NU Online News Service, July 28, 2003, 6:10 p.m. EDT – Allmerica Financial Corp., Worcester, Mass., says it has succeeded at increasing the level of risk-based capital at its Allmerica Financial Life Insurance and Annuity Company unit to 344% at June 30, from 244% a year earlier.

The company as a whole is reporting $24 million in net income for the second quarter on $822 million in revenue, up from a $56 million net loss on $798 million in revenue for the second quarter of 2002.

In July 2002, Allmerica told investors that the stock market slump had hit the Allmerica Financial variable annuity operations hard. The company, which has property-casualty insurance and asset-management operations as well as life insurance and annuity operations, promised to revamp Allmerica Financial and use reinsurance and other means to improve the unit’s capital position.

Since then, Allmerica has sold its fixed universal life insurance block of business, arranged for new reinsurance for the annuity death-benefit guarantees and suspended new sales of some types of products.

The changes have made Allmerica Financial smaller but more profitable.

Allmerica Financial is reporting $18 million in pretax income for the latest quarter on $174 million in revenue, compared with a $114 million pretax loss on $205 million in revenue for the second quarter of 2002.

Revenue from individual annuities fell 15%, to $73 million, but revenue from variable-universal life insurance fell only 6%, to $31 million, Allmerica says.