EX-99.2 3 dex992.htm ALLMERICA FINANCIAL CORPORATION STATISTICAL SUPPLEMENT Allmerica Financial Corporation Statistical Supplement

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

GAAP Underwriting Results

    7-8

Life Companies

     

Condensed Income Statements

    9

Life Companies Consolidated Balance Sheets

    10

Segment Income by Product Line

    11

Segment Income Excluding Certain Non-Cash Items

    12

Selected Financial Information-Variable Annuities

    13

Future Policy Benefits and Account Balances

    14

Investments

     

Net Investment Income

    15

Net Realized Investment Gains (Losses)

    16

Unrealized Losses

    17

Credit Quality of Fixed Maturities

    18

Property and Casualty Statutory Ratios

    19

Historical Financial Highlights

    20-21

Other Information

    Inside back cover

Corporate Information

     

Market and Dividend Information

     

Industry Ratings

     

ALLMERICA FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

 

(In millions, except per share data)

    Quarter ended March 31
  
   2005
     2004
     % Change
  

SEGMENT INCOME

                       

Property and Casualty

                       

Personal Lines

    $ 39.2     $ 10.8     N/M  

Commercial Lines

      20.5       26.5     (22.6 )

Other

      2.1       1.3     61.5  
    
 
 

Total Property and Casualty

      61.8       38.6     60.1  
    
 
 

Life Companies

      (7.4 )     9.8     N/M  

Interest expense on corporate debt

      (10.0 )     (10.0 )   —    
    
 
 

Total segment income

      44.4       38.4     15.6  

Federal income tax expense on segment income

      (10.2 )     (5.2 )   96.2  
    
 
 

Total segment income after taxes

    $ 34.2     $ 33.2     3.0  
    
 
 

RECONCILIATION FROM SEGMENT

                       

INCOME TO NET INCOME

                       

Total segment income after taxes

    $ 34.2     $ 33.2     3.0  

Federal income tax settlement

      —         30.1     N/M  

Net realized investment gains, net of taxes and amortization

      12.8       10.2     25.5  

Losses on derivative instruments, net of taxes

      (0.1 )     —       N/M  

Losses from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes

      —         (2.1 )   N/M  

Restructuring costs, net of taxes

      (0.4 )     (2.1 )   (81.0 )
    
 
 

Income before effect of accounting change

      46.5       69.3     (32.9 )

Cumulative effect of change in accounting principle, net of taxes

      —         (57.2 )   N/M  
    
 
 

Net income

    $ 46.5     $ 12.1     N/M  
    
 
 

PER SHARE DATA (DILUTED)

                       

Total segment income

    $ 0.83     $ 0.72     15.3  

Federal income taxes on segment income

      (0.19 )     (0.10 )   90.0  
    
 
 

Total segment income after taxes

      0.64       0.62     3.2  

Federal income tax settlement

      —         0.56     N/M  

Net realized investment gains, net of taxes and amortization

      0.23       0.19     21.1  

Losses from retirement of funding agreements and trust instruments supported by funding obligations, net of taxes

      —         (0.04 )   N/M  

Restructuring costs, net of taxes

      (0.01 )     (0.04 )   (75.0 )
    
 
 

Income before effect of accounting change

      0.86       1.29     (33.3 )

Cumulative effect of change in accounting principle, net of taxes

      —         (1.06 )   N/M  
    
 
 

Net income

    $ 0.86     $ 0.23     N/M  
    
 
 

 

1

ALLMERICA FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

 

(In millions, except per share data)

   

March 31

2005

    

December 31

2004

     % Change
  

BALANCE SHEET

                       

Shareholders’ equity

                       

The Hanover Insurance Company (consolidated)

    $ 1,680.4     $ 1,680.2     —    

Allmerica Financial Life Insurance and Annuity Company (consolidated)

      1,101.1       1,112.1     (1.0 )

AFC Holding Company and other

      (456.3 )     (452.8 )   0.8  
    
 
     

Total shareholders’ equity

    $ 2,325.2     $ 2,339.5     (0.6 )
    
 
     

Total adjusted statutory capital

                       

The Hanover Insurance Company (consolidated)

    $ 1,135.7     $ 1,098.8     3.4  

Allmerica Financial Life Insurance and Annuity Company (consolidated)

    $ 588.7     $ 581.9     1.2  

First Allmerica Financial Life Insurance Company

    $ 209.9     $ 207.7     1.1  

The Hanover Insurance Company (consolidated) premium to surplus ratio

      2.0:1       2.0:1     N/M  

Allmerica Financial Life Insurance and Annuity Company (consolidated) estimated risk based capital ratio

      506 %     472 %   34.0  

Book value per share

                       

The Hanover Insurance Company (consolidated)

    $ 31.46     $ 31.53     (0.2 )

Allmerica Financial Life Insurance and Annuity Company (consolidated)

      20.61       20.87     (1.2 )

AFC Holding Company and other

      (8.54 )     (8.49 )   0.6  
    
 
     

Total book value per share

    $ 43.53     $ 43.91     (0.9 )
    
 
     

Book value per share, excluding accumulated other comprehensive income

    $ 44.67     $ 43.85     1.9  
    
 
     

Shares outstanding (1)

      53.4       53.2        

Stock price

    $ 35.95     $ 32.83     9.5  

Price/book value per share

      0.8 x     0.7 x   0.1 x

Debt/equity

      21.9 %     21.7 %   0.2 pts

Debt/total capital

      18.0 %     17.9 %   0.1 pts
(1) Shares outstanding do not include common stock equivalents.

 

2

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENTS

 

(In millions, except per share data)

    Quarter ended March 31
  
   2005
    2004
     % Change
  

REVENUES

                      

Premiums

    $ 569.3    $ 576.5     (1.2 )

Fees and other income

      87.1      102.4     (14.9 )

Net investment income

      101.1      104.7     (3.4 )

Net realized investment gains

      20.2      15.7     28.7  
    
  
 

Total revenues

      777.7      799.3     (2.7 )
    
  
 

BENEFITS, LOSSES AND EXPENSES

                      

Policy benefits, claims, losses and loss adjustment expenses

      449.0      459.5     (2.3 )

Policy acquisition expenses

      151.6      150.9     0.5  

Losses from retirement of funding agreements and trust instruments supported by funding obligations

      —        3.2     N/M  

Losses on derivative instruments

      0.4      1.0     (60.0 )

Restructuring costs

      0.7      3.3     (78.8 )

Other operating expenses

      115.0      135.5     (15.1 )
    
  
 

Total benefits, losses and expenses

      716.7      753.4     (4.9 )
    
  
 

Income before federal income taxes

      61.0      45.9     32.9  

Federal income tax expense (benefit)

      14.5      (23.4 )   N/M  
    
  
 

Income before cumulative effect of change in accounting principle

      46.5      69.3     (32.9 )

Cumulative effect of change in accounting principle

      —        57.2     N/M  
    
  
 

Net income

    $ 46.5    $ 12.1     N/M  
    
  
 

PER SHARE DATA (DILUTED)

                      

Income before cumulative effect of change in accounting principle

    $ 0.86    $ 1.29     (33.3 )

Cumulative effect of change in accounting principle

      —        (1.06 )   N/M  
    
  
 

Net income (1)

    $ 0.86    $ 0.23     N/M  
    
  
 

Weighted average shares outstanding

      53.8      53.7        
    
  
     
(1) Basic net income per share was $0.87 and $0.23 for the quarters ended March 31, 2005 and 2004, respectively.

 

3

ALLMERICA FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

 

(In millions, except per share data)

    March 31
2005
     December 31
2004
     % Change
  

ASSETS

                       

Investments:

                       

Fixed maturities, at fair value (amortized cost of $7,103.2 and $7,553.4)

    $ 7,227.6     $ 7,822.2     (7.6 )

Equity securities, at fair value (cost of $13.7)

      16.8       17.0     (1.2 )

Mortgage loans

      113.5       114.8     (1.1 )

Policy loans

      254.0       256.4     (0.9 )

Other long-term investments

      52.0       55.3     (6.0 )
    
 
 

Total investments

      7,663.9       8,265.7     (7.3 )
    
 
 

Cash and cash equivalents

      336.9       486.5     (30.8 )

Accrued investment income

      115.2       118.2     (2.5 )

Premiums, accounts and notes receivable, net

      503.8       485.4     3.8  

Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums

      1,972.2       2,026.4     (2.7 )

Deferred policy acquistion costs

      875.6       905.5     (3.3 )

Deferred federal income taxes

      435.9       415.1     5.0  

Goodwill

      128.2       128.2     —    

Other assets

      410.1       433.2     (5.3 )

Separate account assets

      9,726.0       10,455.0     (7.0 )
    
 
 

Total assets

    $ 22,167.8     $ 23,719.2     (6.5 )
    
 
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

                       

LIABILITIES

                       

Policy liabilities and accruals:

                       

Future policy benefits

    $ 3,403.4     $ 3,462.3     (1.7 )

Outstanding claims, losses and loss adjustment expenses

      3,162.3       3,179.0     (0.5 )

Unearned premiums

      1,031.5       1,029.8     0.2  

Contractholder deposit funds and other policy liabilities

      346.5       379.5     (8.7 )
    
 
 

Total policy liabilities and accruals

      7,943.7       8,050.6     (1.3 )
    
 
 

Expenses and taxes payable

      982.4       1,152.8     (14.8 )

Reinsurance premiums payable

      74.7       86.5     (13.6 )

Trust instruments supported by funding obligations

      607.0       1,126.0     (46.1 )

Long-term debt

      508.8       508.8     —    

Separate account liabilities

      9,726.0       10,455.0     (7.0 )
    
 
 

Total liabilities

      19,842.6       21,379.7     (7.2 )
    
 
 

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

      1,782.9       1,782.1     —    

Accumulated other comprehensive (loss) income

      (60.7 )     3.0     N/M  

Retained earnings

      984.9       943.4     4.4  

Treasury stock at cost (7.0 and 7.2 million shares)

      (382.5 )     (389.6 )   (1.8 )
    
 
 

Total shareholders’ equity

      2,325.2       2,339.5     (0.6 )
    
 
 

Total liabilities and shareholders’ equity

    $ 22,167.8     $ 23,719.2     (6.5 )
    
 
 

 

 

4

PROPERTY & CASUALTY

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS

 

     Quarter ended March 31
  

(In millions)

    2005
    2004
     % Change
  
REVENUES                      

Net premiums written

    $ 548.4    $ 561.3     (2.3 )

Change in unearned premiums, net of prepaid reinsurance premiums

      1.8      (5.0 )   N/M  
    
  
 

Net premiums earned

      550.2      556.3     (1.1 )

Net investment income

      50.8      47.7     6.5  

Other income

      12.9      13.3     (3.0 )
    
  
 

Total segment revenue

      613.9      617.3     (0.6 )
    
  
 
LOSSES AND OPERATING EXPENSES                      

Policy benefits, claims, losses and loss adjustment expenses

      371.5      394.0     (5.7 )

Policy acquisition expenses

      114.1      117.1     (2.6 )

Other operating expenses

      66.5      67.6     (1.6 )
    
  
 

Total losses and operating expenses

      552.1      578.7     (4.6 )
    
  
 

Segment income before federal income taxes

    $ 61.8    $ 38.6     60.1  
    
  
 

 

 

5

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

CONSOLIDATED BALANCE SHEETS (1)

 

(In millions, except per share data)

    March 31
2005
    December 31
2004
    % Change
  
ASSETS                     

Investments:

                     

Fixed maturities, at fair value (amortized cost of $3,672.0 and $3,677.5)

    $ 3,722.3    $ 3,792.0    (1.8 )

Equity securities, at fair value (cost of $1.0)

      2.2      2.1    4.8  

Mortgage loans

      50.7      51.3    (1.2 )

Other long-term investments

      0.6      0.6    —    
    
  
  

Total investments

      3,775.8      3,846.0    (1.8 )
    
  
  

Cash and cash equivalents

      112.2      190.4    (41.1 )

Accrued investment income

      51.1      50.1    2.0  

Premiums, accounts, and notes receivable, net

      501.3      481.2    4.2  

Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums

      999.4      1,039.8    (3.9 )

Deferred policy acquistion costs

      206.6      211.4    (2.3 )

Deferred federal income tax asset

      231.4      206.8    11.9  

Goodwill

      121.4      121.4    —    

Other assets

      182.9      174.2    5.0  
    
  
  

Total assets

    $ 6,182.1    $ 6,321.3    (2.2 )
    
  
  
LIABILITIES AND SHAREHOLDER’S EQUITY                     
LIABILITIES                     

Policy liabilities and accruals:

                     

Outstanding claims, losses and loss adjustment expenses

    $ 3,052.8    $ 3,068.6    (0.5 )

Unearned premiums

      1,028.3      1,026.5    0.2  

Contractholder deposit funds and other policy liabilities

      5.0      4.8    4.2  
    
  
  

Total policy liabilities and accruals

      4,086.1      4,099.9    (0.3 )
    
  
  

Expenses and taxes payable

      351.6      467.0    (24.7 )

Reinsurance premiums payable

      64.0      74.2    (13.7 )
    
  
  

Total liabilities

      4,501.7      4,641.1    (3.0 )
    
  
  
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

      6.3      48.0    (86.9 )

Retained earnings

      1,499.9      1,458.0    2.9  
    
  
  

Total shareholder’s equity

      1,680.4      1,680.2    —    
    
  
  

Total liabilities and shareholder’s equity

    $ 6,182.1    $ 6,321.3    (2.2 )
    
  
  
(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

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

 

(In millions)

 

    Quarter ended March 31, 2005
  
    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

   $ 246.5     $ 81.0     $ 8.3     $ 335.8     $ 40.1     $ 50.2     $ 89.0     $ 33.3     $ 212.6     $ —       $ 548.4  
   
 
 
 
 
 
 
 
 
 
 

Net premiums earned

   $ 247.3     $ 103.3     $ 9.9     $ 360.5     $ 32.2     $ 46.5     $ 82.9     $ 28.1     $ 189.7     $ —       $ 550.2  

Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses

     167.7       48.7       3.8       220.2       24.0       24.4       39.7       11.8       99.9       —         320.1  

Prior year reserve development (favorable) unfavorable

     (3.5 )     (5.8 )     (0.2 )     (9.5 )     3.8       0.1       (4.7 )     (4.1 )     (4.9 )     0.7       (13.7 )

Pre-tax catastrophe losses

     —         6.5       0.3       6.8       —         —         4.5       1.0       5.5       —         12.3  

Loss adjustment expenses excluding prior year reserve development

     25.7       5.4       0.5       31.6       5.2       3.8       9.9       2.2       21.1       0.1       52.8  

Policy acquisition expenses and other underwriting expenses

                             99.6                                       73.3       (0.3 )     172.6  
                           
                                 
 
 

GAAP underwriting profit (loss)

                             11.8                                       (5.2 )     (0.5 )     6.1  

Net investment income

                             24.9                                       24.6       1.3       50.8  

Other income

                             3.9                                       3.3       5.7       12.9  

Other operating expenses

                             (1.4 )                                     (2.2 )     (4.4 )     (8.0 )
                           
                                 
 
 

Segment income before federal income taxes

                           $ 39.2                                     $ 20.5     $ 2.1     $ 61.8  
                           
                                 
 
 
    Quarter ended March 31, 2004
  
    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

   $ 276.7     $ 80.5     $ 8.8     $ 366.0     $ 36.6     $ 48.8     $ 85.6     $ 24.3     $ 195.3     $ —       $ 561.3  
   
 
 
 
 
 
 
 
 
 
 

Net premiums earned

   $ 270.4     $ 99.1     $ 10.7     $ 380.2     $ 30.7     $ 43.4     $ 78.6     $ 23.4     $ 176.1     $ —       $ 556.3  

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       6.6       93.7       —         337.1  

Prior year reserve development (favorable) unfavorable

     (0.5 )     (2.3 )     (0.7 )     (3.5 )     (1.9 )     (7.1 )     (8.6 )     1.1       (16.5 )     0.9       (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

     26.9       6.8       0.9       34.6       4.6       3.3       11.2       1.0       20.1       0.2       54.9  

Policy acquisition expenses and other underwriting expenses

                             106.8                                       71.0       (0.3 )     177.5  
                           
                                 
 
 

GAAP underwriting (loss) profit

                             (15.7 )                                     1.3       (0.8 )     (15.2 )

Net investment income

                             23.5                                       23.7       0.5       47.7  

Other income

                             4.0                                       3.3       6.0       13.3  

Other operating expenses

                             (1.0 )                                     (1.8 )     (4.4 )     (7.2 )
                           
                                 
 
 

Segment income before federal income taxes

                           $ 10.8                                     $ 26.5     $ 1.3     $ 38.6  
                           
                                 
 
 

 

7

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS

 

    Quarter ended March 31, 2005
  
    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

   66.3 %   42.2 %   37.4 %   58.6 %   89.8 %   52.5 %   44.6 %   27.4 %   51.7 %   N/M   56.3 %

Catastrophe losses

   —       6.3 %   3.0 %   1.9 %   —       —       5.4 %   3.6 %   2.9 %   N/M   2.2 %

Loss adjustment expenses

   10.5 %   4.5 %   4.0 %   8.6 %   11.8 %   8.4 %   9.5 %   7.8 %   9.4 %   N/M   8.9 %

Policy acquisition and other underwriting expenses

                     27.6 %                           38.6 %   N/M   31.4 %

Policyholders’ dividends

                     —                               0.2 %   N/M   0.1 %
                     
                         
 
 

Combined

                     96.7 %                           102.8 %   N/M   98.9 %
                     
                         
 
 

Policies in force

   (12.5 )%   (9.3 )%   (7.5 )%   (10.7 )%   (0.1 )%   0.6 %   (1.0 )%   1.7 %   0.3 %   —     (9.5 )%

Retention (1)

   78.4 %   80.7 %   N/M     79.7 %   87.8 %   79.5 %   81.1 %   N/M     82.4 %          
    Quarter ended March 31, 2004
  
    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

   69.5 %   47.9 %   70.1 %   63.9 %   69.1 %   47.9 %   41.7 %   31.2 %   46.6 %   N/M   58.6 %

Catastrophe losses

   —       14.2 %   4.7 %   3.8 %   —       —       8.3 %   —       3.7 %   N/M   3.8 %

Loss adjustment expenses

   9.2 %   5.8 %   8.4 %   8.3 %   9.1 %   3.9 %   11.6 %   6.0 %   8.5 %   N/M   8.4 %

Policy acquisition and other underwriting expenses

                     28.1 %                           40.3 %   N/M   31.9 %

Policyholders’ dividends

                     —                               0.1 %   N/M   —    
                     
                         
 
 

Combined

                     104.1 %                           99.2 %   N/M   102.7 %
                     
                         
 
 

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 %   N/M     81.2 %   74.8 %   84.4 %   79.9 %   N/M     80.1 %          
(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.

 

8

LIFE COMPANIES

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

CONDENSED INCOME STATEMENTS

 

     Quarter ended March 31
  

(In millions)

    2005
     2004
    % Change
  

REVENUES

                      

Premiums

    $ 19.1     $ 20.2    (5.4 )

Fees:

                      

Fees from surrenders

      9.2       13.8    (33.3 )

Other proprietary product fees

      55.0       62.3    (11.7 )

Net investment income

      50.3       56.9    (11.6 )

Other income

      12.1       14.8    (18.2 )
    
 
  

Total segment revenue

      145.7       168.0    (13.3 )
    
 
  

POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES

                      

Policy benefits, claims and losses

      76.7       65.4    17.3  

Policy acquisition expenses

      35.5       32.3    9.9  

Other operating expenses

      40.9       60.5    (32.4 )
    
 
  

Total policy benefits, claims and operating expenses

      153.1       158.2    (3.2 )
    
 
  

Segment (loss) income before federal income taxes

    $ (7.4 )   $ 9.8    N/M  
    
 
  

 

9

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

CONSOLIDATED BALANCE SHEETS (1)

 

(In millions, except per share data)

    March 31
2005
     December 31
2004
     % Change
  

ASSETS

                       

Investments:

                       

Fixed maturities, at fair value (amortized cost of $3,312.5 and $3,826.6)

    $ 3,383.5     $ 3,976.1     (14.9 )

Equity securities, at fair value (cost of $3.5 and $3.4)

      5.3       5.6     (5.4 )

Mortgage loans

      63.3       64.1     (1.2 )

Policy loans

      254.0       256.4     (0.9 )

Other long-term investments

      51.5       54.7     (5.9 )
    
 
 

Total investments

      3,757.6       4,356.9     (13.8 )
    
 
 

Cash and cash equivalents

      216.3       280.9     (23.0 )

Accrued investment income

      62.9       67.4     (6.7 )

Premiums, accounts, and notes receivable, net

      2.5       4.2     (40.5 )

Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums

      972.8       986.6     (1.4 )

Deferred policy acquistion costs

      669.0       694.1     (3.6 )

Deferred federal income tax asset

      203.7       207.9     (2.0 )

Other assets

      214.2       248.5     (13.8 )

Separate account assets

      9,726.0       10,455.0     (7.0 )
    
 
 

Total assets

    $ 15,825.0     $ 17,301.5     (8.5 )
    
 
 

LIABILITIES AND SHAREHOLDER’S EQUITY

                       

LIABILITIES

                       

Policy liabilities and accruals:

                       

Future policy benefits

    $ 3,403.4     $ 3,462.3     (1.7 )

Outstanding claims, losses and loss adjustment expenses

      109.5       110.4     (0.8 )

Unearned premiums

      3.2       3.3     (3.0 )

Contractholder deposit funds and other policy liabilities

      341.5       374.7     (8.9 )
    
 
 

Total policy liabilities and accruals

      3,857.6       3,950.7     (2.4 )
    
 
 

Expenses and taxes payable

      522.6       645.4     (19.0 )

Reinsurance premiums payable

      10.7       12.3     (13.0 )

Trust instruments supported by funding obligations

      607.0       1,126.0     (46.1 )

Separate account liabilities

      9,726.0       10,455.0     (7.0 )
    
 
 

Total liabilities

      14,723.9       16,189.4     (9.1 )
    
 
 

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       1,000.0     —    

Accumulated other comprehensive loss

      (41.8 )     (21.1 )   98.1  

Retained earnings

      140.4       130.7     7.4  
    
 
 

Total shareholder’s equity

      1,101.1       1,112.1     (1.0 )
    
 
 

Total liabilities and shareholder’s equity

    $ 15,825.0     $ 17,301.5     (8.5 )
    
 
 
(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).

 

10

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME BY PRODUCT LINE

 

(In millions)

    Quarter ended March 31, 2005
     Quarter ended March 31, 2004
   Variable
Annuities
     Variable
Universal
Life
    Other (1)
    Total
     Variable
Annuities
    Variable
Universal
Life
    Other (1)
    Total

REVENUES

                                                          

Premiums

    $ —       $ —      $ 19.1    $ 19.1     $ —      $ —      $ 20.2    $ 20.2

Fees:

                                                          

Fees from surrenders

      6.9       2.3      —        9.2       11.0      2.8      —        13.8

Other proprietary product fees

      34.6       19.8      0.6      55.0       40.3      21.6      0.4      62.3

Net investment income

      16.8       4.5      29.0      50.3       17.0      4.7      35.2      56.9

Other income

      6.2       1.5      4.4      12.1       7.8      1.7      5.3      14.8
    
 
  
  
 
  
  
  

Total segment revenue

      64.5       28.1      53.1      145.7       76.1      30.8      61.1      168.0
    
 
  
  
 
  
  
  

POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES

                                                          

Policy benefits, claims and losses

      32.3       10.9      33.5      76.7       26.1      8.4      30.9      65.4

Policy acquisition expenses

      28.4       6.8      0.3      35.5       23.6      8.2      0.5      32.3

Variable operating expenses

      6.8       1.1      10.2      18.1       7.9      1.8      14.5      24.2

(Gain) loss on hedge derivatives

      (5.8 )     —        —        (5.8 )     5.4      —        —        5.4
    
 
  
  
 
  
  
  
       61.7       18.8      44.0      124.5       63.0      18.4      45.9      127.3
    
 
  
  
 
  
  
  

Segment income before other operating expenses

    $ 2.8     $ 9.3    $ 9.1      21.2     $ 13.1    $ 12.4    $ 15.2      40.7
    
 
  
          
  
  
      

Other operating expenses

                            28.6                            30.9
                          
                      

Segment (loss) income before federal income taxes

                          $ (7.4 )                        $ 9.8
                          
                      
(1) 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, our broker/dealer, VeraVest Investments, Inc. and other non-insurance subsidiaries.

 

11

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SEGMENT INCOME EXCLUDING CERTAIN NON-CASH ITEMS

 

     Quarter ended
  

(In millions)

    March 31
2005
     December 31
2004
     March 31
2004
  

Segment (loss) income before federal income taxes

    $ (7.4 )   $ 16.5     $ 9.8  

Deferred acquisition cost, operating amortization and amortization of sales inducements, net

      39.2       14.6       38.0  

Property, plant and equipment, net

      1.3       0.8       0.9  

Statement of Position 98-1 amortization, net

      0.9       0.7       1.2  

Change in guaranteed minimum death and income benefit reserves

      1.6       (19.0 )     (9.6 )
    
 
 

Total segment income excluding certain non-cash items

    $ 35.6     $ 13.6     $ 40.3  
    
 
 

 

12

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

SELECTED FINANCIAL INFORMATION - VARIABLE ANNUITIES

 

(In millions)

 

     Quarter ended March 31
  
     2005
     2004
     % Change
  

SEPARATE ACCOUNT INDIVIDUAL ANNUITIES

                         

Balance at beginning of period

    $ 9,315.1     $ 10,545.8       (11.7 )

Direct premiums and deposits

      7.2       18.3       (60.7 )

Redemptions

      (463.1 )     (557.3 )     (16.9 )

Market (depreciation) appreciation

      (188.2 )     201.1       N/M  

Transfers and other (1)

      (40.5 )     (95.2 )     (57.5 )
    
 
 

Balance at end of period

    $ 8,630.5     $ 10,112.7       (14.7 )
    
 
 
     Quarter ended
  
     March 31
2005
     December 31
2004
     March 31
2004
  

VARIABLE INDIVIDUAL ANNUITIES (2)

                         

Redemptions

    $ 526.5     $ 478.3     $ 634.1  

Redemption rates (3)

      21 %     19 %     22 %
     March 31
2005
     December 31
2004
     % Change
  

VARIABLE INDIVIDUAL ANNUITIES

                         

Account values

    $ 9,746.8     $ 10,460.5       (6.8 )

Net amount at risk

    $ 2,076.2     $ 1,937.9       7.1  

Deferred acquisition cost asset and capitalized sales inducements

    $ 533.5     $ 557.0       (4.2 )

Value of surrender charges (inforce block)

    $ 321.8     $ 360.8       (10.8 )
(1) Reserves for individual annuities at March 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 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.

 

13

ALLMERICA FINANCIAL CORPORATION

LIFE COMPANIES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES

 

(In millions)

    March 31
2005
    December 31
2004
    % Change
  

GENERAL ACCOUNT RESERVES

                     

Insurance

                     

Traditional life

    $ 794.6    $ 821.2    (3.2 )

Universal life (1)

      572.5      579.8    (1.3 )

Variable universal life (2)

      249.0      242.9    2.5  

Individual health (3)

      258.1      257.9    0.1  
    
  
  

Total insurance

      1,874.2      1,901.8    (1.5 )
    
  
  

Annuities

                     

Individual annuities

      1,337.0      1,378.0    (3.0 )

Group annuities

      414.8      428.7    (3.2 )
    
  
  

Total annuities

      1,751.8      1,806.7    (3.0 )
    
  
  

Guaranteed investment contracts

                     

Contractholder deposit funds and other policy liabilities

      29.6      30.0    (1.3 )
    
  
  

Total general account reserves

    $ 3,655.6    $ 3,738.5    (2.2 )
    
  
  

Trust instruments supported by funding obligations

    $ 607.0    $ 1,126.0    (46.1 )
    
  
  

SEPARATE ACCOUNT LIABILITIES

                     

Variable universal life

    $ 972.0    $ 1,025.3    (5.2 )

Variable individual annuities

      8,630.5      9,315.1    (7.3 )
    
  
  

Total individual

      9,602.5      10,340.4    (7.1 )

Group variable universal life

      25.2      28.3    (11.0 )

Group annuities

      98.3      86.3    13.9  
    
  
  

Total group

      123.5      114.6    7.8  
    
  
  

Total separate account liabilities

    $ 9,726.0    $ 10,455.0    (7.0 )
    
  
  
(1) Universal life reserves include reinsured balances of $572.2 and $579.4 million at March 31, 2005 and December 31, 2004, respectively.
(2) Variable universal life reserves include group variable universal life reserves of $11.3 and $11.1 million at March 31, 2005 and December 31, 2004, respectively.
(3) Individual health reserves include reinsured balances of $257.7 and $257.3 million at March 31, 2005 and December 31, 2004, respectively.

 

14

INVESTMENTS

ALLMERICA FINANCIAL CORPORATION

NET INVESTMENT INCOME

 

(In millions, except yields)

 

     Quarter ended March 31, 2005
  
     Property and
Casualty (1)
     Yield
     Life
Companies
     Yield
     Total
     Yield
  

Fixed maturities

    $ 51.4     5.57 %   $ 50.2     5.76 %   $ 101.6     5.66 %

Equity securities

      0.2     N/M       —       —         0.2     N/M  

Mortgages

      1.0     8.10 %     1.3     8.36 %     2.3     8.24 %

All other

      (0.7 )   —         0.4     —         (0.3 )   —    

Investment expenses

      (1.1 )   —         (1.6 )   —         (2.7 )   —    
    
 
 
 
 
 

Total

    $ 50.8     5.36 %   $ 50.3     5.04 %   $ 101.1     5.20 %
    
 
 
 
 
 
     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 %
    
 
 
 
 
 
(1) Includes purchase accounting adjustments of $0.8 million for the quarters ended March 31, 2005 and 2004. Also includes corporate eliminations of $0.2 million and $0.1 million for the quarters ended March 31, 2005 and 2004, respectively.

 

15

ALLMERICA FINANCIAL CORPORATION

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)

 

     Quarter ended March 31
  
     2005
     2004
  
    

Net Realized Gains (Losses)

     Net Realized Gains (Losses)
  

(In millions)

    Property and
Casualty
     Life
Companies
     Total
     Property and
Casualty
     Life
Companies
     Total
  

Net gains on securities transactions

    $ 0.2     $ 22.0     $ 22.2     $ 9.1     $ 9.0     $ 18.1  

Other than temporary impairments

      (1.7 )     (1.2 )     (2.9 )     (0.7 )     (1.7 )     (2.4 )

Other

      0.1       0.8       0.9       —         —         —    
    
 
 
 
 
 

Net realized investment (losses) gains

    $ (1.4 )   $ 21.6     $ 20.2     $ 8.4     $ 7.3     $ 15.7  
    
 
 
 
 
 

 

16

ALLMERICA FINANCIAL CORPORATION

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

 

(In millions)

 

     March 31, 2005
     Gross Unrealized Losses
    Fair Value
     Property and
Casualty
    Life
Companies
    Total
    Property and
Casualty
    Life
Companies
    Total

INVESTMENT GRADE FIXED MATURITIES:

                                          

0 - 6 months

    $ 15.6    $ 15.4    $ 31.0    $ 1,159.3    $ 999.6    $ 2,158.9

7 - 12 months

      3.0      4.2      7.2      107.6      145.9      253.5

Greater than 12 months

      11.1      9.4      20.5      219.3      182.7      402.0
    
  
  
  
  
  

Total investment grade fixed maturities

      29.7      29.0      58.7      1,486.2      1,328.2      2,814.4

BELOW INVESTMENT GRADE FIXED MATURITIES:

                                          

0 - 6 months

      3.7      0.6      4.3      105.9      21.5      127.4

7 - 12 months

      0.7      0.1      0.8      11.4      2.0      13.4

Greater than 12 months

      0.3      0.2      0.5      1.9      1.2      3.1
    
  
  
  
  
  

Total below investment grade fixed maturities

      4.7      0.9      5.6      119.2      24.7      143.9

Equity securities

      0.2      —        0.2      0.2      1.2      1.4
    
  
  
  
  
  

Total fixed maturities and equity securities

    $ 34.6    $ 29.9    $ 64.5    $ 1,605.6    $ 1,354.1    $ 2,959.7
    
  
  
  
  
  
     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
    
  
  
  
  
  

 

17

ALLMERICA FINANCIAL CORPORATION

CREDIT QUALITY OF FIXED MATURITIES

 

(In millions)

 

          March 31, 2005
          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    $ 2,640.5    $ 2,132.0    $ 4,772.5    $ 2,676.8    $ 2,151.4    $ 4,828.2

2

    Baa      912.1      1,011.0      1,923.1      922.4      1,042.6      1,965.0

3

    Ba      94.2      106.8      201.0      95.2      111.0      206.2

4

    B      99.8      42.3      142.1      99.0      46.6      145.6

5

    Caa and lower      40.7      14.0      54.7      46.3      19.5      65.8

6

    In or near default      3.4      6.4      9.8      4.4      12.4      16.8
         
  
  
  
  
  

Total fixed maturities

         $ 3,790.7    $ 3,312.5    $ 7,103.2    $ 3,844.1    $ 3,383.5    $ 7,227.6
         
  
  
  
  
  
          December 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    $ 2,601.9    $ 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
         
  
  
  
  
  

 

18

PROPERTY & CASUALTY

 

STATUTORY RATIOS

ALLMERICA FINANCIAL CORPORATION

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

 

(In millions)

 

    Quarter ended March 31, 2005
  
    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

   66.3 %   42.2 %   37.4 %   58.6 %   90.3 %   52.5 %   44.6 %   27.4 %   51.7 %   N/M   56.6 %

Catastrophe losses

   —       6.3 %   3.0 %   1.9 %   —       —       5.4 %   3.6 %   2.9 %   N/M   2.2 %

Loss adjustment expenses

   10.6 %   4.6 %   3.0 %   8.7 %   11.9 %   8.2 %   9.5 %   8.2 %   9.4 %   N/M   8.9 %

Policy acquisition and other underwriting expenses

                     27.7 %                           35.5 %   N/M   30.7 %

Policyholders’ dividends

                     —                               0.1 %   N/M   —    
                     
                         
 
 

Combined

                     96.9 %                           99.6 %   N/M   98.4 %
                     
                         
 
 
    Quarter ended March 31, 2004
  
    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

   69.5 %   47.9 %   70.1 %   63.9 %   67.9 %   47.9 %   41.7 %   31.2 %   46.5 %   N/M   58.5 %

Catastrophe losses

   —       14.2 %   4.7 %   3.8 %   —       —       8.3 %   —       3.7 %   N/M   3.8 %

Loss adjustment expenses

   9.3 %   5.8 %   8.4 %   8.3 %   9.0 %   3.9 %   11.5 %   5.6 %   8.4 %   N/M   8.4 %

Policy acquisition and other underwriting expenses

                     27.7 %                           36.4 %   N/M   30.7 %

Policyholders’ dividends

                     —                               0.1 %   N/M   —    
                     
                         
 
 

Combined

                     103.7 %                           95.1 %   N/M   101.4 %
                     
                         
 
 

 

19

Historical Highlights

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

 

(In millions, except per share data)

    Q1 05
     2004
     Q4 04
     Q3 04
     Q2 04
     Q1 04
  

SEGMENT INCOME (1)

                                                 

Property and Casualty

                                                 

Personal Lines

    $ 39.2     $ 134.6     $ 45.9     $ 42.1     $ 35.8     $ 10.8  

Commercial Lines

      20.5       58.0       26.0       (7.1 )     12.6       26.5  

Other Property and Casualty

      2.1       5.4       1.7       1.7       0.7       1.3  
    
 
 
 
 
 

Total Property and Casualty

      61.8       198.0       73.6       36.7       49.1       38.6  

Life Companies

      (7.4 )     11.3       16.5       (8.7 )     (6.3 )     9.8  

Interest expense on corporate debt

      (10.0 )     (39.9 )     (10.0 )     (10.0 )     (9.9 )     (10.0 )
    
 
 
 
 
 

Total segment income before federal income taxes

    $ 44.4     $ 169.4     $ 80.1     $ 18.0     $ 32.9     $ 38.4  
    
 
 
 
 
 

Federal income tax (expense) benefit on segment income

      (10.2 )     (28.6 )     (21.2 )     1.6       (3.8 )     (5.2 )
    
 
 
 
 
 

Total segment income after federal income taxes

      34.2       140.8       58.9       19.6       29.1       33.2  

Federal income tax settlement

      —         30.4       0.1       —         0.2       30.1  

Net realized investment gains (losses), net of amortization and taxes

      12.8       16.1       5.2       (3.7 )     4.4       10.2  

(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 )

(Losses) gains on derivative instruments, net of taxes

      (0.1 )     0.8       0.5       0.1       0.2       —    

Restructuring costs, net of taxes

      (0.4 )     (5.5 )     (1.7 )     (0.2 )     (1.5 )     (2.1 )
    
 
 
 
 
 

Income before cumulative effect of accounting change

      46.5       182.5       63.1       17.7       32.4       69.3  

Cumulative effect of change in accounting principle, net of taxes

      —         (57.2 )     —         —         —         (57.2 )
    
 
 
 
 
 

NET INCOME

    $ 46.5     $ 125.3     $ 63.1     $ 17.7     $ 32.4     $ 12.1  
    
 
 
 
 
 

PER SHARE DATA (DILUTED)

                                                 

NET INCOME

    $ 0.86     $ 2.34     $ 1.18     $ 0.33     $ 0.60     $ 0.23  

WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)

      53.8       53.7       53.7       53.6       53.7       53.7  

BALANCE SHEET

                                                 

Total investments

    $ 7,663.9             $ 8,265.7     $ 8,253.1     $ 8,091.3     $ 8,239.5  

Separate account assets

    $ 9,726.0             $ 10,455.0     $ 10,086.0     $ 10,740.3     $ 11,304.9  

Total assets

    $ 22,167.8             $ 23,719.2     $ 23,448.9     $ 24,030.5     $ 24,763.9  

Total shareholders’ equity

    $ 2,325.2             $ 2,339.5     $ 2,294.2     $ 2,207.2     $ 2,289.3  

Book value per share

    $ 43.53             $ 43.91     $ 43.09     $ 41.48     $ 43.04  

Book value per share, excluding accumulated other comprehensive income

    $ 44.67             $ 43.85     $ 42.69     $ 42.36     $ 41.77  
(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.

 

20

ALLMERICA FINANCIAL CORPORATION

HISTORICAL FINANCIAL HIGHLIGHTS

 

(In millions, except per share data)

    2003
     Q4 03
     Q3 03
     Q2 03
     Q1 03
  

SEGMENT INCOME (1)

                                         

Property and Casualty

                                         

Personal Lines

    $ 34.3     $ 25.3     $ 11.5     $ 0.2     $ (2.7 )

Commercial Lines

      98.7       6.0       18.1       35.2       39.4  

Other Property and Casualty

      (15.5 )     2.5       2.6       (22.1 )     1.5  
    
 
 
 
 

Total Property and Casualty

      117.5       33.8       32.2       13.3       38.2  

Life Companies

      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 )
    
 
 
 
 

Total segment income before federal income taxes

    $ 86.3     $ 29.5     $ 14.1     $ 16.9     $ 25.8  
    
 
 
 
 

Federal income tax (expense) benefit on segment income

      6.1       0.8       5.6       1.8       (2.1 )
    
 
 
 
 

Total segment income after federal income taxes

      92.4       30.3       19.7       18.7       23.7  

Federal income tax settlement

      —         —         —         —         —    

Net realized investment gains (losses), net of amortization and taxes

      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

      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

      (4.5 )     (5.4 )     0.3       (0.4 )     1.0  

Restructuring costs, net of taxes

      (18.7 )     (14.9 )     (0.8 )     (0.8 )     (2.2 )
    
 
 
 
 

Income before cumulative effect of accounting change

      86.9       14.0       11.4       24.4       37.1  

Cumulative effect of change in accounting principle, net of taxes

      —         —         —         —         —    
    
 
 
 
 

NET INCOME

    $ 86.9     $ 14.0     $ 11.4     $ 24.4     $ 37.1  
    
 
 
 
 

PER SHARE DATA (DILUTED)

                                         

NET INCOME

    $ 1.63     $ 0.26     $ 0.21     $ 0.46     $ 0.70  

WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)

      53.2       53.5       53.3       53.0       53.0  

BALANCE SHEET

                                         

Total investments

            $ 8,185.6     $ 8,279.5     $ 8,219.0     $ 8,172.2  

Separate account assets

            $ 11,835.4     $ 11,546.0     $ 11,719.0     $ 11,016.2  

Total assets

            $ 25,510.1     $ 25,187.4     $ 25,377.9     $ 24,607.5  

Total shareholders’ equity

            $ 2,220.2     $ 2,196.6     $ 2,225.6     $ 2,115.9  

Book value per share

            $ 41.89     $ 41.42     $ 41.96     $ 39.86  

Book value per share, excluding accumulated other comprehensive income

            $ 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.

 

21

CORPORATE OFFICES AND

PRINCIPAL SUBSIDIARIES

 

Allmerica Financial

440 Lincoln Street

Worcester, MA 01653

 

The Hanover Insurance Company

440 Lincoln Street

Worcester, MA 01653

 

Citizens Insurance Company of America

645 West Grand River

Howell, MI 48843

 

MARKET AND DIVIDEND INFORMATION

 

The following information shows trading activity for the

Company for the periods indicated:

 

Quarter Ended

    2005
   Price Range
   

Dividends
Per Share

   High
    Low
   

March 31

    $ 36.50    $ 30.27    —  

June 30

                   

September 30

                   

December 31

                   

 

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    —  

 

INDUSTRY RATINGS AS OF April 28, 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