Company’s decision to cease the manufacture and sale of proprietary variable annuity and variable life insurance products, as well as the impact of the decline in the equity market throughout 2002.

Allmerica Financial Services highlights:

· Life operations segment income excluding certain non-cash items was $38.8 million in the fourth quarter and $144.7 million for the full-year 2003. Segment income excluding certain non-cash items is reconciled to segment income at the end of this document.

· The Risk Based Capital (RBC) ratio of Allmerica Financial Life Insurance and Annuity Company, Allmerica’s lead life insurance company, increased to 366 percent at December 31, 2003 up from 349 percent at September 30, 2003 and 244 percent at December 31, 2002.

· Total adjusted statutory capital for the combined life insurance subsidiaries at December 31, 2003 was $553.4 million, up from $547.2 million at September 30, 2003 and $481.9 million at December 31, 2002. Total adjusted statutory capital at December 31, 2003 has been reduced by the $25.0 million dividend paid to the holding company, recently approved by the Massachusetts Department of Insurance.

· In the fourth quarter, individual annuity redemptions were $505.9 million compared to $493.6 million in the third quarter and approximately $1.3 billion in the fourth quarter of 2002.

Asset Management

Asset Management’s fourth quarter segment income was $1.1 million, compared to $8.5 million in the same period in the prior year. For the full year, Asset Management reported segment income of $11.3 million, compared to $24.4 million in 2002. In both periods, segment income declined primarily due to the continued runoff of the company’s funding agreements and the effect of replacing high yield investments with lower yielding, higher quality fixed income securities.

Corporate

Corporate segment net expenses were $23.7 million in the fourth quarter of 2003, compared to $20.5 million in the comparable period in 2002. For the full year, Corporate segment net expenses were $95.5 million compared to $88.1 million in 2002. Corporate expenses in each quarter and year include interest expense of $10.0 million and $39.9 million, respectively on the Company’s long term debt and mandatorily redeemable preferred securities of a subsidiary trust.

Investment Results

Net investment income was $109.1 million for the fourth quarter of 2003, compared to $137.3 million in the same period of 2002. For the full year, net investment income was $455.7 million compared to $590.2 million in 2002. In both periods, net investment income decreased primarily due to lower invested assets resulting from surrenders in the general account, a reduction in outstanding guaranteed investment contract balances and the sale of the Company’s fixed universal life insurance business. Also contributing to the decline were lower portfolio yields driven by a shift in the portfolio to higher credit quality bonds.

Fourth quarter 2003 pre-tax net realized investment gains were $5.7 million, compared to $78.4 million of pre-tax net realized investment losses in the same period of 2002. In the current quarter, pre-tax net realized investment gains of $11.2 million from sales of investments were partially offset by $5.4 million of capital losses resulting from impairments on certain fixed maturity and equity securities. In the fourth quarter of 2002, pre-tax net realized investment losses from impairments of $122.3 million and losses from derivative investments of $19.9 million were partially offset by gains of $64.8 million from sales of investments.

3

Full year 2003 pre-tax net realized investment gains were $24.1 million, compared to $162.3 million of pre-tax net realized investment losses in 2002. In 2003, pre-tax net realized investment gains of $87.7 million from sales of investments were partially offset by $61.6 million of capital losses resulting from impairments on certain fixed maturity and equity securities. In 2002, pre-tax net realized investment losses from impairments of $238.5 million and losses from derivative investments of $53.1 million were partially offset by gains of $131.1 million from sales of investments.

Balance Sheet

Shareholders’ equity was $2.2 billion, or $41.89 per share at December 31, 2003, compared to $2.1 billion, or $39.12 per share at December 31, 2002. Excluding accumulated other comprehensive income, book value was $41.59 per share at the close of the fourth quarter, compared to $39.83 per share at December 31, 2002.

Total assets were $25.1 billion at December 31, 2003, compared to $26.6 billion at year-end 2002. Separate account assets were $11.8 billion at December 31, 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 line of business. These declines were almost entirely offset by the effect of the strong equity market in the fourth quarter of 2003.

Ratings Upgrade

On January 21, 2004, A.M. Best Co. upgraded the Company’s property and casualty financial strength ratings to A- (Excellent) from B++ (Very Good) and upgraded the life companies’ financial strength ratings to B+ (Very Good) from B- (Fair). In addition, the Company’s debt ratings were upgraded to “bb+” from “bb” for senior debt, “bb-” from “b+” for capital securities and AMB-3 from AMB-4 for commercial paper. All ratings from A.M. Best have been assigned stable outlooks.

Exit from Broker-Dealer Operations

During the third quarter of 2003, the Company announced the cessation of its broker-dealer operations. As a result, the Company recorded a pre-tax charge of $22 million in the fourth quarter of 2003, primarily for severance and lease termination costs. The Company expects to incur an additional pre-tax charge of approximately $3 million–$5 million, primarily in the first quarter of 2004.

Allmerica Financial Corporation will host a conference call to discuss the Company’s fourth quarter results on Friday, January 30^th at 10:00 a.m. Eastern Time. Interested investors and others can listen to the call through Allmerica’s web site, located at 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.

Allmerica Financial Corporation’s fourth quarter Earnings Press Release and Statistical Supplement are also available in the Investor Relations section at www.allmerica.com.

Certain statements in this release or in the above referenced conference call 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 www.allmerica.com under “Investor Relations”. 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, which include the effect of the Company’s decision to close its broker-dealer operations as well as the anticipated impact and cost of the GMDB hedging program. The performance of the hedging program is dependent on, among other things, the future performance and volatility of the equity market, the extent to which the performance of the various hedging instruments correlates with the investment performance of the underlying annuity sub-accounts, the continued availability of equity index futures and redemption and mortality patterns in the Company’s annuity contracts.

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

CONTACTS:	Investors:	Media:
	Sujata Mutalik (508) 855-3457 smutalik@allmerica.com	Michael F. Buckley (508) 855-3099 mibuckley@allmerica.com

4

ALLMERICA FINANCIAL CORPORATION

(In millions, except per share data)

	Quarter ended December 31				Year ended December 31
	2003		2002		2003		2002
Net income (loss)	$	14.0	$	14.9	$	86.9	$	(306.1	)
Net income (loss) per share(1)	$	0.26	$	0.28	$	1.63	$	(5.79	)
Weighted average shares		53.5		52.9		53.2		52.9

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

PER SHARE DATA (DILUTED) ⁽¹⁾

	Quarter ended December 31												Year ended December 31
	2003						2002						2003						2002
	$			Per Share			$			Per Share			$			Per Share			$			Per Share
Property and Casualty	$	40.2			—		$	35.2			—		$	143.6			—		$	184.3			—
Allmerica Financial Services		11.9			—			(0.7	)		—			26.9			—			(625.0	)		—
Asset Management		1.1			—			8.5			—			11.3			—			24.4			—
Corporate		(23.7	)		—			(20.5	)		—			(95.5	)		—			(88.1	)		—
Total segment income (loss)	$	29.5		$	0.55		$	22.5		$	0.43		$	86.3		$	1.62		$	(504.4	)	$	(9.54	)
Federal income tax benefit (expense) on segment income		0.8			0.02			(0.6	)		(0.01	)		6.1			0.12			229.0			4.33
Total segment income (loss) after federal income taxes		30.3			0.57			21.9			0.42			92.4			1.74			(275.4	)		(5.21	)
Net realized investment gains (losses), net of taxes and amortization		4.0			0.07			(45.8	)		(0.87	)		10.4			0.19			(89.4	)		(1.69	)
(Loss) gain on derivatives, net of taxes		(5.4	)		(0.10	)		6.5			0.12			(4.5	)		(0.08	)		26.2			0.50
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			—			66.7			1.26			3.7			0.07			66.7			1.26
Restructuring costs, net of taxes		(14.9	)		(0.28	)		(9.6	)		(0.18	)		(18.7	)		(0.35	)		(9.6	)		(0.18	)
Other reorganization expenses, net of taxes		—			—			(4.5	)		(0.09	)		—			—			(4.5	)		(0.09	)
(Loss) income from sale of universal life business, net of taxes		—			—			(20.3	)		(0.38	)		3.6			0.06			(20.3	)		(0.38	)
Additional consideration received from sale of defined contribution business, net of taxes		—			—			—			—			—			—			2.3			0.04
Sales practice litigation, net of taxes		—			—			—			—			—			—			1.6			0.03
Income before effect of accounting change		14.0			0.26			14.9			0.28			86.9			1.63			(302.4	)		(5.72	)
Cumulative effect of change in accounting principle, net of taxes		—			—			—			—			—			—			(3.7	)		(0.07	)
Net income (loss)	$	14.0		$	0.26		$	14.9		$	0.28		$	86.9		$	1.63		$	(306.1	)	$	(5.79	)

5

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

	Quarter ended December 31, 2003
	Property & Casualty			Allmerica Financial Services			Asset Management			Corporate			Total
Net realized investment gains (losses), net of taxes and amortization	$	1.7		$	3.1		$	(1.8	)	$	1.0		$	4.0
(Loss) gain on derivatives, net of taxes		—			(5.5	)		0.1			—			(5.4	)
Restructuring costs, net of taxes		—			(14.9	)		—			—			(14.9	)
	Quarter ended December 31, 2002
	Property & Casualty			Allmerica Financial Services			Asset Management			Corporate			Total
Net realized investment (losses) gains, net of taxes and amortization	$	(17.5	)	$	(10.4	)	$	(18.0	)	$	0.1		$	(45.8	)
Gain on derivatives, net of taxes		—			—			6.5			—			6.5
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			—			66.7			—			66.7
Restructuring costs, net of taxes		—			(9.6	)		—			—			(9.6	)
Other reorganization expenses, net of taxes		—			(4.5	)		—			—			(4.5	)
Loss from sale of universal life business, net of taxes		—			(20.3	)		—			—			(20.3	)
	Year ended December 31, 2003
	Property & Casualty			Allmerica Financial Services			Asset Management			Corporate			Total
Net realized investment gains (losses), net of taxes and amortization	$	7.1		$	(2.7	)	$	8.1		$	(2.1	)	$	10.4
(Loss) gain on derivatives, net of taxes		—			(5.5	)		1.0			—			(4.5	)
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			—			3.7			—			3.7
Restructuring costs, net of taxes		0.2			(18.9	)		—			—			(18.7	)
Income from sale of universal life business, net of taxes		—			3.6			—			—			3.6
	Year ended December 31, 2002
	Property & Casualty			Allmerica Financial Services			Asset Management			Corporate			Total
Net realized investment (losses) gains, net of taxes and amortization	$	(18.4	)	$	(36.3	)	$	(37.1	)	$	2.4		$	(89.4	)
Gain on derivatives, net of taxes		—			—			26.2			—			26.2
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			—			66.7			—			66.7
Restructuring costs, net of taxes		—			(9.6	)		—			—			(9.6	)
Other reorganization expenses, net of taxes		—			(4.5	)		—			—			(4.5	)
Loss from sale of universal life business, net of taxes		—			(20.3	)		—			—			(20.3	)
Additional consideration received from sale of defined contribution business, net of taxes		—			2.3			—			—			2.3
Sales practice litigation, net of taxes		—			1.6			—			—			1.6

6

The following is a reconciliation of Allmerica Financial Services and Asset Management segment income to Allmerica Financial Services and Asset Management segment income excluding certain non-cash items:

	Quarter ended December 31, 2003			Year ended December 31, 2003
Allmerica Financial Services segment income	$	11.9		$	26.9
Asset Management segment income		1.1			11.3
		13.0			38.2
Add:
Deferred acquisition cost operating amortization, net		23.8			131.1
Property, plant and equipment depreciation		4.2			12.7
VeraVest asset impairment		0.4			11.5
Statement of Position 98-1 amortization, net		1.1			4.1
AIN goodwill impairment		2.1			2.1
Less:
Change in guaranteed minimum death benefit reserves		(5.8	)		(55.0	)
Total segment income excluding certain non-cash items	$	38.8		$	144.7

(1) Basic net income (loss) per share was $0.26 and $0.28 for the quarters ended December 31, 2003 and 2002, respectively, and $1.64 and $(5.79) for the years ended December 31, 2003 and 2002, respectively.

(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 maker in deciding how to allocate resources and in assessing performance. Management evaluates the results of the aforementioned segments based on a pre-tax basis. Segment income (loss) is determined by adjusting net income (loss) 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.

(3) In compliance with Statement of Accounting Standards No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” and Statement of Accounting Standards No. 131 “Disclosures About Segments of an Enterprise and Related Information”, items previously disclosed as “Minority Interest: distributions on mandatorily redeemable preferred securities of a subsidiary trust” are now included in the Corporate segment.

All figures reported are unaudited.

7

EX-99.2

EXHIBIT 99.2

ALLMERICA FINANCIAL CORPORATION

STATISTICAL SUPPLEMENT

TABLE OF CONTENTS

	Page
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 December 31								Year ended December 31
(In millions, except per share data)	2003			2002			% Change		2003			2002			% Change
RECONCILIATION FROM SEGMENT INCOME TO NET INCOME
Segment income (loss) (1)	$	29.5		$	22.5		31.1		$	86.3		$	(504.4	)	N/M
Federal income tax benefit (expense) on segment income		0.8			(0.6	)	N/M			6.1			229.0		(97.3	)
Net realized investment gains (losses), net of taxes and amortization		4.0			(45.8	)	N/M			10.4			(89.4	)	N/M
(Loss) gain on derivative instruments, net of taxes		(5.4	)		6.5		N/M			(4.5	)		26.2		N/M
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			66.7		N/M			3.7			66.7		(94.5	)
Restructuring costs, net of taxes		(14.9	)		(9.6	)	55.2			(18.7	)		(9.6	)	94.8
Other reorganization expenses, net of taxes		—			(4.5	)	N/M			—			(4.5	)	N/M
(Loss) income from sale of universal life business, net of taxes		—			(20.3	)	N/M			3.6			(20.3	)	N/M
Additional consideration received from sale of defined contribution business, net of taxes		—			—		—			—			2.3		N/M
Sales practice litigation, net of taxes		—			—		—			—			1.6		N/M
Income (loss) before effect of accounting change		14.0			14.9		(6.0	)		86.9			(302.4	)	N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		—			—			(3.7	)	N/M
Net income (loss)	$	14.0		$	14.9		(6.0	)	$	86.9		$	(306.1	)	N/M
PER SHARE DATA (DILUTED)
Segment income (loss) (1)	$	0.55		$	0.43		27.9		$	1.62		$	(9.54	)	N/M
Federal income tax benefit (expense) on segment income		0.02			(0.01	)	N/M			0.12			4.33		(97.2	)
Net realized investment gains (losses), net of taxes and amortization		0.07			(0.87	)	N/M			0.19			(1.69	)	N/M
(Loss) gain on derivative instruments, net of taxes		(0.10	)		0.12		N/M			(0.08	)		0.50		N/M
Gain from retirement of trust instruments supported by funding obligations, net of taxes		—			1.26		N/M			0.07			1.26		(94.4	)
Restructuring costs, net of taxes		(0.28	)		(0.18	)	55.6			(0.35	)		(0.18	)	94.4
Other reorganization expenses, net of taxes		—			(0.09	)	N/M			—			(0.09	)	N/M
(Loss) income from sale of universal life business, net of taxes		—			(0.38	)	N/M			0.06			(0.38	)	N/M
Additional consideration received from sale of defined contribution business, net of taxes		—			—		—			—			0.04		N/M
Sales practice litigation, net of taxes		—			—		—			—			0.03		N/M
Income (loss) before effect of accounting change		0.26			0.28		(7.1	)		1.63			(5.72	)	N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		—			—			(0.07	)	N/M
Net income (loss)	$	0.26		$	0.28		(7.1	)	$	1.63		$	(5.79	)	N/M

	December 31 2003			December 31 2002			% Change
BALANCE SHEET
Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	1,001.6		$	830.3		20.6
Allmerica Financial Life Insurance and Annuity Company (consolidated)	$	553.4		$	481.9		14.8
First Allmerica Financial Life Insurance Company	$	176.6		$	200.0		(11.7	)
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	1,545.6		$	1,400.9		10.3
Allmerica Financial Life Insurance and Annuity Company (consolidated)		1,194.9			1,197.9		(0.3	)
AFC Holding Company and other		(520.3	)		(526.6	)	(1.2	)
Total shareholders’ equity	$	2,220.2		$	2,072.2		7.1
Book value per share
The Hanover Insurance Company (consolidated)	$	29.16		$	26.39		10.5
Allmerica Financial Life Insurance and Annuity Company (consolidated)		22.55			22.64		(0.4	)
AFC Holding Company and other		(9.82	)		(9.91	)	(0.9	)
Total book value per share	$	41.89		$	39.12		7.1
Book value per share, excluding accumulated other comprehensive income	$	41.59		$	39.83		4.4
Shares outstanding (2)		53.0			52.9
Stock price	$	30.77		$	10.10		N/M
Price/book value per share		0.7	x		0.3	x	0.4	x
Debt/equity (3)		22.5	%		9.6	%	12.9	pts
Debt/total capital (3)		18.4	%		7.8	%	10.6	pts
Debt plus preferred securities of a subsidiary trust/total capital		18.4	%		19.4	%	(1.0	)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 maker 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.

⁽³⁾ Debt includes the mandatorily redeemable preferred securities of a subsidiary trust in 2003 in accordance with Statement of Financial Accounting Standards No. 150.

1

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENTS

	Quarter ended December 31								Year ended December 31
(In millions, except per share data)	2003			2002			% Change		2003			2002			% Change
REVENUES
Premiums	$	570.5		$	583.9		(2.3	)	$	2,282.3		$	2,320.1		(1.6	)
Universal life and investment product policy fees		76.6			117.9		(35.0	)		319.3			409.8		(22.1	)
Net investment income		109.1			137.3		(20.5	)		455.7			590.2		(22.8	)
Net realized investment gains (losses)		5.7			(78.4	)	N/M			24.1			(162.3	)	N/M
Other income		38.8			53.3		(27.2	)		182.2			158.8		14.7
Total revenues		800.7			814.0		(1.6	)		3,263.6			3,316.6		(1.6	)
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		460.9			532.1		(13.4	)		1,918.7			2,202.0		(12.9	)
Policy acquisition expenses		142.3			167.8		(15.2	)		602.6			1,080.4		(44.2	)
Gain from retirement of trust instruments supported by funding obligations		—			(102.6	)	N/M			(5.7	)		(102.6	)	(94.4	)
(Loss) income from sale of universal life business		—			31.3		N/M			(5.5	)		31.3		N/M
Losses (gains) on derivative instruments		8.7			(10.0	)	N/M			10.3			(40.3	)	N/M
Restructuring costs		22.9			14.8		54.7			28.7			14.8		93.9
Other operating expenses		157.5			162.7		(3.2	)		635.0			652.2		(2.6	)
Total benefits, losses and expenses		792.3			796.1		(0.5	)		3,184.1			3,837.8		(17.0	)
Income (loss) before federal income taxes		8.4			17.9		(53.1	)		79.5			(521.2	)	N/M
Federal income tax benefit		(5.6	)		(1.0	)	N/M			(7.4	)		(234.8	)	(96.8	)
Income (loss) before minority interest and cumulative effect of change in accounting principle		14.0			18.9		(25.9	)		86.9			(286.4	)	N/M
Minority interest:
Distributions on mandatorily redeemable preferred securities of a subsidiary trust (3)		—			(4.0	)	N/M			—			(16.0	)	N/M
Income (loss) before cumulative effect of change in accounting principle		14.0			14.9		(6.0	)		86.9			(302.4	)	N/M
Cumulative effect of change in accounting principle		—			—		—			—			(3.7	)	N/M
Net income (loss)	$	14.0		$	14.9		(6.0	)	$	86.9		$	(306.1	)	N/M
PER SHARE DATA (DILUTED) (2)
Income (loss) before cumulative effect of change in accounting principle	$	0.26		$	0.28		(7.1	)	$	1.63		$	(5.72	)	N/M
Cumulative effect of change in accounting principle		—			—		—			—			(0.07	)	N/M
Net income (loss) (1)	$	0.26		$	0.28		(7.1	)	$	1.63		$	(5.79	)	N/M
Weighted average shares outstanding		53.5			52.9					53.2			52.9

⁽¹⁾ Basic net income (loss) per share was $0.26 and $0.28 for the quarters ended December 31, 2003 and 2002, respectively and $1.64 and $(5.79) for the years ended December 31, 2003 and 2002, respectively.

⁽²⁾ Excludes 0.2 million shares due to antidilution for the year ended December 31, 2002.

⁽³⁾ In 2003, these costs are reflected in other operating expenses in accordance with Statement of Financial Accounting Standards No. 150.

2

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	December 31 2003			December 31 2002			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $7,346.3 and $7,715.9)	$	7,646.5		$	8,003.1		(4.5	)
Equity securities, at fair value (cost of $9.1 and $49.1)		15.3			52.8		(71.0	)
Mortgage loans		175.1			259.8		(32.6	)
Policy loans		268.0			361.4		(25.8	)
Other long-term investments		80.7			129.7		(37.8	)
Total investments		8,185.6			8,806.8		(7.1	)
Cash and cash equivalents		380.5			389.8		(2.4	)
Accrued investment income		126.5			138.3		(8.5	)
Premiums, accounts, and notes receivable, net		480.9			564.7		(14.8	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		2,111.2			2,075.8		1.7
Deferred policy acquisition costs		1,115.5			1,242.2		(10.2	)
Deferred federal income tax asset		381.0			413.2		(7.8	)
Goodwill		128.2			131.2		(2.3	)
Other assets		367.7			473.5		(22.3	)
Separate account assets		11,835.4			12,343.4		(4.1	)
Total assets	$	25,112.5		$	26,578.9		(5.5	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	3,556.8		$	3,935.7		(9.6	)
Outstanding claims, losses and loss adjustment expenses		3,124.9			3,066.5		1.9
Unearned premiums		1,032.5			1,047.0		(1.4	)
Contractholder deposit funds and other policy liabilities		683.7			737.2		(7.3	)
Total policy liabilities and accruals		8,397.9			8,786.4		(4.4	)
Expenses and taxes payable		822.7			1,115.5		(26.2	)
Reinsurance premiums payable		136.5			559.1		(75.6	)
Trust instruments supported by funding obligations		1,200.3			1,202.8		(0.2	)
Long-term debt (1)		499.5			199.5		N/M
Separate account liabilities		11,835.4			12,343.4		(4.1	)
Total liabilities		22,892.3			24,206.7		(5.4	)
MINORITY INTEREST
Mandatorily redeemable preferred securities of a subsidiary trust (1)		—			300.0		N/M
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		1,775.6			1,768.4		0.4
Accumulated other comprehensive income (loss)		16.1			(37.4	)	N/M
Retained earnings		833.1			746.2		11.6
Treasury stock at cost (7.4 and 7.5 million shares)		(405.2	)		(405.6	)	(0.1	)
Total shareholders’ equity		2,220.2			2,072.2		7.1
Total liabilities and shareholders’ equity	$	25,112.5		$	26,578.9		(5.5	)

⁽¹⁾ Long-term debt includes the mandatorily redeemable preferred securities of a subsidiary trust in 2003 in accordance with Statement of Financial Accounting Standards No. 150.

3

ALLMERICA FINANCIAL CORPORATION

SEGMENT RESULTS

INCOME STATEMENT HIGHLIGHTS

	Quarter ended December 31								Year ended December 31
(In millions)	2003			2002			% Change		2003			2002			% Change
SEGMENT REVENUES (1)
Property and Casualty	$	617.0		$	633.2		(2.6	)	$	2,453.6		$	2,498.7		(1.8	)
Allmerica Financial Services		159.3			230.7		(30.9	)		703.7			854.7		(17.7	)
Asset Management		20.1			31.2		(35.6	)		88.4			127.2		(30.5	)
Corporate		0.5			0.7		(28.6	)		1.9			5.0		(62.0	)
Eliminations and other		(2.3	)		(3.5	)	(34.3	)		(11.5	)		(10.3	)	11.7
Total segment revenues	$	794.6		$	892.3		(10.9	)	$	3,236.1		$	3,475.3		(6.9	)
SEGMENT INCOME (2)
Property and Casualty	$	40.2		$	35.2		14.2		$	143.6		$	184.3		(22.1	)
Allmerica Financial Services		11.9			(0.7	)	N/M			26.9			(625.0	)	N/M
Asset Management		1.1			8.5		(87.1	)		11.3			24.4		(53.7	)
Corporate		(23.7	)		(20.5	)	15.6			(95.5	)		(88.1	)	8.4
Total segment income (loss) before federal income taxes	$	29.5		$	22.5		31.1		$	86.3		$	(504.4	)	N/M

	Year ended December 31
(In millions)	2003			2002			2001			2000			1999
SEGMENT REVENUES (1)
Property and Casualty	$	2,453.6		$	2,498.7		$	2,454.8		$	2,307.7		$	2,189.4
Allmerica Financial Services		703.7			854.7			826.5			867.2			808.3
Asset Management		88.4			127.2			155.2			149.2			150.5
Corporate		1.9			5.0			6.7			6.3			6.0
Eliminations and other		(11.5	)		(10.3	)		(7.5	)		(7.0	)		(5.9	)
Total segment revenues	$	3,236.1		$	3,475.3		$	3,435.7		$	3,323.4		$	3,148.3
SEGMENT INCOME (2)
Property and Casualty	$	143.6		$	184.3		$	93.5		$	190.0		$	199.6
Allmerica Financial Services		26.9			(625.0	)		143.0			222.8			205.5
Asset Management		11.3			24.4			20.7			22.5			23.5
Corporate		(95.5	)		(88.1	)		(88.4	)		(85.4	)		(83.9	)
Total segment income (loss) before federal income taxes	$	86.3		$	(504.4	)	$	168.8		$	349.9		$	344.7

⁽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 maker 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

	December 31, 2003
(In millions)	Property and Casualty		Allmerica Financial Services		Asset Management		Corporate(1)			Total
Cash and investments	$	3,799.4	$	3,368.1	$	1,329.9	$	68.7		$	8,566.1
Reinsurance receivables		1,177.3		933.9		—		—			2,111.2
Deferred policy acquisition costs		223.5		892.0		—		—			1,115.5
Separate account assets		—		11,835.4		—		—			11,835.4
Other assets		1,032.6		358.9		139.6		(46.8	)		1,484.3
Total assets	$	6,232.8	$	17,388.3	$	1,469.5	$	21.9		$	25,112.5
Policy liabilities and accruals:
Future policy benefits	$	105.6	$	3,451.2	$	—	$	—		$	3,556.8
Outstanding claims, losses and loss adjustment expenses		3,099.1		25.8		—		—			3,124.9
Unearned premiums		1,030.8		1.7		—					1,032.5
Contractholder deposit funds and other policy liabilities		30.4		445.8		207.5		—			683.7
Total policy liabilities and accruals	$	4,265.9	$	3,924.5	$	207.5	$	—		$	8,397.9
Trust instruments supported by funding obligations	$	—	$	—	$	1,200.3	$	—		$	1,200.3
Separate account liabilities	$	—	$	11,835.4	$	—	$	—		$	11,835.4
	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 acquisition 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	$	3,829.2	$	—	$	—		$	3,935.7
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		514.9		208.1		—			737.2
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 $(48.9) million and $(78.9) million at December 31, 2003 and December 31, 2002, respectively.

5

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENT

	Quarter ended December 31						Year ended December 31
(In millions)	2003		2002		% Change		2003		2002		% Change
REVENUES
Net premiums written	$	524.0	$	543.5	(3.6	)	$	2,234.2	$	2,267.3	(1.5	)
Change in unearned premiums, net of prepaid reinsurance premiums		39.2		31.5	24.4			6.2		4.7	31.9
Net premiums earned		563.2		575.0	(2.1	)		2,240.4		2,272.0	(1.4	)
Net investment income		46.8		48.6	(3.7	)		183.5		202.0	(9.2	)
Other income		7.0		9.6	(27.1	)		29.7		24.7	20.2
Total segment revenue		617.0		633.2	(2.6	)		2,453.6		2,498.7	(1.8	)
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses (1)		401.8		437.3	(8.1	)		1,653.5		1,683.5	(1.8	)
Policy acquisition expenses		119.0		108.3	9.9			457.6		424.5	7.8
Other operating expenses		56.0		52.4	6.9			198.9		206.4	(3.6	)
Total losses and operating expenses		576.8		598.0	(3.5	)		2,310.0		2,314.4	(0.2	)
Segment income before federal income taxes	$	40.2	$	35.2	14.2		$	143.6	$	184.3	(22.1	)

⁽¹⁾ Policy benefits, claims, losses and loss adjustment expenses for the twelve months ended December 31, 2003 include a $21.9 million charge resulting from an adverse arbitration decision in the second quarter of 2003 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 December 31								Year ended December 31
(In millions)	2003			2002			% Change		2003			2002			% Change
Net premiums earned	$	564.0		$	575.5		(2.0	)	$	2,241.4		$	2,273.2		(1.4	)
Policy benefits, claims, losses and loss adjustment expenses (1)		401.4			442.4		(9.3	)		1,650.9			1,688.0		(2.2	)
Policy acquisition and other underwriting expenses		177.2			160.4		10.5			678.3			651.9		4.0
Policyholders’ dividends		(3.3	)		2.7		N/M			(0.9	)		3.9		N/M
Underwriting loss	$	(11.3	)	$	(30.0	)	N/M		$	(86.9	)	$	(70.6	)	23.1
Net investment income		46.8			48.6		(3.7	)		183.5			202.0		(9.2	)
Other income and expenses, net		6.3			4.9		28.6			24.8			17.4		42.5
Net deferred acquisition costs		(1.9	)		0.9		N/M			8.8			16.1		(45.3	)
Other Statutory to GAAP adjustments		0.3			10.8		(97.2	)		13.4			19.4		(30.9	)
Segment income before federal income taxes - GAAP Basis	$	40.2		$	35.2		14.2		$	143.6		$	184.3		(22.1	)
PRETAX CATASTROPHE LOSSES	$	10.1		$	7.5		34.7		$	59.4		$	31.3		89.8

⁽¹⁾ Policy benefits, claims, losses and loss adjustment expenses for the twelve months ended December 31, 2003 include a $21.9 million charge resulting from an adverse arbitration decision in the second quarter of 2003 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 December 31								Year ended December 31
(In millions, except ratios)	2003			2002			% Change		2003			2002			% Change
NET PREMIUMS WRITTEN
Personal automobile	$	253.9		$	252.4		0.6		$	1,088.5		$	1,090.1		(0.1	)
Homeowners		99.4			89.5		11.1			386.9			351.9		9.9
Other personal		9.7			10.1		(4.0	)		42.0			43.3		(3.0	)
Total personal lines		363.0			352.0		3.1			1,517.4			1,485.3		2.2
Workers’ compensation		26.5			34.2		(22.5	)		127.7			152.0		(16.0	)
Commercial automobile		38.6			48.9		(21.1	)		172.3			197.9		(12.9	)
Commercial multiple peril		75.9			85.1		(10.8	)		329.2			333.8		(1.4	)
Other commercial		20.6			23.7		(13.1	)		88.6			99.4		(10.9	)
Total commercial lines		161.6			191.9		(15.8	)		717.8			783.1		(8.3	)
Total	$	524.6		$	543.9		(3.5	)	$	2,235.2		$	2,268.4		(1.5	)
NET PREMIUMS EARNED
Personal automobile	$	275.1		$	275.1		—		$	1,091.0		$	1,073.9		1.6
Homeowners		97.2			86.7		12.1			368.0			328.7		12.0
Other personal		10.5			11.1		(5.4	)		42.7			43.7		(2.3	)
Total personal lines		382.8			372.9		2.7			1,501.7			1,446.3		3.8
Workers’ compensation		31.2			38.9		(19.8	)		134.1			169.0		(20.7	)
Commercial automobile		44.4			53.1		(16.4	)		183.0			216.5		(15.5	)
Commercial multiple peril		82.9			85.3		(2.8	)		329.7			338.7		(2.7	)
Other commercial		22.7			25.3		(10.3	)		92.9			102.7		(9.5	)
Total commercial lines		181.2			202.6		(10.6	)		739.7			826.9		(10.5	)
Total	$	564.0		$	575.5		(2.0	)	$	2,241.4		$	2,273.2		(1.4	)
POLICY BENEFITS, CLAIMS AND LOSSES
Personal automobile	$	192.4		$	219.6		(12.4	)	$	796.0		$	785.9		1.3
Homeowners		48.7			53.0		(8.1	)		227.2			207.3		9.6
Other personal		6.1			6.5		(6.2	)		18.4			20.4		(9.8	)
Total personal lines		247.2			279.1		(11.4	)		1,041.6			1,013.6		2.8
Workers’ compensation		44.2			19.3		129.0			119.5			109.2		9.4
Commercial automobile		20.5			32.6		(37.1	)		89.2			129.7		(31.2	)
Commercial multiple peril		38.3			42.4		(9.7	)		164.4			185.1		(11.2	)
Other commercial (1)		8.1			26.8		(69.8	)		57.5			59.2		(2.9	)
Total commercial lines		111.1			121.1		(8.3	)		430.6			483.2		(10.9	)
Total	$	358.3		$	400.2		(10.5	)	$	1,472.2		$	1,496.8		(1.6	)
LOSS ADJUSTMENT EXPENSES	$	43.1		$	42.2		2.1		$	178.7		$	191.2		(6.5	)
RATIOS
LOSSES
Personal automobile		69.9	%		79.8	%	(9.9	)pts		73.0	%		73.2	%	(0.2	)pts
Homeowners		50.1	%		61.1	%	(11.0	)pts		61.7	%		63.1	%	(1.4	)pts
Other personal		58.1	%		58.6	%	(0.5	)pts		43.1	%		46.7	%	(3.6	)pts
Total personal lines		64.6	%		74.8	%	(10.2	)pts		69.4	%		70.1	%	(0.7	)pts
Workers’ compensation		141.7	%		49.6	%	92.1	pts		89.1	%		64.6	%	24.5	pts
Commercial automobile		46.2	%		61.4	%	(15.2	)pts		48.7	%		59.9	%	(11.2	)pts
Commercial multiple peril		46.2	%		49.7	%	(3.5	)pts		49.9	%		54.7	%	(4.8	)pts
Other commercial (1)		35.7	%		105.9	%	(70.2	)pts		61.9	%		57.6	%	4.3	pts
Total commercial lines		61.3	%		59.8	%	1.5	pts		58.2	%		58.4	%	(0.2	)pts
Total		63.5	%		69.5	%	(6.0	)pts		65.7	%		65.8	%	(0.1	)pts
LOSS ADJUSTMENT EXPENSES		7.6	%		7.3	%	0.3	pts		8.0	%		8.4	%	(0.4	)pts
POLICY ACQUISITION AND OTHER UNDERWRITING EXPENSES		33.8	%		29.5	%	4.3	pts		30.3	%		28.7	%	1.6	pts
POLICYHOLDERS’ DIVIDENDS		(0.6	)%		0.5	%	(1.1	)pts		—			0.2	%	(0.2	)pts
COMBINED		104.3	%		106.8	%	(2.5	)pts		104.0	%		103.1	%	0.9	pts

⁽¹⁾ Policy benefits, claims, and losses for the twelve months ended December 31, 2003 include a $21.9 million charge resulting from an 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 December 31							Year ended December 31
(In millions)	2003		2002			% Change		2003		2002			% Change
REVENUES
Premiums	$	7.3	$	8.9		(18.0	)	$	41.9	$	48.1		(12.9	)
Fees:
Fees from surrenders		12.6		34.5		(63.5	)		66.9		61.9		8.1
Other proprietary product fees		64.0		83.4		(23.3	)		252.4		347.9		(27.5	)
Net investment income		45.0		63.9		(29.6	)		199.0		283.9		(29.9	)
Brokerage and investment management income (1)		20.4		28.8		(29.2	)		107.0		82.5		29.7
Other income		10.0		11.2		(10.7	)		36.5		30.4		20.1
Total segment revenue		159.3		230.7		(30.9	)		703.7		854.7		(17.7	)
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		61.8		87.5		(29.4	)		259.0		501.6		(48.4	)
Policy acquisition expenses		25.6		64.9		(60.6	)		140.8		674.1		(79.1	)
Brokerage and investment management variable expenses (1)		12.5		21.0		(40.5	)		68.7		55.9		22.9
Other operating expenses		47.5		58.0		(18.1	)		208.3		248.1		(16.0	)
Total policy benefits, claims and operating expenses		147.4		231.4		(36.3	)		676.8		1,479.7		(54.3	)
Segment income (loss) before federal income taxes	$	11.9	$	(0.7	)	N/M		$	26.9	$	(625.0	)	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 December 31, 2003
(In millions)	Individual Annuities		Variable Universal Life (2)		Other Insurance (3)			Total Insurance		VeraVest Distribution		Total
REVENUES
Premiums	$	—	$	—	$	7.3		$	7.3	$	—	$	7.3
Fees:
Fees from surrenders		9.8		2.8		—			12.6		—		12.6
Other proprietary product fees		40.2		22.8		1.0			64.0		—		64.0
Net investment income		13.2		3.3		28.4			44.9		0.1		45.0
Brokerage and investment management income (1)		4.8		0.9		0.1			5.8		14.6		20.4
Other income		3.7		0.6		3.6			7.9		2.1		10.0
Total segment revenue		71.7		30.4		40.4			142.5		16.8		159.3
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		25.3		13.8		22.7			61.8		—		61.8
Policy acquisition expenses		21.0		3.7		0.9			25.6		—		25.6
Variable operating expenses		8.1		1.0		(0.7	)		8.4		9.7		18.1
		54.4		18.5		22.9			95.8		9.7		105.5
Segment income before other operating expenses	$	17.3	$	11.9	$	17.5		$	46.7	$	7.1		53.8
Other operating expenses (4)													41.9
Segment income before federal income taxes												$	11.9
	Quarter ended December 31, 2002
	Individual Annuities		Variable Universal Life (2)		Other Insurance (3)			Total Insurance		VeraVest Distribution		Total
REVENUES
Premiums	$	—	$	—	$	8.9		$	8.9	$	—	$	8.9
Fees:
Fees from surrenders		30.7		3.7		0.1			34.5		—		34.5
Other proprietary product fees		42.8		25.3		15.3			83.4		—		83.4
Net investment income		18.4		3.0		42.4			63.8		0.1		63.9
Brokerage and investment management income (1)		6.0		1.1		0.2			7.3		21.5		28.8
Other income		1.9		0.4		6.1			8.4		2.8		11.2
Total segment revenue		99.8		33.5		73.0			206.3		24.4		230.7
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		30.2		12.4		44.9			87.5		—		87.5
Policy acquisition expenses		54.1		7.4		3.4			64.9		—		64.9
Variable operating expenses		8.1		2.9		0.9			11.9		17.6		29.5
		92.4		22.7		49.2			164.3		17.6		181.9
Segment income before other operating expenses	$	7.4	$	10.8	$	23.8		$	42.0	$	6.8		48.8
Other operating expenses (4)													49.5
Segment loss before federal income taxes												$	(0.7	)

⁽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

	Year ended December 31, 2003
(In millions)	Individual Annuities			Variable Universal Life (2)		Other Insurance (3)		Total Insurance			VeraVest Distribution		Total
REVENUES
Premiums	$	—		$	—	$	41.9	$	41.9		$	—	$	41.9
Fees:
Fees from surrenders		53.7			13.2		—		66.9			—		66.9
Other proprietary product fees		156.9			92.5		3.0		252.4			—		252.4
Net investment income		59.1			14.6		124.9		198.6			0.4		199.0
Brokerage and investment management income (1)		18.2			3.9		0.3		22.4			84.6		107.0
Other income		10.5			4.1		17.6		32.2			4.3		36.5
Total segment revenue		298.4			128.3		187.7		614.4			89.3		703.7
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		103.2			44.4		111.4		259.0			—		259.0
Policy acquisition expenses		120.0			18.5		2.3		140.8			—		140.8
Variable operating expenses		31.5			5.4		1.9		38.8			57.4		96.2
		254.7			68.3		115.6		438.6			57.4		496.0
Segment income before other operating expenses	$	43.7		$	60.0	$	72.1	$	175.8		$	31.9		207.7
Other operating expenses (4)														180.8
Segment income before federal income taxes													$	26.9
	Year ended December 31, 2002
	Individual Annuities			Variable Universal Life (2)		Other Insurance (3)		Total Insurance			VeraVest Distribution		Total
REVENUES
Premiums	$	—		$	—	$	48.1	$	48.1		$	—	$	48.1
Fees:
Fees from surrenders		50.3			10.8		0.8		61.9			—		61.9
Other proprietary product fees		180.5			104.7		62.7		347.9			—		347.9
Net investment income		81.3			11.5		190.9		283.7			0.2		283.9
Brokerage and investment management income (1)		26.9			5.0		1.3		33.2			49.3		82.5
Other income		8.9			0.9		15.3		25.1			5.3		30.4
Total segment revenue		347.9			132.9		319.1		799.9			54.8		854.7
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		265.3			45.2		191.1		501.6			—		501.6
Policy acquisition expenses		592.9			67.0		14.2		674.1			—		674.1
Variable operating expenses		35.6			12.9		3.9		52.4			40.8		93.2
		893.8			125.1		209.2		1,228.1			40.8		1,268.9
Segment (loss) income before other operating expenses	$	(545.9	)	$	7.8	$	109.9	$	(428.2	)	$	14.0		(414.2	)
Other operating expenses (4)														210.8
Segment loss before federal income taxes													$	(625.0	)

⁽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)	December 31 2003		September 30 2003		June 30 2003		March 31 2003		December 31 2002
VARIABLE INDIVIDUAL ANNUITIES - REDEMPTIONS BY DISTRIBUTION CHANNEL (1)
Agency	$	233.7	$	218.5	$	259.4	$	430.4	415.3
Select		114.6		111.6		130.7		267.8	441.3
Partner		157.6		163.5		162.4		292.2	426.8
	$	505.9	$	493.6	$	552.5	$	990.4	1,283.4

	December 31 2003		December 31 2002		% Change
VARIABLE INDIVIDUAL ANNUITIES - ACCOUNT VALUES BY DISTRIBUTION CHANNEL
Agency	$	4,364.3	$	4,623.6	(5.6	)
Select		2,852.3		2,995.3	(4.8	)
Partner		4,526.0		4,507.2	0.4
	$	11,742.6	$	12,126.1	(3.2	)
NET AMOUNT AT RISK BY DISTRIBUTION CHANNEL
Agency	$	956.5	$	1,854.8	(48.4	)
Select		565.7		1,037.3	(45.5	)
Partner		1,029.0		1,720.3	(40.2	)
	$	2,551.2	$	4,612.4	(44.7	)
VARIABLE ANNUITY DEFERRED ACQUISITION COST ASSET BY DISTRIBUTION CHANNEL
Agency	$	259.2	$	290.7	(10.8	)
Select		197.1		270.1	(27.0	)
Partner		203.9		217.4	(6.2	)
	$	660.2	$	778.2	(15.2	)

⁽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)	December 31 2003		December 31 2002		% Change
GENERAL ACCOUNT RESERVES
Insurance
Traditional life	$	845.8	$	854.2	(1.0	)
Universal life (1)		661.6		703.0	(5.9	)
Variable universal life (2)		221.2		222.9	(0.8	)
Individual health (3)		260.3		265.4	(1.9	)
Total insurance		1,988.9		2,045.5	(2.8	)
Annuities
Individual annuities		1,363.1		1,716.0	(20.6	)
Group annuities		572.5		615.0	(6.9	)
Total annuities		1,935.6		2,331.0	(17.0	)
Total general account reserves	$	3,924.5	$	4,376.5	(10.3	)
SEPARATE ACCOUNT LIABILITIES
Variable individual life	$	1,053.2	$	977.9	7.7
Variable individual annuities		10,545.8		10,611.9	(0.6	)
Total individual		11,599.0		11,589.8	0.1
Group variable universal life		127.0		349.7	(63.7	)
Group annuities		109.4		403.9	(72.9	)
Total group		236.4		753.6	(68.6	)
Total separate account liabilities	$	11,835.4	$	12,343.4	(4.1	)

	Quarter ended December 31								Year ended December 31
	2003			2002			% Change		2003			2002			% Change
SEPARATE ACCOUNT INDIVIDUAL ANNUITIES
Balance at beginning of period	$	10,034.9		$	10,445.8		(3.9	)	$	10,611.9		$	12,834.5		(17.3	)
Direct premiums and deposits		21.0			73.2		(71.3	)		103.9			1,892.4		(94.5	)
Redemptions		(440.3	)		(922.0	)	(52.2	)		(2,135.8	)		(2,087.0	)	2.3
Market appreciation (depreciation)		904.2			518.3		74.5			1,946.3			(2,284.5	)	N/M
Transfers and other		26.0			496.6		(94.8	)		19.5			256.5		(92.4	)
Balance at end of period	$	10,545.8		$	10,611.9		(0.6	)	$	10,545.8		$	10,611.9		(0.6	)

⁽¹⁾ Universal life reserves include reinsured balances of $633.8 million and $681.7 million at December 31, 2003 and December 31, 2002, respectively.

⁽²⁾ Variable universal life reserves include group variable universal life reserves of $23.6 million and $11.8 million at December 31, 2003 and December 31, 2002, respectively.

⁽³⁾ Individual health reserves include reinsured balances of $258.9 million and $264.0 million at December 31, 2003 and December 31, 2002, respectively.

13

ALLMERICA FINANCIAL CORPORATION

ASSET MANAGEMENT

CONDENSED INCOME STATEMENTS AND SUPPLEMENTAL INFORMATION

	Quarter ended December 31								Year ended December 31
(In millions)	2003			2002			% Change		2003			2002			% Change
INTEREST MARGINS ON GICS
Net investment income	$	16.7		$	24.4		(31.6	)	$	71.8		$	100.2		(28.3	)
Interest credited		(17.0	)		(17.6	)	(3.4	)		(66.9	)		(85.7	)	(21.9	)
Net interest margin		(0.3	)		6.8		N/M			4.9			14.5		(66.2	)
PREMIUM FINANCING BUSINESS
Fees		3.8			3.5		8.6			14.4			13.5		6.7
Operating expenses		(3.1	)		(3.1	)	—			(12.0	)		(9.8	)	22.4
Net premium financing business		0.7			0.4		75.0			2.4			3.7		(35.1	)
FEES AND OTHER INCOME
External fees		1.1			2.0		(45.0	)		6.5			8.1		(19.8	)
Internal fees		1.3			1.3		—			5.2			5.9		(11.9	)
Other operating expenses		(1.7	)		(2.0	)	(15.0	)		(7.7	)		(7.8	)	(1.3	)
Segment income before federal income taxes	$	1.1		$	8.5		(87.1	)	$	11.3		$	24.4		(53.7	)

	Year ended December 31
	2003			2002			% Change
GIC DEPOSITS
Outstanding GIC deposits, beginning of period	$	1,410.0		$	2,689.7		(47.6	)
Withdrawals during the period		(69.1	)		(1,577.3	)	(95.6	)
Deposits during the period		—			211.9		N/M
Interest credited during the period		66.9			85.7		(21.9	)
Outstanding GIC deposits, end of period	$	1,407.8		$	1,410.0		(0.2	)

	December 31
	2003			2002
GIC SCHEDULED MATURITIES
2003	$	—		$	83.3
2004		221.4			137.2
2005		732.7			672.2
2006		311.4			358.5
2007+		142.3			158.8
		1,407.8	(1)		1,410.0	(1)

⁽¹⁾ Includes $4.1 million and $3.8 million of traditional GIC balances for the years ended December 31, 2003 and 2002, respectively

14

ALLMERICA FINANCIAL CORPORATION

CORPORATE

CONDENSED INCOME STATEMENTS

	Quarter ended December 31								Year ended December 31
(In millions)	2003			2002			% Change		2003			2002			% Change
REVENUES
Net investment income	$	0.5		$	0.7		(28.6	)	$	1.9		$	5.0		(62.0	)
OPERATING EXPENSES
Interest expense (1)		10.0			10.0		—			39.9			39.9		—
Other operating expenses		14.2			11.2		26.8			57.5			53.2		8.1
Total operating expenses		24.2			21.2		14.2			97.4			93.1		4.6
Net segment loss before federal income taxes	$	(23.7	)	$	(20.5	)	15.6		$	(95.5	)	$	(88.1	)	8.4

⁽¹⁾ Reflects the reclassification, in accordance with Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information”, of costs that were classified as Minority Interest prior to the adoption of Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”.

15

ALLMERICA FINANCIAL CORPORATION

NET INVESTMENT INCOME

	Year ended December 31, 2003
(In millions, except yields)	Property and Casualty (1)			Yield		Allmerica Financial Services			Yield		Asset Management			Yield		Corporate(2)			Yield		Total			Yield
Fixed maturities	$	188.5		6.00	%	$	161.7		5.85	%	$	73.4		6.33	%	$	1.3		4.58	%	$	424.9		5.99	%
Equity securities		0.5		4.62	%		0.5		2.99	%		—		—			—		—			1.0		3.65	%
Mortgages		6.3		8.50	%		7.2		7.99	%		5.3		8.47	%		0.5		—			19.3		8.58	%
All other		(8.0	)	—			33.5		—			(5.3	)	—			(0.5	)	—			19.7		—
Investment expenses		(3.8	)	—			(3.9	)	—			(1.5	)	—			—		—			(9.2	)	—
Total	$	183.5		5.57	%	$	199.0		5.88	%	$	71.9		5.85	%	$	1.3		3.86	%	$	455.7		5.74	%
	Year ended December 31, 2002
	Property and Casualty (1)			Yield		Allmerica Financial Services			Yield		Asset Management			Yield		Corporate(2)			Yield		Total			Yield
Fixed maturities	$	200.0		6.43	%	$	230.6		6.98	%	$	133.5		6.78	%	$	3.8		4.88	%	$	567.9		6.71	%
Equity securities		0.7		3.84	%		0.9		2.36	%		—		—			—		—			1.6		2.88	%
Mortgages		6.8		7.32	%		10.2		8.72	%		6.3		6.90	%		0.6		—			23.9		8.00	%
All other		(1.8	)	—			50.1		—			(37.3	)	—			(0.4	)	—			10.6		—
Investment expenses		(3.7	)	—			(7.9	)	—			(2.2	)	—			—		—			(13.8	)	—
Total	$	202.0		6.03	%	$	283.9		6.66	%	$	100.3		4.82	%	$	4.0		3.93	%	$	590.2		6.02	%

⁽¹⁾ Includes purchase accounting adjustments of $3.3 million and $3.5 million for the years ended December 31, 2003 and 2002, respectively.

⁽²⁾ Includes corporate eliminations of $0.6 million and $1.0 million for the years ended December 31, 2003 and 2002, respectively.

16

ALLMERICA FINANCIAL CORPORATION

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

	December 31, 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	$	10.8	$	7.0	$	17.8	$	555.1	$	468.4	$	1,023.5
7 - 12 months		4.9		10.8		15.7		92.7		239.0		331.7
Greater than 12 months		1.2		3.7		4.9		21.8		74.5		96.3
Total investment grade fixed maturities		16.9		21.5		38.4		669.6		781.9		1,451.5
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		0.5		0.7		1.2		18.1		20.4		38.5
7 - 12 months		—		2.5		2.5		—		8.2		8.2
Greater than 12 months		0.5		5.2		5.7		8.1		29.0		37.1
Total below investment grade fixed maturities		1.0		8.4		9.4		26.2		57.6		83.8
Equity securities		—		0.1		0.1		0.5		1.3		1.8
Total fixed maturities and equity securities	$	17.9	$	30.0	$	47.9	$	696.3	$	840.8	$	1,537.1
	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)		December 31, 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	$	2,316.9	$	2,385.7	$	4,702.6	$	2,392.7	$	2,467.2	$	4,859.9
2	Baa		870.0		1,351.7		2,221.7		894.3		1,435.5		2,329.8
3	Ba		91.5		133.9		225.4		97.0		138.8		235.8
4	B		76.1		64.3		140.4		83.9		65.9		149.8
5	Caa and lower		25.9		14.3		40.2		34.6		19.4		54.0
6	In or near default		5.4		10.6		16.0		5.9		11.3		17.2
Total fixed maturities		$	3,385.8	$	3,960.5	$	7,346.3	$	3,508.4	$	4,138.1	$	7,646.5
		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)	2003			Q4 03			Q3 03			Q2 03			Q1 03			2002			Q4 02			Q3 02			Q2 02			Q1 02
SEGMENT INCOME (LOSS) (1)
Property and Casualty	$	143.6		$	40.2		$	38.6		$	20.6		$	44.2		$	184.3		$	35.2		$	58.5		$	51.6		$	39.0
Allmerica Financial Services		26.9			11.9			(5.8	)		18.4			2.4			(625.0	)		(0.7	)		(540.2	)		(113.8	)		29.7
Asset Management		11.3			1.1			5.2			2.5			2.5			24.4			8.5			5.7			5.1			5.1
Corporate (2)		(95.5	)		(23.7	)		(23.9	)		(24.6	)		(23.3	)		(88.1	)		(20.5	)		(23.7	)		(21.3	)		(22.6	)
Total segment income (loss) before federal income taxes	$	86.3		$	29.5		$	14.1		$	16.9		$	25.8		$	(504.4	)	$	22.5		$	(499.7	)	$	(78.4	)	$	51.2
Federal income tax benefit (expense) on segment income (loss)		6.1			0.8			5.6			1.8			(2.1	)		229.0			(0.6	)		184.7			50.7			(5.8	)
Total segment income (loss) after federal income taxes		92.4			30.3			19.7			18.7			23.7			(275.4	)		21.9			(315.0	)		(27.7	)		45.4
Net realized investment gains (losses), net of amortization and taxes		10.4			4.0			(8.2	)		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		3.7			—			0.4			0.3			3.0			66.7			66.7			—			—			—
Income (loss) from sale of universal life business, net of taxes		3.6			—			—			—			3.6			(20.3	)		(20.3	)		—			—			—
(Losses) gains on derivative instruments, net of taxes		(4.5	)		(5.4	)		0.3			(0.4	)		1.0			26.2			6.5			—			9.1			10.6
Restructuring costs, net of taxes		(18.7	)		(14.9	)		(0.8	)		(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		86.9			14.0			11.4			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)	$	86.9		$	14.0		$	11.4		$	24.4		$	37.1		$	(306.1	)	$	14.9		$	(313.4	)	$	(55.5	)	$	47.9
PER SHARE DATA (DILUTED)
NET INCOME (LOSS)	$	1.63		$	0.26		$	0.21		$	0.46		$	0.70		$	(5.79	)	$	0.28		$	(5.93	)	$	(1.05	)	$	0.90
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (3)		53.2			53.5			53.3			53.0			53.0			52.9			52.9			52.9			52.9			53.1
BALANCE SHEET
Total investments				$	8,185.6		$	8,279.5		$	8,219.0		$	8,172.2					$	8,806.8		$	9,816.0		$	9,844.9		$	9,977.2
Separate account assets				$	11,835.4		$	11,546.0		$	11,719.0		$	11,016.2					$	12,343.4		$	12,152.9		$	14,054.3		$	15,085.9
Total assets				$	25,112.5		$	25,008.0		$	25,173.2		$	24,372.8					$	26,578.9		$	27,528.6		$	29,157.3		$	30,292.2
Total shareholders’ equity				$	2,220.2		$	2,196.6		$	2,225.6		$	2,115.9					$	2,072.2		$	2,105.4		$	2,391.7		$	2,384.8
Book value per share				$	41.89		$	41.42		$	41.96		$	39.86					$	39.12		$	39.69		$	45.07		$	44.98
Book value per share, excluding accumulated other comprehensive income				$	41.59		$	41.30		$	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 maker 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⁾ Reflects the reclassification, in accordance with Statement of Financial Accounting Standards No. 131, “Disclosures about Segment of an Enterprise and Related Information”, of costs that were classified as Minority Interest prior to the adoption of Statements of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”.

⁽³⁾ 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 (2)		(88.4	)		(22.4	)		(21.9	)		(21.7	)		(22.4	)		(85.4	)		(26.5	)		(19.9	)		(18.3	)		(20.7	)
Total segment income before federal income taxes	$	168.8		$	32.5		$	25.4		$	66.8		$	44.1		$	349.9		$	70.3		$	102.0		$	95.7		$	81.9
Federal income tax (expense) benefit on segment income		(4.3	)		1.5			9.0			(7.9	)		(6.9	)		(48.7	)		10.1			(22.1	)		(21.2	)		(15.5	)
Total segment income after federal income taxes		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) (3)		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 maker 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⁾ Reflects the reclassification, in accordance with Statement of Financial Accounting Standards No. 131, “Disclosures about Segment of an Enterprise and Related Information”, of costs that were classified as Minority Interest prior to the adoption of Statements of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”.

⁽³⁾ 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 (2)		(83.9	)		(22.2	)		(19.9	)		(19.6	)		(22.2	)		(75.5	)		(21.4	)		(16.8	)		(18.8	)		(18.5	)
Total segment income before federal income taxes and minority interest	$	344.7		$	102.3		$	90.0		$	90.2		$	62.2		$	266.8		$	81.2		$	53.8		$	66.5		$	65.3
Federal income tax expense on segment income		(63.8	)		(21.5	)		(14.2	)		(17.2	)		(10.9	)		(44.5	)		(11.7	)		(8.5	)		(10.1	)		(14.2	)
Minority interest
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) income 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 (3)	$	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 maker 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⁾ Reflects the reclassification, in accordance with Statement of Financial Accounting Standards No. 131, “Disclosures about Segment of an Enterprise and Related Information”, of costs that were classified as Minority Interest prior to the adoption of Statements of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”.

⁽³⁾ 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				Dividends Per Share
	High		Low
March 31	$	16.43	$	9.84	—
June 30	$	18.53	$	13.75	—
September 30	$	24.90	$	17.74	—
December 31	$	31.29	$	24.65	—
Quarter Ended	2002
	Price Range				Dividends Per Share
	High		Low
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 January 28, 2004

Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
The Hanover Insurance Company	A-	BBB+	Baa2
Citizens Insurance Company of America	A-	BBB+	—
First Allmerica Financial Life Insurance Company	B+	B+	Ba1
Allmerica Financial Life Insurance and Annuity Company	B+	B+	Ba1
Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s
Allmerica Financial Corporation Senior Debt	bb+	BB-	Ba3
Allmerica Financial Corporation Capital Securities	bb-	B-	B2
Allmerica Financial Corporation Short Term Debt	AMB-3	—	NP
First Allmerica Financial Life Insurance Company Short Term Insurance Financial Strength Rating	—	—	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

Sujata Mutalik

Vice President, Investor Relations

(508) 855-3457

smutalik@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