Allmerica Financial Posts Quarterly Profit

NU Online News Service, Oct. 28, 11:16 a.m.EST?Allmerica Financial Corp. posted net income of $11.4million for the third quarter compared with a loss of $313.4million one year ago when it took charges for exiting the lifeinsurance and variable annuity business.

The insurer announced it is closing VeraVest Investments, itsbroker-dealer operation, taking a related charge of $7.2 millionfor the quarter. Commenting on its decision to close VeraVest,Allmerica said the move will help sharpen the insurer's focus onthe core property-casualty business.

"The decision to cease operations of our broker-dealer followeda great deal of careful analysis and deliberation. Ultimately, weconcluded that the broker-dealer would not generate sufficientprofitability in the foreseeable future to justify our continuedinvestment," said Frederick Eppinger Jr., chief executive officerfor Allmerica. "This will enable us to focus on the profitablegrowth of our regional property-casualty companies."

For its third quarter, the insurer's p-c segment reported netincome of $38.6 million, down from $58.5 million posted during theyear-ago period. One factor for the lowered p-c profit figure washigher catastrophic losses?the latest quarter included $16.9million of pretax catastrophe losses, higher than $4 millionrecorded last year.

Property-casualty net premiums earned were $561.2 million in thequarter, down slightly from $568.3 million recorded last year.

Allmerica's financial services segment posted a loss of $5.8million, compared with last year's loss figure of $540.2 million,which included charges of $556.4 million for exiting the variableannuity and life insurance business, as well as for the equitymarket's continued decline.

The company's asset management unit posted net profit of $5.2million, down slightly from $5.7 million posted one year ago. Thenet investment income also fell to $110.5 million, from $152.8million reported last year.

Allmerica also had a loss of $8 million in pretax net realizedinvestment losses, nearly unchanged from a loss of $7.8 million ithad one year ago.

"Overall, we are pleased with our continued progress," Mr.Eppinger said. "Earnings for the quarter were in line withexpectations and we began an extensive review of our operationsthat will continue through the fourth quarter."

Based in Worcester, Mass., Allmerica Financial is an insuranceand financial services holding company providing personal auto,homeowners, workers' compensation, commercial automobile andcommercial multiple-peril insurance coverage through its CitizensInsurance and Hanover Insurance subsidiaries.