Smith Barney Citigroup Small

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Smith Barney Citigroup Small Mid-Cap
ConferenceMay 6, 2004
Allmerica Financial Corporation
Ed ParryExecutive Vice PresidentChief
Financial Officer

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Allmerica Financial CorporationForward Looking
Statement

• Certain statements in this presentation may
  contain, 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. In particular, this presentation may
  include forward looking statements with respect
  to earnings growth, return on equity, anticipated
  price increases in our PC business, growth,
  expense management and improved underwriting.
• 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 Companys annual report
  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, changes from assumed
  surrender activities and assumed stock market
  returns, adverse selection in underwriting
  activities and surrender patterns, investment
  impairments, heightened competition, adverse
  state and federal legislation or regulation,
  financial ratings actions, and various other
  factors, which include the effect of the
  Companys decision to close its retail
  broker-dealer operations as well as the
  anticipated impact and cost of the GMDB hedging
  program. The performance of the hedging program
  is dependent on, among other things, the future
  performance and volatility of the equity market,
  the extent to which the performance of the
  various hedging instruments correlate with the
  investment performance of the underlying annuity
  sub-accounts, the continued availability of
  equity index futures and redemption and mortality
  patterns in the Companys annuity contracts.
• The discussion in this presentation includes
  financial measures that are not derived from
  generally accepted accounting principles, or
  GAAP. Information regarding these non-GAAP
  financial measures is available in the Investor
  Relations section of the Allmerica website at
  www.allmerica.com

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Who We Are

• Fortune 500 Market Capitalization of 1.9B
• Regional Property and Casualty Company
• 30th Largest Property and Casualty Insurer
• Over 2 billion in Written Premium
• Partnerships with 1,850 Local Agenciesin 25
  States Northeast and Michigan Focus
• Hanover Citizens Brand Names
• Over 150 Years in the Business
• A.M. Best Rating of A- Excellent
• Life Companies
• Closed Block of Business Consisting Primarily
  ofVariable Annuities
• 14B in Assets
• 120 Million in Annual Operating Cash Flow
• A.M. Best Secure Rating of B Very Good

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Who We Are in Numbers
2003 Revenue
2003 Pre-tax Segment Income
24
7
76
93
Excludes Corporate Debt
2003 Net Income 87m EPS 1.63
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Who We Are in Numbers
GAAP Equity
Statutory Surplus
1,619
1,555
1,312
43
1,218
57
Life and PC Equity 2.8B Debt
(0.5B) Total GAAP Equity 2.3B
3/31/04 Life Company RBC 420
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Allmerica Financial Corporation 2003 Property
and Casualty Business Mix
Commercial Lines by Size
2.2B Total Net Written Premium
13
22
25k-50k
9
10k lt 25k
50k-100k
gt 100k
10
lt 10k
46
81 in Policies lt 50K 2/3 of Accounts lt 75K

• 68 Personal Lines - Short-tail Liabilities
• 32 Commercial Lines - Predominately Main
  Street Small Commercial

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Personal Lines2004 Priorities
Margin Improvement Drive Earnings Growth

• Identify and Grow with Key Agents
• Aggressively Manage Underperforming Agents

• Agency Partnerships

• Achieve Adequate Pricing Levels
• Continue Implementation of Rate
• Tiering
• Shift Geographic Mix of Business
• Improve MA Auto Results

Product Underwriting
Responsive Service Delivery

• Accelerate Deployment of POS
• Introduce Pre-Fill

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Commercial Lines2004 Priorities
Build the Foundation for Earnings Growth in 2005

• Agency Partnerships

• Lock in Strategic Partnerships with Winning
  Commercial Lines Agencies

• Improve Renewal Retention
• Enhance New Business Mix
• Tiered Pricing Strategies

Product Underwriting
Responsive Service Delivery

• Refine small commercial operating model

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Life Companies2004 Priorities

• Maintain Expense Margins
• Retain Profitable Customers

Maximize Long Term Cash Flow

• Manage GMDB Risk Through Hedging

Manage Volatility

• Create Strategies to Utilize Excess Capital

Maximize Long Term Value
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Allmerica Financial Corporation Financial
Performance
( in millions)
After Tax Segment Earnings
First Quarter Highlights

• Segment Income up 40
• Solid PC Earnings
• Life Earnings Better than Expected

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Property Casualty Financial Performance
( in millions)
Pre-tax Segment Earnings
First Quarter Highlights

• Personal Lines
• Rate Increases
• Lower Frequency of Losses
• Commercial Lines
• Lower Favorable Development
• Premium Growth
• Increased Retention

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Life Companies Financial Performance
( in millions)
Pre-tax Segment Earnings

• Lower Operating Expenses
• Favorable Equity Market

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Q1 2003
Q1 2004
2
( in millions)
Net Operating Cash Flow
42
40
39
32
32

• Strong Positive Cash Flow

Q1 2004
Q4 2003
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AFC Performance Metrics
PC
Life

• Cash Flow
• Statutory Surplus

• GAAP Earnings
• GAAP Book Value
• Return onEquity

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2004 Financial Summary
Focus on the Basics
Personal Lines
Great Start Towards Becoming a World Class
PC Company
Margin Improvement Drives Earnings Growth
Improve ROE
Commercial Lines
Building the Foundation for Growth
Life Companies
Maximize Cash Flow Maintain Strong Surplus
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