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): April 26, 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 April 26, 2004, announcing the Company’s financial results for the quarter ended March 31, 2004.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended March 31, 2004.

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 April 26, 2004, Allmerica Financial Corporation issued a press release announcing its financial results for the quarter ended March 31, 2004. The release is furnished as Exhibit 99.1 hereto. Additionally, on April 26, 2004, the Company made available on its website financial information contained in its Statistical Supplement for the period ended March 31, 2004. 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: April 26, 2004

3

Exhibit Index

Exhibit 99.1	Press Release, dated April 26, 2004, announcing the Company’s financial results for the quarter ended March 31, 2004.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended March 31, 2004.

4

EX-99.1

Exhibit 99.1

ALLMERICA FINANCIAL CORPORATION REPORTS FIRST QUARTER:

NET INCOME OF $0.23 PER SHARE

COMPARED TO $0.70 PER SHARE LAST YEAR.

AFTER TAX SEGMENT INCOME OF $0.62 PER SHARE IN THE

QUARTER VERSUS $0.45 PER SHARE LAST YEAR.

WORCESTER, Mass., April 26, 2004—Allmerica Financial Corporation (NYSE: AFC) today reported net income for the first quarter of $12.1 million, or $0.23 per share, compared to net income of $37.1 million, or $0.70 per share in the first quarter of last year. Net income for the current quarter includes an after-tax charge of $57.2 million or $1.06 per share, which reflects the cumulative effect of the adoption of Statement of Position 03-1 relating to establishing reserves for certain life insurance and annuity product benefits, and an after-tax benefit of $30.1 million, or $0.56 per share related to a favorable settlement of prior years’ tax liabilities.

Segment income after taxes was $33.2 million, or $0.62 per share compared to $23.7 million or $0.45 per share in the first quarter of last year. Segment income after taxes is presented consistent with the manner in which management evaluates operating results.

“We are pleased with our first quarter results,” said Frederick H. Eppinger, president and chief executive officer of Allmerica Financial Corporation. “The property and casualty business produced solid earnings, benefiting from continued positive rate actions and an improvement in underwriting results from the successful execution of our operating strategies.” Eppinger added, “Our Life Companies continue to be efficiently run, generating solid cash flow and favorable segment earnings.”

Segment Results

Allmerica Financial consists of property and casualty operations, which represents our ongoing business, and life operations, which is a run-off business consisting primarily of proprietary life insurance, annuity and guaranteed investment products previously issued by Allmerica’s life insurance subsidiaries.

The Company conducts its business in four operating segments. Property and casualty operations consist of three operating segments: Personal Lines, Commercial Lines and Other Property and Casualty. The Personal Lines segment markets automobile, homeowners and

- more -

- 2 -

ancillary coverages to individuals and families. The Commercial Lines segment offers a suite of products targeted at the small to mid-size business markets, which include commercial multiple peril, commercial automobile, workers’ compensation and other commercial coverages. The Other Property and Casualty segment includes a block of run-off voluntary pools business in which the Company has not actively participated in since 1995; AMGRO, Inc. a premium financing business; and Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations. The Life Companies, our fourth operating segment, includes the results of our run-off business of life and annuity products and guaranteed investment contracts.

The following table shows segment income after taxes, and is presented in a manner consistent with the way 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 after taxes excludes the items listed in the table at the end of this document.

	Quarter ended March 31 (In millions)
	2004			2003
Property and Casualty:
Personal Lines	$	10.8		$	(2.7	)
Commercial Lines		26.5			39.4
Other Property & Casualty		1.3			1.5
Total Property & Casualty		38.6			38.2
Life Companies		9.8			(2.4	)
Corporate Debt		(10.0	)		(10.0	)
Total pre-tax segment income		38.4			25.8
Federal Income Taxes		(5.2	)		(2.1	)
Total segment income after taxes(1)	$	33.2		$	23.7

(1) See reconciliation of after-tax segment income to net income at the end of this document.

Property and Casualty

Property and Casualty income was $38.6 million in the first quarter of 2004, up from $38.2 million in the first quarter of 2003 despite a $9.9 million increase in catastrophe losses.

Personal Lines segment income was $10.8 million in the quarter compared to a loss of $2.7 million in the prior year. Excluding catastrophe losses, which were $9.8 million higher in the current quarter, Personal Lines segment income increased by $23.3 million due primarily to

- more -

- 3 -

continued rate increases and lower loss frequency driven primarily by fewer non-catastrophe weather-related losses.

Commercial Lines segment income was $26.5 million in the quarter, compared to $39.4 million in the first quarter of 2003. The $12.9 million decrease was primarily due to $16.6 million of lower favorable development of prior years’ reserves compared to the first quarter of 2003.

Property and Casualty highlights:

• Net premiums written were $561.3 million in the first quarter of 2004, compared to $550.5 million in the first quarter of 2003.

• Net premiums earned were $556.3 million in the first quarter of 2004, compared to $554.2 million in the first quarter of 2003.

• In the first quarter of 2004, pre-tax catastrophe losses were $21.1 million, compared to $11.2 million in the comparable period one year earlier.

The following table summarizes the components of the statutory combined ratio for the property and casualty business:

	Quarter ended March 31
	2004		2003
Personal lines losses	63.9	%	70.6	%
Commercial lines losses	46.5	%	46.0	%
Other P&C losses	N/M		N/M
	58.5	%	62.7	%
Catastrophe losses	3.8	%	2.0	%
Loss adjustment expenses	8.4	%	8.3	%
Policy acquisition and other     underwriting expenses	30.7	%	29.3	%
Policyholders’ dividends	—		0.2	%
Combined ratio	101.4	%	102.5	%

Personal Lines highlights:

• Net premiums written were $366.0 million in the first quarter of 2004, compared to $367.4 million in the first quarter of 2003.

• Net premiums earned were $380.2 million in the first quarter of 2004, compared to $372.7 million in the first quarter of 2003.

• The personal lines statutory combined ratio was 103.7% in the first quarter, versus 108.2% in the same period last year. Personal lines catastrophe losses were $14.6 million, or 3.8 points of the combined ratio in the first quarter versus $4.8 million, or 1.3 points of the combined ratio in the first quarter of 2003.

- more -

- 4 -

Commercial Lines highlights:

• Net premiums written were $195.6 million in the first quarter of 2004, compared to $182.8 million in the first quarter of 2003.

• Net premiums earned were $176.6 million in the first quarter of 2004, compared to $181.2 million in the first quarter of 2003.

• The commercial lines statutory combined ratio was 95.1% in the first quarter, compared to 89.9% in the same period last year. Commercial lines catastrophe losses were $6.5 million, or 3.7 points of the combined ratio in the first quarter versus $6.4 million, or 3.5 points of the combined ratio in the first quarter of 2003.

Life Companies

The Life Companies reported segment income of $9.8 million in the first quarter of 2004, compared to a net loss of $2.4 million in the first quarter of 2003. Results were favorably impacted by lower operating expenses and the relative improvement in the equity market.

Life Companies highlights:

• Life Companies segment income excluding certain non-cash items was $40.3 million in the first quarter of 2004 compared to $31.8 million in the first quarter of 2003 and $29.4 million in the fourth quarter of 2003. Segment income excluding certain non-cash items is reconciled to segment income at the end of this document.

• In the first quarter of 2004, individual annuity redemptions were $634.1 million compared to $505.9 million in the fourth quarter of 2003. The individual annuity redemption rate was 22 percent in the current quarter compared to 18 percent in the fourth quarter of 2003.

• Total adjusted statutory capital for the combined life insurance subsidiaries at March 31, 2004 was $589.8 million, compared to $553.4 million at December 31, 2003. This increase includes a $30.1 million benefit related to the favorable settlement of prior years’ tax liabilities.

• The Risk Based Capital (RBC) ratio of Allmerica Financial Life Insurance and Annuity Company, Allmerica’s lead life insurance company, increased to 420 percent at March 31, 2004, compared to 365 percent at December 31, 2003.

Investment Results

Net investment income was $104.7 million for the first quarter of 2004, compared to $118.7 million in the same period of 2003. First quarter net investment income decreased $14.0 million, due to a decrease of $16.2 million for the Life Companies partially offset by a $2.2 million increase for Property and Casualty. First quarter net investment income increased for Property and Casualty primarily due to an increase in average invested assets, partially offset by a reduction in average pre-tax yields on fixed maturities due to lower prevailing fixed maturity investment rates. First quarter net investment income decreased for the Life Companies primarily due to lower invested assets resulting from general account annuity redemptions and a

- more -

- 5 -

reduction in outstanding guaranteed investment contract balances. Also contributing to the decline was the aforementioned reduction in average pre-tax yields on fixed maturities.

First quarter 2004 pre-tax net realized investment gains were $15.7 million, compared to $13.2 million of pre-tax net realized investment gains in the same period of 2003. In the current quarter, pre-tax realized investment gains of $18.1 million from sales of fixed maturity and equity securities were partially offset by $2.4 million of realized losses resulting from other-than-temporary impairments on certain fixed maturity and equity securities. In the first quarter of 2003, pre-tax net realized investment gains were principally related to realized gains of $42.8 million from sales of certain fixed maturity and equity securities, partially offset by $23.5 million of realized losses resulting from other-than-temporary impairments on certain fixed maturity securities and $6.2 of realized losses primarily due to derivative instruments related to our guaranteed investment contract portfolio.

Balance Sheet

Shareholders’ equity was $2.3 billion, or $43.04 per share at March 31, 2004, compared to $2.2 billion, or $41.89 per share at December 31, 2003. Excluding accumulated other comprehensive income, book value was $41.77 per share at the close of the first quarter, compared to $41.59 per share at December 31, 2003.

Total assets were $24.4 billion at March 31, 2004, compared to $25.1 billion at year-end 2003. Separate account assets were $11.3 billion at March 31, 2004, versus $11.8 billion at December 31, 2003. The declines in total and separate account assets were principally the result of surrenders of individual variable annuities.

Other Items

During the quarter, the Company adopted American Institute of Certified Public Accountants’ Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. This adoption resulted in a charge of $57.2 million, net of taxes, which represents the cumulative effect of a change in accounting principle. The charge results from new requirements for recognizing guaranteed minimum death benefit and guaranteed minimum income reserves based on various assumptions, including estimates of future market returns, mortality and expected contract persistency.

Also during the quarter, the Company recorded a $30.1 million after-tax benefit resulting from the settlement of disputed items in the Company’s federal tax returns filed for 1979 to 1991. The largest of the disputed items relates to deductions taken for increased death benefits pertaining to certain life insurance contracts existing in 1982 and 1983. The settlement entitles the Company to receive a refund of amounts paid for these years, as well as various tax credits that can be applied to offset federal tax liabilities in other years.

Earnings Conference Call

Allmerica Financial Corporation will host a conference call to discuss the Company’s first quarter results on Tuesday, April 27^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 access the web site 15 minutes early to register, download, and install any

- more -

- 6 -

necessary audio software. A re-broadcast of the conference call will be available on this web site two hours after the call.

Statistical Supplement

Allmerica Financial Corporation’s first quarter Earnings Press Release and Statistical Supplement, as well as a Statistical Supplement Historical Restatement prepared to reflect the Company’s current reporting segments, are also available in the Investor Relations section of the Allmerica web site at www.allmerica.com.

Forward-Looking Statements

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 underwriting activities and 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 retail 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 correlate 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	Michael F. Buckley
	(508) 855-3457	(508) 855-3099
	smutalik@allmerica.com	mibuckley@allmerica.com

- more -

ALLMERICA FINANCIAL CORPORATION

(In millions, except per share data)

	Quarter ended March 31
	2004		2003
Net income	$	12.1	$	37.1
Net income per share(1)	$	0.23	$	0.70
Weighted average shares		53.7		53.0

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

PER SHARE DATA (DILUTED)(1)	Quarter ended March 31
	2004						2003
	$			Per Share			$			Per Share
Property and Casualty
Personal Lines	$	10.8			—		$	(2.7	)		—
Commercial Lines		26.5			—			39.4			—
Other Property & Casualty		1.3			—			1.5			—
Total Property & Casualty		38.6			—			38.2			—
Life Companies		9.8			—			(2.4	)		—
Corporate Debt(3)		(10.0	)		—			(10.0	)		—
Total segment income	$	38.4		$	0.72		$	25.8		$	0.49
Federal income taxes on segment income		(5.2	)		(0.10	)		(2.1	)		(0.04	)
Total segment income after federal income taxes		33.2			0.62			23.7			0.45
Tax settlement		30.1			0.56			—			—
Net realized investment gains, net of taxes and amortization		10.2			0.19			8.0			0.14
Gain on derivatives, net of taxes		—			—			1.0			0.02
(Loss) gain from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		(2.1	)		(0.04	)		3.0			0.06
Restructuring costs, net of taxes		(2.1	)		(0.04	)		(2.2	)		(0.04	)
Income from sale of universal life business, net of taxes		—			—			3.6			0.07
Income before effect of accounting change		69.3			1.29			37.1			0.70
Cumulative effect of change in accounting principle, net of taxes		(57.2	)		(1.06	)		—			—
Net income	$	12.1		$	0.23		$	37.1		$	0.70

⁽¹⁾ Basic net income per share was $0.23 and $0.70 for the quarters ended March 31, 2004 and 2003, 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 is determined by adjusting net income for net realized investment gains and losses including certain gains or losses on derivative instruments, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Also, segment income 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, “Disclosure 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 Corporate Debt.

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

	Quarter Ended March 31, 2004
	Personal Lines		Commercial Lines		Other Property and Casualty(2)			Life Companies			Total
Tax settlement	$	—	$	—	$	—		$	30.1		$	30.1
Net realized investment gains, net of taxes and amortization(1)		1.9		2.0		2.2			4.1			10.2
Loss from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		—		—		—			(2.1	)		(2.1	)
Restructuring costs, net of taxes		—		—		—			(2.1	)		(2.1	)
Cumulative effect of change in accounting principle, net of taxes		—		—		—			(57.2	)		(57.2	)
	Quarter Ended March 31, 2003
	Personal Lines		Commercial Lines		Other Property and Casualty(2)			Life Companies			Total
Net realized investment gains (losses), net of taxes and amortization(1)	$	4.1	$	4.1	$	(3.0	)	$	2.8		$	8.0
Gain on derivatives, net of taxes		—		—		—			1.0			1.0
Gain from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		—		—		—			3.0			3.0
Restructuring costs, net of taxes		—		—		0.2			(2.4	)		(2.2	)
Income from sale of universal life business, net of taxes		—		—		—			3.6			3.6

⁽¹⁾ Investment assets for the property and casualty business are managed on the requirements of the entire property and casualty group. Investment income, expenses and realized gains (losses) are allocated to the Personal Lines, Commercial Lines and Other segments based on actuarial information related to the underlying business.

⁽²⁾ Includes corporate eliminations

The following is a reconciliation of the Life Companies segment income to the Life Companies segment income excluding certain non-cash items:

	Quarter ended March 31, 2004			Quarter ended March 31, 2003
Life Companies segment income (loss)	$	9.8		$	(2.4	)
Deferred acquisition cost operating amortization and amortization of sales inducements, net		38.0			58.4
Net change in property, plant and equipment balances		0.9			—
Statement of Position 98-1 amortization, net		1.2			1.1
Change in guaranteed minimum death benefit reserves		(9.6	)		(25.3	)
Total segment income excluding certain non-cash items	$	40.3		$	31.8

All figures reported are unaudited.

EX-99.2

Exhibit 99.2

ALLMERICA FINANCIAL CORPORATION

STATISTICAL SUPPLEMENT

TABLE OF CONTENTS

	Page
Financial Highlights	1-2
Consolidated Financial Statements
Income Statements	3
Balance Sheets	4
Property and Casualty
Condensed Income Statements	6
Property and Casualty Consolidated Balance Sheets	7
Statutory Underwriting Results	8-10
Life Companies
Condensed Income Statements	12
Life Companies Consolidated Balance Sheets	13
Segment Income by Product Line	14
Segment Income Excluding Certain Non-Cash Items	15
Selected Financial Information-Variable Annuities	16
Future Policy Benefits and Account Balances	17
Investments
Net Investment Income	19
Net Realized Investment Gains (Losses)	20
Unrealized Losses	21
Credit Quality of Fixed Maturities	22
Historical Financial Highlights	23-24
Other Information	Inside back cover
Corporate Information
Market and Dividend Information
Industry Ratings

ALLMERICA FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

	Quarter ended March 31
(In millions, except per share data)	2004			2003			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	10.8		$	(2.7	)	N/M
Commercial Lines		26.5			39.4		(32.7	)
Other		1.3			1.5		(13.3	)
Total Property and Casualty		38.6			38.2		1.0
Life Companies		9.8			(2.4	)	N/M
Corporate Debt		(10.0	)		(10.0	)	—
Total segment income		38.4			25.8		48.8
Federal income taxes on segment income		(5.2	)		(2.1	)	N/M
Total segment income after taxes	$	33.2		$	23.7		40.1
RECONCILIATION FROM SEGMENT INCOME TO NET INCOME
Total segment income after taxes	$	33.2		$	23.7		40.1
Tax settlement		30.1			—		N/M
Net realized investment gains, net of taxes and amortization		10.2			8.0		27.5
Gains on derivative instruments, net of taxes		—			1.0		N/M
(Losses) gains from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		(2.1	)		3.0		N/M
Restructuring costs, net of taxes		(2.1	)		(2.2	)	(4.5	)
Income from sale of universal life business, net of taxes		—			3.6		N/M
Income before effect of accounting change		69.3			37.1		86.8
Cumulative effect of change in accounting principle, net of taxes		(57.2	)		—		N/M
Net income	$	12.1		$	37.1		(67.4	)
PER SHARE DATA (DILUTED)
Total segment income	$	0.72		$	0.49		46.9
Federal income taxes on segment income		(0.10	)		(0.04	)	N/M
Total segment income after taxes		0.62			0.45		37.8
Tax settlement		0.56			—		N/M
Net realized investment gains, net of taxes and amortization		0.19			0.14		35.7
Gains on derivative instruments, net of taxes		—			0.02		N/M
(Losses) gains from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		(0.04	)		0.06		N/M
Restructuring costs, net of taxes		(0.04	)		(0.04	)	—
Income from sale of universal life business, net of taxes		—			0.07		N/M
Income before effect of accounting change		1.29			0.70		84.3
Cumulative effect of change in accounting principle, net of taxes		(1.06	)		—		N/M
Net income	$	0.23		$	0.70		(67.1	)

1

ALLMERICA FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

(In millions, except per share data)	March 31 2004			December 31 2003			% Change
BALANCE SHEET
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	1,612.4		$	1,545.6		4.3
Allmerica Financial Life Insurance and Annuity Company (consolidated)		1,196.5			1,194.9		0.1
AFC Holding Company and other		(519.6	)		(520.3	)	(0.1	)
Total shareholders’ equity	$	2,289.3		$	2,220.2		3.1
Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	1,029.4		$	1,001.6		2.8
Allmerica Financial Life Insurance and Annuity Company (consolidated)	$	589.8		$	553.4		6.6
First Allmerica Financial Life Insurance Company	$	197.1		$	176.6		11.6
The Hanover Insurance Company (consolidated) Premium to surplus ratio		2.2:1			2.2:1		—
Allmerica Financial Life Insurance and Annuity Company (consolidated) estimated risk based capital ratio		420	%		365	%	55.0
Book value per share
The Hanover Insurance Company (consolidated)	$	30.31		$	29.16		3.9
Allmerica Financial Life Insurance and Annuity Company (consolidated)		22.49			22.55		(0.3	)
AFC Holding Company and other		(9.76	)		(9.82	)	(0.6	)
Total book value per share	$	43.04		$	41.89		2.7
Book value per share, excluding accumulated other comprehensive income	$	41.77		$	41.59		0.4
Shares outstanding (1)		53.2			53.0
Stock price	$	34.55		$	30.77		12.3
Price/book value per share		0.8	x		0.7	x	0.1	x
Debt/equity		22.2	%		22.5	%	(0.3	)pts
Debt/total capital		18.2	%		18.4	%	(0.2	)pts
Debt plus preferred securities of a subsidiary trust/total capital		18.2	%		18.4	%	(0.2	)pts

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

2

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENTS

	Quarter ended March 31
(In millions, except per share data)	2004			2003			% Change
REVENUES
Premiums	$	576.5		$	575.2		0.2
Universal life and investment product policy fees		76.1			90.3		(15.7	)
Net investment income		104.7			118.7		(11.8	)
Net realized investment gains		15.7			13.2		18.9
Other income		26.3			52.2		(49.6	)
Total revenues		799.3			849.6		(5.9	)
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		459.5			486.7		(5.6	)
Policy acquisition expenses		150.9			171.3		(11.9	)
Losses (gains) from retirement of funding agreements and trust instruments supported by funding obligations		3.2			(4.7	)	N/M
Income from sale of universal life business		—			(5.5	)	N/M
Losses (gains) on derivative instruments		1.0			(1.7	)	N/M
Restructuring costs		3.3			3.3		—
Other operating expenses		135.5			157.8		(14.1	)
Total benefits, losses and expenses		753.4			807.2		(6.7	)
Income before federal income taxes		45.9			42.4		8.3
Federal income tax (benefit) expense		(23.4	)		5.3		N/M
Income before cumulative effect of change in accounting principle		69.3			37.1		86.8
Cumulative effect of change in accounting principle		57.2			—		N/M
Net income	$	12.1		$	37.1		(67.4	)
PER SHARE DATA (DILUTED)
Income before cumulative effect of change in accounting principle	$	1.29		$	0.70		84.3
Cumulative effect of change in accounting principle		(1.06	)		—		N/M
Net income (1)	$	0.23		$	0.70		(67.1	)
Weighted average shares outstanding		53.7			53.0

(1) Basic net income per share was $0.23 and $0.70 for the quarters ended March 31, 2004 and 2003, respectively.

3

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	March 31 2004			December 31 2003			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $7,286.2 and $7,346.3)	$	7,709.4		$	7,646.5		0.8
Equity securities, at fair value (cost of $16.6 and $9.1)		19.8			15.3		29.4
Mortgage loans		173.3			175.1		(1.0	)
Policy loans		262.7			268.0		(2.0	)
Other long-term investments		74.3			80.7		(7.9	)
Total investments		8,239.5			8,185.6		0.7
Cash and cash equivalents		189.5			380.5		(50.2	)
Accrued investment income		125.5			126.5		(0.8	)
Premiums, accounts and notes receivable, net		505.9			480.9		5.2
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		2,109.2			2,111.2		(0.1	)
Deferred policy acquistion costs		966.6			1,115.5		(13.3	)
Deferred federal income taxes		350.3			381.0		(8.1	)
Goodwill		128.2			128.2		—
Other assets		460.8			367.7		25.3
Separate account assets		11,304.9			11,835.4		(4.5	)
Total assets	$	24,380.4		$	25,112.5		(2.9	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	3,636.4		$	3,556.8		2.2
Outstanding claims, losses and loss adjustment expenses		3,141.9			3,124.9		0.5
Unearned premiums		1,043.4			1,032.5		1.1
Contractholder deposit funds and other policy liabilities		393.2			683.7		(42.5	)
Total policy liabilities and accruals		8,214.9			8,397.9		(2.2	)
Expenses and taxes payable		729.7			822.7		(11.3	)
Reinsurance premiums payable		115.4			136.5		(15.5	)
Trust instruments supported by funding obligations		1,217.4			1,200.3		1.4
Long-term debt		508.8			499.5		1.9
Separate account liabilities		11,304.9			11,835.4		(4.5	)
Total liabilities		22,091.1			22,892.3		(3.5	)
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		1,770.5			1,775.6		(0.3	)
Accumulated other comprehensive income		67.2			16.1		N/M
Retained earnings		845.2			833.1		1.5
Treasury stock at cost (7.2 and 7.4 million shares)		(394.2	)		(405.2	)	(2.7	)
Total shareholders’ equity		2,289.3			2,220.2		3.1
Total liabilities and shareholders’ equity	$	24,380.4		$	25,112.5		(2.9	)

4

PROPERTY & CASUALTY

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS

	Quarter ended March 31
(In millions)	2004			2003		% Change
REVENUES
Net premiums written	$	561.3		$	550.5	2.0
Change in unearned premiums, net of prepaid reinsurance premiums		(5.0	)		3.7	N/M
Net premiums earned		556.3			554.2	0.4
Net investment income		47.7			45.8	4.1
Other income		13.3			15.8	(15.8	)
Total segment revenue		617.3			615.8	0.2
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		394.0			405.2	(2.8	)
Policy acquisition expenses		117.1			111.8	4.7
Other operating expenses		67.6			60.6	11.6
Total losses and operating expenses		578.7			577.6	0.2
Segment income before federal income taxes	$	38.6		$	38.2	1.0

6

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	March 31 2004		December 31 2003		% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $3,450.6 and $3,383.9)	$	3,626.0	$	3,506.2	3.4
Equity securities, at fair value (cost of $2.9)		5.0		5.1	(2.0	)
Mortgage loans		53.2		53.8	(1.1	)
Other long-term investments		0.7		0.7	—
Total investments		3,684.9		3,565.8	3.3
Cash and cash equivalents		68.3		113.0	(39.6	)
Accrued investment income		51.0		49.4	3.2
Premiums, accounts, and notes receivable, net		503.7		477.2	5.6
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,076.9		1,070.4	0.6
Deferred policy acquistion costs		216.6		220.9	(1.9	)
Deferred federal income tax asset		148.5		160.8	(7.6	)
Goodwill		121.4		121.4	—
Other assets		180.4		198.7	(9.2	)
Total assets	$	6,051.7	$	5,977.6	1.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,036.6	$	3,018.9	0.6
Unearned premiums		1,039.8		1,029.0	1.0
Contractholder deposit funds and other policy liabilities		8.2		8.2	—
Total policy liabilities and accruals		4,084.6		4,056.1	0.7
Expenses and taxes payable		252.5		251.5	0.4
Reinsurance premiums payable		102.2		124.4	(17.8	)
Total liabilities		4,439.3		4,432.0	0.2
SHAREHOLDERS’ EQUITY
Common stock, par value $1.00 per share; authorized 20.9 million shares; issued 5.0 million shares		5.0		5.0	—
Additional paid-in capital		169.2		169.2	—
Accumulated other comprehensive income		94.5		60.0	57.5
Retained earnings		1,343.7		1,311.4	2.5
Total shareholders’ equity		1,612.4		1,545.6	4.3
Total liabilities and shareholders’ equity	$	6,051.7	$	5,977.6	1.2

(1) Property and Casualty Companies includes The Hanover Insurance Company and Citizens Insurance Company of America, and their subsidiaries.

7

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME

	Quarter ended March 31, 2004												Quarter ended March 31, 2003												% Change
(In millions)	Personal Lines			Commercial Lines			Other Property and Casualty			Total			Personal Lines			Commercial Lines			Other Property and Casualty			Total			Personal Lines		Commercial Lines		Other Property and Casualty		Total
Underwriting profit (loss), excluding prior year reserve development and catastrophes	$	0.8		$	(7.3	)	$	(1.1	)	$	(7.6	)	$	(23.9	)	$	(8.2	)	$	(1.0	)	$	(33.1	)	N/M		(11.0	)	10.0		(77.0	)
Prior year reserve development (favorable) unfavorable		(3.5	)		(15.6	)		—			(19.1	)		0.5			(32.2	)		—			(31.7	)	N/M		(51.6	)	N/M		(39.7	)
Pre-tax catastrophe losses		14.6			6.5			—			21.1			4.8			6.4			—			11.2		N/M		1.6		N/M		88.4
Statutory underwriting (loss) profit		(10.3	)		1.8			(1.1	)		(9.6	)		(29.2	)		17.6			(1.0	)		(12.6	)	(64.7	)	(89.8	)	10.0		(23.8	)
Net investment income		23.5			23.7			0.5			47.7			22.5			22.8			0.5			45.8		4.4		3.9		—		4.1
Fee income		—			—			6.3			6.3			—			—			6.3			6.3		—		—		—		—
Other		(2.4	)		1.0			(4.4	)		(5.8	)		4.0			(1.0	)		(4.3	)		(1.3	)	N/M		N/M		2.3		N/M
Segment income (loss) before federal income taxes	$	10.8		$	26.5		$	1.3		$	38.6		$	(2.7	)	$	39.4		$	1.5		$	38.2		N/M		(32.7	)	(13.3	)	1.0

8

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RESULTS

	Quarter ended March 31, 2004
	Personal Lines												Commercial Lines
(In millions)	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation			Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines			Other Property and Casualty			Total Property and Casualty
Net premiums written	$	276.7		$	80.5		$	8.8		$	366.0		$	36.9		$	48.8		$	85.6		$	24.3		$	195.6		$	—		$	561.6
Net premiums earned	$	270.4		$	99.1		$	10.7		$	380.2		$	31.2		$	43.4		$	78.6		$	23.4		$	176.6		$	—		$	556.8
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		186.5			48.7			8.2			243.4			21.5			26.3			39.3			5.5			92.6			0.9			336.9
Prior year reserve development (favorable) unfavorable		(0.5	)		(2.3	)		(0.7	)		(3.5	)		(2.1	)		(7.1	)		(8.6	)		2.2			(15.6	)		—			(19.1	)
Pre-tax catastrophe losses		—			14.1			0.5			14.6			—			—			6.5			—			6.5			—			21.1
Loss adjustment expenses excluding prior year reserve development		27.1			6.8			0.9			34.8			4.6			3.3			11.1			0.9			19.9			0.2			54.9
Policy acquisition and other underwriting expenses											101.2															71.2			—			172.4
Policyholders’ dividends											—															0.2			—			0.2
Statutory underwriting (loss) profit										$	(10.3	)													$	1.8		$	(1.1	)	$	(9.6	)
	Quarter ended March 31, 2003
	Personal Lines												Commercial Lines
	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation			Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines			Other Property and Casualty			Total Property and Casualty
Net premiums written	$	285.8		$	73.2		$	8.4		$	367.4		$	37.9		$	44.0		$	79.4		$	21.5		$	182.8		$	—		$	550.2
Net premiums earned		273.4			88.4			10.9			372.7			35.4			45.9			75.7			24.2			181.2			—			553.9
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		207.0			49.6			3.4			260.0			25.0			27.2			44.3			10.1			106.6			0.5			367.1
Prior year reserve development unfavorable (favorable)		1.8			(1.2	)		(0.1	)		0.5			(3.4	)		(5.1	)		(16.4	)		(7.3	)		(32.2	)		—			(31.7	)
Pre-tax catastrophe losses		—			4.6			0.2			4.8			—			—			5.7			0.7			6.4			—			11.2
Loss adjustment expenses excluding prior year development		28.2			8.0			0.4			36.6			4.8			2.8			11.7			1.1			20.4			0.5			57.5
Policy acquisition and other underwriting expenses											100.0															61.3			—			161.3
Policyholders’ dividends											—															1.1			—			1.1
Statutory underwriting (loss) profit										$	(29.2	)													$	17.6		$	(1.0	)	$	(12.6	)

9

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Quarter ended March 31, 2004
	Personal Lines								Commercial Lines
(In millions)	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines		Other Property and Casualty	Total Property and Casualty
Losses, excluding catastrophe losses	69.5	%	47.9	%	70.1	%	63.9	%	67.9	%	47.9	%	41.7	%	31.2	%	46.5	%	—	58.5	%
Catastrophe losses	N/M		14.2	%	4.7	%	3.8	%	N/M		N/M		8.3	%	N/M		3.7	%	—	3.8	%
Loss adjustment expenses	9.3	%	5.8	%	8.4	%	8.3	%	9.0	%	3.9	%	11.5	%	5.6	%	8.4	%	—	8.4	%
Policy acquisition and other underwriting expenses							27.7	%									36.4	%	—	30.7	%
Policyholders’ dividends							N/M										0.1	%	—	N/M
Combined							103.7	%									95.1	%	N/M	101.4	%
Policies in force	(5.8	)%	(2.4	)%	(5.6	)%	(4.6	)%	(0.9	)%	(5.5	)%	(1.9	)%	(18.8	)%	(9.0	)%	—	(4.8	)%
Retention (1)	79.9	%	82.3	%	—		81.2	%	74.8	%	84.4	%	79.9	%	—		80.1	%
	Quarter ended March 31, 2003
	Personal Lines								Commercial Lines
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines		Other Property and Casualty	Total Property and Casualty
Losses, excluding catastrophe losses	76.6	%	57.0	%	31.2	%	70.6	%	68.1	%	50.3	%	44.5	%	10.3	%	46.0	%	—	62.7	%
Catastrophe losses	N/M		5.2	%	1.8	%	1.3	%	N/M		N/M		7.5	%	2.9	%	3.5	%	—	2.0	%
Loss adjustment expenses	10.1	%	6.8	%	2.8	%	9.1	%	6.5	%	3.9	%	7.8	%	5.8	%	6.3	%	—	8.3	%
Policy acquisition and other underwriting expenses							27.2	%									33.5	%	—	29.3	%
Policyholders’ dividends							N/M										0.6	%	—	0.2	%
Combined							108.2	%									89.9	%	N/M	102.5	%
Policies in force	(3.7	)%	(1.4	)%	(4.3	)%	(2.7	)%	(11.7	)%	(19.9	)%	(7.4	)%	—	%	(9.5	)%	—	(3.6	)%
Retention (1)	80.0	%	82.8	%	—		81.5	%	76.6	%	74.2	%	76.5	%	—		76.0	%

(1) The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001.

10

LIFE COMPANIES

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

CONDENSED INCOME STATEMENTS

	Quarter ended March 31
(In millions)	2004		2003			% Change
REVENUES
Premiums	$	20.2	$	21.0		(3.8	)
Fees:
Fees from surrenders		13.8		26.4		(47.7	)
Other proprietary product fees		62.3		63.9		(2.5	)
Net investment income		56.9		73.1		(22.2	)
Brokerage and investment management income (1)		7.0		32.5		(78.5	)
Other income		7.8		6.9		13.0
Total segment revenue		168.0		223.8		(24.9	)
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		65.4		76.2		(14.2	)
Policy acquisition expenses		32.3		59.8		(46.0	)
Brokerage and investment management variable expenses (1)		4.3		22.3		(80.7	)
Other operating expenses		56.2		67.9		(17.2	)
Total policy benefits, claims and operating expenses		158.2		226.2		(30.1	)
Segment income (loss) before federal income taxes	$	9.8	$	(2.4	)	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.

12

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	March 31 2004			December 31 2003			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $3,785.7 and $3,912.6)	$	4,025.6		$	4,080.1		(1.3	)
Equity securities, at fair value (cost of $4.4 and $6.2)		5.5			10.3		(46.6	)
Mortgage loans		120.9			122.3		(1.1	)
Policy loans		262.7			268.0		(2.0	)
Other long-term investments		73.7			80.0		(7.9	)
Total investments		4,488.4			4,560.7		(1.6	)
Cash and cash equivalents		104.4			242.8		(57.0	)
Accrued investment income		73.9			76.2		(3.0	)
Premiums, accounts, and notes receivable, net		2.1			3.8		(44.7	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,034.4			1,042.9		(0.8	)
Deferred policy acquistion costs (2)		750.0			894.6		(16.2	)
Deferred federal income tax asset		206.0			223.8		(8.0	)
Goodwill		6.8			6.8		—
Other assets (2)		261.6			150.6		73.7
Separate account assets		11,304.9			11,835.4		(4.5	)
Total assets	$	18,232.5		$	19,037.6		(4.2	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	3,636.4		$	3,556.8		2.2
Outstanding claims, losses and loss adjustment expenses		104.5			105.2		(0.7	)
Unearned premiums		3.6			3.5		2.9
Contractholder deposit funds and other policy liabilities		385.0			675.5		(43.0	)
Total policy liabilities and accruals		4,129.5			4,341.0		(4.9	)
Expenses and taxes payable		371.0			453.9		(18.3	)
Reinsurance premiums payable		13.2			12.1		9.1
Trust instruments supported by funding obligations		1,217.4			1,200.3		1.4
Separate account liabilities		11,304.9			11,835.4		(4.5	)
Total liabilities		17,036.0			17,842.7		(4.5	)
SHAREHOLDERS’ EQUITY
Common stock, par value $1,000 per share; authorized 10,000 shares; issued 2,526 shares		2.5			2.5		—
Additional paid-in capital		1,075.0			1,075.0		—
Accumulated other comprehensive loss		(5.1	)		(23.5	)	(78.3	)
Retained earnings		124.1			140.9		(11.9	)
Total shareholders’ equity		1,196.5			1,194.9		0.1
Total liabilities and shareholders’ equity	$	18,232.5		$	19,037.6		(4.2	)

(1) Life Insurance Companies include Allmerica Financial Life Insurance and Annuity Company and First Allmerica Financial Life Insurance Company, and their subsidiaries. First Allmerica Financial Life Insurance Company includes assets related to our discontinued operations (Group Life & Health) of $280.1 million and policy liabilities and accruals of $205.8 million related to this business.

(2) As a result of the implementation of SOP 03-1, other assets include a reclassification of $82.5 million from deferred policy acquisition costs at March 31, 2004.

13

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME BY PRODUCT LINE

(In millions)	Quarter ended March 31, 2004								Quarter ended March 31, 2003
	Variable Annuities		Variable Universal Life		Other (3)		Total		Variable Annuities			Variable Universal Life		Other (3)			Total
REVENUES
Premiums	$	—	$	—	$	20.2	$	20.2	$	—		$	—	$	21.0		$	21.0
Fees:
Fees from surrenders		11.0		2.8		—		13.8		22.3			4.1		—			26.4
Other proprietary product fees		40.3		21.6		0.4		62.3		38.4			24.3		1.2			63.9
Net investment income		17.0		4.7		35.2		56.9		16.4			3.8		52.9			73.1
Brokerage and investment management income (1)		4.7		1.0		1.3		7.0		5.3			1.1		26.1			32.5
Other income		3.1		0.7		4.0		7.8		2.1			2.5		2.3			6.9
Total segment revenue		76.1		30.8		61.1		168.0		84.5			35.8		103.5			223.8
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		26.1		8.4		30.9		65.4		27.6			9.4		39.2			76.2
Policy acquisition expenses		23.6		8.2		0.5		32.3		52.8			7.3		(0.3	)		59.8
Variable operating expenses		7.9		1.8		14.5		24.2		7.6			1.3		32.4			41.3
Loss on hedge derivatives  (2)		5.4		—		—		5.4		—			—		—			—
		63.0		18.4		45.9		127.3		88.0			18.0		71.3			177.3
Segment income (loss) before other operating expenses	$	13.1	$	12.4	$	15.2		40.7	$	(3.5	)	$	17.8	$	32.2			46.5
Other operating expenses								30.9										48.9
Segment income (loss) before federal income taxes							$	9.8									$	(2.4	)

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

(2) Loss on hedge derivatives relates to the economic hedging program implemented in the fourth quarter of 2003 involving exchange traded futures contracts used to hedge against increased GMDB claims that could arise from declines in the equity market below levels at December 3, 2003.

(3) Other includes results from our broker/dealer, VeraVest Investments, Inc., guaranteed investment contracts, closed block, universal life, traditional life, yearly renewable term life, individual health and other insurance and group retirement products.

14

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME EXCLUDING CERTAIN NON-CASH ITEMS

	Quarter ended
(In millions)	March 31, 2004			December 31, 2003			March 31, 2003
Segment income (loss) before taxes	$	9.8		$	5.7		$	(2.4	)
Deferred acquisition cost operating amortization and amortization of sales inducements, net		38.0			23.8			58.4
Property, plant and equipment depreciation, net		0.9			2.5			—
Goodwill impairment		—			2.1			—
Statement of Position 98-1 amortization, net		1.2			1.1			1.1
Change in guaranteed minimum death benefit reserves		(9.6	)		(5.8	)		(25.3	)
Total segment income excluding certain non-cash items	$	40.3		$	29.4		$	31.8

15

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SELECTED FINANCIAL INFORMATION - VARIABLE ANNUITIES

	Quarter ended March 31
(In millions)	2004			2003			% Change
SEPARATE ACCOUNT INDIVIDUAL ANNUITIES
Balance at beginning of period	$	10,545.8		$	10,611.9			(0.6	)
Direct premiums and deposits		18.3			24.8			(26.2	)
Redemptions		(557.3	)		(794.6	)		(29.9	)
Market appreciation (depreciation)		201.1			(270.2	)		N/M
Transfers and other (1)		(95.2	)		(51.1	)		86.3
Balance at end of period	$	10,112.7		$	9,520.8			6.2
	Quarter Ended
	March 31, 2004			December 31, 2003			March 31, 2003
VARIABLE INDIVIDUAL ANNUITIES (2)
Redemptions	$	634.1		$	505.9		$	990.4
Redemption rates (3)		22	%		18	%		35	%
	March 31 2004			December 31 2003			% Change
VARIABLE INDIVIDUAL ANNUITIES
Account values	$	11,344.3		$	11,742.6			(3.4	)
Net amount at risk	$	2,387.0		$	2,551.2			(6.4	)
Deferred acquisition cost asset and capitalized sales inducements	$	609.5		$	660.2			(7.7	)

(1) As a result of the implementation of SOP 03-1, reserves for individual annuities include a reclassification of $107.1 million to general account liabilities at March 31, 2004.

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

(3) Redemption rates are annualized based on the average account value in the quarter.

16

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES

(In millions)	March 31 2004		December 31 2003		% Change
GENERAL ACCOUNT RESERVES
Insurance
Traditional life	$	844.2	$	845.8	(0.2	)
Universal life (1)		645.4		661.6	(2.4	)
Variable universal life (2)		220.0		221.2	(0.5	)
Individual health (3)		260.9		260.3	0.2
Total insurance		1,970.5		1,988.9	(0.9	)
Annuities
Individual annuities (4)		1,475.8		1,363.1	8.3
Group annuities		444.0		572.5	(22.4	)
Total annuities		1,919.8		1,935.6	(0.8	)
Guaranteed investment contracts
Contractholder deposit funds and other policy liabilities		29.3		207.5	(85.9	)
Total general account reserves	$	3,919.6	$	4,132.0	(5.1	)
Trust instruments supported by funding obligations	$	1,217.4	$	1,200.3	1.4
SEPARATE ACCOUNT LIABILITIES
Variable individual life	$	1,043.7	$	1,053.2	(0.9	)
Variable individual annuities (4)		10,112.7		10,545.8	(4.1	)
Total individual		11,156.4		11,599.0	(3.8	)
Group variable universal life		54.2		127.0	(57.3	)
Group annuities		94.3		109.4	(13.8	)
Total group		148.5		236.4	(37.2	)
Total separate account liabilities	$	11,304.9	$	11,835.4	(4.5	)

(1) Universal life reserves include reinsured balances of $617.6 and $633.8 million at March 31, 2004 and December 31, 2003, respectively.

(2) Variable universal life reserves include group variable universal life reserves of $12.7 and $13.2 million at March 31, 2004 and December 31, 2003, respectively.

(3) Individual health reserves include reinsured balances of $259.4 and $258.9 million at March 31, 2004 and December 31, 2003, respectively.

(4) As a result of the implementation of SOP 03-1, reserves for individual annuities include a reclassification of $107.1 million from separate account liabilities at March 31, 2004.

17

INVESTMENTS

ALLMERICA FINANCIAL CORPORATION

NET INVESTMENT INCOME

(In millions, except yields)	Quarter ended March 31, 2004
	Property and Casualty (1)			Yield		Life Companies			Yield		Total			Yield
Fixed maturities	$	49.0		5.74	%	$	56.0		5.96	%	$	105.0		5.86	%
Equity securities		1.0		N/M			—		—			1.0		N/M
Mortgages		1.1		8.22	%		2.3		7.58	%		3.4		7.77	%
All other		(2.3	)	—			0.3		—			(2.0	)	—
Investment expenses		(1.0	)	—			(1.7	)	—			(2.7	)	—
Total	$	47.8		5.42	%	$	56.9		5.33	%	$	104.7		5.37	%

	Quarter ended March 31, 2003
	Property and Casualty (1)			Yield		Life Companies			Yield		Total			Yield
Fixed maturities	$	47.8		6.22	%	$	63.7		6.26	%	$	111.5		6.24	%
Equity securities		0.2		3.85	%		0.1		1.16	%		0.3		2.02	%
Mortgages		1.6		8.07	%		3.8		9.04	%		5.4		8.72	%
All other		(3.2	)	—			6.6		—			3.4		—
Investment expenses		(0.8	)	—			(1.1	)	—			(1.9	)	—
Total	$	45.6		5.63	%	$	73.1		6.01	%	$	118.7		5.85	%

(1) Includes purchase accounting adjustments of $0.8 million for the quarter ended March 31, 2004 and 2003, respectively. Also includes corporate eliminations of $0.1 million and $0.2 million for the quarter ended March 31, 2004 and 2003, respectively.

19

ALLMERICA FINANCIAL CORPORATION

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)

	Quarter ended March 31
(In millions)	2004									2003
	Net Realized Gains (Losses)									Net Realized Gains (Losses)
	Property and Casualty			Life Companies			Total			Property and Casualty			Life Companies			Total
Net gains on securities transactions	$	9.1		$	9.0		$	18.1		$	6.9		$	35.9		$	42.8
Other than temporary impairments		(0.7	)		(1.7	)		(2.4	)		(1.5	)		(22.0	)		(23.5	)
Other		—			—			—			—			(6.1	)		(6.1	)
Net realized investment gains	$	8.4		$	7.3		$	15.7		$	5.4		$	7.8		$	13.2

20

ALLMERICA FINANCIAL CORPORATION

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

(In millions)	March 31, 2004
	Gross Unrealized Losses						Fair Value
	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months	$	1.1	$	1.6	$	2.7	$	86.9	$	81.5	$	168.4
7 - 12 months		3.5		4.1		7.6		214.6		165.5		380.1
Greater than 12 months		0.5		0.8		1.3		14.1		45.7		59.8
Total investment grade fixed maturities		5.1		6.5		11.6		315.6		292.7		608.3
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		2.3		0.8		3.1		52.5		18.6		71.1
7 - 12 months		—		1.1		1.1		—		4.8		4.8
Greater than 12 months		—		3.7		3.7		0.8		16.5		17.3
Total below investment grade fixed maturities		2.3		5.6		7.9		53.3		39.9		93.2
Equity securities		—		—		—		0.5		1.2		1.7
Total fixed maturities and equity securities	$	7.4	$	12.1	$	19.5	$	369.4	$	333.8	$	703.2

	December 31, 2003
	Gross Unrealized Losses						Fair Value
	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months	$	11.0	$	6.8	$	17.8	$	565.2	$	458.3	$	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		17.1		21.3		38.4		679.7		771.8		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	$	18.1	$	29.8	$	47.9	$	706.4	$	830.7	$	1,537.1

21

ALLMERICA FINANCIAL CORPORATION

CREDIT QUALITY OF FIXED MATURITIES

(In millions)		March 31, 2004
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,306.1	$	2,199.7	$	4,505.8	$	2,419.0	$	2,322.7	$	4,741.7
2	Baa		981.0		1,351.8		2,332.8		1,031.0		1,450.6		2,481.6
3	Ba		104.1		148.9		253.0		111.1		157.7		268.8
4	B		74.7		59.3		134.0		80.7		62.6		143.3
5	Caa and lower		31.4		15.9		47.3		37.9		21.0		58.9
6	In or near default		3.3		10.1		13.4		4.1		11.0		15.1
Total fixed maturities		$	3,500.6	$	3,785.7	$	7,286.3	$	3,683.8	$	4,025.6	$	7,709.4
		December 31, 2003
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,360.7	$	2,341.9	$	4,702.6	$	2,442.5	$	2,417.4	$	4,859.9
2	Baa		874.8		1,346.9		2,221.7		902.5		1,427.3		2,329.8
3	Ba		91.0		134.4		225.4		97.0		138.8		235.8
4	B		75.9		64.5		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		$	3,433.7	$	3,912.6	$	7,346.3	$	3,566.4	$	4,080.1	$	7,646.5

22

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	Q1 04			2003			Q4 03			Q3 03			Q2 03			Q1 03
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	10.8		$	34.3		$	25.3		$	11.5		$	0.2		$	(2.7	)
Commercial Lines		26.5			98.7			6.0			18.1			35.2			39.4
Other		1.3			(15.5	)		2.5			2.6			(22.1	)		1.5
Total Property and Casualty		38.6			117.5			33.8			32.2			13.3			38.2
Life Companies		9.8			8.7			5.7			(8.1	)		13.5			(2.4	)
Corporate Debt		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment income before federal income taxes	$	38.4		$	86.3		$	29.5		$	14.1		$	16.9		$	25.8
Federal income tax (expense) benefit on segment income		(5.2	)		6.1			0.8			5.6			1.8			(2.1	)
Total segment income after federal income taxes		33.2			92.4			30.3			19.7			18.7			23.7
Tax settlement		30.1			—			—			—			—			—
Net realized investment gains (losses), net of amortization and taxes		10.2			10.4			4.0			(8.2	)		6.6			8.0
(Losses) gains from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		(2.1	)		3.7			—			0.4			0.3			3.0
Income from sale of universal life business, net of taxes		—			3.6			—			—			—			3.6
(Losses) gains on derivative instruments, net of taxes		—			(4.5	)		(5.4	)		0.3			(0.4	)		1.0
Restructuring costs, net of taxes		(2.1	)		(18.7	)		(14.9	)		(0.8	)		(0.8	)		(2.2	)
Income before cumulative effect of accounting change		69.3			86.9			14.0			11.4			24.4			37.1
Cumulative effect of change in accounting principle, net of taxes		(57.2	)		—			—			—			—			—
NET INCOME	$	12.1		$	86.9		$	14.0		$	11.4		$	24.4		$	37.1
PER SHARE DATA (DILUTED)
NET INCOME	$	0.23		$	1.63		$	0.26		$	0.21		$	0.46		$	0.70
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)		53.7			53.2			53.5			53.3			53.0			53.0
BALANCE SHEET
Total investments	$	8,239.5					$	8,185.6		$	8,279.5		$	8,219.0		$	8,172.2
Separate account assets	$	11,304.9					$	11,835.4		$	11,546.0		$	11,719.0		$	11,016.2
Total assets	$	24,380.4					$	25,112.5		$	25,008.0		$	25,173.2		$	24,372.8
Total shareholders’ equity	$	2,289.3					$	2,220.2		$	2,196.6		$	2,225.6		$	2,115.9
Book value per share	$	43.04					$	41.89		$	41.42		$	41.96		$	39.86
Book value per share, excluding accumulated other comprehensive income	$	41.77					$	41.59		$	41.30		$	41.07		$	40.59

(1) Represents income or loss of the Company’s operating segments: Personal Lines, Commercial Lines, Other Property and Casualty, Life Companies and Corporate Debt. 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.

23

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	2002			Q4 02			Q3 02			Q2 02			Q1 02
SEGMENT INCOME (LOSS) (1)
Property and Casualty
Personal Lines	$	40.2		$	(6.7	)	$	13.3		$	24.3		$	9.3
Commercial Lines		124.2			40.7			37.2			21.1			25.2
Other		5.8			(3.7	)		3.9			4.4			1.2
Total Property and Casualty		170.2			30.3			54.4			49.8			35.7
Life Companies		(634.7	)		2.2			(544.1	)		(118.3	)		25.5
Corporate Debt		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment (loss) income before federal income taxes	$	(504.4	)	$	22.5		$	(499.7	)	$	(78.4	)	$	51.2
Federal income tax benefit (expense) on segment income (loss)		229.0			(0.6	)		184.7			50.7			(5.8	)
Total segment (loss) income after federal income taxes		(275.4	)		21.9			(315.0	)		(27.7	)		45.4
Net realized investment (losses) gains, net of amortization and taxes		(89.4	)		(45.8	)		(0.7	)		(38.5	)		(4.4	)
Gains from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		66.7			66.7			—			—			—
Loss from sale of universal life business, net of taxes		(20.3	)		(20.3	)		—			—			—
Gains on derivative instruments, net of taxes		26.2			6.5			—			9.1			10.6
Restructuring costs, net of taxes		(9.6	)		(9.6	)		—			—			—
Other items, net of taxes		(0.6	)		(4.5	)		2.3			1.6			—
(Loss) income before cumulative effect of accounting change		(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 (LOSS) INCOME	$	(306.1	)	$	14.9		$	(313.4	)	$	(55.5	)	$	47.9
PER SHARE DATA (DILUTED)
NET (LOSS) INCOME	$	(5.79	)	$	0.28		$	(5.93	)	$	(1.05	)	$	0.90
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		52.9			52.9			52.9			52.9			53.1
BALANCE SHEET
Total investments				$	8,806.8		$	9,816.0		$	9,844.9		$	9,977.2
Separate account assets				$	12,343.4		$	12,152.9		$	14,054.3		$	15,085.9
Total assets				$	26,578.9		$	27,528.6		$	29,157.3		$	30,292.2
Total shareholders’ equity				$	2,072.2		$	2,105.4		$	2,391.7		$	2,384.8
Book value per share				$	39.12		$	39.69		$	45.07		$	44.98
Book value per share, excluding accumulated other comprehensive income				$	39.83		$	39.47		$	45.32		$	46.32

(1) Represents income or loss of the Company’s operating segments: Personal Lines, Commercial Lines, Other Property and Casualty, Life Companies and Corporate Debt. 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.

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

24

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	2004
	Price Range				Dividends Per Share
	High		Low
March 31	$	38.25	$	30.84	—
June 30
September 30
December 31
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	—

INDUSTRY RATINGS AS OF APRIL 26, 2004

Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
Property and Casualty Insurance Companies:
The Hanover Insurance Company	A-	BBB+	Baa2
Citizens Insurance Company of America	A-	BBB+	—
Life Insurance Companies:
Allmerica Financial Life Insurance and Annuity Company	B+	B+	Ba1
First Allmerica Financial Life Insurance 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