8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report

Pursuant to

Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 31, 2005

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 Identification No.)

440 Lincoln Street, Worcester, Massachusetts 01653

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (508) 855-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The following information is being furnished under Item 2.02 – Results of Operations and Financial Condition. Such information, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

On January 31, 2005, Allmerica Financial Corporation issued a press release announcing its financial results for the quarter ended December 31, 2004. The release is furnished as Exhibit 99.1 hereto. Additionally, on January 31, 2005, the Company made available on its website financial information contained in its Statistical Supplement for the period ended December 31, 2004. The supplement is furnished as Exhibit 99.2 hereto.

Item 9.01 Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Exhibits.

The following exhibits are furnished herewith.

Exhibit 99.1	Press Release, dated January 31, 2005, announcing the Company’s financial results for the quarter ended December 31, 2004.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended December 31, 2004.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Allmerica Financial Corporation
(Registrant)
By:	/s/ Edward J. Parry III
	Edward J. Parry III
	Chief Financial Officer,
	Executive Vice President,
	Principal Accounting Officer and Director

Date: January 31, 2005

3

Exhibit Index

Exhibit 99.1	Press Release, dated January 31, 2005, announcing the Company’s financial results for the quarter ended December 31, 2004.
Exhibit 99.2	Allmerica Financial Corporation Statistical Supplement for the period ended December 31, 2004.

4

EX-99.1

Exhibit 99.1

[Allmerica Logo Appears Here]

ALLMERICA FINANCIAL CORPORATION

Traded on the New York Stock Exchange under the symbol AFC

N E W S    R E L E A S E

ALLMERICA FINANCIAL CORPORATION REPORTS FOURTH QUARTER EARNINGS:

NET INCOME OF $1.18 PER SHARE COMPARED TO $0.26 PER SHARE LAST YEAR

AFTER TAX SEGMENT INCOME OF $1.10 PER SHARE COMPARED TO $0.57 PER SHARE LAST YEAR

WORCESTER, Mass., January 31, 2005—Allmerica Financial Corporation (NYSE: AFC) today reported net income for the fourth quarter of $63.1 million, or $1.18 per share, compared to net income of $14.0 million, or $0.26 per share in the fourth quarter of last year. For the full year, the company reported net income of $125.3 million, or $2.34 per share, compared to net income of $86.9 million, or $1.63 per share in 2003.

Total segment income after taxes was $58.9 million, or $1.10 per share in the fourth quarter, compared to $30.3 million, or $0.57 per share in the fourth quarter of last year. Segment income after taxes for the full year was $140.8 million, or $2.62 per share, compared to $92.4 million, or $1.74 per share in 2003. Segment income after taxes is presented consistent with the manner in which management evaluates operating results.

The company also reported that the Massachusetts Division of Insurance approved a $75.0 million dividend from the Life Companies to the holding company effective December 31, 2004.

“I am very pleased with our financial results and the progress we have made in repositioning the company,” said Frederick H. Eppinger, president and chief executive officer of Allmerica Financial Corporation. “Our fourth quarter results reflect continued improvement in our core property and casualty operations. Our Life Companies’ results also were solid, as evidenced by the growth in total adjusted statutory capital.”

Segment Results

Allmerica Financial consists of property and casualty operations, which represents 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 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 we have not actively participated since 1995; AMGRO, Inc., a premium financing business; Opus Investment Management, Inc., which provides investment management services to institutions, pension funds and other organizations; and earnings on holding company assets. 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 December 31 (In millions)						Year ended December 31 (In millions)
	2004			2003			2004			2003
Property and Casualty:
Personal Lines(1)	$	45.9		$	25.3		$	134.6		$	34.3
Commercial Lines(2)		26.0			6.0			58.0			98.7
Other Property and Casualty		1.7			2.5			5.4			(15.5	)
Total Property & Casualty		73.6			33.8			198.0			117.5
Life Companies		16.5			5.7			11.3			8.7
Interest expense on corporate debt		(10.0	)		(10.0	)		(39.9	)		(39.9	)
Total pre-tax segment income		80.1			29.5			169.4			86.3
Federal Income Taxes		(21.2	)		0.8			(28.6	)		6.1
Total segment income after taxes(3)	$	58.9		$	30.3		$	140.8		$	92.4

(1) Includes Personal Lines catastrophe losses of $(0.7) million and $4.6 million for the fourth quarter of 2004 and 2003, respectively; and $49.8 million and $35.6 million for the full year 2004 and 2003, respectively.

(2) Includes Commercial Lines catastrophe losses of $2.1 million and $5.5 million for the fourth quarter of 2004 and 2003, respectively; and $49.5 million and $23.8 million for the full year 2004 and 2003, respectively.

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

Property and Casualty

Property and Casualty segment income was $73.6 million in the fourth quarter of 2004, up from $33.8 million in the fourth quarter of 2003. Earnings were higher in the quarter due to favorable loss performance in Personal Lines and Commercial Lines, partially offset by higher expenses.

Full-year Property and Casualty segment income was $198.0 million in 2004, compared to $117.5 million in 2003. Catastrophe losses in the current year net of reinsurance were $99.3 million compared to $59.4 million in the prior year. Prior-year segment earnings also include a charge of $21.9 million resulting from an adverse arbitration decision related to a single large property claim within a voluntary insurance pool. The company exited this pool in 1996. Excluding these items, segment income increased by $98.5 million due primarily to favorable loss performance in Personal Lines, partially offset by higher expenses.

Property and Casualty highlights:

• Net premiums written were $513.1 million in the fourth quarter of 2004, compared to $524.6 million in the fourth quarter of 2003. Full-year net premiums written were $2,236.7 million in 2004 and $2,235.2 million in 2003.

• Net premiums earned were $562.8 million in the fourth quarter of 2004, compared to $564.0 million in the fourth quarter of 2003. Full-year net premiums earned were $2,249.6 million in 2004 and $2,241.4 million in 2003.

• In the fourth quarter of 2004, net pre-tax catastrophe losses were $1.4 million, compared to $10.1 million in the comparable period one year earlier. Net pre-tax catastrophe losses were $99.3 million for the full year, as compared to $59.4 million for all of 2003.

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

	Quarter ended December 31				Year ended December 31
	2004		2003		2004		2003
Personal Lines losses (excluding catastrophes)(1)	56.9	%	62.6	%	57.9	%	66.1	%
Commercial Lines losses (excluding catastrophes)(2)	53.8	%	59.9	%	50.9	%	53.2	%
Total P&C Losses (excluding catastrophes)	56.0	%	61.7	%	55.8	%	63.1	%(3)
Catastrophe losses	0.2	%	1.8	%	4.4	%	2.6	%
Loss adjustment expenses	9.1	%	7.6	%	9.0	%	8.0	%
Policy acquisition and other underwriting expenses	34.3	%	33.8	%	31.8	%	30.3	%
Policyholders’ dividends	(0.3	)%	(0.6	)%	(0.1	)%	NM
Combined Ratio	99.3	%	104.3	%	100.9	%	104.0	%(3)

(1) Catastrophe losses would add (0.2) points and 1.2 points to the Personal Lines loss ratio in the fourth quarter of 2004 and 2003, respectively, and 3.3 points and 2.3 points to the full-year loss ratio for 2004 and 2003, respectively.

(2) Catastrophe losses would add 1.1 points and 3.1 points to the Commercial Lines loss ratio in the fourth quarter of 2004 and 2003, respectively, and 6.8 points and 3.3 points to the full-year loss ratio for 2004 and 2003, respectively.

(3) Excluding the effect of an adverse arbitration ruling in the second quarter of 2003 related to an exited voluntary insurance pool, the loss ratio is 62.1 percent and the combined ratio is 103.0 percent.

Personal Lines

Personal Lines segment income was $45.9 million in the quarter compared to $25.3 million in the prior year. For the full year, Personal Lines segment income was $134.6 million in 2004 compared to $34.3 million in 2003. Excluding net pre-tax catastrophe losses, Personal Lines segment income for the year was $184.4 million compared to $69.9 million in the prior year.

Personal Lines results improved for both the quarter and the year, despite higher catastrophe losses, primarily due to favorable loss performance. The current quarter loss ratio excluding catastrophes was 5.7 points better than the prior-year quarter. The current full-year loss ratio, excluding catastrophes, was 8.2 points better than the full-year 2003. The major factors driving this improvement were:

• Continued impact of rate increases in both personal automobile and homeowners.

• Improved frequency of current year losses for the quarter in both personal automobile and homeowners.

• A change in development of prior year loss reserves, with $5.6 million of adverse development in the current quarter compared to $6.4 million of adverse development in the year-ago quarter. For the full year, the development of prior year loss reserves was $10.4 million favorable in 2004 compared to $25.3 million unfavorable in 2003.

• Ongoing actions taken to improve the profitability of our Massachusetts personal auto mobile business.

Personal Lines highlights:

• Net premiums written were $341.4 million in the fourth quarter of 2004, compared to $367.9 million in the fourth quarter of 2003. Net premiums written for the full year 2004 were $1,487.3 million, compared to $1,537.8 million in 2003.

• Net premiums earned were $376.3 million in the fourth quarter of 2004, compared to $387.7 million in the fourth quarter of 2003. Net premiums earned for the full year 2004 were $1,521.1 million, compared to $1,522.1 million in 2003.

• The Personal Lines statutory combined ratio was 97.1% in the fourth quarter, versus 101.5% in the same period last year. The full-year Personal Lines statutory combined ratio was 98.6%, versus 104.6% in 2003.

• Net pre-tax catastrophe losses were $(0.7) million, or (0.2) points of the combined ratio for the fourth quarter of 2004 compared to $4.6 million, or 1.2 point of the combined ratio for the fourth quarter of 2003. For the full year, net pre-tax catastrophe losses were $49.8 million, or 3.3 points of the combined ratio in 2004 versus $35.6 million, or 2.3 points of the combined ratio in 2003.

Commercial Lines

Commercial Lines segment income was $26.0 million in the quarter, compared to $6.0 million in the fourth quarter of 2003. For the full year, Commercial Lines segment income was $58.0 million in 2004 compared to $98.7 million in 2003. Excluding net pre-tax catastrophe losses, Commercial Lines segment income was $107.5 million, compared to $122.5 million in the prior year.

Commercial Lines earnings in the quarter benefited from an improvement in the development of prior year reserves. The current quarter’s loss ratio excluding catastrophes was 6 points better than the prior-year quarter. This was driven entirely by a favorable change in prior year reserve development.

For the full year, ex-catastrophe segment income was lower by $15 million as favorable loss performance for the year was more than offset by higher expenses. The current full-year loss ratio excluding catastrophes improved by 2.3 points over 2003.

Expenses in this segment were higher for the full year due to higher loss adjustment expenses and other operating expenses. Loss adjustment expenses in 2003, as compared to 2004, benefited from higher favorable development in prior years’ loss adjustment expense reserves. Loss adjustment expenses in 2004 were also impacted by higher personnel costs, as a result of increased catastrophe activity, and higher litigation activity. Policy acquisition and other operating expenses increased for the year in 2004, resulting from the increased investment in people and technology associated with the company’s Commercial Lines growth strategy.

Expenses in this segment were only slightly higher in the quarter. Higher loss adjustment expenses for the aforementioned reasons were partially offset by lower underwriting expenses in the quarter.

Commercial Lines highlights:

• Net premiums written were $171.7 million in the fourth quarter of 2004, compared to $156.7 million in the fourth quarter of 2003. Net premiums written for the full year 2004 were $749.2 million, compared to $697.1 million in 2003.

• Net premiums earned were $186.5 million in the fourth quarter of 2004, compared to $176.3 million in the fourth quarter of 2003. Net premiums earned for the full year 2004 were $728.3 million, compared to $719.0 million in 2003.

• The Commercial Lines statutory combined ratio was 103.0% in the fourth quarter, compared to 111.5% in the same period last year. The full year Commercial Lines statutory combined ratio was 105.1%, versus 99.4% in 2003.

• Net pre-tax catastrophe losses were $2.1 million, or 1.1 points of the combined ratio in the fourth quarter versus $5.5 million, or 3.1 points of the combined ratio in the fourth quarter of 2003. Full-year net pre-tax catastrophe losses were $49.5, or 6.8 points of the combined ratio in 2004, versus $23.8 million, or 3.3 points of the combined ratio in 2003.

Other Property & Casualty

Other Property & Casualty segment income was $1.7 million in the quarter, compared to $2.5 million in the prior year. Other Property & Casualty segment income was $5.4 million for the full year 2004, compared to a loss of $15.5 million in 2003. The prior-year segment loss includes a charge of $21.9 million resulting from an adverse arbitration decision related to a single large property claim within a voluntary insurance pool. Other Property & Casualty includes our run-off voluntary pools, premium financing and investment management operations.

Life Companies

The Life Companies reported segment income of $16.5 million in the fourth quarter of 2004, compared to $5.7 million in 2003.

The segment income in the fourth quarter of 2004 benefited from lower amortization of deferred policy acquisition costs (DAC) and lower guaranteed minimum death benefit (GMDB) expense, net of hedge losses. This was driven by the strong equity market performance in the quarter, and resulted in full-year segment income of $11.3 million for 2004, compared to $8.7 million for 2003.

Segment income excluding certain non-cash items was $13.6 million in the quarter versus $37.9 million in the third quarter of 2004. This decrease was primarily due to the performance of the equity market, which resulted in derivatives losses of $19.7 million in the current quarter. This compares to derivatives gains of $5.9 million in the third quarter of 2004 due to declines in the equity market. These derivatives losses are related to our GMDB hedging program, which is designed to generate gains during a falling equity market and losses during a rising equity market to offset changes in the underlying GMDB exposure.

The Life Companies segment income is expected to continue to be volatile due to the hedge program and the impact of the SOP 03-1 rules on GMDB reserve and DAC accounting. The inherent volatility is due to several factors, with the most significant being equity market levels. Life Companies segment income is also affected by changes in interest rates, surrenders and any deviation between the performance of the underlying mutual funds and the indices associated with futures contracts in connection with the hedging program.

Life Companies highlights:

• Life operations segment income excluding certain non-cash items was $13.6 million in the fourth quarter and $118.7 million for the full-year 2004. Segment income excluding certain non-cash items, which is a non-GAAP financial measure, is reconciled to segment income at the end of this document.

• The Massachusetts Division of Insurance approved a $75.0 million dividend to the holding company effective December 31, 2004.

• Total adjusted statutory capital for the combined life insurance subsidiaries at December 31, 2004 was $581.9 million, compared to $610.7 million at September 30, 2004 and $553.4 million at December 31, 2003. Total adjusted statutory capital at December 31, 2004 has been reduced by the $75.0 million dividend to the holding company.

• The Risk Based Capital (RBC) ratio of Allmerica Financial Life Insurance and Annuity Company, Allmerica’s lead life insurance company, increased to 472 percent at December 31, 2004 up from 465 percent at September 30, 2004 and 365 percent at December 31, 2003.

• In the fourth quarter, individual annuity redemptions were $478.3 million compared to $491.7 million in the third quarter of 2004 and approximately $505.9 million in the fourth quarter of 2003.

Investment Results

Net investment income was $99.4 million for the fourth quarter of 2004, compared to $109.1 million in the same period of 2003. For the full year, net investment income was $414.5 million compared to $455.7 million in 2003. In both periods, net investment income decreased primarily due to lower invested assets in the Life Companies, resulting from surrenders in the general account, a reduction in outstanding guaranteed investment contract balances and the sale of the company’s fixed universal life insurance business. Invested assets in the P&C Segment continue to grow due to increased cash flows. This is somewhat dampened by the decline in portfolio yields, driven by a shift in the portfolio to higher credit quality bonds and lower current interest rates.

Fourth quarter 2004 pre-tax net realized investment gains were $10.4 million, compared to $5.7 million in the same period of 2003. In the current quarter, pre-tax net realized investment gains of $11.3 million from sales of investments were partially offset by $0.9 million of capital losses resulting from impairments on certain fixed maturity and equity securities. In the fourth quarter of 2003, pre-tax net realized investment gains of $11.2 million from sales of investments were partially offset by $5.4 million of capital losses resulting from impairments on certain fixed maturity and equity securities.

Full year 2004 pre-tax net realized investment gains were $28.7 million, compared to $24.1 million in 2003. In 2004, pre-tax net realized investment gains of $44.4 million from sales of investments were partially offset by $8.7 million of derivatives losses and $7.0 million of capital losses resulting from impairments on certain fixed maturity and equity securities. In 2003, pre-tax net realized investment gains of $87.7 million from sales of investments were partially offset by $61.6 million of capital losses resulting from impairments on certain fixed maturity and equity securities.

Balance Sheet

Shareholders’ equity was $2.3 billion, or $43.91 per share at December 31, 2004, compared to $2.2 billion, or $41.89 per share at December 31, 2003. Excluding accumulated other comprehensive income, book value was $43.85 per share at the close of the fourth quarter, compared to $41.59 per share at December 31, 2003.

Total assets were $23.5 billion at December 31, 2004, compared to $25.1 billion at year-end 2003. Separate account assets were $10.5 billion at December 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 as well as the sale of the company’s fixed universal life insurance line of business.

Earnings Conference Call

Allmerica Financial Corporation will host a conference call to discuss the company’s fourth quarter results on Tuesday, February 1st at 10:00 a.m. Eastern time. Interested investors and others can listen to the call through Allmerica’s web site, located at www.allmerica.com. Web-cast participants should go to the web site 15 minutes early to register, download, and install any necessary audio software. A re-broadcast of the conference call will be available on this web site two hours after the call.

Statistical Supplement

Allmerica Financial Corporation’s fourth quarter Earnings Press Release and Statistical Supplement are also available in the Investor Relations section 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 surrender patterns, investment impairments, heightened competition, adverse state and federal legislation or regulation, financial ratings actions, and various other factors, which include the effect of the company’s decision to close its broker-dealer operations as well as the anticipated impact and cost of the GMDB hedging program. The performance of the hedging program is dependent on, among other things, the future performance and volatility of the equity market, the extent to which the performance of the various hedging instruments correlates with the investment performance of the underlying annuity sub-accounts, the continued availability of equity index futures and redemption and mortality patterns in the company’s annuity contracts.

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

Contact Information

Investors:

Sujata Mutalik

E-mail: smutalik@allmerica.com

1-508-855-3457

Media:

Micheal F. Buckley

E-mail: mibuckley@allmerica.com

1-508-855-3099

ALLMERICA FINANCIAL CORPORATION

(In millions, except per share data)

	Quarter ended December 31				Year ended December 31
	2004		2003		2004		2003
Net income	$	63.1	$	14.0	$	125.3	$	86.9
Net income per share(1)	$	1.18	$	0.26	$	2.34	$	1.63
Weighted average shares		53.7		53.5		53.7		53.2

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

PER SHARE DATA (DILUTED) (1)	Quarter ended December 31												Year ended December 31
	2004						2003						2004						2003
	$			Per Share			$			Per Share			$			Per Share			$			Per Share
Property and Casualty
Personal Lines	$	45.9			—		$	25.3			—		$	134.6			—		$	34.3			—
Commercial Lines		26.0			—			6.0			—			58.0			—			98.7			—
Other Property & Casualty		1.7			—			2.5			—			5.4			—			(15.5	)		—
Total Property and Casualty		73.6			—			33.8			—			198.0			—			117.5			—
Life Companies		16.5			—			5.7			—			11.3			—			8.7			—
Interest expense on corporate debt(3)		(10.0	)		—			(10.0	)		—			(39.9	)		—			(39.9	)		—
Total segment income	$	80.1		$	1.49		$	29.5		$	0.55		$	169.4		$	3.15		$	86.3		$	1.62
Federal income tax (expense) benefit on segment income		(21.2	)		(0.39	)		0.8			0.02			(28.6	)		(0.53	)		6.1			0.12
Total segment income after federal income taxes		58.9			1.10			30.3			0.57			140.8			2.62			92.4			1.74
Federal income tax settlement		0.1			—			—			—			30.4			0.57			—			—
Net realized investment gains, net of taxes and amortization		5.2			0.10			4.0			0.07			16.1			0.30			10.4			0.19
Gain (loss) on derivatives, net of taxes		0.5			0.01			(5.4	)		(0.10	)		0.8			0.01			(4.5	)		(0.08	)
Gain (loss) from retirement of trust instruments supported by funding obligations, net of taxes		0.1			—			—			—			(0.1	)		—			3.7			0.07
Restructuring costs, net of taxes		(1.7	)		(0.03	)		(14.9	)		(0.28	)		(5.5	)		(0.10	)		(18.7	)		(0.35	)
Income from sale of universal life business, net of taxes		—			—			—			—			—			—			3.6			0.06
Income before effect of accounting change		63.1			1.18			14.0			0.26			182.5			3.40			86.9			1.63
Cumulative effect of change in accounting principle, net of taxes		—			—			—			—			(57.2	)		(1.06	)		—			—
Net income	$	63.1		$	1.18		$	14.0		$	0.26		$	125.3		$	2.34		$	86.9		$	1.63

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

	Quarter ended December 31, 2004
	Personal Lines			Commercial Lines			Other Property & Casualty			Life Companies			Total
Net realized investment gains, net of taxes and amortization	$	0.6		$	1.0		$	0.1		$	3.5		$	5.2
Gains on derivatives, net of taxes		—			—			—			0.5			0.5
Gains from retirement of trust instruments supported by funding obligations, net of taxes		—			—			—			0.1			0.1
Restructuring costs, net of taxes		(0.8	)		(1.3	)		—			0.4			(1.7	)
Federal income tax settlement		—			—			—			0.1			0.1
	Quarter ended December 31, 2003
	Personal Lines			Commercial Lines			Other Property & Casualty			Life Companies			Total
Net realized investment gains net of taxes and amortization	$	0.5		$	0.6		$	1.1		$	1.8		$	4.0
Losses on derivatives, net of taxes		—			—			—			(5.4	)		(5.4	)
Restructuring costs, net of taxes		—			—			—			(14.9	)		(14.9	)
	Year ended December 31, 2004
	Personal Lines			Commercial Lines			Other Property & Casualty			Life Companies			Total
Net realized investment gains, net of taxes and amortization	$	5.0		$	5.1		$	3.0		$	3.0		$	16.1
Gains on derivatives, net of taxes		—			—			—			0.8			0.8
Losses from retirement of trust instruments supported by funding obligations, net of taxes		—			—			—			(0.1	)		(0.1	)
Restructuring costs, net of taxes		(0.8	)		(1.3	)		—			(3.4	)		(5.5	)
Federal income tax settlement		—			—			—			30.4			30.4
Cumulative effect of change in accounting principle, net of taxes		—			—			—			(57.2	)		(57.2	)
	Year ended December 31, 2003
	Personal Lines			Commercial Lines			Other Property & Casualty			Life Companies			Total
Net realized investment gains (losses), net of taxes and amortization	$	3.2		$	3.3		$	(2.0	)	$	5.9		$	10.4
Losses on derivatives, net of taxes		—			—			—			(4.5	)		(4.5	)
Gains from retirement of trust instruments supported by funding obligations, net of taxes		—			—			—			3.7			3.7
Restructuring costs, net of taxes		—			0.2			—			(18.9	)		(18.7	)
Income from sale of universal life business, net of taxes		—			—			—			3.6			3.6

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

	Quarter ended December 31, 2004			Year ended December 31, 2004
Life Companies segment income	$	16.5		$	11.3
Deferred acquisition cost operating amortization, net		14.6			130.8
Property, plant and equipment depreciation, net		0.8			3.2
Statement of Position 98-1 amortization, net		0.7			4.1
Change in guaranteed minimum death and income benefit reserves		(19.0	)		(30.7	)
Total segment income excluding certain non-cash items	$	13.6		$	118.7

(1) Basic net income per share was $1.19 and $0.26 for the quarters ended December 31, 2004 and 2003, respectively, and $2.36 and $1.64 for the years ended December 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 on a pre-tax basis. Segment income (loss) is determined by adjusting net income (loss) for net realized investment gains and losses including certain gains or losses on derivative instruments, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Also, segment income (loss) excludes net gains and losses on disposals of businesses, discontinued operations, restructuring and reorganization costs, extraordinary items, the cumulative effect of accounting changes and certain other items.

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

All figures reported are unaudited.

EX-99.2

Exhibit 99.2

ALLMERICA FINANCIAL CORPORATION

STATISTICAL SUPPLEMENT

TABLE OF CONTENTS

Financial Highlights	1-2
Consolidated Financial Statements
Income Statements	3
Balance Sheets	4
Property and Casualty
Condensed Income Statements	5
Property and Casualty Consolidated Balance Sheets	6
Statutory Underwriting Results	7-11
Life Companies
Condensed Income Statements	12
Life Companies Consolidated Balance Sheets	13
Segment Income by Product Line	14-15
Segment Income Excluding Certain Non-Cash Items	16
Selected Financial Information-Variable Annuities	17
Future Policy Benefits and Account Balances	18
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 December 31								Year ended December 31
(In millions, except per share data)	2004			2003			% Change		2004			2003			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	45.9		$	25.3		81.4		$	134.6		$	34.3		N/M
Commercial Lines		26.0			6.0		N/M			58.0			98.7		(41.2	)
Other		1.7			2.5		(32.0	)		5.4			(15.5	)	N/M
Total Property and Casualty		73.6			33.8		N/M			198.0			117.5		68.5
Life Companies		16.5			5.7		N/M			11.3			8.7		29.9
Interest expense on corporate debt		(10.0	)		(10.0	)	—			(39.9	)		(39.9	)	—
Total segment income		80.1			29.5		N/M			169.4			86.3		96.3
Federal income tax (expense) benefit on segment income		(21.2	)		0.8		N/M			(28.6	)		6.1		N/M
Total segment income after taxes	$	58.9		$	30.3		94.4		$	140.8		$	92.4		52.4
RECONCILIATION FROM SEGMENT
INCOME TO NET INCOME
Total segment income after taxes	$	58.9		$	30.3		94.4		$	140.8		$	92.4		52.4
Federal income tax settlement		0.1			—		—			30.4			—		N/M
Net realized investment gains, net of taxes and amortization		5.2			4.0		30.0			16.1			10.4		54.8
Gains (losses) on derivative instruments, net of taxes		0.5			(5.4	)	N/M			0.8			(4.5	)	N/M
Gains (losses) from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		0.1			—		N/M			(0.1	)		3.7		N/M
Restructuring costs, net of taxes		(1.7	)		(14.9	)	(88.6	)		(5.5	)		(18.7	)	(70.6	)
Income from sale of universal life business, net of taxes		—			—		—			—			3.6		N/M
Income before effect of accounting change		63.1			14.0		N/M			182.5			86.9		N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		—			(57.2	)		—		N/M
Net income	$	63.1		$	14.0		N/M		$	125.3		$	86.9		44.2
PER SHARE DATA (DILUTED)
Total segment income	$	1.49		$	0.55		N/M		$	3.15		$	1.62		94.4
Federal income taxes on segment income		(0.39	)		0.02		N/M			(0.53	)		0.12		N/M
Total segment income after taxes		1.10			0.57		93.0			2.62			1.74		50.6
Federal income tax settlement		—			—		—			0.57			—		N/M
Net realized investment gains, net of taxes and amortization		0.10			0.07		42.9			0.30			0.19		57.9
Gains (losses) on derivative instruments, net of taxes		0.01			(0.10	)	N/M			0.01			(0.08	)	N/M
Gains (losses) from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes		—			—		—			—			0.07		N/M
Restructuring costs, net of taxes		(0.03	)		(0.28	)	(89.3	)		(0.10	)		(0.35	)	(71.4	)
Income from sale of universal life business, net of taxes		—			—		—			—			0.06		N/M
Income before effect of accounting change		1.18			0.26		N/M			3.40			1.63		N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		—			(1.06	)		—		N/M
Net income	$	1.18		$	0.26		N/M		$	2.34		$	1.63		43.6

1

ALLMERICA FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

(In millions, except per share data)	December 31 2004			December 31 2003			% Change
BALANCE SHEET
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	1,680.2		$	1,545.6		8.7
Allmerica Financial Life Insurance and Annuity Company (consolidated)		1,112.1			1,194.9		(6.9	)
AFC Holding Company and other		(452.8	)		(520.3	)	(13.0	)
Total shareholders’ equity	$	2,339.5		$	2,220.2		5.4
Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	1,098.8		$	1,001.6		9.7
Allmerica Financial Life Insurance and Annuity Company (consolidated)	$	581.9		$	553.4		5.1
First Allmerica Financial Life Insurance Company	$	207.7		$	176.6		17.6
The Hanover Insurance Company (consolidated) premium to surplus ratio		2.0:1			2.2:1		N/M
Allmerica Financial Life Insurance and Annuity Company (consolidated) estimated risk based capital ratio		472	%		365	%	107.0
Book value per share
The Hanover Insurance Company (consolidated)	$	31.53		$	29.16		8.1
Allmerica Financial Life Insurance and Annuity Company (consolidated)		20.87			22.55		(7.5	)
AFC Holding Company and other		(8.49	)		(9.82	)	(13.5	)
Total book value per share	$	43.91		$	41.89		4.8
Book value per share, excluding accumulated other comprehensive income	$	43.85		$	41.59		5.4
Shares outstanding (1)		53.2			53.0
Stock price	$	32.83		$	30.77		6.7
Price/book value per share		0.7	x		0.7	x	-	x
Debt/equity		21.7	%		22.5	%	(0.8 pts	)
Debt/total capital		17.9	%		18.4	%	(0.5 pts	)

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

2

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENTS

	Quarter ended December 31								Year ended December 31
(In millions, except per share data)	2004			2003			% Change		2004			2003			% Change
REVENUES
Premiums	$	569.9		$	570.5		(0.1	)	$	2,288.6		$	2,282.3		0.3
Fees and other income		91.3			115.4		(20.9	)		379.2			501.5		(24.4	)
Net investment income		99.4			109.1		(8.9	)		414.5			455.7		(9.0	)
Net realized investment gains		10.4			5.7		82.5			28.7			24.1		19.1
Total revenues		771.0			800.7		(3.7	)		3,111.0			3,263.6		(4.7	)
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		394.9			460.9		(14.3	)		1,784.0			1,918.7		(7.0	)
Policy acquisition expenses		132.7			142.3		(6.7	)		590.8			602.6		(2.0	)
(Gains) losses from retirement of funding agreements and trust instruments supported by funding obligations		(0.1	)		—		N/M			0.2			(5.7	)	N/M
Income from sale of universal life business		—			—		—			—			(5.5	)	N/M
Losses on derivative instruments		0.2			8.7		(97.7	)		0.6			10.3		(94.2	)
Restructuring costs		2.7			22.9		(88.2	)		8.5			28.7		(70.4	)
Other operating expenses		153.6			157.5		(2.5	)		540.2			635.0		(14.9	)
Total benefits, losses and expenses		684.0			792.3		(13.7	)		2,924.3			3,184.1		(8.2	)
Income before federal income taxes		87.0			8.4		N/M			186.7			79.5		N/M
Federal income tax expense (benefit)		23.9			(5.6	)	N/M			4.2			(7.4	)	N/M
Income before cumulative effect of change in accounting principle		63.1			14.0		N/M			182.5			86.9		N/M
Cumulative effect of change in accounting principle		—			—		—			(57.2	)		—		N/M
Net income	$	63.1		$	14.0		N/M		$	125.3		$	86.9		44.2
PER SHARE DATA (DILUTED)
Income before cumulative effect of change in accounting principle	$	1.18		$	0.26		N/M		$	3.40		$	1.63		N/M
Cumulative effect of change in accounting principle		—			—		—			(1.06	)		—		N/M
Net income (1)	$	1.18		$	0.26		N/M		$	2.34		$	1.63		43.6
Weighted average shares outstanding		53.7			53.5					53.7			53.2

(1) Basic net income per share was $1.19 and $0.26 for the quarters ended December 31, 2004 and 2003, respectively and $2.36 and $1.64 for the years ended December 31, 2004 and 2003, respectively.

3

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	December 31 2004			December 31 2003			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $7,553.4 and $7,346.3)	$	7,822.2		$	7,646.5		2.3
Equity securities, at fair value (cost of $13.7 and $9.1)		17.0			15.3		11.1
Mortgage loans		114.8			175.1		(34.4	)
Policy loans		256.4			268.0		(4.3	)
Other long-term investments		55.3			80.7		(31.5	)
Total investments		8,265.7			8,185.6		1.0
Cash and cash equivalents		202.4			380.5		(46.8	)
Accrued investment income		118.2			126.5		(6.6	)
Premiums, accounts and notes receivable, net		485.4			480.9		0.9
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		2,026.4			2,111.2		(4.0	)
Deferred policy acquistion costs		905.5			1,115.5		(18.8	)
Deferred federal income taxes		415.1			381.0		9.0
Goodwill		128.2			128.2		—
Other assets		433.2			367.7		17.8
Separate account assets		10,455.0			11,835.4		(11.7	)
Total assets	$	23,435.1		$	25,112.5		(6.7	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	3,462.3		$	3,556.8		(2.7	)
Outstanding claims, losses and loss adjustment expenses		3,179.0			3,124.9		1.7
Unearned premiums		1,029.8			1,032.5		(0.3	)
Contractholder deposit funds and other policy liabilities		379.5			683.7		(44.5	)
Total policy liabilities and accruals		8,050.6			8,397.9		(4.1	)
Expenses and taxes payable		868.7			822.7		5.6
Reinsurance premiums payable		86.5			136.5		(36.6	)
Trust instruments supported by funding obligations		1,126.0			1,200.3		(6.2	)
Long-term debt		508.8			499.5		1.9
Separate account liabilities		10,455.0			11,835.4		(11.7	)
Total liabilities		21,095.6			22,892.3		(7.8	)
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		1,782.1			1,775.6		0.4
Accumulated other comprehensive income		3.0			16.1		(81.4	)
Retained earnings		943.4			833.1		13.2
Treasury stock at cost (7.2 and 7.4 million shares)		(389.6	)		(405.2	)	(3.8	)
Total shareholders’ equity		2,339.5			2,220.2		5.4
Total liabilities and shareholders’ equity	$	23,435.1		$	25,112.5		(6.7	)

4

PROPERTY & CASUALTY

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS

	Quarter ended December 31						Year ended December 31
(In millions)	2004		2003		% Change		2004		2003		% Change
REVENUES
Net premiums written	$	513.2	$	524.0	(2.1	)	$	2,236.2	$	2,234.2	0.1
Change in unearned premiums, net of prepaid reinsurance premiums		49.7		39.2	26.8			12.9		6.2	N/M
Net premiums earned		562.9		563.2	(0.1	)		2,249.1		2,240.4	0.4
Net investment income		50.9		47.3	7.6			196.9		185.5	6.1
Other income		13.3		13.2	0.8			52.7		55.7	(5.4	)
Total segment revenue		627.1		623.7	0.5			2,498.7		2,481.6	0.7
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses (1)		363.4		401.8	(9.6	)		1,552.0		1,653.5	(6.1	)
Policy acquisition expenses		117.0		119.0	(1.7	)		470.1		457.6	2.7
Other operating expenses		73.1		69.1	5.8			278.6		253.0	10.1
Total losses and operating expenses		553.5		589.9	(6.2	)		2,300.7		2,364.1	(2.7	)
Segment income before federal income taxes	$	73.6	$	33.8	N/M		$	198.0	$	117.5	68.5

(1) Policy benefits, claims, losses and loss adjustment expenses for the year 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.

5

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	December 31 2004		December 31 2003		% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $3,677.5 and $3,383.9)	$	3,792.0	$	3,506.2	8.2
Equity securities, at fair value (cost of $1.0 and $2.9)		2.1		5.1	(58.8	)
Mortgage loans		51.3		53.8	(4.6	)
Other long-term investments		0.6		0.7	(14.3	)
Total investments		3,846.0		3,565.8	7.9
Cash and cash equivalents		78.6		113.0	(30.4	)
Accrued investment income		50.1		49.4	1.4
Premiums, accounts, and notes receivable, net		481.2		477.2	0.8
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,039.8		1,070.4	(2.9	)
Deferred policy acquisition costs		211.4		220.9	(4.3	)
Deferred federal income tax asset		206.8		160.8	28.6
Goodwill		121.4		121.4	—
Other assets		174.2		198.7	(12.3	)
Total assets	$	6,209.5	$	5,977.6	3.9
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,068.6	$	3,018.9	1.6
Unearned premiums		1,026.5		1,029.0	(0.2	)
Contract holder deposit funds and other policy liabilities		4.8		8.2	(41.5	)
Total policy liabilities and accruals		4,099.9		4,056.1	1.1
Expenses and taxes payable		355.2		251.5	41.2
Reinsurance premiums payable		74.2		124.4	(40.4	)
Total liabilities		4,529.3		4,432.0	2.2
SHAREHOLDER’S 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		48.0		60.0	(20.0	)
Retained earnings		1,458.0		1,311.4	11.2
Total shareholder’s equity		1,680.2		1,545.6	8.7
Total liabilities and shareholder’s equity	$	6,209.5	$	5,977.6	3.9

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

6

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME (LOSS)

	Quarter ended December 31, 2004												Quarter ended December 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	$	26.7		$	2.3		$	(0.7	)	$	28.3		$	11.4		$	11.8		$	(0.1	)	$	23.1		N/M		(80.5	)	N/M		22.5
Prior year reserve development (favorable) unfavorable		5.6			0.1			—			5.7			6.4			17.9			—			24.3		(12.5	)	(99.4	)	—		(76.5	)
Pre-tax catastrophe losses		(0.7	)		2.1			—			1.4			4.6			5.5			—			10.1		N/M		(61.8	)	—		(86.1	)
Statutory underwriting profit (loss)		21.8			0.1			(0.7	)		21.2			0.4			(11.6	)		(0.1	)		(11.3	)	N/M		N/M		N/M		N/M
Net investment income		25.1			25.2			0.6			50.9			23.2			23.6			0.5			47.3		8.2		6.8		20.0		7.6
Fee income		—			—			6.1			6.1			—			—			6.2			6.2		—		—		(1.6	)	(1.6	)
Other statutory to GAAP adjustments		(1.0	)		0.7			(4.3	)		(4.6	)		1.7			(6.0	)		(4.1	)		(8.4	)	N/M		N/M		4.9		(45.2	)
Segment income (loss) before federal income taxes	$	45.9		$	26.0		$	1.7		$	73.6		$	25.3		$	6.0		$	2.5		$	33.8		81.4		N/M		(32.0	)	N/M
	Year ended December 31, 2004												Year ended December 31, 2003												% Change
	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	$	71.1		$	0.1		$	(4.1	)	$	67.1		$	(13.6	)	$	28.4		$	(1.9	)	$	12.9		N/M		(99.6	)	N/M		N/M
Prior year reserve development (favorable) unfavorable		(10.4	)		(4.1	)		—			(14.5	)		25.3			(7.9	)		23.0			40.4		N/M		(48.1	)	N/M		N/M
Pre-tax catastrophe losses		49.8			49.5			—			99.3			35.6			23.8			—			59.4		39.9		N/M		—		67.2
Statutory underwriting profit (loss)		31.7			(45.3	)		(4.1	)		(17.7	)		(74.5	)		12.5			(24.9	)		(86.9	)	N/M		N/M		(83.5	)	(79.6	)
Net investment income		97.1			97.6			2.2			196.9			91.1			92.4			2.0			185.5		6.6		5.6		10.0		6.1
Fee income		—			—			24.9			24.9			—			—			26.0			26.0		—		—		(4.2	)	(4.2	)
Other statutory to GAAP adjustments		5.8			5.7			(17.6	)		(6.1	)		17.7			(6.2	)		(18.6	)		(7.1	)	(67.2	)	N/M		(5.4	)	(14.1	)
Segment income (loss) before federal income taxes	$	134.6		$	58.0		$	5.4		$	198.0		$	34.3		$	98.7		$	(15.5	)	$	117.5		N/M		(41.2	)	N/M		68.5

7

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RESULTS

	Quarter ended December 31, 2004
	Personal Lines										Commercial Lines														Other Property and Casualty			Total Property and Casualty
(In millions)	Personal Automobile		Homeowners			Other Personal Lines		Total Personal Lines			Workers’ Compensation		Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	231.0	$	101.6		$	8.8	$	341.4		$	25.8	$	41.3		$	76.1		$	28.5		$	171.7		$	—		$	513.1
Net premiums earned	$	262.2	$	104.0		$	10.1	$	376.3		$	30.6	$	46.0		$	83.5		$	26.4		$	186.5		$	—		$	562.8
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		160.2		43.5			5.3		209.0			22.0		24.5			41.0			8.8			96.3			0.6			305.9
Prior year reserve development (favorable) unfavorable		7.5		(1.9	)		—		5.6			0.2		(3.3	)		3.7			(0.5	)		0.1			—			5.7
Pre-tax catastrophe losses		—		(1.2	)		0.5		(0.7	)		—		—			1.7			0.4			2.1			—			1.4
Loss adjustment expenses excluding prior year reserve development		25.6		6.3			0.4		32.3			6.1		4.3			10.3			1.2			21.9			0.2			54.4
Policy acquisition and other underwriting expenses									108.3														67.5			(0.1	)		175.7
Policyholders’ dividends									—														(1.5	)		—			(1.5	)
Statutory underwriting profit (loss)								$	21.8													$	0.1		$	(0.7	)	$	21.2
	Quarter ended December 31, 2003
	Personal Lines										Commercial Lines														Other Property and Casualty			Total Property and Casualty
	Personal Automobile		Homeowners			Other Personal Lines		Total Personal Lines			Workers’ Compensation		Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	256.4	$	101.6		$	9.9	$	367.9		$	25.5	$	38.3		$	72.4		$	20.5		$	156.7		$	—		$	524.6
Net premiums earned	$	277.6	$	99.4		$	10.7	$	387.7		$	30.2	$	44.1		$	79.4		$	22.6		$	176.3		$	—		$	564.0
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		179.6		47.6			5.6		232.8			22.3		18.3			35.8			4.5			80.9			0.1			313.8
Prior year reserve development unfavorable (favorable)		10.2		(3.8	)		—		6.4			20.3		2.3			(3.8	)		(0.9	)		17.9			—			24.3
Pre-tax catastrophe losses		0.3		3.8			0.5		4.6			—		0.1			3.1			2.3			5.5			—			10.1
Loss adjustment expenses excluding prior year reserve development		26.6		7.3			1.1		35.0			3.9		2.3			10.9			1.1			18.2			—			53.2
Policy acquisition and other underwriting expenses									108.5														68.7			—			177.2
Policyholders’ dividends									—														(3.3	)		—			(3.3	)
Statutory underwriting (loss) profit								$	0.4													$	(11.6	)	$	(0.1	)	$	(11.3	)

8

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RESULTS

	Year ended December 31, 2004
	Personal Lines												Commercial Lines														Other Property and Casualty			Total Property and Casualty
(In millions)	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation		Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	1,033.2		$	413.6		$	40.5		$	1,487.3		$	125.4	$	186.3		$	332.2		$	105.3		$	749.2		$	0.2		$	2,236.7
Net premiums earned	$	1,070.2		$	408.8		$	42.1		$	1,521.1		$	125.6	$	180.7		$	325.7		$	96.3		$	728.3		$	0.2		$	2,249.6
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		685.2			180.9			23.0			889.1			88.1		92.0			152.1			28.6			360.8			3.6			1,253.5
Prior year reserve development (favorable) unfavorable		(2.9	)		(6.8	)		(0.7	)		(10.4	)		6.7		(7.8	)		(15.1	)		12.1			(4.1	)		—			(14.5	)
Pre-tax catastrophe losses		1.9			46.0			1.9			49.8			—		0.2			48.3			1.0			49.5			—			99.3
Loss adjustment expenses excluding prior year reserve development		100.4			30.0			2.0			132.4			20.3		15.0			44.8			5.6			85.7			0.6			218.7
Policy acquisition and other underwriting expenses											428.5														283.1			0.1			711.7
Policyholders’ dividends											—														(1.4	)		—			(1.4	)
Statutory underwriting profit (loss)										$	31.7													$	(45.3	)	$	(4.1	)	$	(17.7	)
	Year ended December 31, 2003
	Personal Lines												Commercial Lines														Other Property and Casualty			Total Property and Casualty
	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation		Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	1,098.2		$	396.7		$	42.9		$	1,537.8		$	123.6	$	171.3		$	314.2		$	88.0		$	697.1		$	0.3		$	2,235.2
Net premiums earned	$	1,100.7		$	377.8		$	43.6		$	1,522.1		$	130.0	$	182.0		$	314.7		$	92.3		$	719.0		$	0.3		$	2,241.4
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		764.2			190.9			17.3			972.4			89.5		90.8			156.8			26.5			363.6			2.3			1,338.3
Prior year reserve development unfavorable (favorable)		26.0			(0.7	)		—			25.3			25.0		(3.6	)		(28.1	)		(1.2	)		(7.9	)		23.0			40.4
Pre-tax catastrophe losses		2.2			32.3			1.1			35.6			—		0.4			19.0			4.4			23.8			—			59.4
Loss adjustment expenses excluding prior year reserve development		106.9			29.8			2.0			138.7			14.1		10.3			43.2			6.8			74.4			(0.3	)		212.8
Policy acquisition and other underwriting expenses											424.6														253.5			0.2			678.3
Policyholders’ dividends											—														(0.9	)		—			(0.9	)
Statutory underwriting (loss) profit										$	(74.5	)												$	12.5		$	(24.9	)	$	(86.9	)

9

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Quarter ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
(In millions)	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.8	%	39.9	%	52.5	%	56.9	%	81.0	%	48.5	%	54.1	%	30.3	%	53.8	%	—	56.0	%
Catastrophe losses	N/M		(1.2	)%	5.0	%	(0.2	)%	N/M		N/M		2.0	%	1.5	%	1.1	%	—	0.2	%
Loss adjustment expenses	10.0	%	6.2	%	4.0	%	8.7	%	11.4	%	7.0	%	11.7	%	5.7	%	9.6	%	—	9.1	%
Policy acquisition and other underwriting expenses							31.7	%									39.3	%	—	34.3	%
Policyholders’ dividends							—										(0.8	)%	—	(0.3	)%
Combined							97.1	%									103.0	%	—	99.3	%
Policies in force	(11.9	)%	(8.7	)%	(7.3	)%	(10.2	)%	(0.7	)%	0.6	%	(0.8	)%	1.2	%	0.1	%	—	(9.1	)%
Retention (1)	78.3	%	80.9	%	N/M		79.7	%	80.3	%	76.0	%	79.4	%	N/M		78.6	%
	Quarter ended December 31, 2003
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	69.2	%	45.2	%	52.3	%	62.6	%	148.3	%	46.3	%	44.3	%	22.6	%	59.9	%	—	61.7	%
Catastrophe losses	0.1	%	3.8	%	4.7	%	1.2	%	N/M		0.2	%	3.9	%	10.2	%	3.1	%	—	1.8	%
Loss adjustment expenses	8.8	%	6.2	%	10.3	%	8.2	%	5.6	%	5.7	%	9.7	%	(1.8	)%	6.4	%	—	7.6	%
Policy acquisition and other underwriting expenses							29.5	%									43.9	%	—	33.8	%
Policyholders’ dividends							—										(1.8	)%	—	(0.6	)%
Combined							101.5	%									111.5	%	—	104.3	%
Policies in force	(5.1	)%	(1.9	)%	(5.4	)%	(3.7	)%	(3.6	)%	(9.1	)%	(2.8	)%	(21.1	)%	(10.9	)%	—	(4.5	)%
Retention (1)	80.5	%	82.6	%	N/M		81.6	%	59.3	%	62.2	%	66.2	%	N/M		64.8	%

(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

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Year ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
(In millions)	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.7	%	43.1	%	53.0	%	57.9	%	79.6	%	48.4	%	44.1	%	41.4	%	50.9	%	—	55.8	%
Catastrophe losses	0.2	%	11.3	%	4.5	%	3.3	%	N/M		0.1	%	14.8	%	1.0	%	6.8	%	—	4.4	%
Loss adjustment expenses	9.4	%	6.8	%	4.8	%	8.6	%	12.0	%	6.5	%	11.8	%	6.6	%	9.8	%	—	9.0	%
Policy acquisition and other underwriting expenses							28.8	%									37.8	%	—	31.8	%
Policyholders’ dividends							—										(0.2	)%	—	(0.1	)%
Combined							98.6	%									105.1	%	—	100.9	%
Policies in force	(11.9	)%	(8.7	)%	(7.3	)%	(10.2	)%	(0.7	)%	0.6	%	(0.8	)%	1.2	%	0.1	%	—	(9.1	)%
Retention (1)	78.3	%	80.9	%	N/M		79.7	%	76.0	%	77.8	%	79.0	%	N/M		78.0	%
	Year ended December 31, 2003
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	72.1	%	51.6	%	39.7	%	66.1	%	91.9	%	48.8	%	46.2	%	31.1	%	53.2	%	—	63.1	%
Catastrophe losses	0.2	%	8.5	%	2.5	%	2.3	%	N/M		0.2	%	6.0	%	4.8	%	3.3	%	—	2.6	%
Loss adjustment expenses	9.4	%	6.6	%	4.6	%	8.6	%	7.0	%	4.8	%	8.4	%	3.7	%	6.6	%	—	8.0	%
Policy acquisition and other underwriting expenses							27.6	%									36.4	%	—	30.3	%
Policyholders’ dividends							—										(0.1	)%	—	—
Combined							104.6	%									99.4	%	—	104.0	%
Policies in force	(5.1	)%	(1.9	)%	(5.4	)%	(3.7	)%	(3.6	)%	(9.1	)%	(2.8	)%	(21.1	)%	(10.9	)%	—	(4.5	)%
Retention (1)	80.5	%	82.6	%	N/M		81.6	%	66.0	%	70.2	%	72.8	%	N/M		70.9	%

(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.

11

LIFE COMPANIES

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

CONDENSED INCOME STATEMENTS

	Quarter ended December 31						Year ended December 31
(In millions)	2004		2003		% Change		2004		2003		% Change
REVENUES
Premiums	$	7.0	$	7.3	(4.1	)	$	39.5	$	41.9	(5.7	)
Fees:
Fees from surrenders		9.2		12.6	(27.0	)		46.4		66.9	(30.6	)
Other proprietary product fees		56.2		64.0	(12.2	)		233.6		252.4	(7.4	)
Net investment income		48.5		61.7	(21.4	)		217.4		270.8	(19.7	)
Brokerage and investment management income (1)		5.2		20.4	(74.5	)		22.9		107.0	(78.6	)
Other income		9.0		7.2	25.0			32.1		27.0	18.9
Total segment revenue		135.1		173.2	(22.0	)		591.9		766.0	(22.7	)
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		31.8		61.2	(48.0	)		232.0		262.9	(11.8	)
Policy acquisition expenses		13.8		25.6	(46.1	)		116.8		140.8	(17.0	)
Brokerage and investment management variable expenses (1)		2.5		12.5	(80.0	)		11.4		68.7	(83.4	)
Other operating expenses		70.5		68.2	3.4			220.4		284.9	(22.6	)
Total policy benefits, claims and operating expenses		118.6		167.5	(29.2	)		580.6		757.3	(23.3	)
Segment income before federal income taxes	$	16.5	$	5.7	N/M		$	11.3	$	8.7	29.9

(1) Brokerage and investment management income for 2004 primarily reflect fees earned from the management of assets for proprietary products. Brokerage and investment management income for 2003 primarily reflect fees earned from the distribution of non-proprietary insurance products. In 2004, variable expenses consist primarily of subadvisory fees and in 2003, these expenses primarily reflect commissions. The Company no longer sells non-proprietary products through its brokerage sales force.

12

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	December 31 2004			December 31 2003			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $3,826.6 and $3,912.6)	$	3,976.1		$	4,080.1		(2.5	)
Equity securities, at fair value (cost of $3.4 and $6.2)		5.6			10.3		(45.6	)
Mortgage loans		64.1			122.3		(47.6	)
Policy loans		256.4			268.0		(4.3	)
Other long-term investments		54.7			80.0		(31.6	)
Total investments		4,356.9			4,560.7		(4.5	)
Cash and cash equivalents		108.5			242.8		(55.3	)
Accrued investment income		67.4			76.2		(11.5	)
Premiums, accounts, and notes receivable, net		4.2			3.8		10.5
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		986.6			1,042.9		(5.4	)
Deferred policy acquisition costs (2)		694.1			894.6		(22.4	)
Deferred federal income tax asset		207.9			223.8		(7.1	)
Goodwill		6.8			6.8		—
Other assets (2)		241.7			150.6		60.5
Separate account assets		10,455.0			11,835.4		(11.7	)
Total assets	$	17,129.1		$	19,037.6		(10.0	)
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	3,462.3		$	3,556.8		(2.7	)
Outstanding claims, losses and loss adjustment expenses		110.4			105.2		4.9
Unearned premiums		3.3			3.5		(5.71	)
Contractholder deposit funds and other policy liabilities		374.7			675.5		(44.5	)
Total policy liabilities and accruals		3,950.7			4,341.0		(9.0	)
Expenses and taxes payable		473.0			453.9		4.2
Reinsurance premiums payable		12.3			12.1		1.7
Trust instruments supported by funding obligations		1,126.0			1,200.3		(6.2	)
Separate account liabilities		10,455.0			11,835.4		(11.7	)
Total liabilities		16,017.0			17,842.7		(10.2	)
SHAREHOLDER’S 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		1,000.0			1,075.0		(6.98	)
Accumulated other comprehensive loss		(21.1	)		(23.5	)	(10.2	)
Retained earnings		130.7			140.9		(7.2	)
Total shareholder’s equity		1,112.1			1,194.9		(6.9	)
Total liabilities and shareholder’s equity	$	17,129.1		$	19,037.6		(10.0	)

(1) The Life 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).

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

13

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME BY PRODUCT LINE

	Quarter ended December 31, 2004								Quarter ended December 31, 2003
(In millions)	Variable Annuities		Variable Universal Life		Other (3)		Total		Variable Annuities		Variable Universal Life		Other (3)		Total
REVENUES
Premiums	$	—	$	—	$	7.0	$	7.0	$	—	$	—	$	7.3	$	7.3
Fees:
Fees from surrenders		6.7		2.5		—		9.2		9.8		2.8		—		12.6
Other proprietary product fees		35.8		20.3		0.1		56.2		40.2		22.8		1.0		64.0
Net investment income		17.2		4.3		27.0		48.5		13.2		3.3		45.2		61.7
Brokerage and investment management income (1)		4.1		0.8		0.3		5.2		4.8		0.9		14.7		20.4
Other income		4.3		0.7		4.0		9.0		3.7		0.6		2.9		7.2
Total segment revenue		68.1		28.6		38.4		135.1		71.7		30.4		71.1		173.2
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		6.6		10.4		14.8		31.8		25.3		13.8		22.1		61.2
Policy acquisition expenses		9.3		4.1		0.4		13.8		21.0		3.7		0.9		25.6
Variable operating expenses		6.6		1.2		13.7		21.5		8.1		1.0		23.8		32.9
Loss on hedge derivatives (2)		19.7		—		—		19.7		—		—		—		—
		42.2		15.7		28.9		86.8		54.4		18.5		46.8		119.7
Segment income before other operating expenses	$	25.9	$	12.9	$	9.5		48.3	$	17.3	$	11.9	$	24.3		53.5
Other operating expenses								31.8								47.8
Segment income before federal income taxes							$	16.5							$	5.7

(1) Brokerage and investment management income for 2004 primarily reflect fees earned from the management of assets for proprietary products. Brokerage and investment management income for 2003 primarily reflect fees earned from the distribution of non-proprietary insurance products. Variable expenses for 2004 consist primarily of subadvisory fees while these expenses primarily reflect commissions in 2003. The Company no longer sells non-proprietary products through its brokerage sales force.

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

14

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME BY PRODUCT LINE

(In millions)	Year ended December 31, 2004								Year ended December 31, 2003
	Variable Annuities		Variable Universal Life		Other (3)		Total		Variable Annuities		Variable Universal Life		Other (3)		Total
REVENUES
Premiums	$	—	$	—	$	39.5	$	39.5	$	—	$	—	$	41.9	$	41.9
Fees:
Fees from surrenders		35.1		11.3		—		46.4		53.7		13.2		—		66.9
Other proprietary product fees		149.6		83.0		1.0		233.6		156.9		92.5		3.0		252.4
Net investment income		69.1		17.7		130.6		217.4		59.1		14.6		197.1		270.8
Brokerage and investment management income (1)		17.1		3.6		2.2		22.9		18.2		3.9		84.9		107.0
Other income		13.2		2.7		16.2		32.1		10.5		4.1		12.4		27.0
Total segment revenue		284.1		118.3		189.5		591.9		298.4		128.3		339.3		766.0
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		101.0		44.8		86.2		232.0		103.2		44.4		115.3		262.9
Policy acquisition expenses		91.7		23.3		1.8		116.8		120.0		18.5		2.3		140.8
Variable operating expenses		29.6		5.2		53.0		87.8		31.5		5.4		112.8		149.7
Loss on hedge derivatives (2)		25.1		—		—		25.1		—		—		—		—
		247.4		73.3		141.0		461.7		254.7		68.3		230.4		553.4
Segment income before other operating expenses	$	36.7	$	45.0	$	48.5		130.2	$	43.7	$	60.0	$	108.9		212.6
Other operating expenses								118.9								203.9
Segment income before federal income taxes							$	11.3							$	8.7

(1) Brokerage and investment management income for 2004 primarily reflect fees earned from the management of assets for proprietary products. Brokerage and investment management income for 2003 primarily reflect fees earned from the distribution of non-proprietary insurance products. Variable expenses for 2004 consist primarily of subadvisory fees while these expenses primarily reflect commissions in 2003. The Company no longer sells non-proprietary products through its brokerage sales force.

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

15

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME EXCLUDING CERTAIN NON-CASH ITEMS

	Quarter ended
(In millions)	December 31 2004			September 30 2004			December 31 2003
Segment income (loss) before federal income taxes	$	16.5		$	(8.7	)	$	5.7
Deferred acquisition cost, operating amortization and amortization of sales inducements, net		14.6			44.6			23.8
Property, plant and equipment, net		0.8			0.6			2.1
Statement of Position 98-1 amortization, net		0.7			1.1			1.1
VeraVest asset impairment		—			—			0.4
AIN goodwill impairment		—			—			2.1
Change in guaranteed minimum death and income benefit reserves		(19.0	)		0.3			(5.8	)
Total segment income excluding certain non-cash items	$	13.6		$	37.9		$	29.4
				Year ended December 31
				2004			2003
Segment income before federal income taxes				$	11.3		$	8.7
Deferred acquisition cost, operating amortization and amortization of sales inducements, net					130.8			131.1
Property, plant and equipment, net					3.2			3.7
Statement of Position 98-1 amortization, net					4.1			4.1
VeraVest asset impairment					—			11.5
AIN goodwill impairment					—			2.1
Change in guaranteed minimum death and income benefit reserves					(30.7	)		(55.0	)
Total segment income excluding certain non-cash items				$	118.7		$	106.2

16

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SELECTED FINANCIAL INFORMATION - VARIABLE ANNUITIES

	Quarter ended December 31								Year ended December 31
(In millions)	2004			2003			% Change		2004			2003			% Change
SEPARATE ACCOUNT INDIVIDUAL ANNUITIES
Balance at beginning of period	$	8,973.4		$	10,034.9		(10.6	)	$	10,545.8		$	10,611.9		(0.6	)
Direct premiums and deposits		7.4			21.0		(64.8	)		50.4			103.9		(51.5	)
Redemptions		(425.2	)		(440.3	)	(3.4	)		(1,893.2	)		(2,135.8	)	(11.4	)
Market appreciation		737.5			904.2		(18.4	)		788.3			1,946.3		(59.5	)
Transfers and other (1)		22.0			26.0		(15.4	)		(176.2	)		19.5		N/M
Balance at end of period	$	9,315.1		$	10,545.8		(11.7	)	$	9,315.1		$	10,545.8		(11.7	)

	Quarter ended
	December 31 2004			September 30 2004			December 31 2003
VARIABLE INDIVIDUAL ANNUITIES (2)
Redemptions	$	478.3		$	491.7		$	505.9
Redemption rates (3)		19	%		19	%		18	%

	December 31 2004		December 31 2003		% Change
VARIABLE INDIVIDUAL ANNUITIES
Account values	$	10,460.5	$	11,742.6	(10.9	)
Net amount at risk	$	1,937.9	$	2,551.2	(24.0	)
Deferred acquisition cost asset and capitalized sales inducements	$	557.0	$	660.2	(15.6	)
Value of surrender charges (inforce block)	$	360.8	$	458.3	(21.3	)

(1) Reserves for individual annuities at December 31, 2004 include a reclassification of $107.1 million to general account liabilities as a result of the implementation of SOP 03-1 on January 1, 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.

17

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES

(In millions)	December 31 2004		December 31 2003		% Change
GENERAL ACCOUNT RESERVES
Insurance
Traditional life	$	821.2	$	845.8	(2.9	)
Universal life (1)		579.8		633.0	(8.4	)
Variable universal life (2)		242.9		249.8	(2.8	)
Individual health (3)		257.9		260.3	(0.9	)
Total insurance		1,901.8		1,988.9	(4.4	)
Annuities
Individual annuities (4)		1,378.0		1,363.1	1.1
Group annuities		428.7		572.5	(25.1	)
Total annuities		1,806.7		1,935.6	(6.7	)
Guaranteed investment contracts
Contractholder deposit funds and other policy liabilities		30.0		207.5	(85.5	)
Total general account reserves	$	3,738.5	$	4,132.0	(9.5	)
Trust instruments supported by funding obligations	$	1,126.0	$	1,200.3	(6.2	)
SEPARATE ACCOUNT LIABILITIES
Variable universal life	$	1,025.3	$	1,053.2	(2.6	)
Variable individual annuities (4)		9,315.1		10,545.8	(11.7	)
Total individual		10,340.4		11,599.0	(10.9	)
Group variable universal life		28.3		127.0	(77.7	)
Group annuities		86.3		109.4	(21.1	)
Total group		114.6		236.4	(51.5	)
Total separate account liabilities	$	10,455.0	$	11,835.4	(11.7	)

(1) Universal life reserves include reinsured balances of $579.4 and $631.7 million at December 31, 2004 and December 31, 2003, respectively.

(2) Variable universal life reserves include group variable universal life reserves of $11.1 and $13.2 million at December 31, 2004 and December 31, 2003, respectively.

(3) Individual health reserves include reinsured balances of $257.3 and $258.9 million at December 31, 2004 and December 31, 2003, respectively.

(4) Reserves for individual annuities at December 31, 2004 include a reclassification of $107.1 million from separate account liabilities as a result of the implementation of SOP 03-1 on January 1, 2004.

18

INVESTMENTS

ALLMERICA FINANCIAL CORPORATION

NET INVESTMENT INCOME

(In millions, except yields)	Year ended December 31, 2004
	Property and Casualty (1)			Yield		Life Companies			Yield		Total			Yield
Fixed maturities	$	199.7		5.68	%	$	217.0		5.88	%	$	416.7		5.78	%
Equity securities		2.0		—			0.1		—			2.1		—
Mortgages		4.2		8.19	%		8.0		8.42	%		12.2		8.34	%
All other		(4.7	)	—			(0.5	)	—			(5.2	)	—
Investment expenses		(4.1	)	—			(7.2	)	—			(11.3	)	—
Total	$	197.1		5.42	%	$	217.4		5.18	%	$	414.5		5.30	%
	Year ended December 31, 2003
	Property and Casualty (1)			Yield		Life Companies			Yield		Total			Yield
Fixed maturities	$	189.8		5.99	%	$	235.1		5.99	%	$	424.9		5.99	%
Equity securities		0.5		4.62	%		0.5		3.01	%		1.0		3.65	%
Mortgages		6.8		9.40	%		12.5		8.18	%		19.3		8.58	%
All other		(8.4	)	—			28.1		—			19.7		—
Investment expenses		(3.8	)	—			(5.4	)	—			(9.2	)	—
Total	$	184.9		5.55	%	$	270.8		5.88	%	$	455.7		5.74	%

(1) Includes purchase accounting adjustments of $3.2 million and $3.3 million for the year ended December 31, 2004 and 2003, respectively. Also includes corporate eliminations of $0.6 million for the years ended December 31, 2004 and 2003.

19

ALLMERICA FINANCIAL CORPORATION

COMPONENTS OF NET REALIZED INVESTMENT GAINS

	Quarter ended December 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	$	3.4		$	7.8		$	11.2		$	5.2		$	4.5		$	9.7
Other than temporary impairments		—			(0.9	)		(0.9	)		(1.9	)		(3.5	)		(5.4	)
Other		—			0.1			0.1			1.5			(0.1	)		1.4
Net realized investment gains	$	3.4		$	7.0		$	10.4		$	4.8		$	0.9		$	5.7
	Year ended December 31
	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	$	22.7		$	21.9		$	44.6		$	23.2		$	63.5		$	86.7
Other than temporary impairments		(1.9	)		(5.1	)		(7.0	)		(17.7	)		(43.9	)		(61.6	)
Other		(0.7	)		(8.2	)		(8.9	)		2.1			(3.1	)		(1.0	)
Net realized investment gains	$	20.1		$	8.6		$	28.7		$	7.6		$	16.5		$	24.1

20

ALLMERICA FINANCIAL CORPORATION

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

(In millions)	December 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	$	1.9	$	2.3	$	4.2	$	285.4	$	367.3	$	652.7
7 - 12 months		3.0		3.1		6.1		156.5		175.5		332.0
Greater than 12 months		8.1		7.4		15.5		229.4		196.0		425.4
Total investment grade fixed maturities		13.0		12.8		25.8		671.3		738.8		1,410.1
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		0.3		0.1		0.4		31.6		5.3		36.9
7 - 12 months		1.4		0.5		1.9		16.9		3.4		20.3
Greater than 12 months		—		—		—		—		1.0		1.0
Total below investment grade fixed maturities		1.7		0.6		2.3		48.5		9.7		58.2
Equity securities		0.1		—		0.1		0.7		—		0.7
Total fixed maturities and equity securities	$	14.8	$	13.4	$	28.2	$	720.5	$	748.5	$	1,469.0
	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) NAIC Designation		December 31, 2004
		Amortized Cost						Fair Value
	Rating Agency Equivalent Designation	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,601.9	$	2,374.4	$	4,976.3	$	2,676.9	$	2,436.9	$	5,113.8
2	Baa		908.8		1,258.7		2,167.5		937.3		1,320.3		2,257.6
3	Ba		89.5		130.6		220.1		94.8		138.9		233.7
4	B		92.2		40.6		132.8		96.7		45.9		142.6
5	Caa and lower		31.1		13.7		44.8		36.7		19.6		56.3
6	In or near default		3.3		8.6		11.9		3.7		14.5		18.2
Total fixed maturities		$	3,726.8	$	3,826.6	$	7,553.4	$	3,846.1	$	3,976.1	$	7,822.2
		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)	2004			Q4 04			Q3 04			Q2 04			Q1 04			2003			Q4 03			Q3 03			Q2 03			Q1 03
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	134.6		$	45.9		$	42.1		$	35.8		$	10.8		$	34.3		$	25.3		$	11.5		$	0.2		$	(2.7	)
Commercial Lines		58.0			26.0			(7.1	)		12.6			26.5			98.7			6.0			18.1			35.2			39.4
Other Property and Casualty		5.4			1.7			1.7			0.7			1.3			(15.5	)		2.5			2.6			(22.1	)		1.5
Total Property and Casualty		198.0			73.6			36.7			49.1			38.6			117.5			33.8			32.2			13.3			38.2
Life Companies		11.3			16.5			(8.7	)		(6.3	)		9.8			8.7			5.7			(8.1	)		13.5			(2.4	)
Interest expense on corporate debt		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment income before federal income taxes	$	169.4		$	80.1		$	18.0		$	32.9		$	38.4		$	86.3		$	29.5		$	14.1		$	16.9		$	25.8
Federal income tax (expense) benefit on segment income		(28.6	)		(21.2	)		1.6			(3.8	)		(5.2	)		6.1			0.8			5.6			1.8			(2.1	)
Total segment income after federal income taxes		140.8			58.9			19.6			29.1			33.2			92.4			30.3			19.7			18.7			23.7
Federal income tax settlement		30.4			0.1			—			0.2			30.1			—			—			—			—			—
Net realized investment gains (losses), net of amortization and taxes		16.1			5.2			(3.7	)		4.4			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		(0.1	)		0.1			1.9			—			(2.1	)		3.7			—			0.4			0.3			3.0
Income from sale of universal life business, net of taxes		—			—			—			—			—			3.6			—			—			—			3.6
Gains (losses) on derivative instruments, net of taxes		0.8			0.5			0.1			0.2			—			(4.5	)		(5.4	)		0.3			(0.4	)		1.0
Restructuring costs, net of taxes		(5.5	)		(1.7	)		(0.2	)		(1.5	)		(2.1	)		(18.7	)		(14.9	)		(0.8	)		(0.8	)		(2.2	)
Income before cumulative effect of accounting change		182.5			63.1			17.7			32.4			69.3			86.9			14.0			11.4			24.4			37.1
Cumulative effect of change in accounting principle, net of taxes		(57.2	)		—			—			—			(57.2	)		—			—			—			—			—
NET INCOME	$	125.3		$	63.1		$	17.7		$	32.4		$	12.1		$	86.9		$	14.0		$	11.4		$	24.4		$	37.1
PER SHARE DATA (DILUTED)
NET INCOME	$	2.34		$	1.18		$	0.33		$	0.60		$	0.23		$	1.63		$	0.26		$	0.21		$	0.46		$	0.70
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)		53.7			53.7			53.6			53.7			53.7			53.2			53.5			53.3			53.0			53.0
BALANCE SHEET
Total investments				$	8,265.7		$	8,253.1		$	8,091.3		$	8,239.5					$	8,185.6		$	8,279.5		$	8,219.0		$	8,172.2
Separate account assets				$	10,455.0		$	10,086.0		$	10,740.3		$	11,304.9					$	11,835.4		$	11,546.0		$	11,719.0		$	11,016.2
Total assets				$	23,435.1		$	23,107.0		$	23,664.2		$	24,380.4					$	25,112.5		$	25,008.0		$	25,173.2		$	24,372.8
Total shareholders’ equity				$	2,339.5		$	2,294.2		$	2,207.2		$	2,289.3					$	2,220.2		$	2,196.6		$	2,225.6		$	2,115.9
Book value per share				$	43.91		$	43.09		$	41.48		$	43.04					$	41.89		$	41.42		$	41.96		$	39.86
Book value per share, excluding accumulated other comprehensive income				$	43.85		$	42.69		$	42.36		$	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 interest expense on 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 Property and Casualty		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
Interest expense on 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 (loss) income		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 interest expense on 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	$	36.10	$	30.71	—
September 30	$	34.61	$	26.05	—
December 31	$	33.00	$	25.45	—
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 JANUARY 31, 2005

Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
Property and Casualty Insurance Companies:
The Hanover Insurance Company	A-	BBB+	Baa1
Citizens Insurance Company of America	A-	BBB+	—
Life Insurance Companies:
Allmerica Financial Life Insurance and Annuity Company	B+	BB	Ba1
First Allmerica Financial Life Insurance Company	B+	BB	Ba1
Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s
Allmerica Financial Corporation Senior Debt	bb+	BB	Ba1
Allmerica Financial Corporation Capital Securities	bb-	B	Ba2
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

Debra Casey, CPA

Director, Investor Relations

(508) 855-6658

dcasey@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