Allmerica Financial Posts Quarterly Profit

Allmerica Financial Posts Quarterly Profit

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

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

"The decision to cease operations of our broker-dealer followed a great deal of careful analysis and deliberation. Ultimately, we concluded that the broker-dealer would not generate sufficient profitability in the foreseeable future to justify our continued investment," said Frederick Eppinger Jr., chief executive officer for Allmerica. "This will enable us to focus on the profitable growth of our regional property-casualty companies."

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

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

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

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

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

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

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