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): September 27, 2002
ALLMERICA FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-13754 04-3263626
(State or other jurisdic- (Commission File Number) (I.R.S. Employer I.D.
tion of Incorporation) Number)
440 Lincoln Street, Worcester, Massachusetts 01653
(Address of Principal Executive Offices)
(Zip Code)
(508) 855-1000
(Registrant's Telephone Number including area code)
Page 1 of 6 pages
Exhibit Index on page 4
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Item 5. Other Events.
On September 27, 2002, Allmerica Financial Corporation announced plans to
consider strategic alternatives with regard to its Allmerica Financial Services
business unit, which includes the company's life insurance and annuity
operations.
Item 7. Financial Statements and Exhibits.
Exhibit 99 Press Release dated September 27, 2002, announcing Allmerica
Financial Corporation's Plans to Consider Strategic
Alternatives for Life and Annuity Operations.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Allmerica Financial Corporation
-------------------------------
Registrant
By: /s/ Edward J. Parry III
-------------------------------
Edward J. Parry III
Vice President, Chief Financial Officer
and Principal Accounting Officer
Date: September 27, 2002
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Exhibit Index
Exhibit 99 Press Release dated September 27, 2002, announcing Allmerica
Financial Corporation's Plans to Consider Strategic
Alternatives for Life and Annuity Operations.
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Exhibit 99
Allmerica Announces Plans to Consider Strategic Alternatives for Life and
Annuity Operations
WORCESTER, Mass., September 27, 2002 - Allmerica Financial Corporation
(NYSE: AFC; "Allmerica") today announced plans to consider strategic
alternatives with regard to its Allmerica Financial Services business unit,
which includes the company's life insurance and annuity operations. This action
was prompted by the continued sharp decline and volatility in the equity
markets, and resultant impact of these factors on this business.
The company noted that as of the close of business yesterday, the S&P 500
index was off 44% from its peak in March 2000. The company also noted that
year-to-date, the index has declined over 25%, and since the end of the second
quarter, has declined 14%. The decline in the equity markets results in, among
other things, increased Guaranteed Minimum Death Benefit ("GMDB") expenses,
lower fee income, higher deferred acquisition cost amortization and higher
statutory capital reserve requirements. The reduction in statutory profits
associated with these items also exacerbates the strain on statutory capital
associated with continued sales of variable annuities.
Among the strategic alternatives the company is considering is capital
raising in some form, including, but not limited to, raising external capital,
making use of reinsurance of certain lines of business, and potentially selling
certain appreciated lines of business in its life insurance companies. It is
contemplated that the company will significantly reduce sales of proprietary
variable annuities and life insurance products, primarily in its Select and
Partner channels. Allmerica also plans to reduce its operating expenses. The
company noted that the actions announced today do not involve the holding
company, Allmerica's property & casualty operations, or its third-party asset
management business, all of which remain well positioned.
"The prolonged downturn in the equity markets, which represents arguably
the worst bear market since the Depression, has placed a strain on the statutory
capital base of our life insurance and annuity business," said John F. O'Brien,
Allmerica's President and Chief Executive Officer. "The uncertain economic
outlook and the potential for further uncertainty in the equity markets makes
these actions the prudent response to these difficult conditions in order to
manage the risk and maximize the value of our enterprise for all of our
stakeholders. As we implement these changes to our life and annuity operations,
Allmerica will become a smaller asset accumulation operation, focused primarily
on management of the existing in-force assets in our products as well as
continuing to increase the distribution of third-party asset accumulation
products through our Advisor channel. We will also remain committed to pursuing
the excellent opportunities for continued profitable growth in our property &
casualty insurance business, which is experiencing increased earnings this
year."
The company expects to provide further details on the strategic actions
being considered and implemented when it announces its third quarter results,
currently expected to be October 28, 2002.
Certain statements in this release, including Mr. O'Brien's comments, 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, the Quarterly Report on Form 10-Q for the quarter ended June 30, 2002,
and other documents filed by Allmerica with the Securities and Exchange
Commission. 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, heightened
competition, adverse state and federal legislation or regulation, and various
other factors.
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Allmerica Financial Corporation is the holding company for a diversified
group of insurance and financial services companies headquartered in Worcester,
Mass.
CONTACTS: Investors Media
Henry P. St. Cyr Michael F. Buckley
(508) 855-2959 (508) 855-3099
hstcyr@allmerica.com mibuckley@allmerica.com
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