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                                                                   EXHIBIT 10.35

                             NEW ENGLAND FINANCIAL
                         ANNUAL VARIABLE INCENTIVE PLAN
         (FOR PERFORMANCE PERIODS STARTING ON OR AFTER JANUARY 1, 2000)

I.       PURPOSE OF THE PLAN


-        Align total annual pay with the Company's annual financial business
         results.

-        Provide competitive levels of pay for competitive levels of Company
         performance.

-        Make a competitive portion of total compensation variable based on
         Company, business unit and individual performance.

II.      PARTICIPATION

         All associates in salary grade 29 and above AND EQUIVALENT GRADES who
         have signed the "Agreement to Protect Corporate Property", other than
         those participating in incentive plans which are alternatives to, and
         not supplementary to, the Annual Variable Incentive Plan.

         In addition, the Officers may impose such other reasonable conditions
         for participation in the Annual Variable Incentive Plan as they deem
         necessary or appropriate.

III.     DETERMINATION OF THE INCENTIVE POOL FOR DISTRIBUTION

         The Board determines at the beginning of the performance year financial
         objectives consistent with the Company's Annual Business Plan that will
         provide the basis for determining the maximum aggregate incentive pool
         for distribution. The pool will be determined using a formula approved
         by the Board, which will be expressed in terms of percentages of
         operating earnings and return on equity ("ROE"). The formula will be
         reviewed each year by the Board to determine its appropriateness in
         connection with the Company's Business Plan, and may be revised by the
         Board as a result of such review. The maximum pool may also be
         increased by the Nominating and Compensation Committee ("Committee")
         based on the recommendation of the Chief Executive Officer ("CEO").

         For purposes of this Plan: (a) "Operating earnings" means earnings net
         of all taxes (other than the surplus tax), and excludes the impact of
         demutualization costs; and (b) "Return on Equity" means operating
         earnings divided by GAAP equity, where GAAP equity excludes unrealized
         investment gains.


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         A portion of the aggregate incentive pool will be allocated by the CEO
         among the various business units based on their performance relative to
         certain agreed upon objectives set at the beginning of the performance
         year by the CEO. Following the performance year, business unit
         performance will be evaluated by the CEO. All or a portion of the
         aggregate incentive pool allocated to a particular business unit may be
         distributed to Plan participants in that business unit, depending on
         the performance of that business unit. A portion of the pool will be
         applied to the Company's Performance Incentive Plan, as determined by
         the CEO.


IV.      TARGET INCENTIVE OPPORTUNITIES

         A.       Incentive opportunity percentages for the various grades are
                  determined based on competitive total compensation market
                  factors and take into account incentive compensation
                  opportunities for comparable positions at our comparator
                  companies, including major insurance companies, banks and
                  diversified financial services companies.

         B.       The schedule of incentive opportunity percentages for the
                  various grades is as follows:


<TABLE>
<CAPTION>
                                                                              TARGET INCENTIVE
                  GRADE (CURRENT TITLE)                                       OPPORTUNITY PERCENTAGE
                  ---------------------                                       ----------------------
<S>               <C>                                                         <C>
                  41 (CHIEF EXECUTIVE OFFICER)                                              150%
                  40 (PRESIDENT)                                                             90%
                  39 (SENIOR EXECUTIVE VICE PRESIDENT)                                       80%
                  38 (EXECUTIVE VICE PRESIDENT)                                              70%
                  37 (SENIOR VICE PRESIDENT)                                                 50%
                  36 (VICE PRESIDENT/SENIOR VICE PRESIDENT)                                  50%
                  35 (VICE PRESIDENT)                                                        45%
                  34 (VICE PRESIDENT)                                                        40%
                  33 (VICE PRESIDENT)                                                        40%
                  32 (ASSISTANT VICE PRESIDENT)                                              25%
                  29-31 (VARIOUS NON-OFFICER TITLES)                                      5%-15%
</TABLE>

V.       CALCULATION OF INDIVIDUAL AWARDS

         Annual incentive awards are discretionary and significant weight is
         given to individual performance and relative contributions among plan
         participants. It is anticipated that there will be significant
         differentiation of annual incentive awards




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         based on individual performance. Where performance indicates,
         individuals may receive no award at all.



         The total of all individual awards under the Plan may not exceed the
         maximum aggregate incentive pool.

VI.      ADMINISTRATION OF AWARDS

         A.       Incentive awards for any performance year shall be made as
                  soon as possible during the following calendar year in the
                  form of lump sum payments.

         B.       Participants who voluntarily terminate their employment or
                  whose employment is discontinued for cause after the
                  performance year, but before the payout, or during the
                  performance year are not eligible to receive an award.

         C.       Participants terminating employment during or after the
                  performance year due to death, disability, or retirement may
                  be eligible to receive awards on a pro-rata basis, at the
                  Company's discretion. PARTICIPANTS WHOSE EMPLOYMENT IS
                  TERMINATED DURING THE PERFORMANCE YEAR AND WHO ARE ELIGIBLE TO
                  RECEIVE A SEVERANCE PAYMENT FROM THE COMPANY MAY RECEIVE A PRO
                  RATA AWARD AT THE COMPANY'S DISCRETION, IN EXCHANGE FOR THEIR
                  VALID RELEASE.

         D.       Incentive awards paid prior to retirement or discontinuance of
                  employment will be taken into account for purposes of
                  determining the level of Insurance and Retirement benefits and
                  contributions to the Savings and Investment Plan, subject to
                  any regulatory limitations or approvals. Incentive awards paid
                  subsequent to retirement or discontinuance of employment will
                  not be taken into account for purposes of determining the
                  level of Insurance and Retirement benefits or contributions to
                  the Savings and Investment Plan, except as may be provided
                  otherwise in any other Company plan or program.

         VII.     ROLE OF THE NOMINATING AND COMPENSATION COMMITTEE

         The Committee exercises overall responsibility and has broad discretion
         in the administration of the Plan.

         With respect to corporate performance, inasmuch as other unforeseen
         matters have an impact on overall performance during the year, the
         Committee, at its discretion, may adjust THE MAXIMUM POOL either
         positively or negatively. The Committee may use its discretion to
         adjust for unusual events that are beyond the





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         control of management and obviously influence performance results
         unduly, such as material changes in accounting policy, tax and other
         government regulations, and the acquisition or sale of a business.

         With respect to individual awards, the Committee will report its
         recommendations for individual incentive awards for Officers of the
         rank of Executive Vice President and above, OR SUCH OTHER GROUP OF
         OFFICERS AS THE COMMITTEE MAY FROM TIME TO TIME SELECT, to the Board
         following the performance year. Following the determination of awards,
         the Committee will receive a summary report of all incentive award
         payments.



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