STATISTICAL SUPPLEMENT

EX-99.2 4 dex992.htm STATISTICAL SUPPLEMENT STATISTICAL SUPPLEMENT

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.

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.

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.

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.

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.

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.

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⁾

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.

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.

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⁾

⁽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.

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⁾

⁽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.

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).

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.

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

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”.

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.

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.

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⁾

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.

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⁾

⁽³⁾

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

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⁾

⁽³⁾

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

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		Dividends Per Share
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		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 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