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Former Allmerica Sells Life And Annuity Blocks

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Hanover Insurance Group Inc. says it has closed on a previously announced sale of its run-off variable life and variable annuity businesses to Goldman Sachs Group Inc.[@@]

Goldman Sachs, New York, will pay a total of about $347 million for the operations, according to Hanover, Worcester, Mass.

Hanover, formerly known as Allmerica Financial Corp., got out of the life and annuity business to focus resources on its property-casualty operations.

Hanover says it has received approval from the Massachusetts Division of Insurance to take a dividend of $40 million from its retained life business, First Allmerica Financial Life Insurance Company, as a result of the completion of the Goldman Sachs deal.

Hanover President Frederick Eppinger says the deal will increase his company’s financial flexibility and help it fund its share repurchase program.

The deal will result in a net after-tax loss of about $457 million for 2005, Hanover says.

Hanover is attributing the loss to the write-down of non-cash deferred acquisition cost assets.

In addition, severance costs and transition services will lead to about $16 million in net after-tax charges, Hanover estimates.