<PAGE>

                                                        Registration No.


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-6

              FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
             SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
                                     N-8B-2

                         Initial Registration Statement

                              SEPARATE ACCOUNT SPVL
               OF FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                           (Exact Name of Registrant)

                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                               440 Lincoln Street
                               Worcester, MA 01653
                     (Address of Principal Executive Office)

                            Mary Eldridge, Secretary
                               440 Lincoln Street
                               Worcester, MA 01653
               (Name and Address of Agent for Service of Process)

             It is proposed that this filing will become effective:


            ___  immediately upon filing pursuant to paragraph (b)
            ___  on May 1, 2000 pursuant to paragraph (b)
            ___  60 days after filing pursuant to paragraph (a)(1)
            ___  on (date) pursuant to paragraph (a)(1)
            ___  this post-effective amendment designates a new effective date
                 for a previously filed post-effective amendment.

                          SINGLE PREMIUM VARIABLE LIFE

Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940 ("1940
Act"), Registrant hereby declares that an indefinite amount of its securities is
being registered under the Securities Act of 1933 ("1933 Act"). The Rule 24f-2
Notice for the issuer's fiscal year ended December 31, 1999 was filed on or
before March 30, 2000.

Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registrations Statement
shall become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date or
dates as the Commission, acting pursuant to said Section 8(a) may determine.


<PAGE>


                         RECONCILIATION AND TIE BETWEEN ITEMS
                          IN FORM N-8B-2 AND THE PROSPECTUS

<TABLE>
<CAPTION>
ITEM NO. OF
FORM N-8B-2             CAPTION IN PROSPECTUS
-----------             ---------------------
<S>                     <C>
1........................Cover Page
2........................Cover Page
3........................Not Applicable
4........................Distribution
5........................Description of the Company, The Variable Account and the Underlying Funds
6........................The Variable Account
7........................Not Applicable
8........................Not Applicable
9........................Legal Proceedings
10 ..................... Summary; Description of the Company, Variable
                         Account and Underlying Funds; The Contract; Contract
                         Termination and Reinstatement; Other Contract
                         Provisions
11 ......................Summary; The Trust; Fidelity VIP;
                         Fidelity VIP II; T. Rowe Price; DGPF; Investment
                         Objectives and Policies
12 ......................Summary; The Trust; Fidelity
                         VIP and Fidelity VIP II; T. Rowe Price; DGPF.
13 ......................Summary; The Trust; Fidelity VIP and Fidelity VIP II;
                         T. Rowe Price; DGPF; Charges and Deductions
14.......................Summary; Application for a Contract
15 ......................Summary; Application for a Contract; Premium Payments; Allocation
                         of Net Premiums
16 ......................The Variable Account; The Trust; Fidelity VIP and Fidelity VIP II; T. Rowe Price; DGPF; Allocation
                         of Net Premiums
17 ......................Summary; Surrender; Partial Withdrawal; Charges and Deductions; Contract Termination and
                         Reinstatement
18 ......................The Variable Account; The Trust; Fidelity VIP and Fidelity VIP II; T. Rowe Price; DGPF; Premium
                         Payments
19.......................Reports; Voting Rights
20.......................Not Applicable
21.......................Summary; Contract Loans; Other Contract Provisions
22.......................Other Contract Provisions
23.......................Not Required
24.......................Other Contract Provisions
25.......................Allmerica Financial
26.......................Not Applicable
27.......................The Company
28.......................Directors and Principal Officers of the Company
29.......................The Company
30.......................Not Applicable
31.......................Not Applicable
32.......................Not Applicable
33.......................Not Applicable
34.......................Not Applicable
35 ......................Distribution
36.......................Not Applicable
37.......................Not Applicable
38.......................Summary; Distribution

<PAGE>

39.......................Summary; Distribution
40.......................Not Applicable
41.......................The Company, Distribution
42.......................Not Applicable
43.......................Not Applicable
44.......................Premium Payments; Contract Value and Cash Surrender Value
45.......................Not Applicable
46.......................Contract Value and Cash Surrender Value;  Federal Tax Considerations
47.......................The Company
48.......................Not Applicable
49.......................Not Applicable
50.......................The Variable Account
51 ......................Cover Page; Summary; Charges and Deductions; The Contract; Contract Termination
                         and Reinstatement; Other Contract Provisions
52.......................Addition, Deletion or Substitution of Investments
53 ......................Federal Tax Considerations
54.......................Not Applicable
55.......................Not Applicable
56.......................Not Applicable
57.......................Not Applicable
58.......................Not Applicable
59.......................Not Applicable
</TABLE>


<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                            WORCESTER, MASSACHUSETTS
            MODIFIED SINGLE PAYMENT VARIABLE LIFE INSURANCE POLICIES
                           ALLMERICA ESTATE OPTIMIZER

This Prospectus provides important information about Allmerica Estate Optimizer,
a modified single payment variable life insurance contract issued by First
Allmerica Financial Life Insurance Company. The contracts are funded through
Separate Account SPVL, a separate investment account of the Company that is
referred to as the Variable Account. The Contracts are designed for a large
single payment and limit the ability to make additional payments. The Contract
requires the Contract Owner to make an initial payment of at least $25,000.
PLEASE READ THIS PROSPECTUS CAREFULLY BEFORE INVESTING AND KEEP IT FOR FUTURE
REFERENCE.

The Variable Account is subdivided into Sub-Accounts. Each Sub-Account invests
exclusively in shares of one of the following Funds of Allmerica Investment
Trust, Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, T. Rowe Price International Series, Inc., and Delaware Group
Premium Fund.

<TABLE>
<CAPTION>
   ALLMERICA INVESTMENT TRUST                           FIDELITY VARIABLE INSURANCE PRODUCTS FUND
   --------------------------                           -----------------------------------------
   <S>                                                  <C>
   Select Aggressive Growth Fund                        Fidelity VIP Overseas Portfolio
   Select Capital Appreciation Fund                     Fidelity VIP Growth Portfolio
   Select Value Opportunity Fund                        Fidelity VIP Equity-Income Portfolio
   Select Emerging Markets Fund                         Fidelity VIP High Income Portfolio
   Select International Equity Fund
   Select Growth Fund                                   FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
   Select Strategic Growth Fund                         Fidelity VIP II Asset Manager Portfolio
   Core Equity Fund
   Equity Index Fund                                    T. ROWE PRICE INTERNATIONAL SERIES, INC.
   Select Growth and Income Fund                        T. Rowe International Stock Portfolio
   Select Investment Grade Income Fund
   Government Bond Fund                                 DELAWARE GROUP PREMIUM FUND
   Money Market Fund                                    DGPF International Equity Series
</TABLE>

Each Contract is a modified endowment contract for federal income tax purposes,
except in certain circumstances described in FEDERAL TAX CONSIDERATIONS. A loan,
distribution or other amounts received from a modified endowment contract during
the life of the Insured will be taxed to the extent of accumulated income in the
contract. Death Benefits under a modified endowment contract, however, are
generally not subject to federal income tax. See FEDERAL TAX CONSIDERATIONS.

THE CONTRACTS ARE NOT SUITABLE FOR SHORT-TERM INVESTMENT. VARIABLE LIFE
CONTRACTS INVOLVE RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL. IT MAY NOT BE
ADVANTAGEOUS TO REPLACE EXISTING INSURANCE WITH THE CONTRACT. THIS LIFE CONTRACT
IS NOT: A BANK DEPOSIT OR OBLIGATION; OR FEDERALLY INSURED; OR ENDORSED BY ANY
BANK OR GOVERNMENTAL AGENCY.

This Prospectus can also be obtained from the Securities and Exchange
Commission's website (http://www.sec.gov).

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED THAT THE INFORMATION IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
   <S>                                                  <C>
   CORRESPONDENCE MAY BE MAILED TO:                     DATED _________, 2000
   ALLMERICA LIFE                                       440 LINCOLN STREET
   P.O. BOX 8014                                        WORCESTER, MASSACHUSETTS 01653
   BOSTON, MA 02266-8014                                (508) 855-1000
</TABLE>
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<S>                                                           <C>
SPECIAL TERMS...............................................       3
SUMMARY OF FEES AND CHARGES.................................       6
SUMMARY OF CONTRACT FEATURES................................       9
DESCRIPTION OF THE COMPANY, THE VARIABLE ACCOUNT, AND THE
 UNDERLYING FUNDS...........................................      15
INVESTMENT OBJECTIVES AND POLICIES..........................      17
THE CONTRACT................................................      20
    Applying for a Contract.................................      20
    Free Look Period........................................      20
    Conversion Privilege....................................      21
    Payments................................................      21
    Allocation of Payments..................................      21
    Transfer Privilege......................................      22
    Death Benefit (Without Guaranteed Death Benefit
     Rider).................................................      23
    Guaranteed Death Benefit Rider..........................      23
    Contract Value..........................................      25
    Payment Options.........................................      26
    Optional Insurance Benefits.............................      26
    Surrender...............................................      26
    Partial Withdrawal......................................      27
CHARGES AND DEDUCTIONS......................................      28
    Monthly Deductions......................................      28
    Surrender Charge........................................      29
    Transfer Charges........................................      31
CONTRACT LOANS..............................................      32
CONTRACT TERMINATION AND REINSTATEMENT......................      33
OTHER CONTRACT PROVISIONS...................................      34
FEDERAL TAX CONSIDERATIONS..................................      35
    The Company and the Variable Account....................      35
    Taxation of the Contracts...............................      35
    Modified Endowment Contracts............................      36
    Contract Loans..........................................      36
VOTING RIGHTS...............................................      37
DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY.............      38
DISTRIBUTION................................................      39
REPORTS.....................................................      39
LEGAL PROCEEDINGS...........................................      40
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS...........      40
FURTHER INFORMATION.........................................      41
MORE INFORMATION ABOUT THE FIXED ACCOUNT....................      41
INDEPENDENT ACCOUNTANTS.....................................      42
FINANCIAL STATEMENTS........................................      42
APPENDIX A -- GUIDELINE MINIMUM SUM INSURED TABLE...........     A-1
APPENDIX B -- OPTIONAL INSURANCE BENEFITS...................     B-1
APPENDIX C -- PAYMENT OPTIONS...............................     C-1
APPENDIX D -- ILLUSTRATIONS.................................     D-1
APPENDIX E -- PERFORMANCE INFORMATION.......................     E-1
FINANCIAL STATEMENTS........................................   FIN-1
</TABLE>

                                       2
<PAGE>
                                 SPECIAL TERMS

AGE: how old the Insured is on his/her last birthday measured on the Date of
Issue and each Contract anniversary.

ALLMERICA FINANCIAL: Allmerica Financial Life Insurance and Annuity Company.

BENEFICIARY: the person or persons you name to receive the Net Death Benefit
when the Insured dies.

CONTRACT OWNER: the person who may exercise all rights under the Contract, with
the consent of any irrevocable Beneficiary. "You" and "your" refer to the
Contract Owner in this prospectus.

CONTRACT VALUE: the total value of your Contract. It is the SUM of the:

    - Value of the units of the Sub-Accounts credited to your Contract; PLUS

    - Accumulation in the Fixed Account credited to the Contract.

DATE OF ISSUE: the date the Contract was issued, used to measure the Monthly
Processing Date, Contract months, Contract years and Contract anniversaries.

DEATH BENEFIT: the Face Amount (the amount of insurance determined by your
payment) or the Guideline Minimum Sum Insured, whichever is greater. After the
Final Payment Date, if the Guaranteed Death Benefit Rider is in effect, the
Death Benefit will be the greater of the Face Amount as of the Final Payment
Date or the Contract Value as of the date due proof of death is received by the
Company.

EVIDENCE OF INSURABILITY: information, including medical information, used to
decide the Insured's Underwriting Class.

FACE AMOUNT: the amount of insurance coverage. The Face Amount is shown in your
Contract.

FINAL PAYMENT DATE: the Contract anniversary before the Insured's 100th
birthday. After this date, no payments may be made and the Net Death Benefit is
the Contract Value less any Outstanding Loan. The Net Death Benefit may be
different before and after the Final Payment Date. See NET DEATH BENEFIT.

FIRST ALLMERICA: First Allmerica Financial Life Insurance Company Company. "We,"
"our," "us," and "the Company" refer to First Allmerica Financial Life Insurance
Company in this Prospectus.

FIXED ACCOUNT: the part of the Company's General Account that guarantees
principal and a fixed interest rate.

GENERAL ACCOUNT: all our assets other than those held in separate investment
accounts.

GUIDELINE MINIMUM SUM INSURED: the Guideline Minimum Death Benefit required to
qualify the Contract as "life insurance" under federal tax laws. The Guideline
Minimum Death Benefit is the product of

    - The Contract Value TIMES

    - A percentage based on the Insured's age

The percentage factor is a percentage that, when multiplied by the Contract
Value, determines the Guideline Minimum Death Benefit required under federal tax
laws. The percentage factor is based on the Insured's attained age, as set forth
in APPENDIX A -- GUIDELINE MINIMUM SUM INSURED TABLE.

GUIDELINE SINGLE PREMIUM: used to determine the Face Amount under the Contract.

                                       3
<PAGE>
INSURED: the person or persons covered under the Contract. If more than one
person is named, all provisions of the Contract that are based on the death of
the Insured will be based on the date of death of the last surviving Insured.

LOAN VALUE: the maximum amount you may borrow under the Contract.

MONTHLY DEDUCTIONS: the amount of money that we deduct from the Contract Value
each month to pay for the Monthly Maintenance Fee, Administration Charge,
Monthly Insurance Protection Charge, Distribution Charge and the Federal and
State Payment Tax Charge.

MONTHLY INSURANCE PROTECTION CHARGE: the amount of money that we deduct from the
Contract Value each month to pay for the insurance.

MONTHLY PROCESSING DATE: the date, shown in your Contract, when Monthly
Deductions are deducted.

NET DEATH BENEFIT: Before the Final Payment Date the Net Death Benefit is:

    - The Death Benefit; MINUS

    - Any Outstanding Loan on the Insured's death rider charges and Monthly
      Deductions due and unpaid through the Contract month in which the Insured
      dies, as well as any partial withdrawal costs and surrender charges.

After the Final Payment Date, if the Guaranteed Death Benefit Rider is NOT in
effect, the Net Death Benefit is:

    - The Contract Value; MINUS

    - Any Outstanding Loan on the Insured's death. If the Guaranteed Death
      Benefit Rider is in effect after the Final Payment Date, the Death Benefit
      will be either the Face Amount as of the Final Payment Date or the
      Contract Value as of the date due proof of death is received by the
      Company, whichever is greater, reduced by an Outstanding Loan through the
      contract month in which the Insured dies.

OUTSTANDING LOAN: all unpaid Contract loans plus loan interest due or accrued.

PRINCIPAL OFFICE: our office at 440 Lincoln Street, Worcester, Massachusetts
01653.

PRO-RATA ALLOCATION: an allocation among the Fixed Account and the Sub-Accounts
of the Variable Account in the same proportion that, on the date of allocation,
the Contract Value in the Fixed Account (other than value subject to Outstanding
Loan) and the Contract Value in each Sub-Account bear to the total Contract
Value.

SECOND-TO-DIE: the Contract may be issued as a joint survivorship
("Second-to-Die") Contract. Life insurance coverage is provided for two
Insureds, with death benefits payable at the death of the last surviving
Insured.

SUB-ACCOUNT: a subdivision of the Variable Account investing exclusively in the
shares of a Fund.

SURRENDER VALUE: the amount payable on a full surrender. It is the Contract
Value less any Outstanding Loan and surrender charges.

UNDERLYING FUNDS (FUNDS): the investment Funds of Allmerica Investment Trust
("Trust"), the Portfolios of Fidelity Variable Insurance Products Fund
("Fidelity VIP"), Fidelity Variable Insurance Products Fund II ("Fidelity VIP
II"), T. Rowe Price International Series, Inc. ("T. Rowe Price"), and the
Series of Delaware Group Premium Fund ("DGPF") which are available under the
Contract.

                                       4
<PAGE>
UNDERWRITING CLASS: the insurance risk classification that we assign the Insured
based on the information in the application and other Evidence of Insurability
we consider. The Insured's underwriting class will affect the Monthly Insurance
Protection Charge.

UNIT: a measure of your interest in a Sub-Account.

VALUATION DATE: any day on which the net asset value of the shares of any Funds
and Unit values of any Sub-Accounts are computed. Valuation dates currently
occur on:

    - Each day the New York Stock Exchange is open for trading; and

    - Other days (other than a day during which no payment, partial withdrawal
      or surrender of a Contract was received) when there is a sufficient degree
      of trading in a Fund's portfolio securities so that the current net asset
      value of the Sub-Accounts may be materially affected.

VALUATION PERIOD: the interval between two consecutive Valuation Dates.

VARIABLE ACCOUNT: Separate Account SPVL, one of the Company's separate
investment accounts.

WRITTEN REQUEST: your request in writing, satisfactory to us, received at our
Principal Office.

                                       5
<PAGE>
                          SUMMARY OF FEES AND CHARGES

WHAT CHARGES WILL I INCUR UNDER MY CONTRACT?

The following charges will apply to your Contract under the circumstances
described. Some of these charges apply throughout the Contract's duration.

We deduct the following monthly charges from the Contract Value:

    - a $2.50 Maintenance Fee from Contracts with a Contract Value of less than
      $100 (See "Maintenance Fee");

    - 0.20% on an annual basis for the administrative expenses (See
      "Administration Charge");

    - a deduction for the cost of insurance, which varies depending on the type
      of Contract and Underwriting Class (See "Monthly Insurance Protection
      Charge");

    - For the first ten Contract years only, 0.90% on an annual basis for
      distribution expenses (See "Distribution Fee"); and

    - For the first Contract year only, 1.50% on an annual basis for federal,
      state and local taxes (See "Federal and State Payment Tax Charge").

The following daily charge is deducted from the Variable Account:

    - 0.90% on an annual basis for the mortality and expense risks (See
      "Mortality and Expense Risk Charge").

There are deductions from and expenses paid out of the assets of the Funds that
are described in the accompanying prospectuses.

WHAT CHARGES DO I INCUR IF I SURRENDER MY CONTRACT OR MAKE A PARTIAL WITHDRAWAL?

The charges below apply only if you surrender your Contract or make partial
withdrawals:

    - Surrender Charge -- A surrender charge on a withdrawal exceeding the "Free
      10% Withdrawal," described below. This charge applies on surrenders or
      partial withdrawals within ten Contract years from Date of Issue. The
      surrender charge begins at 10.00% of the amount that exceeds the Free 10%
      Withdrawal amount and decreases to 0% by the tenth Contract year.

    - Partial Withdrawal Transaction Fee -- A transaction fee of 2.0% of the
      amount withdrawn, not to exceed $25, for each partial withdrawal for
      processing costs. The transaction fee applies to all partial withdrawals,
      including a Withdrawal without a surrender charge.

                                       6
<PAGE>
WHAT ARE THE EXPENSES AND FEES OF THE FUNDS?

In addition to the charges described above, certain fees and expenses are
deducted from the assets of the Underlying Funds. The levels of fees and
expenses vary among the Underlying Funds. The following table shows the expenses
of the Underlying Funds for 1999.

<TABLE>
<CAPTION>
                                               MANAGEMENT FEE     OTHER EXPENSES     TOTAL FUND EXPENSES
                                              (AFTER VOLUNTARY   (AFTER APPLICABLE     (AFTER WAIVERS/
UNDERLYING FUND                                   WAIVERS)        REIMBURSEMENTS)      REIMBURSEMENTS)
---------------                                   --------        ---------------      ---------------
<S>                                           <C>                <C>                 <C>
Select Aggressive Growth Fund...............         0.81%*             0.06%               0.87%(1)(2)
Select Capital Appreciation Fund............         0.90%*             0.07%               0.97%(1)
Select Value Opportunity Fund...............         0.90%              0.07%               0.97%(1)(2)
Select Emerging Markets Fund................         1.35%              0.57%               1.92%(1)(2)
Select International Equity Fund............         0.89%              0.13%               1.02%(1)(2)
DGPF International Equity Series............         0.83%(4)           0.12%               0.95%(4)
Fidelity VIP Overseas Portfolio.............         0.73%              0.18%               0.91%(3)
T. Rowe Price International Stock
 Portfolio..................................         1.05%              0.00%               1.05%
Select Growth Fund..........................         0.78%              0.05%               0.83%(1)(2)
Select Strategic Growth Fund................         0.85%              0.35%               1.20%(1)(2)
Core Equity Fund............................         0.43%              0.05%               0.48%(1)(2)
Fidelity VIP Growth Portfolio...............         0.58%              0.08%               0.66%(3)
Equity Index Fund...........................         0.28%              0.07%               0.35%(1)
Select Growth and Income Fund...............         0.67%              0.07%               0.74%(1)(2)
Fidelity VIP Equity-Income Portfolio........         0.48%              0.09%               0.57%(3)
Fidelity VIP II Asset Manager Portfolio.....         0.53%              0.10%               0.63%(3)
Fidelity VIP High Income Portfolio..........         0.58%              0.11%               0.69%
Select Investment Grade Income Fund.........         0.43%              0.07%               0.50%(1)
Government Bond Fund........................         0.50%              0.12%               0.62%(1)
Money Market Fund...........................         0.24%              0.05%               0.29%(1)
</TABLE>

*   Effective September 1, 1999, the management fee rates for the Select
    Aggressive Growth Fund and Select Capital Appreciation Fund were revised.
    The Management Fee and Total Fund Expense ratios shown in the table above
    have been adjusted to assume that the revised rates took effect January 1,
    1999.

(1)  Until further notice, Allmerica Financial Investment Management
      Services, Inc. ("AFIMS") has declared a voluntary expense limitation of
    1.50% of average net assets for Select International Equity Fund, 1.35% for
    Select Aggressive Growth Fund and Select Capital Appreciation Fund, 1.25%
    for Select Value Opportunity Fund, 1.20% for Select Growth Fund and Core
    Equity Fund, 1.10% for Select Growth and Income Fund, 1.00% for Select
    Investment Grade Income Fund and Government Bond Fund, and 0.60% for Money
    Market Fund and Equity Index Fund. The total operating expenses of these
    Funds of the Trust were less than their respective expense limitations
    throughout 1999.

    Until further notice, AFIMS has declared a voluntary expense limitation of
    1.20% of average daily net assets for the Select Strategic Growth Fund. In
    1999, the Select Strategic Growth Fund received a reimbursement of $813
    under its expense limitation. However, this amount was not enough to make a
    difference in the percentage shown as the Fund's total operating expenses
    and as its expense limitation (both 1.20%).

    Until further notice, AFIMS has agreed to voluntarily waive its management
    fee to the extent that expenses of the Select Emerging Markets Fund exceed
    2.00% of the Fund's average daily net assets, except that such waiver shall
    not exceed the net amount of management fees earned by AFIMS from the Fund
    after subtracting fees paid by AFIMS to a sub-advisor.

    Until further notice, the Select Value Opportunity Fund's management fee
    rate has been voluntarily limited to an annual rate of 0.90% of average
    daily net assets, and total expenses are limited to 1.25% of average daily
    net assets.

                                       7
<PAGE>
    The declaration of a voluntary management fee or expense limitation in any
    year does not bind AFIMS to declare future expense limitations with respect
    to these Funds. These limitations may be terminated at any time.

(2)  These Funds have entered into agreements with brokers whereby the brokers
      rebate a portion of commissions. These amounts have been treated as
    reductions of expenses. Including these reductions, total annual fund
    operating expenses were 1.01% for Select International Equity Fund, 1.88%
    for Select Emerging Markets, 0.84% for Select Aggressive Growth Fund, 0.88%
    for Select Value Opportunity Fund, 0.81% for Select Growth Fund, 1.17% for
    Select Strategic Growth Fund, 0.45% for Core Equity Fund, and 0.73% for
    Select Growth and Income Fund.

(3)  A portion of the brokerage commissions that certain funds paid was used to
      reduce fund expenses. In addition, through arrangements with certain
    funds', or Fidelity Management & Research Company on behalf of certain
    funds', custodian credits realized as a result of uninvested cash balances
    were used to reduce a portion of the fund's expenses. Including these
    reductions, total operating expenses presented in the table would have been
    0.87% for the Fidelity VIP Overseas Portfolio; 0.56% for the Fidelity VIP
    Equity-Income Portfolio; 0.62% for the Fidelity VIP II Asset Manager
    Portfolio and 0.65% for the Fidelity VIP Growth Portfolio.

(4)  The investment adviser for the DGPF International Equity Series is Delaware
      International Advisers Ltd. ("Delaware International"). Effective May 1,
    2000 through October 31, 2000, Delaware International has agreed voluntarily
    to waive its management fee and reimburse the Series for expenses to the
    extent that total expenses will not exceed 0.95%. This limitation replaces a
    prior limitation of 0.95% that expired on April 30, 2000. The fee ratios
    shown above have been restated, if necessary, to reflect the new voluntary
    limitation which took effect on May 1, 2000. The declaration of a voluntary
    expense limitation does not bind Delaware International to declare future
    expense limitations with respect to this Series. For the fiscal year ended
    December 31, 1999, before waiver and/or reimbursement by Delaware
    International, total fund expenses as a percentage of average daily net
    assets were 0.97%.

The Underlying Fund information above was provided by the Underlying Funds and
was not independently verified by the Company.

                                       8
<PAGE>
                          SUMMARY OF CONTRACT FEATURES

This Summary is intended to provide only a very brief overview of the more
significant aspects of the Contract. If you are considering the purchase of this
product, you should read the remainder of this Prospectus carefully before
making a decision. It offers a more complete presentation of the topics
presented here, and will help you better understand the product. However, the
Contract, together with its attached application, constitutes the entire
agreement between you and the Company.

There is no guaranteed minimum Contract Value. The value of a Contract will vary
up or down to reflect the investment experience of allocations to the
Sub-Accounts and the fixed rates of interest earned by allocations to the
General Account. The Contract Value will also be adjusted for other factors,
including the amount of charges imposed. The Contract Value may decrease to the
point where the Contract will lapse and provide no further death benefit without
additional premium payments, unless the optional Guaranteed Death Benefit Rider
is in effect. This Rider may not be available in all states.

WHAT IS THE CONTRACT'S OBJECTIVE?

The objective of the Contract is to give permanent life insurance protection and
to help you build assets tax-deferred. Benefits available through the Contract
include:

    - A life insurance benefit that can protect your family;

    - Payment options that can guarantee an income for life, if you want to use
      your Contract for retirement income;

    - A personalized investment portfolio you may tailor to meet your needs,
      time frame and risk tolerance level;

    - Experienced professional investment advisers; and

    - Tax deferral on earnings while your money is accumulating.

The Contract combines features and benefits of traditional life insurance with
the advantages of professional money management. However, unlike the fixed
benefits of ordinary life insurance, the Contract Value will increase or
decrease depending on investment results. Unlike traditional insurance policies,
the Contract has no fixed schedule for payments.

WHO ARE THE KEY PERSONS UNDER THE CONTRACT?

The Contract is a contract between you and us. Each Contract has a Contract
Owner ("you"), the Insured and a Beneficiary. As Contract Owner, you make the
payment, choose investment allocations and select the Insured and Beneficiary.
The Insured is the person covered under the Contract. The Beneficiary is the
person who receives the Net Death Benefit when the Insured dies.

WHAT HAPPENS WHEN THE INSURED DIES?

We will pay the Net Death Benefit to the Beneficiary when the Insured dies while
the Contract is in effect. If the Contract was issued as a Second-to-Die
Contract, the Net Death Benefit will be paid on the death of the last surviving
Insured.

Before the Final Payment Date, the Death Benefit is either the Face Amount (the
amount of insurance determined by your payment) or the minimum death benefit
provided by the Guideline Minimum Sum Insured, whichever is greater. The Net
Death Benefit is the Death Benefit less any Outstanding Loan, rider charges and
Monthly Deductions due and unpaid through the Contract month in which the
Insured dies, as well as any partial withdrawals and surrender charges.

                                       9
<PAGE>
After the Final Payment Date, if the Guaranteed Death Benefit Rider is NOT in
effect, the Net Death Benefit is the Contract Value less any Outstanding Loan.
The Beneficiary may receive the Net Death Benefit in a lump sum or under one of
the Company's payment options. If the Guaranteed Death Benefit Rider is in
effect on the Final Payment Date, a Guaranteed Death Benefit will be provided
unless the Rider is subsequently terminated. The Guaranteed Death Benefit will
be either the Face or the Contract Value as of the date due proof of death is
received by the Company, which is greater, reduced by any Outstanding Loan
through the Contract month in which the insured dies. For more information, see
"Guaranteed Death Benefit Rider."

CAN I EXAMINE THE CONTRACT?

Yes. You have the right to examine and cancel your Contract by returning it to
us or to one of our representatives within 10 days (or such later date as
required in your state) after you receive the Contract. If your Contract was
purchased in New York as a replacement for an existing policy, you after the
right to cancel for up to 60 days after your receive the Contract.

If you exercise your right to cancel, the Company will mail a refund to you
within seven days. We may delay a refund of any payment made by check until the
check has cleared your bank.

Where required by state law, your refund will be your entire payment. Otherwise,
the refund will equal the sum of:

    - Amounts allocated to the Fixed Account; PLUS

    - The value of the Units in the Variable Account; PLUS

    - All fees, charges and taxes which have been imposed.

Your refund will be determined as of the Valuation Date that the Contract is
received at our Principal Office.

WHAT ARE MY INVESTMENT CHOICES?

The Contract permits you to allocate payments to up to twenty Sub-Accounts of
the Variable Account. Each Sub-Account invests its assets in a corresponding
investment portfolio ("Fund") of Allmerica Investment Trust ("Trust"), Fidelity
Variable Insurance Products Fund ("Fidelity VIP"), Fidelity Variable Insurance
Products Fund II ("Fidelity VIP II"), T. Rowe Price International Series, Inc.
("T. Rowe Price") or Delaware Group Premium Fund ("DGPF").

In some states, insurance regulations may restrict the availability of
particular Underlying Funds. The Contract also offers a Fixed Account that is
part of the general account of the Company. The Fixed Account is a guaranteed
account offering a minimum interest rate. This range of investment choices
allows you to allocate your money among the Sub-Accounts and the Fixed Account
to meet your investment needs.

If your Contract provides for a full refund under its "Right to Examine Policy"
provision as required in your state, we will allocate all sub-account
investments to the Money Market Fund until the fourth day after the expiration
of the "Right to Examine" provision of your Contract. After this, we will
allocate all amounts as you have chosen. For more information about your
investment choices, see WHO ARE THE INVESTMENT ADVISERS AND HOW ARE THEY
SELECTED?, below.

WHO ARE THE INVESTMENT ADVISERS AND HOW ARE THEY SELECTED?

BARRA RogersCasey, Inc. ("BARRA RogersCasey"), a pension consulting firm,
assists the Company in the selection of the Contract's Funds. In addition, BARRA
RogersCasey assists the Trust in the selection of investment advisers for the
Funds of the Trust. BARRA RogersCasey provides consulting services to pension
plans representing hundreds of billions of dollars in total assets and, in its
consulting capacity, monitors the

                                       10
<PAGE>
investment performance of over 1000 investment advisers. BARRA RogersCasey also
develops asset allocation strategies that broker-dealers may elect to provide to
their registered representatives in assisting clients in developing diversified
portfolios. BARRA RogersCasey is wholly-controlled by BARRA, Inc. As a
consultant, BARRA RogersCasey has no decision-making authority with respect to
the Funds, and is not responsible for any investment advice provided to the
Funds by Allmerica Financial Investment Management Services, Inc. ("AFIMS") or
the investment advisers.

AFIMS, an affiliate of the Company, is the investment manager of the Trust.
AFIMS has entered into agreements with investment advisers ("Sub-Advisers")
selected by AFIMS and the Trustees in consultation with BARRA RogersCasey. Each
investment adviser is selected by using strict objective, quantitative, and
qualitative criteria, with special emphasis on the investment adviser's record
in managing similar portfolios. In consultation with BARRA RogersCasey, a
committee monitors and evaluates the ongoing performance of all of the Funds.
The committee may recommend the replacement of an investment adviser of one of
the Funds of the Trust, or the addition or deletion of Funds. The committee
includes members who may be affiliated or unaffiliated with the Company and the
Trust. The Sub-Advisers (other than Allmerica Asset Management, Inc.) are not
affiliated with the Company or the Trust.

Fidelity Management & Research Company ("FMR") is the investment adviser of
Fidelity VIP and Fidelity VIP II. FMR is one of America's largest investment
management organizations and has its principal business address at 82 Devonshire
Street, Boston, Massachusetts. It is composed of a number of different
companies, which provide a variety of financial services and products. FMR is
the original Fidelity company, founded in 1946. It provides a number of mutual
funds and other clients with investment research and portfolio management
services.

Rowe Price-Fleming International, Inc. ("Price-Fleming") is the investment
adviser of T. Rowe Price. Price-Fleming, founded in 1979 as a joint venture
between T. Rowe Price Associates, Inc. and Robert Fleming Holdings, Limited, is
one of the largest no-load international mutual fund asset managers with
approximately $42.5 billion (as of December 31, 1999) under management in its
offices in Baltimore, London, Tokyo, Hong Kong, Singapore and Buenos Aires. T.
Rowe Price Associates, Inc., an affiliate of Price-Fleming, serves as
Sub-Adviser of the Select Capital Appreciation Fund of the Trust.

Delaware International Advisers, Ltd. ("Delaware International") is the
investment adviser for the International Equity Series.

                                       11
<PAGE>
The following are the Investment Managers and Sub-Advisers of the Funds:

<TABLE>
<CAPTION>
FUND                                         MANAGER
----                                         -------
<S>                                          <C>
Select Aggressive Growth Fund                Nicholas-Applegate Capital Management, L.P.
Select Capital Appreciation Fund             T. Rowe Price Associates, Inc.
Select Value Opportunity Fund                Cramer Rosenthal McGlynn, LLC
Select Emerging Markets Fund                 Schroder Investment Management North America Inc.
T. Rowe Price International Stock Portfolio  Rowe Price-Fleming International, Inc.
Fidelity VIP Overseas Portfolio              Fidelity Management & Research Company
Select International Equity Fund             Bank of Ireland Asset Management (U.S.) Limited
Delaware International Equity Series         Delaware International Advisers, Ltd.
Fidelity VIP Growth Portfolio                Fidelity Management & Research Company
Select Growth Fund                           Putnam Investment Management, Inc.
Select Strategic Growth Fund                 TCW Investment Management Company
Core Equity Fund                             Miller, Anderson, & Sherrerd
Equity Index Fund                            Allmerica Asset Management, Inc.
Fidelity VIP Equity-Income Portfolio         Fidelity Management & Research Company
Select Growth and Income Fund                J.P. Morgan Investment Management Inc.
Fidelity VIP II Asset Manager Portfolio      Fidelity Management & Research Company
Fidelity VIP High Income Portfolio           Fidelity Management & Research Company
Select Investment Grade Income Fund          Allmerica Asset Management, Inc.
Government Bond Fund                         Allmerica Asset Management, Inc.
Money Market Fund                            Allmerica Asset Management, Inc.
</TABLE>

CAN I MAKE TRANSFERS AMONG THE FUNDS AND THE FIXED ACCOUNT?

Yes. You may transfer among the Funds and the Fixed Account, subject to our
consent and then current rules. Under present law, you will incur no current
taxes on transfers while your money is in the Contract. You also may elect
automatic account rebalancing so that assets remain allocated according to a
desired mix or choose automatic dollar cost averaging to gradually move funds
into one or more Sub-Accounts. See "Transfer Privilege." The first 12 transfers
of Contract Value in a Contract year are free. A transfer charge not to exceed
$25 may apply for each additional transfer in the same Contract year. This
charge is for the costs of processing the transfer.

HOW MUCH CAN I INVEST AND HOW OFTEN?

The Contract requires a single payment on or before the Date of Issue.
Additional payment(s) of at least $10,000 may be made as long as the total
payments do not exceed the maximum payment amount specified in the Contract.

WHAT IF I NEED MY MONEY?

You may borrow up to the Loan Value of your Contract. The Loan Value is 90% of
your Surrender Value. You may also make partial withdrawals and surrender the
Contract for its Surrender Value.

The guaranteed annual interest rate credited to the Contract Value securing a
loan will be at least 4.0%. However, any portion of the Outstanding Loan that is
a preferred loan will be credited with not less than 5.50%.

We will allocate Contract loans among the Sub-Accounts and the Fixed Account
according to your instructions. If you do not make an allocation, we will make a
Pro-rata Allocation. We will transfer the Contract Value in each Sub-Account
equal to the Contract loan to the Fixed Account.

                                       12
<PAGE>
You may surrender your Contract and receive its Surrender Value. You may make
partial withdrawals of $1,000 or more from the Contract Value, subject to a
partial withdrawal transaction fee and any applicable surrender charges. The
Face Amount is proportionately reduced by each partial withdrawal. We will not
allow a partial withdrawal if it would reduce the Contract Value below $25,000.
There is some uncertainty as to the tax treatment of a preferred loan, which may
be treated as a taxable distribution from the Contract. See FEDERAL TAX
CONSIDERATIONS, "Contract Loans." A surrender on partial withdrawal may have tax
consequences. See FEDERAL TAX CONSIDERATIONS, "Taxation of the Contracts."

CAN I MAKE FUTURE CHANGES UNDER MY CONTRACT?

Yes. There are several changes you can make after receiving your Contract,
within limits. You may

    - Cancel your Contract under its "Right to Cancel" provision;

    - Transfer your ownership to someone else;

    - Change the Beneficiary;

    - Change the allocation for any additional payment, with no tax consequences
      under current law;

    - Make transfers of the Contract Value among the Funds, with no taxes
      incurred under current law; and

    - Add or remove the optional insurance benefits provided by rider.

CAN I CONVERT MY CONTRACT INTO A FIXED CONTRACT?

Yes. You can convert your Contract without charge during the first 24 months
after the Date of Issue. On conversion, we will transfer the Contract Value in
the Variable Account to the Fixed Account. We will allocate any future
payment(s) to the Fixed Account, unless you instruct us otherwise.

WHAT ARE THE LAPSE AND REINSTATEMENT PROVISIONS OF MY CONTRACT?

The Contract will not lapse unless the Surrender Value on a Monthly Processing
Date is less than zero. There is a 62-day grace period in this situation. If the
Insured has not died, you may reinstate your Contract within three years after
the grace period, within limits. The Insured must provide evidence of
insurability subject to our then current underwriting standards. See CONTRACT
TERMINATION AND REINSTATEMENT. If the Guaranteed Death Benefit Rider is in
effect, the Contract will not lapse. However, if the Guaranteed Death Benefit
Rider terminates, the Contract may then lapse. See "Guaranteed Death Benefit
Rider."

HOW IS MY CONTRACT TAXED?

The Contract has been designed to be a "modified endowment contract." However,
under Section 1035 of the Internal Revenue Code of 1986, as amended ("Code") an
exchange of (1) a life insurance contract entered into before June 21, 1988 or
(2) a life insurance contract that is not itself a modified endowment contract,
will not cause this Contract to be treated as a modified endowment contract if
no additional payments are made and there is no increase in the death benefit as
a result of the exchange.

If the Contract is considered a modified endowment contract, all distributions
(including Contract loans, partial withdrawals, surrenders and assignments) will
be taxed on an "income-first" basis. Also, a 10% additional penalty tax may be
imposed on that part of a distribution that is includible in income. However,
the Net Death Benefit under the Contract is excludable from the gross income of
the Beneficiary. In some

                                       13
<PAGE>
circumstances, federal estate tax may apply to the Net Death Benefit or the
Contract Value. See "Taxation of the Contracts."

                            ------------------------

This Summary is intended to provide only a very brief overview of the more
significant aspects of the Contract. The Prospectus and the Contract provide
further detail. The Contract provides insurance protection for the named
beneficiary. The Contract and its attached application or enrollment form are
the entire agreement between you and the Company.

THE PURPOSE OF THE CONTRACT IS TO PROVIDE INSURANCE PROTECTION FOR THE
BENEFICIARY. IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE, OR IF YOU
ALREADY OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT.

NO CLAIM IS MADE THAT THE CONTRACT IS IN ANY WAY SIMILAR OR COMPARABLE TO A
SYSTEMATIC INVESTMENT PLAN OF A MUTUAL FUND.

                                       14
<PAGE>
               DESCRIPTION OF THE COMPANY, THE VARIABLE ACCOUNT,
                            AND THE UNDERLYING FUNDS

THE COMPANY

The Company, organized under the law of Massachusetts in 1844, is the fifth
oldest life insurance company in America. Effective October 16, 1995, the
Company converted from a mutual life insurance company known as State Mutual
Life Assurance Company of America to a stock life insurance company and adopted
its present name. As of December 31, 1999, the Company and its subsidiaries had
over $25 billion in combined assets and over $43 billion of life insurance in
force. The Company is a wholly owned subsidiary of Allmerica Financial
Corporation ("AFC"). The Company's Principal Office is located at 440 Lincoln
Street, Worcester, Massachusetts 01653, telephone 508-855-1000 ("Principal
Office").

The Company is subject to the laws of the Commonwealth of Massachusetts
governing insurance companies and to regulation by the Commissioner of Insurance
of Massachusetts. In addition, the Company is subject to the insurance laws and
regulations of other states and jurisdictions in which it is licensed to
operate.

The Company is a charter member of the Insurance Marketplace Standards
Association ("IMSA"). Companies that belong to IMSA subscribe to a rigorous set
of standards that cover the various aspects of sales and service for
individually sold life insurance and annuities. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.

THE VARIABLE ACCOUNT

The Variable Account is a separate investment account with twenty-one (21)
Sub-Accounts. You may have allocations in up to twenty (20) Sub-Accounts at one
time. Each Sub-Account invests in a Fund of the Trust, Fidelity VIP, Fidelity
VIP II, T. Rowe Price or DGPF. The assets used to fund the variable part of the
Policies are set aside in Sub-Accounts and are separate from our general assets.
We administer and account for each Sub-Account as part of our general business.
However, income, capital gains and capital losses are allocated to each
Sub-Account without regard to any of our other income, capital gains or capital
losses. Under Massachusetts law, the assets of the Variable Account may not be
charged with any liabilities arising out of any other business of ours.

Our Board of Directors authorized the establishment of the Variable Account by
vote on June 13, 1996. The Variable Account meets the definition of "separate
account" under federal securities laws. It is registered with the Securities and
Exchange Commission ("SEC") as a unit investment trust under the Investment
Company Act of 1940 ("1940 Act"). This registration does not involve SEC
supervision of the management or investment practices or policies of the
Variable Account or of the Company. We reserve the right, subject to law, to
change the names of the Variable Account and the Sub-Accounts.

THE UNDERLYING FUNDS

Each Underlying Fund pays a management fee to an investment manager or adviser
for managing and providing services to the Underlying Fund. However, management
fee waivers and/or reimbursements may be in effect for certain or all of the
Underlying Funds. For specific information regarding the existence and effect of
any waiver/reimbursements see "WHAT ARE THE EXPENSES AND FEES OF THE FUNDS?"
under the SUMMARY OF FEES AND CHARGES section. The prospectuses of the
Underlying Funds also contain information regarding fees for advisory services
and should be read in conjunction with this prospectus.

                                       15
<PAGE>
ALLMERICA INVESTMENT TRUST

Allmerica Investment Trust ("AIT") is an open-end, diversified, management
investment company and is registered with the SEC under the 1940 Act. AIT was
established as a Massachusetts business trust on October 11, 1984 for the
purpose of providing a vehicle for the investment of assets of various separate
accounts established by the Company or other insurance companies. Thirteen
investment portfolios ("Funds") of AIT are available under the Certificates,
each issuing a series of shares: Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select Value Opportunity Fund, Select Emerging Markets Fund,
Select International Equity Fund, Select Growth Fund, Select Strategic Growth
Fund, Core Equity Fund, Equity Index Fund, Select Growth and Income Fund, Select
Investment Grade Income Fund, Government Bond Fund, and Money Market Fund.

Allmerica Financial Investment Management Services, Inc. ("AFIMS"), which is a
wholly-owned subsidiary of Allmerica Financial, serves as overall investment
manager of AIT under the terms of a Management Agreement. Subject to Trustee
review, AFIMS is responsible for the daily affairs of AIT and the general
management of the Funds. AFIMS performs administrative and management services
for AIT, furnishes to AIT all necessary office space, facilities and equipment,
and pays the compensation, if any, of officers and Trustees who are affiliated
with AFIMS. AIT bears all expenses incurred in its operation, other than the
expenses AFIMS assumes under the management agreement.

Under the Management Agreement with AIT, AFIMS has entered into agreements with
investment advisers ("Sub-Advisers") selected by AFIMS and Trustees in
consultation with BARRA RogersCasey, Inc. Under each Sub-Adviser Agreement, the
Sub-Adviser is authorized to engage in portfolio transactions on behalf of the
Fund, subject to the Trustee's instructions. The Sub-Advisers (other than
Allmerica Asset Management, Inc.) are not affiliated with the Company or AIT.

FIDELITY VIP

Fidelity VIP, managed by Fidelity Management & Research Company ("FMR"), is an
open-end, diversified, management investment company organized as a
Massachusetts business trust on November 13, 1981. Four of its investment
portfolios are available under the Contract: Fidelity VIP High Income Portfolio,
Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth Portfolio and Fidelity
VIP Overseas Portfolio.

Various Fidelity companies perform certain activities required to operate VIP.
FMR is one of America's largest investment management organizations, and has its
principal business address at 82 Devonshire Street, Boston, Massachusetts. It is
composed of a number of different companies which provide a variety of financial
services and products. FMR is the original Fidelity company, founded in 1946. It
provides a number of mutual funds and other clients with investment research and
portfolio management services. The Portfolios of Fidelity VIP, as part of their
operating expenses, pay an monthly management fee to FMR for managing
investments and business affairs. The prospectus of Fidelity VIP contains
additional information concerning the Portfolios, including information
concerning additional expenses paid by the Portfolios, and should be read in
conjunction with this Prospectus.

FIDELITY VIP II

Fidelity Variable Insurance Products Fund II ("Fidelity VIP II"), managed by FMR
(see discussion under "Fidelity VIP"), is an open-end, diversified, management
investment company organized as a Massachusetts business trust on March 21, 1988
and is registered with the SEC under the 1940 Act. One of its investment
portfolios is available under the Contract: the Fidelity VIP II Asset Manager
Portfolio.

T. ROWE PRICE

T. Rowe Price International Series, Inc. ("T. Rowe Price"), managed by Rowe
Price-Fleming International, Inc. ("Price-Fleming"), is an open-end, diversified
management investment company organized in 1994 as a Maryland corporation, and
is registered with the SEC under the 1940 Act. One of its investment portfolios
is available under the Policies: the T. Rowe Price International Stock
Portfolio. An affiliate of Price-

                                       16
<PAGE>
Fleming, T. Rowe Price Associates, Inc. serves as Sub-Adviser to the Select
Capital Appreciation Fund of the Trust.

DELAWARE GROUP PREMIUM FUND

Delaware Group Premium Fund ("DGPF") is an open-end, diversified, management
investment company registered with the SEC under the 1940 Act. Such registration
does not involve supervision by the SEC of the investments or investment policy
of DGPF or its separate investment series. DGPF was established to provide a
vehicle for the investment of assets of various separate accounts supporting
variable insurance policies. One investment portfolio ("Series") is available
under the Contract: the DGPF International Equity Series. The investment adviser
for the DGPF International Equity Series is Delaware International Advisers Ltd.
("Delaware International").

                       INVESTMENT OBJECTIVES AND POLICIES

A summary of investment objectives of each of the Funds is set forth below. The
Funds are listed by general investment risk characteristics. MORE DETAILED
INFORMATION REGARDING THE INVESTMENT OBJECTIVES, RESTRICTIONS AND RISKS,
EXPENSES PAID BY THE FUNDS AND OTHER RELEVANT INFORMATION REGARDING THE MAY BE
FOUND IN THEIR RESPECTIVE PROSPECTUSES, WHICH ACCOMPANY THIS PROSPECTUS AND
SHOULD BE READ CAREFULLY BEFORE INVESTING. The Statements of Additional
Information of the Funds are available upon request. There can be no assurance
that the investment objectives of the Funds can be achieved.

SELECT AGGRESSIVE GROWTH FUND -- The Select Aggressive Growth Fund of the Trust
seeks above-average capital appreciation by investing primarily in common stocks
of companies which are believed to have significant potential for capital
appreciation.

SELECT CAPITAL APPRECIATION FUND -- The Select Capital Appreciation Fund of the
Trust seeks long-term growth of capital. Realization of income is not a
significant investment consideration and any income realized on the Fund's
investments will be incidental to its primary objective. The Fund invests
primarily in common stock of industries and companies which are believed to be
experiencing favorable demand for their products and services, and which operate
in a favorable competitive environment and regulatory climate.

SELECT VALUE OPPORTUNITY FUND -- The Select Value Opportunity Fund of the Trust
seeks long-term growth by investing primarily in a diversified portfolio of
common stocks of small and mid-size companies whose securities at the time of
purchase are considered by the Sub-Adviser to be undervalued.

SELECT EMERGING MARKETS FUND -- The Select Emerging Markets Fund of the Trust
seeks long-term growth of capital by investing in the world's emerging markets.
The Fund may invest in high yielding, lower-rated fixed-income securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities.

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO -- The T. Rowe Price International
Stock Portfolio seeks long-term growth of capital through investments primarily
in common stocks of established, non-U.S. companies.

FIDELITY VIP OVERSEAS PORTFOLIO -- The Overseas Portfolio of Fidelity VIP seeks
long-term growth of capital primarily through investments in foreign securities
and provides a means for aggressive investors to diversify their own portfolios
by participating in companies and economies outside of the United States.

SELECT INTERNATIONAL EQUITY FUND -- The Select International Equity Fund of the
Trust seeks maximum long-term total return (capital appreciation and income)
primarily by investing in common stocks of established non-U.S. companies.

                                       17
<PAGE>
DGPF INTERNATIONAL EQUITY SERIES -- The International Equity Series of DGPF
seeks long-term growth without undue risk to principal by investing primarily in
equity securities of foreign issuers providing the potential for capital
appreciation and income.

FIDELITY VIP GROWTH PORTFOLIO -- The Growth Portfolio of Fidelity VIP seeks to
achieve capital appreciation. The Portfolio normally purchases common stocks,
although its investments are not restricted to any one type of security. Capital
appreciation also may be found in other types of securities, including bonds and
preferred stocks.

SELECT GROWTH FUND -- The Select Growth Fund of the Trust seeks to achieve
long-term growth of capital by investing in a diversified portfolio consisting
primarily of common stocks selected on the basis of their long-term growth
potential.

SELECT STRATEGIC GROWTH FUND -- The Select Strategic Growth Fund of the Trust
seeks long-term growth of capital by investing primarily in common stocks of
established companies.

CORE EQUITY FUND -- The Core Equity Fund of the Trust is invested in common
stocks and securities convertible into common stocks that are believed to
represent significant underlying value in relation to current market prices. The
objective of the Core Equity Fund is to achieve long-term growth of capital.
Realization of current investment income, if any, is incidental to this
objective.

EQUITY INDEX FUND -- The Equity Index Fund of the Trust seeks to provide
investment results that correspond to the aggregate price and yield performance
of a representative selection of United States publicly traded common stocks.
The Equity Index Fund seeks to achieve its objective by attempting to replicate
the aggregate price and yield performance of the Standard & Poor's Composite
Index of 500 Stocks.

FIDELITY VIP EQUITY-INCOME PORTFOLIO -- The Equity-Income Portfolio of Fidelity
VIP seeks reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Portfolio also will consider the
potential for capital appreciation. The Portfolio's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the S&P 500. The
Portfolio may invest in high yielding, lower-rated fixed-income securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. See "Risks of Lower-Rated Debt
Securities" in the Fidelity VIP prospectus.

SELECT GROWTH AND INCOME FUND -- The Select Growth and Income Fund of the Trust
seeks a combination of long-term growth of capital and current income. The Fund
will invest primarily in dividend-paying common stocks and securities
convertible into common stocks.

FIDELITY VIP II ASSET MANAGER PORTFOLIO -- The Asset Manager Portfolio of
Fidelity VIP II seeks high total return with reduced risk over the long term by
allocating its assets among domestic and foreign stocks, bonds and short-term
fixed-income instruments.

FIDELITY VIP HIGH INCOME PORTFOLIO -- The High Income Portfolio of Fidelity VIP
seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated fixed-income securities (commonly referred to as
"junk bonds"), while also considering growth of capital. These securities often
are considered to be speculative, and involve greater risk of default or price
changes than securities assigned a high quality rating.

SELECT INVESTMENT GRADE INCOME FUND -- The Select Investment Grade Income Fund
of the Trust is invested in a diversified portfolio of fixed income securities
with the objective of seeking as high a level of total return (including both
income and capital appreciation) as is consistent with prudent investment
management.

                                       18
<PAGE>
GOVERNMENT BOND FUND -- The Government Bond Fund of the Trust has the investment
objectives of seeking high income, preservation of capital and maintenance of
liquidity, primarily through investments in debt instruments issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, and in
related options, futures and repurchase agreements.

MONEY MARKET FUND -- The Money Market Fund of the Trust is invested in a
diversified portfolio of high-quality, short-term money market instruments with
the objective of obtaining maximum current income consistent with the
preservation of capital and liquidity.

CERTAIN UNDERLYING FUNDS HAVE INVESTMENT OBJECTIVES AND/OR POLICIES SIMILAR TO
THOSE OF OTHER UNDERLYING FUNDS. THEREFORE, TO CHOOSE THE SUB-ACCOUNTS WHICH
BEST MEET YOUR NEEDS AND OBJECTIVES, CAREFULLY READ THE PROSPECTUSES OF THE
TRUST, FIDELITY VIP, FIDELITY VIP II, T. ROWE PRICE AND DGPF, ALONG WITH THIS
PROSPECTUS. IN SOME STATES, INSURANCE REGULATIONS MAY RESTRICT THE AVAILABILITY
OF PARTICULAR SUB-ACCOUNTS.

If required in your state, in the event of a material change in the investment
policy of a Sub-Account or the Underlying Fund in which it invests, you will be
notified of the change. If you have Contract Value in that Sub-Account, the
Company will transfer it without charge on written request within sixty (60)
days of the later of (1) the effective date of such change in the investment
policy, or (2) your receipt of the notice of the right to transfer. You may then
change the percentages of your premium and deduction allocations.

                                       19
<PAGE>
                                  THE CONTRACT

APPLYING FOR A CONTRACT

Individuals wishing to purchase a Contract must complete an application and
submit it to an authorized representative or to the Company at its Principal
Office. We offer Contracts to applicants 89 years old and under. After receiving
a completed application from a prospective Contract Owner, we will begin
underwriting to decide the insurability of the proposed Insured. We may require
medical examinations and other information before deciding insurability. We
issue a Contract only after underwriting has been completed. We may reject an
application that does not meet our underwriting guidelines.

If a prospective Contract Owner makes the initial payment with the application,
we will provide fixed conditional insurance during underwriting. The conditional
insurance will be based upon Death Benefit Factors shown in the Conditional
Insurance Agreement, up to a maximum of $500,000, depending on Age and
Underwriting Class. This coverage will continue for a maximum of 90 days from
the date of the application or, if required, the completed medical exam. If
death is by suicide, we will return only the payment made. If the initial
payment is not made with the application, on Contract delivery we will require
the initial payment to place the insurance in force.

If you made the initial payment before the date of Issuance and Acceptance, we
will allocate the payment to our Fixed Account within two business days of
receipt of the payment at our Principal Office. IF WE ARE UNABLE TO ISSUE THE
CONTRACT, THE PAYMENT WILL BE RETURNED TO THE CONTRACT OWNER WITHOUT INTEREST.

If your application is approved and the Contract is issued and accepted, we will
allocate your Contract Value on Issuance and Acceptance according to your
instructions. However, if your Contract provides for a full refund of payments
under its "Right to Cancel" provision as required in your state (see THE
CONTRACT -- "Free Look Period," below), we will initially allocate your
Sub-Account investments to the Money Market Fund. We will reallocate all amounts
according to your investment choices no later than the expiration of the right
to cancel period.

If your initial payment is equal to the amount of the Guideline Single Premium,
the contract will be issued with the Guaranteed Death Benefit Rider at no
additional cost. If the Guaranteed Death Benefit Rider is in effect on the Final
Payment Date, a guaranteed Net Death Benefit will be provided thereafter unless
the Guaranteed Death Benefit Rider is terminated. (See THE CONTRACT -- "Death
Benefit" -- "Guaranteed Death Benefit Rider," below.)

FREE LOOK PERIOD

The Contract provides for a free look period under the "Right to Cancel"
provision. You have the right to examine and cancel your Contract by returning
it to us or to one of our representatives on or before the tenth day (or such
later date as required in your state) after you receive the Contract. If your
Contract was purchased in New York as a replacement for an existing policy, you
after the right to cancel for up to 60 days after your receive the Contract. If
you exercise your right to cancel, the Company will mail a refund to you within
seven days. We may delay a refund of any payment made by check until the check
has cleared your bank.

Where required by state law, your refund will be your entire payment. Otherwise,
the refund will equal the sum of:

    - Amounts allocated to the Fixed Account; PLUS

    - The Contract Value in the Variable Account; PLUS

    - All fees, charges and taxes which have been imposed.

                                       20
<PAGE>
We may delay a refund of any payment made by check until the check has cleared
your bank. Your refund will be determined as of the Valuation Date that the
Contract is received at our Principal Office.

CONVERSION PRIVILEGE

Within 24 months of the Date of Issue, you can convert your Contract into a
fixed Contract by transferring all Contract Value in the Sub-Accounts to the
Fixed Account. The conversion will take effect at the end of the Valuation
Period in which we receive, at our Principal Office, notice of the conversion
satisfactory to us. There is no charge for this conversion. We will allocate any
future payment(s) to the Fixed Account, unless you instruct us otherwise.

PAYMENTS

The Contracts are designed for a large single payment to be paid by the Contract
Owner on or before the Date of Issue. The minimum initial payment is $25,000.
The initial payment is used to determine the Face Amount. The Face Amount will
be determined by treating the payment as equal to 100% of the Guideline Single
Premium. You may indicate the desired Face Amount on the application. If the
Face Amount specified exceeds 100% of the Guideline Single Premium for the
payment amount, the application will be amended and a Contract with a higher
Face Amount will be issued.

If the Face Amount specified is less than 80% of the Guideline Single Premium
for the payment amount, the application will be amended and a Contract with a
lower Face Amount will be issued. The Contract Owner must agree to any amendment
to the application.

Under our underwriting rules, the Face Amount must be based on 100% of the
Guideline Single Premium to be eligible for simplified underwriting.

Payments are payable to the Company. Payments may be made by mail to our
Principal Office or through our authorized representative. Any additional
payment, after the initial payment, is credited to the Variable Account or Fixed
Account on the date of receipt at the Principal Office.

The Contract limits the ability to make additional payments. However, no
additional payment may be less than $10,000 without our consent. Any additional
payment(s) may not cause total payments to exceed the maximum payment on the
specifications page of your Contract.

Total payments may not exceed the current maximum payment limits under federal
tax law. Where total payments would exceed the current maximum payment limits,
we will only accept that part of a payment that will make total payments equal
the maximum. We will return any part of a payment that is greater than that
amount. However, we will accept a payment needed to prevent Contract lapse
during a Contract year. See CONTRACT TERMINATION AND REINSTATEMENT.

ALLOCATION OF PAYMENTS

In the application for your Contract, you decide the initial allocation of the
payment among the Sub-Accounts and the Fixed Account. You may allocate the
payment to one or more of the Sub-Accounts and/or the Fixed Account, but may not
have Contract Value in more than twenty (20) Sub-Accounts at one time. The
minimum amount that you may allocate to a Sub-Account is 1.00% of the payment.
Allocation percentages must be in whole numbers (for example, 33 1/3% may not be
chosen) and must total 100%.

You may change the allocation of any future payment by Written Request or
telephone request. You have the privilege to make telephone requests, unless you
elected not to have the privilege on the application. The policy of the Company
and its representatives and affiliates is that they will not be responsible for
losses resulting from acting on telephone requests reasonably believed to be
genuine. We will use reasonable

                                       21
<PAGE>
methods to confirm that instructions communicated by telephone are genuine;
otherwise, the Company may be liable for any losses from unauthorized or
fraudulent instructions. Such procedures may include, among other things,
requiring some form of personal identification prior to acting upon instructions
received by telephone. All telephone requests are tape recorded. An allocation
change will take effect on the date of receipt of the notice at the Principal
Office. No charge is currently imposed for changing payment allocation
instructions. We reserve the right to impose a charge in the future, but
guarantee that the charge will not exceed $25.

The Contract Value in the Sub-Accounts will vary with investment experience. You
bear this investment risk. Investment performance may also affect the Death
Benefit. Review your allocations of Contract Value as market conditions and your
financial planning needs change.

TRANSFER PRIVILEGE

At any time prior to the election of a payment option, subject to our then
current rules, you may transfer amounts among the Sub-Accounts or between a
Sub-Account and the Fixed Account. (You may not transfer that portion of the
Contract Value held in the Fixed Account that secures a Contract loan.)

We will make transfers at your Written Request or telephone request, as
described in THE CONTRACT -- "Allocation of Payments." Transfers are effected at
the value next computed after receipt of the transfer order.

The first 12 transfers in a Contract year are free. After that, we may deduct a
transfer charge not to exceed $25 from amounts transferred in that Contract
year.

Transfers to and from the Fixed Account are currently permitted only if:

    - There has been at least a ninety (90) day period since the last transfer
      from the Fixed Account; and

    - The amount transferred from the Fixed Account in each transfer does not
      exceed the lesser of $100,000 or 25% of the Contract Value under the
      Contract.

DOLLAR-COST AVERAGING OPTION AND AUTOMATIC REBALANCING OPTION

You may have automatic transfers of at least $100 made on a periodic basis:

    - from the Fixed Account or the Sub-Account which invests in the Money
      Market Fund of the Trust to one or more of the other Sub-Accounts
      ("Dollar-Cost Averaging Option"), or

    - to reallocate Contract Value among the Sub-Accounts ("Automatic Account
      Rebalancing Option").

Automatic transfers may be made every one, three, six or twelve months.
Generally, all transfers will be processed on the 15th of each scheduled month.
If the 15th is not a business day, however, or is the Monthly Processing Date,
the automatic transfer will be processed on the next business day. The
Dollar-Cost Averaging Option and the Automatic Account Rebalancing Option may
not be in effect at the same time. The Fixed Account is not included in
Automatic Account Rebalancing.

If the Contract Value in the Sub-Account from which the automatic transfer is to
be made is reduced to zero, the automatic transfer option will terminate. The
Contract Owner must reapply for any future automatic transfers.

The first automatic transfer counts as one transfer toward the 12 free transfers
allowed in each Contract year. Each subsequent automatic transfer is free and
does not reduce the remaining number of transfers that are free in a Contract
year. Any transfers made for a conversion privilege, Contract loan or material
change in investment policy will not count toward the 12 free transfers.

                                       22
<PAGE>
ASSET ALLOCATION MODEL REALLOCATIONS

If a Contract Owner elects to follow an asset allocation strategy, the Contract
Owner may preauthorize transfers in accordance with the chosen strategy. The
Company may provide administrative or other support services to independent
third parties who provide recommendations as to such allocation strategies.
However, the Company does not engage any third parties to offer investment
allocation services of any type under this Contract, does not endorse or review
any investment allocations recommendations made by such third parties, and is
not responsible for the investment allocations and transfers transacted on the
Contract Owner's behalf. The Company does not charge for providing additional
asset allocation support services. Additional information concerning asset
allocation programs for which the Company is currently providing support
services may be obtained from a registered representative or the Company.

TRANSFER PRIVILEGES SUBJECT TO POSSIBLE LIMITS

All of the transfer privileges described above are subject to our consent. We
reserve the right to impose limits on transfers including, but not limited to,
the:

    - Minimum amount that may be transferred;

    - Minimum amount that may remain in a Sub-Account following a transfer from
      that Sub-Account;

    - Minimum period between transfers involving the Fixed Account; and

    - Maximum amounts that may be transferred from the Fixed Account.

These rules are subject to change by the Company.

DEATH BENEFIT (WITHOUT GUARANTEED DEATH BENEFIT RIDER)

If the Contract is in force on the Insured's death, we will, with due proof of
death, pay the Net Death Benefit to the named Beneficiary. For Second-to-Die
Contracts, the Net Death Benefit is payable on the death of the last surviving
Insured. There is no Death Benefit payable on the death of the first Insured to
die. We will normally pay the Net Death Benefit within seven days of receiving
due proof of the Insured's death, but we may delay payment of Net Death
Benefits. See OTHER CONTRACT PROVISIONS -- "Delay of Payments." The Beneficiary
may receive the Net Death Benefit in a lump sum or under a payment option,
unless the payment option has been restricted by the Contract Owner. See
APPENDIX C -- PAYMENT OPTIONS.

The Death Benefit is the GREATER of the:

    - Face Amount OR

    - Minimum Sum Insured.

Before the Final Payment Date the Net Death Benefit is:

    - The Death Benefit; MINUS

    - Any Outstanding Loan, rider charges and Monthly Deductions due and unpaid
      through the Contract month in which the Insured dies, as well as any
      partial withdrawals and surrender charges.

After the Final Payment Date, the Net Death benefit is:

    - The Contract Value; MINUS

    - Any Outstanding Loan.

GUARANTEED DEATH BENEFIT RIDER (NOT AVAILABLE IN ALL STATES)

If at the time of issue the Contract Owner has made payments equal to 100% of
the Guideline Single Premium, a Guaranteed Death Benefit Rider will be added to
the Contract at no additional charge. The

                                       23
<PAGE>
Contract will not lapse while the Guaranteed Death Benefit Rider is in force.
The Death Benefit before the Final Payment Date will be the greater of the

    - Face Amount OR

    - Guideline Minimum Sum Insured.

If the Guaranteed Death Benefit Rider is in effect on the Final Payment Date, a
guaranteed Net Death Benefit will be provided thereafter unless the Guaranteed
Death Benefit Rider is terminated, as described below. The guaranteed Net Death
Benefit will be:

    - the GREATER of (a) the Face Amount as of the Final Payment Date or
      (b) the Contract Value as of the date due proof of death is received by
      the Company,

    - REDUCED by the Outstanding Loan, if any, through the contract month in
      which the Insured dies.

The Guaranteed Death Benefit Rider will terminate (and may not be reinstated) on
the first to occur of the following:

    - Foreclosure of the Outstanding Loan, if any; OR

    - Any contract change that results in a negative guideline level premium; OR

    - A request for a partial withdrawal or preferred loan after the Final
      Payment Date; OR

    - Upon your written request.

GUIDELINE MINIMUM SUM INSURED -- The Guideline Minimum Sum Insured is a
percentage of the Contract Value as set forth in APPENDIX A -- GUIDELINE MINIMUM
SUM INSURED TABLE. The Guideline Minimum Sum Insured is computed based on
federal tax regulations to ensure that the Contract qualifies as a life
insurance Contract and that the insurance proceeds will be excluded from the
gross income of the Beneficiary. The Guideline Minimum Sum Insured under this
Contract meets or exceeds the IRS Guideline Minimum Sum Insured.

ILLUSTRATION -- In this illustration, assume that the Insured is under the age
of 40, and that there is no Outstanding Loan.

A Contract with a $100,000 Face Amount will have a Death Benefit of $100,000.
However, because the Death Benefit must be equal to or greater than 265% of
Contract Value, if the Contract Value exceeds $37,740 the Death Benefit will
exceed the $100,000 Face Amount. In this example, each dollar of Contract Value
above $37,740 will increase the Death Benefit by $2.65. For example, a Contract
with a Contract Value of $50,000 will have a guideline minimum sum insured of
$132,500 ($50,000 X 2.65); Contract Value of $60,000 will produce a guideline
minimum sum insured of $159,000 ($60,000 X 2.65); and Contract Value of $75,000
will produce a guideline minimum sum insured of $198,750 ($75,000 X 2.65).

Similarly, if Contract Value exceeds $37,740, each dollar taken out of Contract
Value will reduce the Death Benefit by $2.65. If, for example, the Contract
Value is reduced from $60,000 to $50,000 because of partial withdrawals, charges
or negative investment performance, the Death Benefit will be reduced from
$159,000 to $132,500. If, however, the Contract Value multiplied by the
applicable percentage from the table in Appendix A is less than the Face Amount,
the Death Benefit will equal the Face Amount.

The applicable percentage becomes lower as the Insured's age increases. If the
Insured's age in the above example were, for example, 50 (rather than between
zero and 40), the applicable percentage would be 200%. The Death Benefit would
not exceed the $100,000 Face Amount unless the Contract Value exceeded $50,000
(rather than $37,740), and each dollar then added to or taken from Contract
Value would change the Death Benefit by $2.00.

                                       24
<PAGE>
CONTRACT VALUE

The Contract Value is the total value of your Contract. It is the SUM of:

    - Your accumulation in the Fixed Account; PLUS

    - The value of your Units in the Sub-Accounts.

There is no guaranteed minimum Contract Value. The Contract Value on any date
depends on variables that cannot be predetermined.

Your Contract Value is affected by the:

    - Amount of your payment(s);

    - Interest credited in the Fixed Account;

    - Investment performance of the Funds you select;

    - Partial withdrawals;

    - Loans, loan repayments and loan interest paid or credited; and

    - Charges and deductions under the Contract.

COMPUTING CONTRACT VALUE -- We compute the Contract Value on the Date of Issue
and on each Valuation Date. On the Date of Issue, the Contract Value is:

    - Your payment plus any interest earned during the underwriting period it
      was allocated to the Fixed Account (see THE CONTRACT -- "Applying for a
      Contract"); MINUS

    - The Monthly Deductions due.

On each Valuation Date after the Date of Issue, the Contract Value is the SUM
of:

    - Accumulations in the Fixed Account; PLUS

    - The SUM of the PRODUCTS of:

    - The number of Units in each Sub-Account; TIMES

    - The value of a Unit in each Sub-Account on the Valuation Date.

THE UNIT -- We allocate each payment to the Sub-Accounts you selected. We credit
allocations to the Sub-Accounts as Units. Units are credited separately for each
Sub-Account.

The number of Units of each Sub-Account credited to the Contract is the QUOTIENT
of:

    - That part of the payment allocated to the Sub-Account; DIVIDED BY

    - The dollar value of a Unit on the Valuation Date the payment is received
      at our Principal Office.

The number of Units will remain fixed unless changed by a split of Unit value,
transfer, loan, partial withdrawal or surrender. Also, Monthly Deductions taken
from a Sub-Account will result in cancellation of Units equal in value to the
amount deducted.

The dollar value of a Unit of a Sub-Account varies from Valuation Date to
Valuation Date based on the investment experience of that Sub-Account. This
investment experience reflects the investment performance, expenses and charges
of the Fund in which the Sub-Account invests. The value of each Unit was set at
$1.00 on the first Valuation Date of each Sub-Account.

                                       25
<PAGE>
The value of a Unit on any Valuation Date is the PRODUCT of:

    - The dollar value of the Unit on the preceding Valuation Date; TIMES

    - The Net Investment Factor.

NET INVESTMENT FACTOR -- The net investment factor measures the investment
performance of a Sub-Account during the Valuation Period just ended. The net
investment factor for each Sub-Account is the result of:

    - The net asset value per share of a Fund held in the Sub-Account determined
      at the end of the current Valuation Period; PLUS

    - The per share amount of any dividend or capital gain distributions made by
      the Fund on shares in the Sub-Account if the "ex-dividend" date occurs
      during the current Valuation Period; DIVIDED BY

    - The net asset value per share of a Fund share held in the Sub-Account
      determined as of the end of the immediately preceding Valuation Period;
      MINUS

    - The mortality and expense risk charge for each day in the Valuation
      Period, currently at an annual rate of 0.90% of the daily net asset value
      of that Sub-Account.

The net investment factor may be greater or less than one.

PAYMENT OPTIONS

The Net Death Benefit payable may be paid in a single sum or under one or more
of the payment options then offered by the Company. See APPENDIX C -- PAYMENT
OPTIONS. These payment options also are available at the Final Payment Date or
if the Contract is surrendered. If no election is made, we will pay the Net
Death Benefit in a single sum.

OPTIONAL INSURANCE BENEFITS

You may add an optional insurance benefit to the Contract by rider, as described
in APPENDIX B -- OPTIONAL INSURANCE BENEFITS.

SURRENDER

You may surrender the Contract and receive its Surrender Value. The Surrender
Value is:

    - The Contract Value; MINUS

    - Any Outstanding Loan and surrender charges.

We will compute the Surrender Value on the Valuation Date on which we receive
the Contract with a Written Request for surrender. We will deduct a surrender
charge if you surrender the Contract within 10 full Contract years of the Date
of Issue. See CHARGES AND DEDUCTIONS -- "Surrender Charge."

The Surrender Value may be paid in a lump sum or under a payment option then
offered by us. See APPENDIX C -- PAYMENT OPTIONS. We will normally pay the
Surrender Value within seven days following our receipt of Written Request. We
may delay benefit payments under the circumstances described in OTHER CONTRACT
PROVISIONS -- "Delay of Payments."

For important tax consequences of a surrender, see FEDERAL TAX CONSIDERATIONS.

                                       26
<PAGE>
PARTIAL WITHDRAWAL

You may withdraw part of the Contract Value of your Contract on Written Request.
Your Written Request must state the dollar amount you wish to receive. You may
allocate the amount withdrawn among the Sub-Accounts and the Fixed Account. If
you do not provide allocation instructions, we will make a Pro-rata Allocation.
Each partial withdrawal must be at least $1,000. We will not allow a partial
withdrawal if it would reduce the Contract Value below $25,000. The Face Amount
is reduced proportionately based on the ratio of the amount of the partial
withdrawal and charges to the Contract Value on the date of withdrawal.

On a partial withdrawal from a Sub-Account, we will cancel the number of Units
equal in value to the amount withdrawn. The amount withdrawn will be the amount
you requested plus the partial withdrawal costs and any applicable surrender
fee. See CHARGES AND DEDUCTIONS -- "Surrender Charge" and CHARGES AND
DEDUCTIONS -- "Partial Withdrawal TRANSACTION FEE." We will normally pay the
partial withdrawal within seven days following our receipt of the written
request. We may delay payment as described in OTHER CONTRACT PROVISIONS --
"Delay of Payments."

For important tax consequences of partial withdrawals, see FEDERAL TAX
CONSIDERATIONS.

                                       27
<PAGE>
                             CHARGES AND DEDUCTIONS

The following charges will apply to your Contract under the circumstances
described. Some of these charges apply throughout the Contract's duration.

No surrender charges are imposed, and no commissions are paid, where the Insured
as of the date of application is within the following class of individuals:

    - All employees of First Allmerica and its affiliates and subsidiaries
      located at First Allmerica's home office (or at off-site locations if such
      employees are on First Allmerica's home office payroll); all Directors of
      First Allmerica and its affiliates and subsidiaries, all employees and
      registered representatives of any broker-dealer that has entered into a
      sales agreement with us or Allmerica Investments, Inc. to sell the
      Contracts and any spouses or children of the above persons. However, such
      Insureds will be subject to the Distribution Expense Charge.

MONTHLY DEDUCTIONS

On the Monthly Processing Date, the Company will deduct an amount to cover
charges and expenses incurred in connection with the Contract. This Monthly
Deduction will be deducted by subtracting values from the Fixed Account
accumulation and/or canceling Units from each applicable Sub-Account in the
ratio that the Contract Value in the Sub-Account bears to the Contract Value.
The amount of the Monthly Deduction will vary from month to month. If the
Contract Value is not sufficient to cover the Monthly Deduction which is due,
the Contract may lapse. (See CONTRACT TERMINATION AND REINSTATEMENT.) The
Monthly Deduction is comprised of the following charges:

    - MAINTENANCE FEE: The Company will make a deduction of $2.50 from any
      Contract with less than $100 in Contract Value to cover charges and
      expenses incurred in connection with the Contract. This charge is to
      reimburse the Company for expenses related to issuance and maintenance of
      the Contract. The Company does not intend to profit from this charge.

    - ADMINISTRATION CHARGE: The Company imposes a monthly charge at an annual
      rate of 0.20% of the Contract Value. This charge is to reimburse us for
      administrative expenses incurred in the administration of the Contract. It
      is not expected to be a source of profit.

    - MONTHLY INSURANCE PROTECTION CHARGE: Immediately after the Contract is
      issued, the Death Benefit will be greater than the payment. While the
      Contract is in force, prior to the Final Payment Date, the Death Benefit
      will generally be greater than the Contract Value. To enable us to pay
      this excess of the Death Benefit over the Contract Value, a monthly cost
      of insurance charge is deducted. This charge varies depending on the type
      of Contract and the Underwriting Class. In no event will the current
      deduction for the cost of insurance exceed the guaranteed maximum
      insurance protection rates set forth in the Contract. These guaranteed
      rates are based on the Commissioners 1980 Standard Ordinary Mortality
      Tables, Tobacco User or Non-Tobacco User (Mortality Table B for unisex
      Contracts and Mortality Table D for Second-to-Die Contracts) and the
      Insured's sex and Age. The Tables used for this purpose set forth
      different mortality estimates for males and females and for tobacco user
      and non-tobacco user. Any change in the insurance protection rates will
      apply to all Insured of the same Age, sex and Underwriting Class whose
      Contracts have been in force for the same period.

      The Underwriting Class of an Insured will affect the insurance protection
      rate. We currently place Insureds into standard Underwriting Classes and
      non-standard Underwriting Classes. The Underwriting Classes are also
      divided into two categories: tobacco user and non-tobacco user. We will
      place Insureds under the age of 18 at the Date of Issue in a standard or
      non-standard Underwriting Class. We will then classify the Insured as a
      non-tobacco user.

                                       28
<PAGE>
    - DISTRIBUTION EXPENSE: During the first ten Contract years, we make a
      monthly deduction to compensate for a portion of the sales expense which
      are incurred by us with respect to the Contracts. This charge is equal to
      an annual rate of 0.90% of the Contract Value.

    - FEDERAL AND STATE PAYMENT TAX CHARGE: During the first Contract year, we
      make a monthly deduction to partially compensate the Company for the
      increase in federal tax liability from the application of Section 848 of
      the Internal Revenue Code and to offset a portion of the average premium
      tax the Company is expected to pay to various state and local
      jurisdictions. This charge is equal to an annual rate of 1.50% of the
      Contract Value. The Company does not intend to profit from the premium tax
      portion of this charge. Premium taxes vary from state-to-state, ranging
      from zero to 5%. The deduction may be higher or lower than the actual
      premium tax imposed by the applicable jurisdiction, and is made whether or
      not any premium tax applies.

    - DAILY DEDUCTIONS: We assess each Sub-Account with a charge for mortality
      and expense risks we assume. Fund expenses are also reflected in the
      Variable Account.

    - MORTALITY AND EXPENSE RISK CHARGE: We impose a daily charge at a current
      annual rate of 0.90% of the average daily net asset value of each
      Sub-Account. This charge compensates us for assuming mortality and expense
      risks for variable interests in the Contracts.

      The mortality risk we assume is that Insureds may live for a shorter time
      than anticipated. If this happens, we will pay more Net Death Benefits
      than anticipated. The expense risk we assume is that the expenses incurred
      in issuing and administering the Contracts will exceed those compensated
      by the maintenance fee and administration charges in the Contracts. If the
      charge for mortality and expense risks is not sufficient to cover
      mortality experience and expenses, we will absorb the losses. If the
      charge turns out to be higher than mortality and expense risk expenses,
      the difference will be a profit to us. If the charge provides us with a
      profit, the profit will be available for our use to pay distribution,
      sales and other expenses.

    - FUND EXPENSES: The value of the Units of the Sub-Accounts will reflect the
      investment advisory fee and other expenses of the Funds whose shares the
      Sub-Accounts purchase. The prospectuses and statements of additional
      information of the Funds contain more information concerning the fees and
      expenses.

No charges are currently made against the Sub-Accounts for federal or state
income taxes. Should income taxes be imposed, we may make deductions from the
Sub-Accounts to pay the taxes. See FEDERAL TAX CONSIDERATIONS.

SURRENDER CHARGE

A contingent surrender charge is deducted from Contract Value in the case of
surrender and/or a partial withdrawal for up to 10 years from Date of Issue of
the Contract. The payments you make for the Contract are the maximum amount
subject to a surrender charge. Certain withdrawals may be made without surrender
charges, but any part of a withdrawal that is assessed a surrender charge
reduces the remaining payments that will be subject to a surrender charge in the
future.

In any Contract year, you may withdraw, without a surrender charge, up to:

    - 10% of the Contract Value at the time of the withdrawal, MINUS

    - The total of any prior free withdrawals in the same Contract year ("Free
      10% Withdrawal.")

The 10% Free Withdrawal amount applies to both partial withdrawals and a full
surrender of the Contract.

We will apply a surrender charge only to the amount by which your requested
withdrawal exceeds the remaining 10% Free Withdrawal amount for that Contract
year. This excess withdrawal amount, which is

                                       29
<PAGE>
subject to a surrender charge based on the table below, reduces the remaining
amount of your payments that will be subject to a surrender charge in the
future. If the amount of the remaining payments that are subject to a surrender
charge is reduced to zero, we will no longer assess a surrender charge, even if
the surrender or partial withdrawal is within 10 years of the Contract's Date of
Issue. During the first Contract year, the surrender charge could be as much as
10% of your purchase payments. See the EXAMPLES, below.

The surrender charge applicable to the excess withdrawal amount will depend upon
the number of years that the Contract has been in force, based on the following
schedule:

<TABLE>
<CAPTION>
   Contract Year*        1       2      3      4      5      6      7      8      9        10+
<S>                    <C>     <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
Surrender Charge       10.00%  9.25%  8.50%  7.75%  7.00%  6.25%  4.75%  3.25%  1.50%      0%
</TABLE>

* For a Contract that lapses and reinstates, see CONTRACT TERMINATION AND
REINSTATEMENT.

The amount withdrawn from Contract Value equals the amount you request plus the
contingent surrender charge and the partial withdrawal transaction fee
(described below).

The right to make the Free 10% Withdrawal is not cumulative from Contract year
to Contract year. For example, if you withdraw only 8% of Contract Value in the
second Contract year, the amount you could withdraw in future Contract years
would not be increased by the amount you did not withdraw in the second Contract
year.

PARTIAL WITHDRAWAL TRANSACTION FEE

For each partial withdrawal (including a Free 10% Withdrawal), we deduct a
transaction fee of 2.0% of the amount withdrawn, not to exceed $25. This fee is
intended to reimburse us for the cost of processing the partial withdrawal. The
transaction fee applies to all partial withdrawals, including a Withdrawal
without a surrender charge (described below).

EXAMPLES

In each example below, it is assumed that you have not taken any loans from the
Contract.

EXAMPLE 1. Assume that you made an initial payment of $100,000 to the Contract,
and that the Contract Value is $120,000 when you request a full surrender of the
Contract eight months later. The amount of the Free 10% Withdrawal is $12,000
(10% of Contract Value). The amount of the Contract Value that is subject to a
surrender charge is $108,000 (the $120,000 Contract Value minus the Free 10%
Withdrawal of $12,000). However, the amount of the surrender charge is capped at
$10,000 (the first year surrender charge of 10% times your $100,000 payment to
the Contract). The Surrender Value is $110,000 (the Contract Value of $120,000
minus the surrender charge of $10,000).

EXAMPLE 2. Assume that you made an initial payment of $100,000 for the Contract,
and that you request a partial withdrawal of $15,000 at the beginning of the
fifth Contract year when the Contract Value is $130,000. The amount of the Free
10% Withdrawal is $13,000 (10% of the Contract Value). The amount of the partial
withdrawal that is subject to a surrender charge is $2,000 (the $15,000 you
requested minus the Free 10% Withdrawal of $13,000). The amount of the surrender
charge is $140 ($2,000 times the 7.00% surrender charge applicable in the fifth
Contract year). The remaining Contract Value is $114,835 (the $130,000 Contract
Value at the time of the withdrawal minus the $15,000 you requested, the $140
surrender charge, and the $25 partial withdrawal transaction fee). The amount of
the Contract Value that is subject to a surrender charge is $98,000 (your
$100,000 initial payment minus the $2,000 that was subject to the surrender
charge).

Assume that, later in the same year, your Contract Value has grown to $150,000
and you make a request for a partial withdrawal of $10,000. The amount of the
Free 10% Withdrawal is $2,000 (the $15,000 that is 10% of

                                       30
<PAGE>
Contract Value at the time of withdrawal minus the prior Free 10% Withdrawal in
that year of $13,000). The amount of the withdrawal that is subject to a
surrender charge is $8,000 (the $10,000 you requested minus the current Free 10%
Withdrawal of $2,000). The amount of the surrender charge is $560 ($8,000 times
the 7.00% surrender charge applicable in the fifth contract year). The remaining
Contract Value is $139,415 (the $150,000 Contract Value at the time of the
withdrawal minus the $10,000 you requested, the $560 surrender charge, and the
$25 partial withdrawal transaction fee). The amount of the Contract Value that
is subject to a surrender charge is now $90,000 (the $98,000 of the initial
payment that was still subject to a surrender charge after the first withdrawal
minus the $8,000 that is subject to the surrender charge at the second
withdrawal).

TRANSFER CHARGES

The first 12 transfers in a Contract year are free. After that, we may deduct a
transfer charge not to exceed $25 from amounts transferred in that Contract
year. This charge reimburses us for the administrative costs of processing the
transfer.

If you apply for automatic transfers, the first automatic transfer counts as one
transfer. Each future automatic transfer is without charge and does not reduce
the remaining number of transfers that may be made without charge in that
Contract year or in later Contract years. However, if you change your
instructions for automatic transfers, the first automatic transfer thereafter
will count as one transfer.

Each of the following transfers of Contract Value from the Sub-Accounts to the
Fixed Account is free and does not count as one of the 12 free transfers in a
Contract year:

    - A conversion within the first 24 months from Date of Issue;

    - A transfer to the Fixed Account to secure a loan; and

    - A transfer from the Fixed Account as a results of a loan repayment.

                                       31
<PAGE>
                                 CONTRACT LOANS

You may borrow money secured by your Contract Value, both during and after the
first Contract year. The total amount you may borrow is the Loan Value. The Loan
Value is 90% of the Contract Value minus any surrender charges. Contract Value
equal to the Outstanding Loan will earn monthly interest in the Fixed Account at
an annual rate of at least 4.0%.

The minimum loan amount is $1,000. The maximum loan is the Loan Value minus any
Outstanding Loan. We will usually pay the loan within seven days after we
receive the Written Request. We may delay the payment of loans as stated in
OTHER CONTRACT PROVISIONS -- "Delay of Payments."

We will allocate the loan among the Sub-Accounts and the Fixed Account according
to your instructions. If you do not make an allocation, we will make a Pro-rata
Allocation. We will transfer Contract Value in each Sub-Account equal to the
Contract loan to the Fixed Account. We will not count this transfer as a
transfer subject to the transfer charge.

PREFERRED LOAN OPTION

Any portion of the Outstanding Loan that represents earnings in this Contract, a
loan from an exchanged life insurance policy that was as carried over to this
Contract or the gain in the exchanged life insurance policy that was carried
over to this Contract may be treated as a preferred loan. You may change a
preferred loan to a non-preferred loan at any time upon written request. The
available percentage of the gain carried over from an exchanged policy less any
policy loan carried over which will be eligible for preferred loan treatment is
as follows:

<TABLE>
<CAPTION>
Beginning of                    1    2    3    4    5    6    7    8    9   10    11
Contract Year                  ---  ---  ---  ---  ---  ---  ---  ---  ---  ---  ----
<S>                            <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>  <C>
Unloaned Gain                  0%   10%  20%  30%  40%  50%  60%  70%  80%  90%  100%
Available
</TABLE>

The guaranteed annual interest rate credited to the Contract Value securing a
preferred loan will be at least 5.5%.

There is some uncertainty as to the tax treatment of a preferred loan, which may
be treated as a taxable distribution from the Contract. Consult a qualified tax
adviser (and see FEDERAL TAX CONSIDERATIONS).

LOAN INTEREST CHARGED

Interest accrues daily at the annual rate of 6.0%. Interest is due and payable
in arrears at the end of each Contract year or for as short a period as the loan
may exist. Interest not paid when due will be added to the Outstanding Loan by
transferring Contract Value equal to the interest due to the Fixed Account. The
interest due will bear interest at the same rate.

REPAYMENT OF OUTSTANDING LOAN

You may pay any loans before Contract lapse. We will allocate that part of the
Contract Value in the Fixed Account that secured a repaid loan to the
Sub-Accounts and Fixed Account according to your instructions. If you do not
make a repayment allocation, we will allocate Contract Value according to your
most recent payment allocation instructions. However, loan repayments allocated
to the Variable Account cannot exceed Contract Value previously transferred from
the Variable Account to secure the outstanding loan.

                                       32
<PAGE>
If the Outstanding Loan exceeds the Contract Value less the surrender charge,
the Contract will terminate. We will mail a notice of termination to the last
known address of you and any assignee. If you do not make sufficient payment
within 62 days after this notice is mailed, the Contract will terminate with no
value. See CONTRACT TERMINATION AND REINSTATEMENT.

EFFECT OF CONTRACT LOANS

Contract loans will permanently affect the Contract Value and Surrender Value,
and may permanently affect the Death Benefit. The effect could be favorable or
unfavorable, depending on whether the investment performance of the Sub-Accounts
is less than or greater than the interest credited to the Contract Value in the
Fixed Account that secures the loan. We will deduct any Outstanding Loan from
the proceeds payable when the Insured dies or from a surrender.

                     CONTRACT TERMINATION AND REINSTATEMENT

TERMINATION

Unless the Guaranteed Death Benefit Rider is in effect, the Contract will
terminate if on a Monthly Processing Date the Surrender Value is less than $0
(zero.) If this situation occurs, the Contract will be in default. You will then
have a grace period of 62 days, measured from the date of default, to make a
payment sufficient to prevent termination. On the date of default, we will send
a notice to you and to any assignee of record. The notice will state the payment
due and the date by which it must be paid. Failure to make a sufficient payment
within the grace period will result in the Contract terminating without value.
If the Insured dies during the grace period, we will deduct from the Net Death
Benefit any overdue charges. See THE CONTRACT -- "Guaranteed Death Benefit
Rider."

REINSTATEMENT

A terminated Contract may be reinstated within three years of the date of
default and before the Final Payment Date. The reinstatement takes effect on the
Monthly Processing Date following the date you submit to us:

    - Written application for reinstatement;

    - Evidence of Insurability showing that the Insured is insurable according
      to our current underwriting rules;

    - A payment that is large enough to cover the cost of all Contract charges
      that were due and unpaid during the grace period;

    - A payment that is large enough to keep the Contract in force for three
      months; and

    - A payment or reinstatement of any loan against the Contract that existed
      at the end of the grace period.

    - Contracts which have been surrendered may not be reinstated. The
      Guaranteed Death Benefit Rider may not be reinstated.

SURRENDER CHARGE -- For the purpose of measuring the surrender charge period,
the Contract will be reinstated as of the date of default. The surrender charge
on the date of reinstatement is the surrender charge that would have been in
effect on the date of default.

CONTRACT VALUE ON REINSTATEMENT -- The Contract Value on the date of
reinstatement is:

    - The payment made to reinstate the Contract and interest earned from the
      date the payment was received at our Principal Office; PLUS

    - The Contract Value less any Outstanding Loan on the date of default; MINUS

                                       33
<PAGE>
    - The Monthly Deductions due on the date of reinstatement.

You may reinstate any Outstanding Loan.

                           OTHER CONTRACT PROVISIONS

CONTRACT OWNER

The Contract Owner named on the specifications page of the Contract is the
Insured unless another Contract Owner has been named in the application. As
Contract Owner, you are entitled to exercise all rights under your Contract
while the Insured is alive, with the consent of any irrevocable Beneficiary.

BENEFICIARY

The Beneficiary is the person or persons to whom the Net Death Benefit is
payable on the Insured's death. Unless otherwise stated in the Contract, the
Beneficiary has no rights in the Contract before the Insured dies. While the
Insured is alive, you may change the Beneficiary, unless you have declared the
Beneficiary to be irrevocable. If no Beneficiary is alive when the Insured dies,
the Contract Owner (or the Contract Owner's estate) will be the Beneficiary. If
more than one Beneficiary is alive when the Insured dies, we will pay each
Beneficiary in equal shares, unless you have chosen otherwise. Where there is
more than one Beneficiary, the interest of a Beneficiary who dies before the
Insured will pass to surviving Beneficiaries proportionally, unless the Contract
Owner has requested otherwise.

ASSIGNMENT

You may assign a Contract as collateral or make an absolute assignment. All
Contract rights will be transferred as to the assignee's interest. The consent
of the assignee may be required to make changes in payment allocations, make
transfers or to exercise other rights under the Contract. We are not bound by an
assignment or release thereof, unless it is in writing and recorded at our
Principal Office. When recorded, the assignment will take effect on the date the
Written Request was signed. Any rights the assignment creates will be subject to
any payments we made or actions we took before the assignment is recorded. We
are not responsible for determining the validity of any assignment or release.

THE FOLLOWING CONTRACT PROVISIONS MAY VARY BY STATE.

LIMIT ON RIGHT TO CHALLENGE THE CONTRACT

We cannot challenge the validity of your Contract if the Insured was alive after
the Contract had been in force for two years from the Date of Issue.

SUICIDE

The Net Death Benefit will not be paid if the Insured commits suicide within two
years from the Date of Issue. Instead, we will pay the Beneficiary all payments
made for the Contract, without interest, less any Outstanding Loan and partial
withdrawals.

MISSTATEMENT OF AGE OR SEX

If the Insured's Age or sex is not correctly stated in the Contract application,
we will adjust the Death Benefit and Face Amount under the Contract to reflect
the correct Age and sex. The adjustment will be based upon the ratio of the
maximum payment for the Contract to the maximum payment for the Contract issued
for the correct Age or sex. We will not reduce the Death Benefit to less than
the Guideline Minimum Sum Insured. For a unisex Contract, there is no adjusted
benefit for misstatement of sex.

                                       34
<PAGE>
DELAY OF PAYMENTS

We may delay paying any amounts derived from a payment you made by check until
the check has cleared your bank. Amounts payable from the Variable Account for
surrender, partial withdrawals, Net Death Benefit, Contract loans and transfers
may be postponed whenever:

    - The New York Stock Exchange is closed other than customary weekend and
      holiday closings;

    - The SEC restricts trading on the New York Stock Exchange; OR

    - The SEC determines an emergency exists, so that disposal of securities is
      not reasonably practicable or it is not reasonably practicable to compute
      the value of the Variable Account's net assets.

We reserve the right to defer amounts payable from the Fixed Account. This delay
may not exceed six months. However, if payment is delayed for 30 days or more,
we will pay interest at least equal to an effective annual yield of 3.0% per
year for the deferment. Amounts from the Fixed Account used to make payments on
Contracts that we or our affiliates issue will not be delayed.

                           FEDERAL TAX CONSIDERATIONS

The following summary of federal tax considerations is based on our
understanding of the present federal income tax laws as they are currently
interpreted. Legislation may be proposed which, if passed, could adversely and
possibly retroactively affect the taxation of the Contracts. This summary is not
exhaustive, does not purport to cover all situations, and is not intended as tax
advice. We do not address tax provisions that may apply if the Contract Owner is
a corporation or the Trustee of an employee benefit plan. You should consult a
qualified tax adviser to apply the law to your circumstances.

THE COMPANY AND THE VARIABLE ACCOUNT

The Company is taxed as a life insurance company under Subchapter L of the
Internal Revenue Code. We file a consolidated tax return with our parent and
affiliates. We do not currently charge for any income tax on the earnings or
realized capital gains in the Variable Account. We do not currently charge for
federal income taxes with respect to the Variable Account. A charge may apply in
the future for any federal income taxes we incur. The charge may become
necessary, for example, if there is a change in our tax status. Any charge would
be designed to cover the federal income taxes on the investment results of the
Variable Account.

Under current laws, the Company may incur state and local taxes besides premium
taxes. These taxes are not currently significant. If there is a material change
in these taxes affecting the Variable Account, we may charge for taxes paid or
for tax reserves.

TAXATION OF THE CONTRACTS

We believe that the Contracts described in this prospectus are life insurance
contracts under Section 7702 of the Code. Section 7702 affects the taxation of
life insurance contracts and places limits on the total amount of premiums and
on the relationship of the Contract Value to the Death Benefit. So long as the
Contracts are life insurance contracts, the Net Death Benefit of the Contract is
excludable from the gross income of the Beneficiary. Also, any increase in
Contract Value is not taxable until received by you or your designee. Although
the Company believes the Contracts are in compliance with Section 7702 of the
Code, the manner in which Section 7702 should be applied to a last survivorship
life insurance contract is not directly addressed by Section 7702. In absence of
final regulations or other guidance issued under Section 7702, there is
necessarily some uncertainty whether a Contract will meet the Section 7702
definition of a life insurance contract. This is true particularly if the
Contract Owner pays the full amount of payments permitted under the Contract. A
Contract Owner contemplating the payment of such amounts should do so only after
consulting a tax advisor.

                                       35
<PAGE>
If a Contract were determined not to be a life insurance contract under
Section 7702, it would not have most of the tax advantages normally provided by
a life insurance contract.

MODIFIED ENDOWMENT CONTRACTS

A life insurance Contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay test" of Section 7702A. The seven-pay test
provides that payments can not be paid at a rate more rapidly than allowed by
the payment of seven annual payments using specified computational rules
provided in Section 7702A. In addition, if benefits are reduced at anytime
during the life of the Contract, there may be adverse tax consequences. Please
consult your tax adviser.

If the Contract is considered a modified endowment contract, distributions
(including Contract loans, partial withdrawals, surrenders and assignments) will
be taxed on an "income-first" basis and includible in gross income to the extent
that the Surrender Value exceeds the Contract Owner's investment in the
Contract. Any other amounts will be treated as a return of capital up to the
Contract Owner's basis in the Contract. A 10% additional tax is imposed on that
part of any distribution that is includible in income, unless the distribution
is:

    - Made after the taxpayer becomes disabled;

    - Made after the taxpayer attains age 59 1/2; OR

    - Part of a series of substantially equal periodic payments for the
      taxpayer's life or life expectancy or joint life expectancies of the
      taxpayer and beneficiary.

The Company has designed this Contract to meet the definition of a modified
endowment contract.

Any contract received in exchange for a modified endowment contract will also be
a modified endowment contract. However, an exchange under Section 1035 of the
Code of (1) a life insurance contract entered into before June 21, 1988 or
(2) a life insurance contract that is not itself a modified endowment Contract,
will not cause the new Contract to be treated as a modified endowment contract
if no additional payments are paid and there is no increase in the death benefit
as a result of the exchange.

All modified endowment contracts issued by the same insurance company to the
same Contract Owner during any calendar period will be treated as a single
modified endowment contract in computing taxable distributions.

CONTRACT LOANS

Consumer interest paid on Contract loans under an individually owned Contract is
not tax deductible. A business may deduct interest on loans up to $50,000
subject to a prescribed maximum amount, provided that the Insured is a "key
person" of that business. The Code defines "key person" to mean an officer or a
20% owner.

Federal tax law requires that the investment of each Sub-Account funding the
Contracts be adequately diversified according to Treasury regulations. Although
we do not have control over the investments of the Funds, we believe that the
Funds currently meet the Treasury's diversification requirements. We will
monitor continued compliance with these requirements.

The Treasury Department has announced that previous regulations on
diversification do not provide guidance concerning the extent to which Contract
Owners may direct their investments to divisions of a separate investment
account. Regulations may provide guidance in the future. The Contracts or our
administrative rules may be modified as necessary to prevent a Contract Owner
from being considered the owner of the assets of the Variable Account.

                                       36
<PAGE>
                                 VOTING RIGHTS

Where the law requires, we will vote Fund shares that each Sub-Account holds
according to instructions received from Contract Owners with Contract Value in
the Sub-Account. If, under the 1940 Act or its rules, we may vote shares in our
own right, whether or not the shares relate to the Contracts, we reserve the
right to do so.

We will provide each person having a voting interest in a Fund with proxy
materials and voting instructions. We will vote shares held in each Sub-Account
for which no timely instructions are received in proportion to all instructions
received for the Sub-Account. We will also vote in the same proportion our
shares held in the Variable Account that do not relate to the Contracts.

We will compute the number of votes that a Contract Owner has the right to
instruct on the record date established for the Fund. This number is the
quotient of:

    - Each Contract Owner's Contract Value in the Sub-Account; divided by

    - The net asset value of one share in the Fund in which the assets of the
      Sub-Account are invested.

We may, when required by state insurance regulatory authorities, disregard
voting instructions if the instructions require that Fund shares be voted so as
(1) to cause to change in the sub-classification or investment objective of one
or more of the Funds, or (2) to approve or disapprove an investment advisory
contract for the Funds. In addition, we may disregard voting instructions that
are in favor of any change in the investment policies or in any investment
adviser or principal underwriter if the change has been initiated by Contract
Owners or the Trustees. Our disapproval of any such change must be reasonable
and, in the case of a change in investment policies or investment adviser, based
on a good faith determination that such change would be contrary to state law or
otherwise is inappropriate in light of the objectives and purposes of the Funds.
In the event we do disregard voting instructions, a summary of and the reasons
for that action will be included in the next periodic report to Contract Owners.

                                       37
<PAGE>
                DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY

<TABLE>
<CAPTION>
NAME AND POSITION WITH COMPANY               PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
------------------------------               ----------------------------------------------
<S>                                          <C>
Bruce C. Anderson                            Director (since 1996), Vice President (since
  Director                                   1984) and Assistant Secretary (since 1992) of
                                             First Allmerica

Warren E. Barnes                             Vice President (since 1996) and Corporate
  Vice President and Corporate Controller    Controller (since 1998) of First Allmerica

Mark R. Colburn                              Director (since 2000) and Vice President
  Director and Vice President                (since 1992) of First Allmerica.

Charles F. Cronin                            Secretary and Counsel (since 2000) of First
  Secretary and Counsel                      Allmerica; Counsel (since 1996) of First
                                             Allmerica; Attorney (1991-1996) of Nutter,
                                             McClennen & Fish

J. Kendall Huber                             Director, Vice President and General Counsel
  Director, Vice President and General       of First Allmerica (since 2000); Vice
  Counsel                                    President (1999) of Promos Hotel Corporation;
                                             Vice President & Deputy General Counsel
                                             (1998-1999) of Legg Mason, Inc.; Vice
                                             President and Deputy General Counsel
                                             (1995-1998) of USF&G Corporation.

John P. Kavanaugh                            Director and Chief Investment Officer (since
  Director, Vice President and Chief         1996) and Vice President (since 1991) of First
  Investment Officer                         Allmerica; and Vice President (since 1998) of
                                             Allmerica Financial Investment Management
                                             Services, Inc.; and President (since 1995)
                                             and Director (since 1996) of Allmerica Asset
                                             Management, Inc.

J. Barry May                                 Director (since 1996) of First Allmerica;
  Director                                   Director and President (since 1996) of The
                                             Hanover Insurance Company; and Vice President
                                             (1993 to 1996) of The Hanover Insurance
                                             Company

John F. O'Brien                              Director, President and Chief Executive
  Director and Chairman of the Board         Officer (since 1989) of First Allmerica;
                                             Director (since 1989) of Allmerica
                                             Investments, Inc.; and Director and Chairman
                                             of the Board (since 1990) of Allmerica
                                             Financial Investment Management Services, Inc.

Edward J. Parry, III                         Director and Chief Financial Officer (since
  Director, Vice President, and              1996) and Vice President and Treasurer (since
  Chief Financial Officer                    1993) of First Allmerica; Treasurer (since
                                             1993) of Allmerica Investments, Inc.; and
                                             Treasurer (since 1993) of Allmerica Financial
                                             Investment Management Services, Inc.
</TABLE>

                                       38
<PAGE>

<TABLE>
<CAPTION>
NAME AND POSITION WITH COMPANY               PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
------------------------------               ----------------------------------------------
<S>                                          <C>
Richard M. Reilly                            Director (since 1996) and Vice President
  Director, President and Chief Executive    (since 1990) of First Allmerica; President
  Officer                                    (since 1995) of Allmerica Financial Life
                                             Insurance and Annuity Company; Director (since
                                             1990) of Allmerica Investments, Inc.; and
                                             Director and President (since 1998) of
                                             Allmerica Financial Investment Management
                                             Services, Inc.

Robert P. Restrepo, Jr.                      Director and Vice President (since 1998) of
  Director                                   First Allmerica; Director (since 1998) of The
                                             Hanover Insurance Company; Chief Executive
                                             Officer (1996 to 1998) of Travelers
                                             Property & Casualty; Senior Vice President
                                             (1993 to 1996) of Aetna Life & Casualty
                                             Company

Eric A. Simonsen                             Director (since 1996) and Vice President
  Director and Vice President                (since 1990) of First Allmerica; Director
                                             (since 1991) of Allmerica Investments, Inc.;
                                             and Director (since 1991) of Allmerica
                                             Financial Investment Management
                                             Services, Inc.
</TABLE>

                                  DISTRIBUTION

Allmerica Investments, Inc., an indirect wholly-owned subsidiary of First
Allmerica, acts as the principal underwriter and general distributor of the
Contracts. Allmerica Investments, Inc. is registered with the SEC as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Broker-dealers sell the Contracts through their registered
representatives who are appointed by us.

The Company pays commissions not to exceed 5.5% of the payment to broker-dealers
that sell the Contracts. Alternative commission schedules are available with
lower initial commission amounts, plus ongoing annual compensation of up to
1.00% of Contract Value. To the extent permitted by NASD rules, promotional
incentives or payments may also be provided to broker-dealers based on sales
volumes, the assumption of wholesaling functions or other sales-related
criteria. Other payments may be made for other services that do not directly
involve the sale of the Contracts. These services may include the recruitment
and training of personnel, production of promotional literature, and similar
services.

We intend to recoup commissions and other sales expenses through a combination
of the contingent surrender charge, the distribution expense charge, and
investment earnings on amounts allocated under the Contracts to the Fixed
Account in excess of the interest credited on amounts in the Fixed Account.
Commissions paid on the Contracts, including other incentives or payments, are
not charged to Contract Owners or to the Separate Account.

                                    REPORTS

We will maintain the records for the Variable Account. We will promptly send you
statements of transactions under your Contract, including:

    - Payments;

    - Transfers among Sub-Accounts and the Fixed Account;

    - Partial withdrawals;

    - Increases in loan amount or loan repayments;

                                       39
<PAGE>
    - Lapse or termination for any reason; and

    - Reinstatement.

We will send an annual statement to you that will summarize all of the above
transactions and deductions of charges during the Contract year. It will also
set forth the status of the Death Benefit, Contract Value, Surrender Value,
amounts in the Sub-Accounts and Fixed Account, and any Contract loans. The Owner
should review the information in all statements carefully. All errors or
corrections must be reported to the Company immediately to assure proper
crediting to the Contract. The Company will assume that all transactions are
accurately reported on confirmation statements and quarterly/annual statements
unless the Owner notifies the Principal Office in writing within 30 days after
receipt of the statement. We will send you reports containing financial
statements and other information for the Variable Account and the Funds as the
1940 Act requires.

                               LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Variable Account is a party,
or to which the assets of the Variable Account are subject. The Company and
Allmerica Investments, Inc. are not involved in any litigation that is of
material importance in relation to their total assets or that relates to the
Variable Account.

               ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

We reserve the right, subject to law, to make additions to, deletions from, or
substitutions for the shares that are held in the Sub-Accounts. We may redeem
the shares of a Fund and substitute shares of another registered open-end
management company, if:

    - The shares of the Fund are no longer available for investment; OR

    - In our judgment further investment in the Fund would be improper based on
      the purposes of the Variable Account or the affected Sub-Account.

Where the 1940 Act or other law requires, we will not substitute any shares
respecting a Contract interest in a Sub-Account without notice to Contract
Owners and prior approval of the SEC and state insurance authorities. The
Variable Account may, as the law allows, purchase other securities for other
contracts or allow a conversion between contracts on a Contract Owner's request.

We reserve the right to establish additional Sub-Accounts funded by a new fund
or by another investment company. Subject to law, we may, in our sole
discretion, establish new Sub-Accounts or eliminate one or more Sub-Accounts.

Shares of the Funds are issued to other separate accounts of the Company and its
affiliates that fund variable annuity Contracts ("mixed funding"). Shares of the
Funds may also be issued to other unaffiliated insurance companies ("shared
funding"). It is conceivable that in the future such mixed funding or shared
funding may be disadvantageous for variable life contract owners or variable
annuity contract owners. The Company and the Funds do not believe that mixed
funding is currently disadvantageous to either variable life insurance contract
owners or variable annuity contract owners. The Company will monitor events to
identify any material conflicts among contract owners because of mixed funding.
If the Company concludes that separate funds should be established for variable
life and variable annuity separate accounts, we will bear the expenses.

We may change the Contract to reflect a substitution or other change and will
notify Contract Owners of the change. Subject to any approvals the law may
require, the Variable Account or any Sub-Accounts may be:

    - Operated as a management company under the 1940 Act;

    - Deregistered under the 1940 Act if registration is no longer required; OR

    - Combined with other sub-accounts or our other separate accounts.

                                       40
<PAGE>
                              FURTHER INFORMATION

We have filed a registration statement under the Securities Act of 1933 ("1933
Act") for this offering with the SEC. Under SEC rules and regulations, we have
omitted from this prospectus parts of the registration statement and amendments.
Statements contained in this prospectus are summaries of the Contract and other
legal documents. The complete documents and omitted information may be obtained
from the SEC's principal office in Washington, D.C., on payment of the SEC's
prescribed fees.

                    MORE INFORMATION ABOUT THE FIXED ACCOUNT

This prospectus serves as a disclosure document only for the aspects of the
Contract relating to the Variable Account. For complete details on the Fixed
Account, read the Contract itself. The Fixed Account and other interests in the
Fixed Account are not regulated under the 1933 Act or the 1940 Act because of
exemption and exclusionary provisions. 1933 Act provisions on the accuracy and
completeness of statements made in prospectuses may apply to information on the
fixed part of the Contract and the Fixed Account. The SEC has not reviewed the
disclosures in this section of the prospectus.

GENERAL DESCRIPTION

You may allocate part or all of your payment to accumulate at a fixed rate of
interest in the Fixed Account. The Fixed Account is a part of our General
Account. The General Account is made up of all of our general assets other than
those allocated to any separate account. Allocations to the Fixed Account become
part of our General Account assets and are used to support insurance and annuity
obligations.

FIXED ACCOUNT INTEREST AND CONTRACT LOANS

We guarantee amounts allocated to the Fixed Account as to principal and a
minimum rate of interest. The minimum interest we will credit on amounts
allocated to the Fixed Account is 4.0% compounded annually. "Excess interest"
may or may not be credited at our sole discretion. We will guarantee initial
rates on amounts allocated to the Fixed Account, either as a payment or a
transfer, to the next Contract anniversary.

Contract loans may also be made from the Contract Value in the Fixed Account. We
will credit that part of the Contract Value that is equal to any Outstanding
Loan with interest at an effective annual yield of at least 4.0% (5.5% for
preferred loans).

We may delay transfers, surrenders, partial withdrawals, Net Death Benefits and
Contract loans up to six months. However, if payment is delayed for 30 days or
more, we will pay interest at least equal to an effective annual yield of 3.0%
per year for the deferment. Amounts from the Fixed Account used to make payments
on Contracts that we or our affiliates issue will not be delayed.

TRANSFERS, SURRENDERS, AND PARTIAL WITHDRAWALS

If a Contract is surrendered or if a partial withdrawal is made, a surrender
charge and/or partial withdrawal charge may be imposed. We deduct partial
withdrawals from Contract Value allocated to the Fixed Account on a
last-in/first out basis. This means that the last payments allocated to Fixed
Account will be withdrawn first.

The first 12 transfers in a Contract year are free. After that, we may deduct a
transfer charge not to exceed $25 for each transfer in that Contract year. The
transfer privilege is subject to our consent and to our then current rules.

                                       41
<PAGE>
                            INDEPENDENT ACCOUNTANTS

The financial statements of the Company as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999, included in this
Prospectus constituting part of this Registration Statement, have been so
included in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

                              FINANCIAL STATEMENTS

Financial Statements for the Company are included in this Prospectus, starting
immediately after the Appendices. The financial statements of the Company should
be considered only as bearing on our ability to meet our obligations under the
Contract. They should not be considered as bearing on the investment performance
of the assets held in the Variable Account.

                                       42
<PAGE>
               APPENDIX A -- GUIDELINE MINIMUM SUM INSURED TABLE

The Guideline Minimum Sum Insured is a percentage of the Contract Value as set
forth below. The Guideline Minimum Sum Insured meets or exceeds the Guideline
Minimum Sum Insured according to federal tax regulations:

                              MINIMUM SUM INSURED

<TABLE>
<CAPTION>
                     Age of Insured                        Percentage of
                    on Date of Death                       Contract Value
---------------------------------------------------------  --------------
<S>                                                        <C>
    0-40.................................................       265%
    45...................................................       230%
    50...................................................       200%
    55...................................................       165%
    60...................................................       145%
    65...................................................       135%
    70...................................................       130%
    71...................................................       128%
    72...................................................       127%
    75...................................................       127%
    80...................................................       127%
    85...................................................       127%
    90...................................................       127%
    91...................................................       127%
    92...................................................       127%
    93...................................................       127%
    94...................................................       127%
    95...................................................       127%
    96...................................................       120%
    97...................................................       113%
    98...................................................       106%
    99...................................................       100%
</TABLE>

For the ages not listed, the progression between the listed ages is linear.

                                      A-1
<PAGE>
                   APPENDIX B -- OPTIONAL INSURANCE BENEFITS

This Appendix provides only a summary of other insurance benefits available by
rider. For more information, contact your representative. Certain riders may not
be available in all states.

OPTION TO ACCELERATE BENEFITS (LIVING BENEFITS) RIDER

    This rider allows part of the Contract proceeds to be available before death
    if the Insured becomes terminally ill or is permanently confined to a
    nursing home.

LIFE INSURANCE 1035 EXCHANGE RIDER

    This rider provides preferred loan rates to: (a) any outstanding loan
    carried over from an exchanged policy, the proceeds of which are applied to
    purchase the Contract; and (b) a percentage of the gain under the exchanged
    policy, less the outstanding policy loans carried over to the Contract, as
    of the date of exchange.

GUARANTEED DEATH BENEFIT RIDER

    This rider provides a guaranteed Net Death Benefit which is the GREATER of
    (a) the Face Amount as of the Final Payment Date or (b) the Contract Value
    as of the date due proof of death is received by the Company, REDUCED by the
    Outstanding Loan, if any, through the Contract month in which the Insured
    dies. If the Contract Owner pays an initial payment equal to the Guideline
    Single Premium, the Contract will be issued with the Guaranteed Death
    Benefit Rider at no additional charge. The rider may terminate under certain
    circumstances.

                                      B-1
<PAGE>
                         APPENDIX C -- PAYMENT OPTIONS

PAYMENT OPTIONS -- On Written Request, the Surrender Value or all or part of any
payable Net Death Benefit may be paid under one or more payment options then
offered by the Company. If you do not make an election, we will pay the benefits
in a single sum. If a payment option is selected, the beneficiary may pay to us
any amount that would otherwise be deducted from the Death Benefit. A
certificate will be provided to the payee describing the payment option
selected.

The amounts payable under a payment option are paid from the Fixed Account.
These amounts are not based on the investment experience of the Variable
Account. The amounts payable under these options, for each $1,000 applied, will
be:

(a) the rate per $1,000 of benefit based on our non-guaranteed current benefit
    option rates for this class of Contracts, or

(b) the rate in your Contract for the applicable benefit option, whichever is
    greater.

If you choose a benefit option, the Beneficiary may, when filing a proof of
claim, pay us any amount that otherwise would be deducted from the proceeds.

- OPTION A: BENEFITS FOR A SPECIFIED NUMBER OF YEARS -- We will make equal
  payments for any selected number of years up to 30 years. These payments may
  be made annually, semi-annually, quarterly or monthly, whichever you choose.

- OPTION B: LIFETIME MONTHLY BENEFIT -- Benefits are based on the age of the
  person who receives the money (called the payee) on the date the first payment
  will be made. You may choose one of the three following options to specify
  when benefits will cease:

    - when the payee dies with no further benefits due (Life Annuity);

    - when the payee dies but not before the total benefit payments made by us
      equals the amount applied under this option (Life Annuity with Installment
      Refund); or

    - when the payee dies but not before 10 years have elapsed from the date of
      the first payment (Life Annuity with Payments Guaranteed for 10 years).

- OPTION C: INTEREST BENEFITS -- We will pay interest at a rate we determine
  each year. It will not be less than 3% per year. We will make payments
  annually, semi-annually, quarterly, or monthly, whichever is preferred. These
  benefits will stop when the amount left has been withdrawn. If the payee dies,
  any unpaid balance plus accrued interest will be paid in a lump sum.

- OPTION D: BENEFITS FOR A SPECIFIED AMOUNT -- Interest will be credited to the
  unpaid balance and we will make payments until the unpaid balance is gone. We
  will credit interest at a rate we determine each year, but not less than 3%.
  We will make payments annually, semi-annually, quarterly, or monthly,
  whichever is preferred. The benefit level chosen must provide for an annual
  benefit of at least 8% of the amount applied.

- OPTION E: LIFETIME MONTHLY BENEFITS FOR TWO PAYEES -- We will pay a benefit
  jointly to two payees during their joint lifetime. After one payee dies, the
  benefits to the survivor will be:

    - the same as the original amount, or

    - in an amount equal to 2/3 of the original amount.

    Benefits are based on the payees' ages on the date the first payment is due.
    Benefits will end when the second payee dies.

SELECTION OF PAYMENT OPTIONS -- The amount applied under any one option for any
one payee must be at least $5,000. The periodic payment for any one payee must
be at least $50. Subject to the Contract Owner and Beneficiary provisions, any
option selection may be changed before the Net Death Benefit

                                      C-1
<PAGE>
become payable. If you make no selection, the Beneficiary may select an option
when the Net Death Benefit becomes payable.

If the amount of the monthly benefit under Option B for the age of the payee is
the same for different periods certain, the payee will be entitled to the
longest period certain for the payee's age.

You may give the Beneficiary the right to change from Option C or D to any other
option at any time. If Option C or D is chosen by the payee when this Contract
becomes a claim, the payee may reserve the right to change to any other option.
The payee who elects to change options must be the payee under the option
selected.

ADDITIONAL DEPOSITS -- An additional deposit may be added to any proceeds when
they are applied under Option B and E. We reserve the right to limit the amount
of any additional deposit. We may levy a charge of no more than 3% on any
additional deposits.

RIGHTS AND LIMITATIONS -- A payee has no right to assign any amount payable
under any option, nor to demand a lump sum benefit in place of any amount
payable under Options B or E. A payee will have the right to receive a lump sum
in place of installments under Option A. The payee must provide us with a
Written Request to reserve this right. If the right to receive a lump sum is
exercised, we will determine the lump sum benefit at the same interest rates
used to calculate the installments. The amount left under Option C and any
unpaid balance under Option D, may be withdrawn only as noted in the Written
Request selecting the option.

A corporate or fiduciary payee may select only Option A, C or D, subject to our
approval.

PAYMENT DATES -- The first payment under any option, except Option C, will be
due on the date this Contract matures, by death or otherwise, unless another
date is designated. Benefits under Option C begin at the end of the first
benefit period.

The last payment under any option will be made as stated in the option's
description. However, if a payee under Options B or E dies before the due date
of the second monthly payment, the amount applied, minus the first monthly
payment, will be paid in a lump sum or under any option other than Option E.
This payment will be made to the surviving payee under Option E or the
succeeding payee under Option B.

BENEFIT RATES -- The Benefit Option Tables in your Contract show benefit amounts
for Option A, B and E. If you choose one of these options, either within five
years of the date of surrender or the date the proceeds are otherwise payable,
we will apply either the benefit rates listed in the Tables, or the rates we use
on the date the proceeds are paid, whichever is more favorable. Benefits that
begin more than five years after that date, or as a result of additional
deposits, will be based on the rates we use on the date the first benefit is
due.

                                      C-2
<PAGE>
         APPENDIX D -- ILLUSTRATIONS OF DEATH BENEFIT, CONTRACT VALUES
                            AND ACCUMULATED PAYMENTS

The following tables illustrate the way in which a Contract's Death Benefit and
Contract Value could vary over an extended period.

ASSUMPTIONS

The tables illustrate the following Contracts: a Contract issued to a male, age
55, under a standard underwriting class and qualifying for the non-tobacco user
discount; a Contract issued on a unisex basis to an Insured, age 55, under a
standard underwriting class and qualifying for the non-tobacco user discount; a
Second-to-Die Contract issued to a male, age 65, under a standard Underwriting
Class and qualifying for the non-tobacco user discount and a female, age 65,
under a standard Underwriting Class and qualifying for the non-tobacco user
discount; and a Second-to-Die Contract issued on a unisex basis to two Insureds
both age 65, under a standard Underwriting Class and qualifying for the
non-tobacco user discount. The tables illustrate the guaranteed insurance
protection rates and the current insurance protection rates as presently in
effect. On request, we will provide a comparable illustration based on the
proposed Insured's age, sex, and Underwriting Class, and a specified payment.

The tables illustrate Contract Values based on the assumptions that no Contract
loans have been made, that no partial withdrawals have been made, and that no
more than 12 transfers have been made in any Contract year (so that no
transaction or transfer charges have been incurred). The tables also assume that
the Guaranteed Death Benefit Rider is in effect. (The Contract will lapse when
the Surrender Value or Contract Value is zero, unless the Guaranteed Death
Benefit Rider is in effect.)

The tables assume that the initial payment is allocated to and remains in the
Variable Account for the entire period shown. They are based on hypothetical
gross investment rates of return for the Fund (i.e., investment income and
capital gains and losses, realized or unrealized) equal to constant gross annual
rates of 0%, 6%, and 12%. The second column of the tables shows the amount that
would accumulate if the initial payment was invested to earn interest (after
taxes) at 5% compounded annually.

The Contract Values and Death Benefit would be different from those shown if the
gross annual investment rates of return averaged 0%, 6%, and 12% over a period
of years, but fluctuated above or below the averages for individual Contract
years. The values would also be different depending on the allocation of the
Contract's total Contract Value among the Sub-Accounts, if the rates of return
averaged 0%, 6% or 12%, but the rates of each Fund varied above and below the
averages.

The hypothetical returns shown in the table do not reflect any charges for
income taxes against the Variable Account since no charges are currently made.
However, if in the future the charges are made, to produce illustrated Death
Benefits and Contract Value, the gross annual investment rate of return would
have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.

DEDUCTIONS FOR CHARGES

The amounts shown for the Death Proceeds and Contract Values take into account
the deduction from payments for the tax expense charge, the Monthly Deductions
from Contract Value (including the administrative charge (equivalent to 0.20% on
an annual basis), and the distribution charge (equivalent to 0.90% on an annual
basis, for the first ten Contract years only). and the daily charge against the
Variable Account for mortality and expense risks (0.90% on an annual basis). In
both the Current Cost of Insurance Charges illustrations and Guaranteed Cost of
Insurance Charges illustrations, the Variable Account charges currently are
equivalent to an effective annual rate of 0.90% of the average daily value of
the assets in the Variable Account.

                                      D-1
<PAGE>
EXPENSES OF THE UNDERLYING FUNDS

The amounts shown in the tables also take into account the Underlying Fund
advisory fees and operating expenses. These are assumed to be at an annual rate
of 0.85% of the average daily net assets of the Underlying Funds, which is the
approximate average of the expenses of the Underlying Funds in 1999. The actual
fees and expenses of each Underlying Fund vary, and, in 1999, ranged from an
annual rate of 0.29% to an annual rate of 1.92% of average daily net assets. The
fees and expenses associated with the Contract may be more or less than 0.85% in
the aggregate, depending upon how you make allocations of the Contract Value
among the Sub-Accounts.

Until further notice, Allmerica Financial Investment Management Services, Inc.
("AFIMS") has declared a voluntary expense limitation of 1.50% of average net
assets for Select International Equity Fund, 1.35% for Select Aggressive Growth
Fund and Select Capital Appreciation Fund, 1.25% for Select Value Opportunity
Fund, 1.20% for Select Growth Fund and Core Equity Fund, 1.10% for Select Growth
and Income Fund, 1.00% for Select Investment Grade Income Fund and Government
Bond Fund, and 0.60% for Money Market Fund and Equity Index Fund. The total
operating expenses of these Funds of the Trust were less than their respective
expense limitations throughout 1999.

Until further notice, AFIMS has declared a voluntary expense limitation of 1.20%
of average daily net assets for the Select Strategic Growth Fund. In 1999, the
Select Strategic Growth Fund received a reimbursement of $813 under its expense
limitation. However, this amount was not enough to make a difference in the
percentage shown as the Fund's total operating expenses and as its expense
limitation (both 1.20%). Until further notice, the Select Value Opportunity
Fund's management fee rate has been voluntarily limited to an annual rate of
0.90% of average daily net assets, and total expenses are limited to 1.25% of
average daily net assets. Until further notice, AFIMS has agreed to voluntarily
waive its management fee to the extent that expenses of the Select Emerging
Markets Fund exceed 2.00% of the Fund's average daily net assets, except that
such waiver shall not exceed the net amount of management fees earned by AFIMS
from the Fund after subtracting fees paid by AFIMS to a sub-advisor. The
declaration of a voluntary management fee or expense limitation in any year does
not bind AFIMS to declare future expense limitations with respect to these
Funds. These limitations may be terminated at any time.

The investment adviser for the DGPF International Equity Series is Delaware
International Advisers Ltd. ("Delaware International"). Effective May 1, 2000
through October 31, 2000, Delaware International has agreed voluntarily to waive
its management fee and reimburse the Series for expenses to the extent that
total expenses will not exceed 0.95%. This limitation replaces a prior
limitation of 0.95% that expired on April 30, 2000. The fee ratios shown above
have been restated, if necessary, to reflect the new voluntary limitation which
took effect on May 1, 2000. The declaration of a voluntary expense limitation
does not bind Delaware International to declare future expense limitations with
respect to this Series. For the fiscal year ended December 31, 1999, before
waiver and/or reimbursement by Delaware International, total fund expenses as a
percentage of average daily net assets were 0.97%.

The Underlying Fund information above was provided by the Underlying Funds and
was not independently verified by the Company.

NET ANNUAL RATES OF INVESTMENT

Taking into account the Separate Account mortality and expense risk charge of
0.90%, and the assumed 0.85% charge for Underlying Fund advisory fees and
operating expenses, the gross annual rates of investment return of 0%, 6% and
12% correspond to net annual rates of -1.75%, 4.25% and 10.25%, respectively.

The hypothetical returns shown in the table do not reflect any charges for
income taxes against the Separate Account since no charges are currently made.
However, if in the future such charges are made, in order to produce illustrated
death benefits and Contract Values, the gross annual investment rate of return
would have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax
charges.

UPON REQUEST, THE COMPANY WILL PROVIDE A COMPARABLE ILLUSTRATION BASED UPON THE
PROPOSED INSURED'S AGE AND UNDERWRITING CLASSIFICATION, AND THE REQUESTED FACE
AMOUNT, SUM INSURED OPTION, AND RIDERS.

                                      D-2
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      MALE NONSMOKER AGE 55

                                                      SPECIFIED FACE AMOUNT =
                                                      $74,596

                       CURRENT COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,288    23,788   74,596     22,741    25,241   74,596     24,194    26,694   74,596
   2         27,563     20,665    22,978   74,596     23,557    25,870   74,596     26,621    28,934   74,596
   3         28,941     20,070    22,195   74,596     24,390    26,515   74,596     29,236    31,361   74,596
   4         30,388     19,501    21,439   74,596     25,238    27,175   74,596     32,055    33,993   74,596
   5         31,907     18,959    20,709   74,596     26,103    27,853   74,596     35,095    36,845   74,596
   6         33,502     18,441    20,003   74,596     26,984    28,547   74,596     38,374    39,937   74,596
   7         35,178     18,134    19,322   74,596     28,071    29,258   74,596     42,100    43,288   74,596
   8         36,936     17,851    18,663   74,596     29,175    29,987   74,596     46,107    46,920   74,596
   9         38,783     17,653    18,028   74,596     30,360    30,735   74,596     50,482    50,857   74,596
   10        40,722     17,413    17,413   74,596     31,501    31,501   74,596     55,124    55,124   75,520
   11        42,758     17,006    17,006   74,596     32,643    32,643   74,596     60,411    60,411   81,555
   12        44,896     16,609    16,609   74,596     33,827    33,827   74,596     66,205    66,205   88,714
   13        47,141     16,220    16,220   74,596     35,053    35,053   74,596     72,554    72,554   96,497
   14        49,498     15,841    15,841   74,596     36,324    36,324   74,596     79,512    79,512  104,956
   15        51,973     15,471    15,471   74,596     37,642    37,642   74,596     87,138    87,138  114,150
   16        54,572     15,109    15,109   74,596     39,007    39,007   74,596     95,494    95,494  124,143
   17        57,300     14,756    14,756   74,596     40,421    40,421   74,596    104,653   104,653  133,955
   18        60,165     14,411    14,411   74,596     41,887    41,887   74,596    114,689   114,689  145,655
   19        63,174     14,074    14,074   74,596     43,406    43,406   74,596    125,688   125,688  159,624
   20        66,332     13,745    13,745   74,596     44,980    44,980   74,596    137,742   137,742  174,933

 Age 60      31,907     18,959    20,709   74,596     26,103    27,853   74,596     35,095    36,845   74,596
 Age 65      40,722     17,413    17,413   74,596     31,501    31,501   74,596     55,124    55,124   75,520
 Age 70      51,973     15,471    15,471   74,596     37,642    37,642   74,596     87,138    87,138  114,150
 Age 75      66,332     13,745    13,745   74,596     44,980    44,980   74,596    137,742   137,742  174,933
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-3
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      MALE NONSMOKER AGE 55

                                                      SPECIFIED FACE AMOUNT =
                                                      $74,596

                      GUARANTEED COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,029    23,529   74,596     22,483    24,983   74,596     23,938    26,438   74,596
   2         27,563     20,094    22,407   74,596     22,994    25,307   74,596     26,069    28,382   74,596
   3         28,941     19,131    21,256   74,596     23,470    25,595   74,596     28,350    30,475   74,596
   4         30,388     18,138    20,075   74,596     23,910    25,847   74,596     30,799    32,736   74,596
   5         31,907     17,100    18,850   74,596     24,300    26,050   74,596     33,428    35,178   74,596
   6         33,502     16,015    17,578   74,596     24,640    26,203   74,596     36,261    37,824   74,596
   7         35,178     15,055    16,242   74,596     25,103    26,291   74,596     39,507    40,694   74,596
   8         36,936     14,022    14,834   74,596     25,493    26,306   74,596     43,004    43,817   74,596
   9         38,783     12,960    13,335   74,596     25,857    26,232   74,596     46,847    47,222   74,596
   10        40,722     11,719    11,719   74,596     26,047    26,047   74,596     50,944    50,944   74,596
   11        42,758     10,078    10,078   74,596     25,986    25,986   74,596     55,542    55,542   74,981
   12        44,896      8,275     8,275   74,596     25,800    25,800   74,596     60,598    60,598   81,201
   13        47,141      6,286     6,286   74,596     25,468    25,468   74,596     66,073    66,073   87,878
   14        49,498      4,081     4,081   74,596     24,966    24,966   74,596     71,997    71,997   95,036
   15        51,973      1,628     1,628   74,596     24,266    24,266   74,596     78,400    78,400  102,704
   16        54,572          0         0        0     23,324    23,324   74,596     85,309    85,309  110,901
   17        57,300          0         0        0     22,080    22,080   74,596     92,786    92,786  118,766
   18        60,165          0         0        0     20,471    20,471   74,596    100,832   100,832  128,057
   19        63,174          0         0        0     18,402    18,402   74,596    109,413   109,413  138,954
   20        66,332          0         0        0     15,776    15,776   74,596    118,532   118,532  150,535

 Age 60      31,907     17,100    18,850   74,596     24,300    26,050   74,596     33,428    35,178   74,596
 Age 65      40,722     11,719    11,719   74,596     26,047    26,047   74,596     50,944    50,944   74,596
 Age 70      51,973      1,628     1,628   74,596     24,266    24,266   74,596     78,400    78,400  102,704
 Age 75      66,332          0         0        0     15,776    15,776   74,596    118,532   118,532  150,535
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-4
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      UNISEX NONSMOKER AGE 55

                                                      SPECIFIED FACE AMOUNT =
                                                      $76,948

                       CURRENT COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,288    23,788   76,948     22,741    25,241   76,948     24,194    26,694   76,948
   2         27,563     20,665    22,978   76,948     23,557    25,870   76,948     26,621    28,934   76,948
   3         28,941     20,070    22,195   76,948     24,390    26,515   76,948     29,236    31,361   76,948
   4         30,388     19,501    21,439   76,948     25,238    27,175   76,948     32,055    33,993   76,948
   5         31,907     18,959    20,709   76,948     26,103    27,853   76,948     35,095    36,845   76,948
   6         33,502     18,441    20,003   76,948     26,984    28,547   76,948     38,374    39,937   76,948
   7         35,178     18,134    19,322   76,948     28,071    29,258   76,948     42,100    43,288   76,948
   8         36,936     17,851    18,663   76,948     29,175    29,987   76,948     46,107    46,920   76,948
   9         38,783     17,653    18,028   76,948     30,360    30,735   76,948     50,482    50,857   76,948
   10        40,722     17,413    17,413   76,948     31,501    31,501   76,948     55,124    55,124   76,948
   11        42,758     17,006    17,006   76,948     32,643    32,643   76,948     60,411    60,411   81,555
   12        44,896     16,609    16,609   76,948     33,827    33,827   76,948     66,205    66,205   88,714
   13        47,141     16,220    16,220   76,948     35,053    35,053   76,948     72,554    72,554   96,497
   14        49,498     15,841    15,841   76,948     36,324    36,324   76,948     79,512    79,512  104,956
   15        51,973     15,471    15,471   76,948     37,642    37,642   76,948     87,138    87,138  114,150
   16        54,572     15,109    15,109   76,948     39,007    39,007   76,948     95,494    95,494  124,143
   17        57,300     14,756    14,756   76,948     40,421    40,421   76,948    104,653   104,653  133,955
   18        60,165     14,411    14,411   76,948     41,887    41,887   76,948    114,689   114,689  145,655
   19        63,174     14,074    14,074   76,948     43,406    43,406   76,948    125,688   125,688  159,624
   20        66,332     13,745    13,745   76,948     44,980    44,980   76,948    137,742   137,742  174,933

 Age 60      31,907     18,959    20,709   76,948     26,103    27,853   76,948     35,095    36,845   76,948
 Age 65      40,722     17,413    17,413   76,948     31,501    31,501   76,948     55,124    55,124   76,948
 Age 70      51,973     15,471    15,471   76,948     37,642    37,642   76,948     87,138    87,138  114,150
 Age 75      66,332     13,745    13,745   76,948     44,980    44,980   76,948    137,742   137,742  174,933
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-5
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      UNISEX NONSMOKER AGE 55

                                                      SPECIFIED FACE AMOUNT =
                                                      $76,948

                      GUARANTEED COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,029    23,529   76,948     22,483    24,983   76,948     23,937    26,437   76,948
   2         27,563     20,092    22,405   76,948     22,991    25,304   76,948     26,065    28,377   76,948
   3         28,941     19,139    21,264   76,948     23,475    25,600   76,948     28,350    30,475   76,948
   4         30,388     18,153    20,091   76,948     23,920    25,857   76,948     30,801    32,739   76,948
   5         31,907     17,135    18,885   76,948     24,325    26,075   76,948     33,439    35,189   76,948
   6         33,502     16,074    17,637   76,948     24,684    26,247   76,948     36,282    37,844   76,948
   7         35,178     15,143    16,331   76,948     25,170    26,357   76,948     39,535    40,723   76,948
   8         36,936     14,144    14,956   76,948     25,586    26,398   76,948     43,040    43,852   76,948
   9         38,783     13,121    13,496   76,948     25,979    26,354   76,948     46,885    47,260   76,948
   10        40,722     11,930    11,930   76,948     26,208    26,208   76,948     50,983    50,983   76,948
   11        42,758     10,347    10,347   76,948     26,190    26,190   76,948     55,572    55,572   76,948
   12        44,896      8,617     8,617   76,948     26,058    26,058   76,948     60,657    60,657   81,280
   13        47,141      6,716     6,716   76,948     25,792    25,792   76,948     66,185    66,185   88,026
   14        49,498      4,624     4,624   76,948     25,373    25,373   76,948     72,177    72,177   95,273
   15        51,973      2,302     2,302   76,948     24,771    24,771   76,948     78,663    78,663  103,048
   16        54,572          0         0        0     23,935    23,935   76,948     85,669    85,669  111,369
   17        57,300          0         0        0     22,829    22,829   76,948     93,265    93,265  119,379
   18        60,165          0         0        0     21,401    21,401   76,948    101,461   101,461  128,856
   19        63,174          0         0        0     19,563    19,563   76,948    110,232   110,232  139,994
   20        66,332          0         0        0     17,222    17,222   76,948    119,581   119,581  151,868

 Age 60      31,907     17,135    18,885   76,948     24,325    26,075   76,948     33,439    35,189   76,948
 Age 65      40,722     11,930    11,930   76,948     26,208    26,208   76,948     50,983    50,983   76,948
 Age 70      51,973      2,302     2,302   76,948     24,771    24,771   76,948     78,663    78,663  103,048
 Age 75      66,332          0         0        0     17,222    17,222   76,948    119,581   119,581  151,868
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-6
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      MALE NONSMOKER AGE 65

                                                      FEMALE NONSMOKER AGE 65

                                                      SPECIFIED FACE AMOUNT =
                                                      $73,207

                       CURRENT COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,416    23,916   73,207     22,877    25,377   73,207     24,339    26,839   73,207
   2         27,563     20,876    23,189   73,207     23,803    26,115   73,207     26,903    29,215   73,207
   3         28,941     20,341    22,466   73,207     24,721    26,846   73,207     29,644    31,769   73,207
   4         30,388     19,828    21,766   73,207     25,661    27,598   73,207     32,600    34,538   73,207
   5         31,907     19,338    21,088   73,207     26,621    28,371   73,207     35,798    37,548   73,207
   6         33,502     18,868    20,430   73,207     27,603    29,165   73,207     39,259    40,821   73,207
   7         35,178     18,606    19,794   73,207     28,795    29,982   73,207     43,192    44,379   73,207
   8         36,936     18,364    19,177   73,207     30,009    30,822   73,207     47,435    48,248   73,207
   9         38,783     18,204    18,579   73,207     31,310    31,685   73,207     52,078    52,453   73,207
   10        40,722     18,000    18,000   73,207     32,572    32,572   73,207     57,026    57,026   73,207
   11        42,758     17,615    17,615   73,207     33,821    33,821   73,207     62,620    62,620   79,527
   12        44,896     17,237    17,237   73,207     35,117    35,117   73,207     68,763    68,763   87,329
   13        47,141     16,868    16,868   73,207     36,463    36,463   73,207     75,508    75,508   95,895
   14        49,498     16,507    16,507   73,207     37,861    37,861   73,207     82,915    82,915  105,302
   15        51,973     16,153    16,153   73,207     39,313    39,313   73,207     91,049    91,049  115,632
   16        54,572     15,807    15,807   73,207     40,820    40,820   73,207     99,981    99,981  126,976
   17        57,300     15,468    15,468   73,207     42,385    42,385   73,207    109,789   109,789  139,432
   18        60,165     15,137    15,137   73,207     44,010    44,010   73,207    120,559   120,559  153,110
   19        63,174     14,813    14,813   73,207     45,697    45,697   73,207    132,386   132,386  168,130
   20        66,332     14,495    14,495   73,207     47,449    47,449   73,207    145,373   145,373  184,623

 Age 70      31,907     19,338    21,088   73,207     26,621    28,371   73,207     35,798    37,548   73,207
 Age 75      40,722     18,000    18,000   73,207     32,572    32,572   73,207     57,026    57,026   73,207
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-7
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      MALE NONSMOKER AGE 65

                                                      FEMALE NONSMOKER AGE 65

                                                      SPECIFIED FACE AMOUNT =
                                                      $73,207

                      GUARANTEED COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,416    23,916   73,207     22,877    25,377   73,207     24,339    26,839   73,207
   2         27,563     20,876    23,189   73,207     23,803    26,115   73,207     26,903    29,215   73,207
   3         28,941     20,310    22,435   73,207     24,708    26,833   73,207     29,644    31,769   73,207
   4         30,388     19,709    21,646   73,207     25,585    27,523   73,207     32,574    34,511   73,207
   5         31,907     19,059    20,809   73,207     26,425    28,175   73,207     35,709    37,459   73,207
   6         33,502     18,346    19,908   73,207     27,214    28,777   73,207     39,068    40,630   73,207
   7         35,178     17,735    18,922   73,207     28,125    29,312   73,207     42,856    44,044   73,207
   8         36,936     17,011    17,824   73,207     28,947    29,759   73,207     46,912    47,725   73,207
   9         38,783     16,203    16,578   73,207     29,716    30,091   73,207     51,330    51,705   73,207
   10        40,722     15,142    15,142   73,207     30,275    30,275   73,207     56,028    56,028   73,207
   11        42,758     13,598    13,598   73,207     30,560    30,560   73,207     61,281    61,281   77,827
   12        44,896     11,747    11,747   73,207     30,640    30,640   73,207     66,946    66,946   85,022
   13        47,141      9,525     9,525   73,207     30,473    30,473   73,207     73,022    73,022   92,738
   14        49,498      6,853     6,853   73,207     30,006    30,006   73,207     79,510    79,510  100,978
   15        51,973      3,625     3,625   73,207     29,165    29,165   73,207     86,402    86,402  109,730
   16        54,572          0         0        0     27,854    27,854   73,207     93,676    93,676  118,968
   17        57,300          0         0        0     25,936    25,936   73,207    101,292   101,292  128,641
   18        60,165          0         0        0     23,221    23,221   73,207    109,187   109,187  138,668
   19        63,174          0         0        0     19,454    19,454   73,207    117,279   117,279  148,945
   20        66,332          0         0        0     14,286    14,286   73,207    125,466   125,466  159,342

 Age 70      31,907     19,059    20,809   73,207     26,425    28,175   73,207     35,709    37,459   73,207
 Age 75      40,722     15,142    15,142   73,207     30,275    30,275   73,207     56,028    56,028   73,207
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-8
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      UNISEX NONSMOKER AGE 65

                                                      UNISEX NONSMOKER AGE 65

                                                      SPECIFIED FACE AMOUNT =
                                                      $72,969

                       CURRENT COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,416    23,916   72,969     22,877    25,377   72,969     24,338    26,838   72,969
   2         27,563     20,874    23,186   72,969     23,800    26,113   72,969     26,901    29,213   72,969
   3         28,941     20,339    22,464   72,969     24,719    26,844   72,969     29,639    31,764   72,969
   4         30,388     19,826    21,764   72,969     25,658    27,596   72,969     32,595    34,532   72,969
   5         31,907     19,336    21,086   72,969     26,619    28,369   72,969     35,792    37,542   72,969
   6         33,502     18,866    20,428   72,969     27,600    29,163   72,969     39,252    40,815   72,969
   7         35,178     18,604    19,792   72,969     28,792    29,979   72,969     43,185    44,372   72,969
   8         36,936     18,362    19,175   72,969     30,006    30,819   72,969     47,428    48,240   72,969
   9         38,783     18,202    18,577   72,969     31,307    31,682   72,969     52,070    52,445   72,969
   10        40,722     17,998    17,998   72,969     32,569    32,569   72,969     57,017    57,017   72,969
   11        42,758     17,613    17,613   72,969     33,818    33,818   72,969     62,610    62,610   79,515
   12        44,896     17,236    17,236   72,969     35,114    35,114   72,969     68,752    68,752   87,315
   13        47,141     16,866    16,866   72,969     36,460    36,460   72,969     75,496    75,496   95,880
   14        49,498     16,505    16,505   72,969     37,858    37,858   72,969     82,902    82,902  105,286
   15        51,973     16,151    16,151   72,969     39,310    39,310   72,969     91,035    91,035  115,614
   16        54,572     15,805    15,805   72,969     40,817    40,817   72,969     99,965    99,965  126,956
   17        57,300     15,467    15,467   72,969     42,381    42,381   72,969    109,772   109,772  139,410
   18        60,165     15,136    15,136   72,969     44,006    44,006   72,969    120,540   120,540  153,086
   19        63,174     14,811    14,811   72,969     45,693    45,693   72,969    132,365   132,365  168,103
   20        66,332     14,494    14,494   72,969     47,445    47,445   72,969    145,350   145,350  184,594

 Age 70      31,907     19,336    21,086   72,969     26,619    28,369   72,969     35,792    37,542   72,969
 Age 75      40,722     17,998    17,998   72,969     32,569    32,569   72,969     57,017    57,017   72,969
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-9
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
                      SINGLE PREMIUM VARI-EXEPTIONAL LIFE

                                                      UNISEX NONSMOKER AGE 65

                                                      UNISEX NONSMOKER AGE 65

                                                      SPECIFIED FACE AMOUNT =
                                                      $72,969

                      GUARANTEED COST OF INSURANCE CHARGES

<TABLE>
<CAPTION>
          Premiums         Hypothetical 0%               Hypothetical 6%               Hypothetical 12%
          Paid Plus    Gross Investment Return       Gross Investment Return       Gross Investment Return
          Interest   ----------------------------  ----------------------------  ----------------------------
Contract    At 5%    Surrender  Contract   Death   Surrender  Contract   Death   Surrender  Contract   Death
  Year    Per Year     Value     Value    Benefit    Value     Value    Benefit    Value     Value    Benefit
--------  ---------  ---------  --------  -------  ---------  --------  -------  ---------  --------  -------
<S>       <C>        <C>        <C>       <C>      <C>        <C>       <C>      <C>        <C>       <C>
   1         26,250     21,416    23,916   72,969     22,877    25,377   72,969     24,338    26,838   72,969
   2         27,563     20,874    23,186   72,969     23,800    26,113   72,969     26,901    29,213   72,969
   3         28,941     20,305    22,430   72,969     24,703    26,828   72,969     29,638    31,763   72,969
   4         30,388     19,698    21,636   72,969     25,575    27,512   72,969     32,564    34,501   72,969
   5         31,907     19,041    20,791   72,969     26,407    28,157   72,969     35,693    37,443   72,969
   6         33,502     18,316    19,878   72,969     27,185    28,748   72,969     39,041    40,604   72,969
   7         35,178     17,689    18,876   72,969     28,081    29,268   72,969     42,818    44,005   72,969
   8         36,936     16,948    17,761   72,969     28,887    29,699   72,969     46,862    47,674   72,969
   9         38,783     16,119    16,494   72,969     29,637    30,012   72,969     51,267    51,642   72,969
   10        40,722     15,035    15,035   72,969     30,175    30,175   72,969     55,952    55,952   72,969
   11        42,758     13,465    13,465   72,969     30,435    30,435   72,969     61,190    61,190   77,711
   12        44,896     11,586    11,586   72,969     30,489    30,489   72,969     66,836    66,836   84,882
   13        47,141      9,336     9,336   72,969     30,295    30,295   72,969     72,892    72,892   92,572
   14        49,498      6,636     6,636   72,969     29,800    29,800   72,969     79,357    79,357  100,784
   15        51,973      3,384     3,384   72,969     28,933    28,933   72,969     86,226    86,226  109,507
   16        54,572          0         0        0     27,597    27,597   72,969     93,477    93,477  118,715
   17        57,300          0         0        0     25,657    25,657   72,969    101,071   101,071  128,360
   18        60,165          0         0        0     22,927    22,927   72,969    108,949   108,949  138,365
   19        63,174          0         0        0     19,152    19,152   72,969    117,029   117,029  148,626
   20        66,332          0         0        0     13,989    13,989   72,969    125,212   125,212  159,019

 Age 70      31,907     19,041    20,791   72,969     26,407    28,157   72,969     35,693    37,443   72,969
 Age 75      40,722     15,035    15,035   72,969     30,175    30,175   72,969     55,952    55,952   72,969
</TABLE>

THE HYPOTHETICAL INVESTMENT RATES OF RETURN ARE ILLUSTRATIVE ONLY. THEY ARE NOT
A REPRESENTATION OF PAST OR FUTURE INVESTMENT RATES OF RETURN. INVESTMENT
RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN. INVESTMENT RESULTS WILL DEPEND ON
INVESTMENT ALLOCATIONS AND THE DIFFERENT INVESTMENT RATES OF RETURN FOR THE
FUNDS. THESE HYPOTHETICAL INVESTMENT RATES OF RETURN MAY NOT BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD. VALUES WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE RATES OF RETURN AVERAGED THE HYPOTHETICAL 0%, 6%, AND 12%, BUT
FLUCTUATED ABOVE AND BELOW THE AVERAGE IN INDIVIDUAL CONTRACT YEARS.

                                      D-10
<PAGE>
                     APPENDIX E -- PERFORMANCE INFORMATION

The Contracts were first offered to the public in 2000. However, the Company may
advertise "Total Return" and "Average Annual Total Return" performance
information based on the periods that the Funds have been in existence. The
results for any period prior to the Contracts being offered will be calculated
as if the Contracts had been offered during that period of time, with all
charges assumed to be those applicable to the Sub-Accounts and the Funds.

Total return and average annual total return are based on the hypothetical
profile of a representative Contract Owner and historical earnings and are not
intended to indicate future performance. "Total return" is the total income
generated net of certain expenses and charges. "Average annual total return" is
net of the same expenses and charges, but reflects the hypothetical return
compounded annually. This hypothetical return is equal to cumulative return had
performance been constant over the entire period. Average annual total returns
are not the same as yearly results and tend to smooth out variations in the
Fund's return.

In Tables IA and IIA, performance information under the Contracts is net of Fund
expenses, Monthly Deductions and surrender charges. We take a representative
Contract Owner and assume that:

    - The Insured is a male Age 36, standard (non-tobacco user) Underwriting
      Class;

    - The Contract Owner had allocations in each of the Sub-Accounts for the
      Fund durations shown; and

    - There was a full surrender at the end of the applicable period.

Performance information for any Sub-Account reflects only the performance of a
hypothetical investment in the Sub-Account during a period. It is not
representative of what may be achieved in the future. However, performance
information may be helpful in reviewing market conditions during a period and in
considering a Fund's success in meeting its investment objectives.

We may compare performance information for a Sub-Account in reports and
promotional literature to:

    - Standard & Poor's 500 Stock Index ("S&P 500");

    - Dow Jones Industrial Average ("DJIA");

    - Shearson Lehman Aggregate Bond Index;

    - Other unmanaged indices of unmanaged securities widely regarded by
      investors as representative of the securities markets;

    - Other groups of variable life separate accounts or other investment
      products tracked by Lipper Inc.;

    - Other services, companies, publications, or persons such as
      Morningstar, Inc., who rank the investment products on performance or
      other criteria; and

    - The Consumer Price Index.

Unmanaged indices may assume the reinvestment of dividends but generally do not
reflect deductions for insurance and administrative charges, separate account
charges and Fund management costs and expenses.

In advertising, sales literature, publications or other materials, we may give
information on various topics of interest to Contract Owners and prospective
Contract Owners. These topics may include:

    - The relationship between sectors of the economy and the economy as a whole
      and its effect on various securities markets, investment strategies and
      techniques (such as value investing, market timing, dollar cost averaging,
      asset allocation and automatic account rebalancing);

    - The advantages and disadvantages of investing in tax-deferred and taxable
      investments;

                                      E-1
<PAGE>
    - Customer profiles and hypothetical payment and investment scenarios;

    - Financial management and tax and retirement planning; and

    - Investment alternatives to certificates of deposit and other financial
      instruments, including comparisons between the Contracts and the
      characteristics of and market for the financial instruments.

At times, the Company may also advertise the ratings and other information
assigned to it by independent rating organizations such as A.M. Best Company
("A.M. Best"), Moody's Investors Service ("Moody's"), Standard & Poor's
Insurance Rating Services ("S&P") and Duff & Phelps. A.M. Best's and Moody's
ratings reflect their current opinion of the Company's relative financial
strength and operating performance in comparison to the norms of the life/health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues but
do not measure the ability of such companies to meet other non-policy
obligations. The ratings also do not relate to the performance of the Underlying
Funds.

                                      E-2
<PAGE>
                                   TABLE I(A)
AVERAGE ANNUAL TOTAL RETURNS OF SUB-ACCOUNT FOR PERIODS ENDING DECEMBER 31, 1999
                    SINCE INCEPTION OF THE UNDERLYING FUNDS
           NET OF ALL CHARGES AND ASSUMING SURRENDER OF THE CONTRACT

The following performance information is based on the periods that the Funds
have been in existence. The data is net of expenses of the Funds, all
Sub-Account charges, and all Contract charges (including surrender charges) for
a representative Contract. It is assumed that the Insured is Male, Age 36,
standard (non-tobacco user) Underwriting Class, that a single payment of $25,000
was made, that the entire payment was allocated to each Sub-Account
individually, and that there was a full surrender of the Contract at the end of
the applicable period.

<TABLE>
<CAPTION>

 <S>                                            <C>              <C>     <C>
                                                                           10 Years
                                                   One-Year               or Life of
                                                    Total          5         Fund
 Underlying Fund                                    Return       Years     (if less)
 Select Aggressive Growth Fund                           23.21%  19.25%          17.29%
 Select Capital Appreciation Fund                        10.44%    N/A           17.15%
 Select Value Opportunity Fund                          -18.45%   9.43%           8.06%
 Select Emerging Markets Fund                            49.22%    N/A            6.39%
 T. Rowe Price International Stock Portfolio             18.08%  11.14%           9.64%
 Fidelity VIP Overseas Portfolio                         27.02%  13.29%           8.51%
 Select International Equity Fund                        16.54%  14.47%          11.64%
 DGPF International Equity Series                         1.21%   9.15%           8.41%
 Fidelity VIP Growth Portfolio                           22.04%  25.64%          16.84%
 Select Growth Fund                                      14.71%  24.98%          17.15%
 Select Strategic Growth Fund                             1.51%    N/A           -1.97%
 Core Equity Fund                                        14.25%  21.17%          14.27%
 Equity Index Fund                                        5.68%  23.71%          17.49%
 Fidelity VIP Equity-Income Portfolio                    -7.85%  14.53%          11.59%
 Select Growth and Income Fund                            3.77%  17.62%          12.54%
 Fidelity VIP II Asset Manager Portfolio                 -3.27%  11.54%          10.18%
 Fidelity VIP High Income Portfolio                      -6.09%   6.76%           9.50%
 Select Investment Grade Income Fund                    -14.86%   3.22%           4.88%
 Government Bond Fund                                   -13.70%   2.04%           3.11%
 Money Market Fund                                       -8.94%   1.26%           2.49%
</TABLE>

The inception dates for the Underlying Funds are: 4/29/85 for Core Equity,
Select Investment Grade and Money Market; 9/28/90 for Equity Index; 8/26/91 for
Government Bond; 8/21/92 for Select Aggressive Growth, Select Growth, Select
Income, and Select Growth and Income; 4/30/93 for Select Value Opportunity;
5/2/94 for Select International Equity; 4/28/95 for Select Capital Appreciation;
10/9/86 for Fidelity VIP Equity-Income and Fidelity VIP Growth; 9/19/85 for
Fidelity VIP High Income; 1/28/87 for Fidelity VIP Overseas; 9/6/89 for Fidelity
VIP II Asset Manager; 10/29/92 for DGPF International Equity; 3/31/94 for
T. Rowe Price International Stock, and 2/20/98 for Select Emerging Markets and
Select Strategic Growth.

PERFORMANCE INFORMATION REFLECTS ONLY THE PERFORMANCE OF A HYPOTHETICAL
INVESTMENT DURING THE PARTICULAR TIME PERIOD ON WHICH THE CALCULATIONS ARE
BASED. ONE-YEAR TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN FIGURES ARE BASED
ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE.
PERFORMANCE INFORMATION SHOULD BE CONSIDERED IN LIGHT OF THE INVESTMENT
OBJECTIVES AND POLICIES, CHARACTERISTICS AND QUALITY OF THE PORTFOLIO OF THE
UNDERLYING FUND IN WHICH A SUB-ACCOUNT INVESTS AND THE MARKET CONDITIONS DURING
THE GIVEN TIME PERIOD, AND SHOULD NOT BE CONSIDERED AS A REPRESENTATION OF WHAT
MAY BE ACHIEVED IN THE FUTURE.

                                      E-3
<PAGE>
                                   TABLE I(B)
  SUPPLEMENTAL AVERAGE ANNUAL TOTAL RETURNS OF SUB-ACCOUNT FOR PERIODS ENDING
                               DECEMBER 31, 1999
                    SINCE INCEPTION OF THE UNDERLYING FUNDS
            EXCLUDING MONTHLY CONTRACT CHARGES AND SURRENDER CHARGES

The following performance information is based on the periods that the Funds
have been in existence. The performance information is net of total Fund
expenses and all Sub-Account charges. THE DATA DOES NOT REFLECT MONTHLY CHARGES
UNDER THE CONTRACTS OR SURRENDER CHARGES. It is assumed that a single premium
payment of $25,000 has been made and that the entire payment was allocated to
each Sub-Account individually.

<TABLE>
<CAPTION>

 <S>                                            <C>             <C>     <C>
                                                                        10 Years
                                                                        or Life
                                                  One-Year                of
                                                    Total         5      Fund
 Underlying Fund                                   Return       Years   (if less)
 Select Aggressive Growth Fund                          37.41%  22.23%   19.62%
 Select Capital Appreciation Fund                       24.24%    N/A    20.32%
 Select Value Opportunity Fund                          -5.56%  12.51%   10.57%
 Select Emerging Markets Fund                           64.24%    N/A    14.19%
 T. Rowe Price International Stock Portfolio            32.12%  14.19%   12.44%
 Fidelity VIP Overseas Portfolio                        41.34%  16.32%   10.43%
 Select International Equity Fund                       30.53%  17.49%   14.45%
 DGPF International Equity Series                       14.72%  12.23%   10.78%
 Fidelity VIP Growth Portfolio                          36.20%  28.58%   18.87%
 Select Growth Fund                                     28.64%  27.92%   19.48%
 Select Strategic Growth Fund                           15.02%    N/A     5.93%
 Core Equity Fund                                       28.17%  24.13%   16.27%
 Equity Index Fund                                      19.33%  26.65%   19.58%
 Fidelity VIP Equity-Income Portfolio                    5.37%  17.55%   13.56%
 Select Growth and Income Fund                          17.36%  20.61%   14.87%
 Fidelity VIP II Asset Manager Portfolio                10.09%  14.59%   12.13%
 Fidelity VIP High Income Portfolio                      7.18%   9.89%   11.43%
 Select Investment Grade Income Fund                    -1.86%   6.43%    6.73%
 Government Bond Fund                                   -0.67%   5.28%    5.22%
 Money Market Fund                                       4.24%   4.53%    4.30%
</TABLE>

The inception dates for the Underlying Funds are: 4/29/85 for Core Equity,
Select Investment Grade and Money Market; 9/28/90 for Equity Index; 8/26/91 for
Government Bond; 8/21/92 for Select Aggressive Growth, Select Growth, Select
Income, and Select Growth and Income; 4/30/93 for Select Value Opportunity;
5/2/94 for Select International Equity; 4/28/95 for Select Capital Appreciation;
10/9/86 for Fidelity VIP Equity-Income and Fidelity VIP Growth; 9/19/85 for
Fidelity VIP High Income; 1/28/87 for Fidelity VIP Overseas; 9/6/89 for Fidelity
VIP II Asset Manager; 10/29/92 for DGPF International Equity; 3/31/94 for
T. Rowe Price International Stock; and 2/20/98 for the Select Emerging Markets
and Select Strategic Growth.

PERFORMANCE INFORMATION REFLECTS ONLY THE PERFORMANCE OF A HYPOTHETICAL
INVESTMENT DURING THE PARTICULAR TIME PERIOD ON WHICH THE CALCULATIONS ARE
BASED. ONE-YEAR TOTAL RETURN AND AVERAGE ANNUAL TOTAL RETURN FIGURES ARE BASED
ON HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE.
PERFORMANCE INFORMATION SHOULD BE CONSIDERED IN LIGHT OF THE INVESTMENT
OBJECTIVES AND POLICIES, CHARACTERISTICS AND QUALITY OF THE PORTFOLIO OF THE
FUND IN WHICH A SUB-ACCOUNT INVESTS AND THE MARKET CONDITIONS DURING THE GIVEN
TIME PERIOD, AND SHOULD NOT BE CONSIDERED AS A REPRESENTATION OF WHAT MAY BE
ACHIEVED IN THE FUTURE.

                                      E-4
<PAGE>







FIRST ALLMERICA

FINANCIAL LIFE

INSURANCE COMPANY


CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2000

<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                                              (UNAUDITED)                      (UNAUDITED)
                                                                             QUARTER ENDED                   SIX MONTHS ENDED
                                                                                JUNE 30,                         JUNE 30,
(In millions)                                                             2000           1999             2000             1999
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>             <C>              <C>
REVENUES
  Premiums                                                             $     0.5      $   494.4         $     1.0        $   952.4
  Universal life and investment product policy fees                        102.7           88.6             205.2            171.5
  Net investment income                                                     90.8          155.7             176.9            309.1
  Net realized investment (losses) gains                                   (18.1)          (5.9)            (26.4)           124.1
  Other income                                                              27.4           26.9              54.6             54.0
                                                                       ---------      ---------         ---------        ---------
    Total revenues                                                         203.3          759.7             411.3          1,611.1
                                                                       ---------      ---------         ---------        ---------


BENEFITS, LOSSES AND EXPENSES
  Policy benefits, claims, losses and loss adjustment expenses              78.6          440.0             156.4            882.8
  Policy acquisition expenses                                               21.0          111.9              46.1            204.6
  Other operating expenses                                                  68.9          112.3             129.3            223.5
  Restructuring costs                                                       11.0           --                11.0             --
                                                                       ---------      ---------         ---------        ---------
    Total benefits, losses and expenses                                    179.5          664.2             342.8          1,310.9

  Income from continuing operations before federal income taxes             23.8           95.5              68.5            300.2
                                                                       ---------      ---------         ---------        ---------

  Federal income tax expense (benefit)
     Current                                                                (7.2)          22.6             (10.1)            77.6
     Deferred                                                               14.2             .4              25.4             (6.4)
                                                                       ---------      ---------         ---------        ---------
        Total federal income tax expense                                     7.0           23.0              15.3             71.2
                                                                       ---------      ---------         ---------        ---------


Income from continuing operations before minority interest                  16.8           72.5              53.2            229.0

Minority interest                                                           --             (7.3)             --              (39.9)
                                                                       ---------      ---------         ---------        ---------

Income from continuing operations                                           16.8           65.2              53.2            189.1

(Loss) income from operations of discontinued business (net
of less applicable income (benefit) taxes                                    0.2           (6.4)              0.7             (3.2)
                                                                       ---------      ---------         ---------        ---------

Net income                                                             $    17.0      $    58.8         $    53.9        $   185.9
                                                                       =========      =========         =========        =========



                The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         (UNAUDITED)        (AUDITED)
                                                                                           JUNE 30,       DECEMBER 31,
(In millions)                                                                                2000             1999
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>             <C>
ASSETS
   Investments:
      Fixed maturities-at fair value (amortized cost of $3,980.9 and $3,721.6)            $ 4,079.0        $ 3,660.7
      Equity securities-at fair value (cost of $ 28.1 and $27.9)                               46.9             51.4
      Mortgage loans                                                                          500.3            521.2
      Policy loans                                                                            181.1            170.5
      Real estate and other long-term investments                                             171.1            177.0
                                                                                          ---------        ---------
         Total investments                                                                  4,978.4          4,580.8
   Cash and cash equivalents                                                                  211.4            279.3
   Accrued investment income                                                                   71.2             73.3
   Deferred policy acquisition costs                                                        1,326.9          1,219.5
   Reinsurance receivable on paid and unpaid losses,
      Benefits and unearned premiums                                                          471.1            480.3
   Deferred federal income taxes                                                               (4.3)            18.1
   Premiums, accounts and notes receivable                                                     51.7             81.0
   Other assets                                                                               217.1            199.6
   Closed Block assets                                                                        768.5            772.3
   Separate account assets                                                                 18,477.5         17,629.6
                                                                                          ---------        ---------
         Total assets                                                                     $26,569.5        $25,333.8
                                                                                          =========        =========

LIABILITIES
   Policy liabilities and accruals:
      Future policy benefits                                                              $ 2,685.1        $ 2,825.0
      Outstanding claims, losses and loss adjustment expenses                                 197.8            218.8
      Unearned premiums                                                                         6.6              6.6
      Contractholder deposit funds and other policy liabilities                             2,179.9          2,025.5
                                                                                          ---------        ---------
         Total policy liabilities and accruals                                              5,069.4          5,075.9
                                                                                          ---------        ---------
   Expenses and taxes payable                                                                 518.7            512.0
   Reinsurance premiums payable                                                                23.4             17.9
   Trust instruments supported by funding obligation                                          403.5             50.6
   Short-term debt                                                                             --               --
   Closed Block liabilities                                                                   824.9            842.1
   Separate account liabilities                                                            18,476.5         17,628.9
                                                                                          ---------        ---------
      Total liabilities                                                                    25,316.4         24,127.4
                                                                                          ---------        ---------


   Commitments and contingencies

SHAREHOLDER'S EQUITY
   Common stock, $10 par value, 1 million shares authorized, 500,001 shares issued &
    outstanding                                                                                 5.0              5.0
   Additional paid in capital                                                                 569.0            569.0
   Accumulated other comprehensive loss                                                       (22.1)           (14.9)
   Retained earnings                                                                          701.2            647.3
                                                                                          ---------        ---------
      Total shareholder's equity                                                            1,253.1          1,206.4
                                                                                          ---------        ---------
      Total liabilities and shareholder's equity                                          $26,569.5        $25,333.8
                                                                                          =========        =========


                The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                                                 (UNAUDITED)
                                                                                          SIX MONTHS ENDED JUNE 30,
(In millions)                                                                               2000              1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>              <C>

COMMON STOCK                                                                              $     5.0        $     5.0
                                                                                          ---------        ---------

ADDITIONAL PAID IN CAPITAL                                                                    569.0            444.0
                                                                                          ---------        ---------

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
  Net unrealized appreciation (depreciation) on investments:
  Balance at beginning of period                                                              (14.9)           169.1
      Net (depreciation) on available-for-sale securities                                     (11.1)          (269.5)
      Benefit for deferred federal income taxes                                                 3.9             94.3
      Minority interest                                                                        --               31.8
                                                                                          ---------        ---------
          Other comprehensive loss                                                             (7.2)          (143.4)
                                                                                          ---------        ---------
  Balance at end of period                                                                    (22.1)            25.7
                                                                                          ---------        ---------
RETAINED EARNINGS
  Balance at beginning of period                                                              647.3          1,698.3
      Net income                                                                               53.9            185.9
      Dividends to shareholders                                                                --               --
                                                                                          ---------        ---------
  Balance at end of period                                                                    701.2          1,884.2
                                                                                          ---------        ---------

      Total shareholder's equity                                                          $ 1,253.1        $ 2,358.9
                                                                                          =========        =========


                The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                               (UNAUDITED)                      (UNAUDITED)
                                                                          QUARTER ENDED JUNE 30,         SIX MONTHS ENDED JUNE 30,
(In millions)                                                              2000            1999             2000             1999
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <S>              <C>              <C>             <C>
Net Income                                                             $    17.0       $    58.8         $    53.9       $   185.9
                                                                       ---------       ---------         ---------       ---------

Other comprehensive income:
  Net depreciation on available-for-sale securities                        (12.2)         (110.4)            (11.1)         (269.5)
  Benefit for deferred federal income taxes                                  4.3            38.7               3.9            94.4
  Minority interest                                                         --               7.2              --              31.8
                                                                       ---------       ---------         ---------       ---------
      Other comprehensive loss                                              (7.9)          (64.5)             (7.2)         (143.3)
                                                                       ---------       ---------         ---------       ---------

Comprehensive income (loss)                                            $     9.1       $    (5.7)        $    46.7       $    42.6
                                                                       =========       =========         =========       =========


      The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                 (UNAUDITED)
                                                                                               SIX MONTHS ENDED
                                                                                                   JUNE 30,
(In millions)                                                                               2000              1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                            $    53.9         $   185.9
    Adjustments to reconcile net income to net cash provided by (used in) operating
     activities:
      Minority interest                                                                                        39.9
      Net realized losses (gains)                                                            26.7            (124.0)
      Net amortization and depreciation                                                      10.8              17.5
      Deferred federal income taxes                                                          26.3              (1.3)
      Change in deferred acquisition costs                                                 (106.3)            (97.4)
      Change in premiums and notes receivable, net of reinsurance                            34.8             (55.9)
      Change in accrued investment income                                                     2.1               1.8
      Change in policy liabilities and accruals, net                                       (521.1)             63.8
      Change in reinsurance receivable                                                        9.2             (16.3)
      Change in expenses and taxes payable                                                    0.5             (10.3)
      Separate account activity, net                                                         (0.3)             53.5
      Other, net                                                                            (39.2)            (31.2)
                                                                                        ---------         ---------
         Net cash (used in) provided by operating activities                               (502.6)             26.0
                                                                                        ---------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from disposals and maturities of available-for-sale fixed maturities            822.7           1,205.9
   Proceeds from disposals of equity securities                                               1.7             371.4
   Proceeds from disposals of other investments                                              22.9              20.6
   Proceeds from mortgages matured or collected                                              40.5              49.3
   Purchase of available-for-sale fixed maturities                                       (1,290.5)         (1,667.5)
   Purchase of equity securities                                                             (0.1)            (67.2)
   Purchase of other investments                                                            (48.1)            (71.8)
   Capital expenditures                                                                      (6.2)            (15.9)
   Purchase of Minority Interest                                                             --              (325.5)
   Other investing activities                                                                16.5              13.6
                                                                                        ---------         ---------
      Net cash (used in) provided by investing activities                                  (440.6)           (487.1)
                                                                                        ---------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Deposits and interest credited to contractholder deposit funds                           982.9           1,246.5
   Withdrawals from contractholder deposit funds                                           (469.4)           (668.5)
   Change in trust agreements supported by funding obligations                              352.9
   Change in short term debt                                                                 --              (171.1)
   Change in long term debt                                                                  --
   Dividends paid to shareholders
                                                                                        ---------         ---------
      Net cash provided by (used in) financing activities                                   866.4             406.9
                                                                                        ---------         ---------
Net change in cash and cash equivalents                                                     (76.8)            (54.2)
                                                                                        ---------         ---------
Net change in cash held in the Closed Block                                                   8.9              14.0
Cash and cash equivalents, beginning of period                                              279.3             504.0
                                                                                        ---------         ---------
Cash and cash equivalents, end of period                                                $   211.4         $   463.8
                                                                                        =========         =========

         The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
                      FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
               (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited consolidated financial statements of First Allmerica
Financial Life Insurance Company ("FAFLIC" or the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information.

The interim consolidated financial statements of First Allmerica Financial Life
Insurance Company ("FAFLIC", or the "Company"), a wholly-owned subsidiary of
Allmerica Financial Corporation ("AFC"), include the accounts of its
wholly-owned life insurance subsidiary, Allmerica Financial Life Insurance and
Annuity Company ("AFLIAC"), its non-insurance subsidiaries (principally
brokerage and investment advisory subsidiaries), Advantage Insurance Network,
Inc., and Allmerica Trust Company, N.A.

Prior to July 1, 1999, the consolidated financial statements of FAFLIC included
the accounts of its wholly-owned life insurance subsidiary Allmerica Financial
Life Insurance and Annuity Company ("AFLIAC"), its non-insurance subsidiaries
(principally brokerage and investment advisory services), Allmerica Property
and Casualty Companies, Inc. ("Allmerica P&C") (an 85.0%-owned non-insurance
holding company), and various other non-insurance subsidiaries.

Effective July 1, 1999, AFC made certain changes to its corporate structure
(Note 4). These changes included the transfer of the Company's ownership of
Allmerica P&C and its subsidiaries, as well as several other non-insurance
subsidiaries from the Company to AFC. In exchange, AFC contributed capital to
the Company and agreed to maintain the Company's statutory surplus at specified
levels during the following 6 years. Comparability between current and prior
period financial statements and footnotes has been significantly impacted by
the Company's divestiture of these subsidiaries during 1999, as disclosed in
Note 4.

Prior to the July 1, 1999 changes in AFC's corporate structure, minority
interest relates to the Company's investment in Allmerica P&C and its only
significant subsidiary, Hanover. Hanover's wholly-owned subsidiary is Citizens
Corporation, the holding company for Citizens.

The accompanying interim consolidated financial statements reflect, in the
opinion of the Company's management, all adjustments necessary for a fair
presentation of the financial position and results of operations. The results
of operations for the six months ended June 30, 2000, are not necessarily
indicative of the results to be expected for the full year. These financial
statements should be read in conjunction with the Company's 1999 Annual Audited
Financial Statements.

2. NEW ACCOUNTING PRONOUNCEMENTS

In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation -- an interpretation of APB Opinion No. 25" ("FIN44"). FIN 44
clarifies the application of APB Opinion No. 25 regarding the definition of
employee, the criteria for determining a noncompensatory plan, the accounting
for changes to the terms of a previously fixed stock option or award, the
accounting for an exchange of stock compensation awards in a business
combination, and other stock compensation related issues. FIN 44 is effective
July 1, 2000, but to the extent that it covers certain events occurring during
the period after December 15, 1998, and certain other events occurring during
the period after January 12, 2000, but before the effective date of July 1,
2000, the effects of applying the Interpretation are recognized on a
prospective basis from July 1, 2000. The Company does not expect the
application of FIN 44 to have a material impact on the Company's financial
position or results of operations.

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("Statement No. 133"), which establishes
accounting and reporting standards for derivative instruments.  Statement No.
133 requires that an entity recognize all derivatives as either assets or
liabilities at fair value in the statement of financial position, and
establishes special accounting for the following three types of hedges: fair
value hedges, cash flow hedges, and hedges of foreign currency exposures. In
June 2000, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Hedging Activities -- an amendment of FASB Statement No. 133
("Statement No. 138"), which further addresses the accounting for hedges and
the application of certain exceptions to Statement No. 133. These statements
are effective for fiscal years beginning after June 15, 2000. The Company is
currently assessing the impact of the adoption of Statement No. 133 and
Statement No. 138.

<PAGE>

3. DISCONTINUED OPERATIONS

During the second quarter of 1999, the Company approved a plan to exit its
group life and health insurance business, consisting of its Employee Benefit
Services ("EBS") business, its Affinity Group Underwriters ("AGU") business and
its accident and health assumed reinsurance pool business ("reinsurance pool
business"). Prior to 1999, these businesses comprised substantially all of the
former Corporate Risk Management Services segment. Accordingly, the operating
results of the discontinued segment, including its reinsurance pool business,
have been reported in the Consolidated Statements of Income as discontinued
operations in accordance with Accounting Principles Board Opinion No. 30,
Reporting the Results of Operations -- Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" ("APB Opinion No. 30"). In the third quarter of 1999,
the operating results from the discontinued segment were adjusted to reflect
the recording of additional reserves related to accident claims from prior
years. The Company also recorded a $30.5 million loss, net of taxes, on the
disposal of this segment, including $23.0 million of after tax losses generated
after the June 30, 1999 measurement date.

In March of 2000, the Company transferred its EBS business to Great-West Life
and Annuity Insurance Company of Denver and received consideration of
approximately $22.0 million, based on renewal rights for existing policies.
Additional consideration may be received in 2001, based on premium in force as
of March, 2001. However, the Company retained policy liabilities estimated at
$193.6 million at June 30, 2000 related to this business.

As permitted by APB Opinion No. 30, the Consolidated Balance Sheets have not
been segregated between continuing and discontinued operations. At June 30,
2000, the discontinued segment had assets of approximately $525.5 million
consisting primarily of invested assets, premiums and fees receivable, and
reinsurance recoverables, and liabilities of approximately $466.1 million
consisting primarily of policy liabilities. Revenues for the discontinued
operations were $55.9 million and $89.9 million for the quarters ended June 30,
2000 and 1999, respectively, and $130.8 million and $187.4 million for the six
months ended June 30, 2000 and 1999, respectively.


4. REORGANIZATION OF AFC CORPORATE STRUCTURE

AFC made certain changes to its corporate structure effective July 1, 1999.
These changes included transfer of the Company's ownership of Allmerica P&C and
all of its subsidiaries, as well as certain other non-insurance subsidiaries,
from FAFLIC to AFC, referred to as the "distribution of subsidiaries". The
Company retained ownership of its primary insurance subsidiary, AFLIAC and
certain broker dealer and investment management and advisory subsidiaries. AFC
contributed capital to FAFLIC in the amount of $125.0 million, consisting of
cash and securities of $36.0 million and $89.0 million, respectively, and
agreed to maintain the Company's statutory surplus at specified levels during
the following six years. In addition, any dividend from FAFLIC to AFC during
2000 and 2001 requires the prior approval of the Commonwealth of Massachusetts
Insurance Commissioner. This transaction was approved by the Commissioner on
May 24, 1999.

The equity of the subsidiaries transferred from FAFLIC on July 1, 1999 was
$1,274.1 million. As of June 30, 1999, the transferred subsidiaries had total
assets of $5,334.1 million, including cash and cash equivalents of $202.2
million, and total revenue of $1,196.5 million.

The Company's consolidated results of operations in 1999 include $107.2 million
of net income associated with these subsidiaries through June 30, 1999. The
following unaudited pro forma information presents consolidated results of
operations as if the reorganization had occurred at the beginning of 1999. This
information is not necessarily indicative of future results.

<PAGE>

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
(Unaudited)
For the Six Months Ended June 30,
(In millions)                                                                    2000            1999
---------------------------------------------------------------------------------------      ----------
<S>                                                                         <C>              <C>
Revenue                                                                       $   411.3       $   414.6
                                                                              =========       =========
Net realized capital (losses) gains included in revenue                           (26.4)           12.0
                                                                              =========       =========

Income from continuing operations before taxes                                     68.5           111.3
Income taxes                                                                       15.3            29.3
                                                                              ---------       ---------
Net income from continuing operations                                              53.2            82.0
Income (Loss) from operations of discontinued business (less applicable income
taxes of $0.4 and $(1.7) for the six months ended June 30, 2000 and 1999).          0.7            (3.2)
                                                                              ---------       ---------
Net income                                                                    $    58.8       $    78.8
                                                                              =========       =========
</TABLE>


5. SIGNIFICANT TRANSACTIONS

During the second quarter of 2000, the Company adopted a formal company-wide
restructuring plan. This plan is the result of a corporate initiative that
began in the fall of 1999, intended to reduce expenses and enhance revenues. As
a result of the Company's restructuring plan, it recognized a pre-tax charge of
$11.0 million for the quarter ended June 30, 2000 as reflected in restructuring
costs in the Consolidated Statements of Income. Approximately $1.9 million of
this charge relates to severance and other employee related costs resulting
from the elimination of positions. All levels of employees, from staff to
senior management, were affected by the restructuring. In addition,
approximately $9.1 million of this charge relates to other restructuring costs,
including one-time project costs.

Effective January 1, 1999, Allmerica P&C entered into a Whole Account Aggregate
Excess of Loss reinsurance agreement. The reinsurance agreement provided
accident year coverage for the three years 1999 to 2001 for the Company's
property and casualty business, and is subject to cancellation or commutation
annually at the Company's option. In accordance with the provisions of this
contract, Allmerica P&C exercised its option to cancel this contract effective
January 1, 2000. The program covers losses and allocated loss adjustment
expenses ("LAE"), including those incurred but not yet reported, in excess of a
specified whole account loss and allocated LAE ratio. The annual and aggregate
coverage limits for losses and allocated LAE are $150.0 million and $300.0
million, respectively. The effect of this agreement on results of operations in
each reporting period is based on losses and allocated LAE ceded, reduced by a
sliding scale premium of 50.0-67.5% depending on the size of the loss, and
increased by a ceding commission of 20.0% of ceded premium. In addition, net
investment income is reduced for amounts credited to the reinsurer. As a result
of this agreement and prior to the corporate reorganization discussed in
footnote 4, the Company recognized a net (benefit) expense of $(3.0) million
and $16.9 million for the quarter and six months ended June 30, 1999, based on
year-to-date estimates of losses and allocated loss adjustment expenses for
accident year 1999.


6. FEDERAL INCOME TAXES

Federal income tax expense for the six months ended June 30, 2000 and 1999, has
been computed using estimated effective tax rates. These rates are revised, if
necessary, at the end of each successive interim period to reflect the current
estimates of the annual effective tax rates.


7. CLOSED BLOCK

Included in other income in the Consolidated Statements of Income is a net
pre-tax contribution from the Closed Block of $1.6 million and $4.8 million for
the quarter and six months ended June 30, 2000, respectively, compared to $2.5
million and $7.1 million for the quarter and six months ended June 30, 1999,
respectively. Summarized financial information of the Closed Block is as
follows:

<PAGE>

<TABLE>
<CAPTION>
                                                                         (UNAUDITED)
                                                                           JUNE 30,   DECEMBER 31,
(In millions)                                                                2000         1999
---------------------------------------------------------------------------------------------------
<S>                                                                      <C>          <C>
Assets
   Fixed maturities-at fair value (amortized cost of $391.4 and $387.4)    $   374.9  $    372.9
   Mortgage loans                                                              150.4       136.3
   Policy loans                                                                196.4       201.1
   Cash and cash equivalents                                                    13.7        22.6
   Accrued investment income                                                    14.5        14.0
   Deferred policy acquisition costs                                            11.8        13.1
   Other assets                                                                  6.8        12.3
                                                                           ---------   ---------
             Total assets                                                  $   768.5   $   772.3
                                                                           =========   =========
Liabilities
   Policy liabilities and accruals                                         $   821.7   $   835.2
   Other liabilities                                                             3.2         6.9
                                                                           ---------   ---------
      Total liabilities                                                    $   824.9   $   842.1
                                                                           =========   =========
</TABLE>

<TABLE>
<CAPTION>
                                                                               (UNAUDITED)                 (UNAUDITED)
                                                                               QUARTER ENDED             SIX MONTHS ENDED
                                                                                  JUNE 30,                   JUNE 30,
(In millions)                                                               2000          1999          2000         1999
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>          <C>           <C>
Revenues
   Premiums                                                              $     8.3    $     8.4      $   34.3     $    35.6
   Net investment income                                                      13.8         13.5          27.0          26.6
   Net realized investment gains                                              (3.3)        (0.3)         (3.6)          0.5
                                                                         ---------    ---------      ---------    ---------
      Total revenues                                                          18.8         21.6          57.7          62.7
                                                                         ---------    ---------      ---------    ---------

Benefits and expenses
   Policy benefits                                                            16.9          18.9         51.7          54.4
   Policy acquisition expenses                                                 0.4           0.6          1.0           1.1
   Other operating expenses                                                   (0.1)         (0.4)         0.2           0.1
                                                                         ---------    ---------      ---------    ---------
      Total benefits and expenses                                             17.2          19.1         52.9          55.6
                                                                         ---------    ---------      ---------    ---------

         Contribution from the Closed Block                              $     1.6    $     2.5      $    4.8     $     7.1
                                                                         =========    =========      =========    =========
</TABLE>

Many expenses related to Closed Block operations are charged to operations
outside the Closed Block; accordingly, the contribution from the Closed Block
does not represent the actual profitability of the Closed Block operations.
Operating costs and expenses outside of the Closed Block are, therefore,
disproportionate to the business outside the Closed Block.


8. SEGMENT INFORMATION

The Company offers financial products and services through its Asset
Accumulation group. Within this broad area the Company conducts business
principally in two operating segments. These segments are Allmerica Financial
Services and Allmerica Asset Management. The separate financial information of
each segment is presented consistent with the way results are regularly
evaluated by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. A summary of the Company's reportable
segments is included below.

The Asset Accumulation group includes two segments: Allmerica Financial
Services and Allmerica Asset Management. The Allmerica Financial Services
segment includes variable annuities, variable universal life and traditional
life insurance products distributed via retail channels, as well as group
retirement products, such as defined benefit and 401(k) plans and tax-sheltered
annuities distributed to institutions. Through its Allmerica Asset Management
segment, the Company offers its customers the option of investing in Guaranteed
Investment Contracts ("GICs"), such as short term and long term funding
agreements. Short term funding agreements are investment contracts issued to
institutional buyers, such as money market funds, corporate cash management
programs and securities lending collateral programs, which typically have short
maturities and periodic interest rate resets based on an index such as LIBOR.
Long term funding agreements are investment contracts issued to various
businesses or charitable trusts, which are used to support debt issued by the
trust to foreign and domestic institutional buyers, such as banks, insurance
companies, and pension plans. These funding agreements have long maturities and
may be issued with a fixed or variable interest rate based on an index such as
LIBOR. Prior to the reorganization discussed in footnote 4, this segment's
results also included a Registered Investment Advisor providing investment
advisory services, primarily to affiliates and to third parties, such as money
market and other fixed income clients.

<PAGE>

In addition to the two operating segments, the Company has a Corporate segment,
which consists primarily of cash, investments, and corporate overhead expenses.
Corporate overhead expenses reflect costs not attributable to a particular
segment, such as those generated by certain officers and directors, Corporate
Technology, Corporate Finance, Human Resources and the Legal department.

Prior to the reorganization discussed in footnote 4, the Company's results
included products and services offered through its Risk Management segment In
1999, the Company reorganized its Property and Casualty business and Corporate
Risk Management Services operations within the Risk Management segment. Under
the new structure, the Risk Management segment manages its business through
five distribution channels identified as Hanover North, Hanover South, Citizens
Midwest, Allmerica Voluntary Benefits and Allmerica Specialty. During the
second quarter of 1999, the Company approved a plan to exit its group life and
health business, consisting of its EBS business and its reinsurance pool
business. Results of operations from this business, relating to both the
current and the prior periods, have been segregated and reported as a component
of discontinued operations in the Consolidated Statements of Income. The Risk
Management segment's property and casualty business is offered primarily
through the Hanover North, Hanover South and Citizens Midwest distribution
channels utilizing the Company's independent agent network primarily in the
Northeast, Midwest and Southeast United States, maintaining a strong regional
focus. Allmerica Voluntary Benefits focuses on worksite distribution, which
offers discounted property and casualty products through employer sponsored
programs.

Management evaluates the results of the aforementioned segments based on a
pre-tax and minority interest basis. Segment income is determined by adjusting
net income for net realized investment gains and losses, net gains and losses
on disposals of businesses, discontinued operations, extraordinary items, the
cumulative effect of accounting changes and certain other items which
management believes are not indicative of overall operating trends. While these
items may be significant components in understanding and assessing the
Company's financial performance, management believes that the presentation of
segment income enhances its understanding of the Company's results of
operations by highlighting net income attributable to the normal, recurring
operations of the business. However, segment income should not be construed as
a substitute for net income determined in accordance with generally accepted
accounting principles.

Summarized below is financial information with respect to business segments for
the periods indicated.

<TABLE>
<CAPTION>
                                                                    (UNAUDITED)                          (UNAUDITED)
                                                                   QUARTER ENDED                       SIX MONTHS ENDED
                                                                      JUNE 30,                              JUNE 30,
(In millions)                                                2000                 1999              2000                1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>               <C>                <C>                <C>
Segment revenues:
   Risk Management                                         $      --           $   553.9         $    --            $ 1,074.8
                                                           ---------           ---------         ---------          ---------
   Asset Accumulation
     Allmerica Financial Services                              209.8               192.0             435.7              394.9
     Allmerica Asset Management                                 32.1                40.5              58.5               74.8
                                                           ---------           ---------         ---------          ---------
        Subtotal                                               241.9               232.5             494.2              469.7
                                                           ---------           ---------         ---------          ---------
   Corporate                                                    --                   0.3              --                  0.7
   Intersegment revenues                                        --                  (1.1)             --                 (2.5)
                                                           ---------           ---------         ---------          ---------
       Total segment revenues including Closed Block           241.9               785.6             494.2            1,542.7
Adjustments to segment revenues:
          Adjustment for Closed Block                          (20.5)              (19.9)            (56.5)             (55.6)
          Net realized (losses) gains                          (18.1)               (6.0)            (26.4)             124.0
                                                           ---------           ---------         ---------          ---------
       Total revenues                                      $   203.3           $   759.7         $   411.3          $ 1,611.1
                                                           =========           =========         =========          =========

Segment income (loss) before income taxes and minority
interest:
   Risk Management                                         $    --             $    55.3         $    --            $    84.9
                                                           ---------           ---------         ---------          ---------
   Asset Accumulation
     Allmerica Financial Services                               55.7                48.1             110.7               97.2
     Allmerica Asset Management                                  3.3                 6.8               7.1               12.5
                                                           ---------           ---------         ---------          ---------
         Subtotal                                               59.0                54.9             117.8              109.7
                                                           ---------           ---------         ---------          ---------
   Corporate                                                    (5.1)              (15.4)            (11.2)             (25.3)
                                                           ---------           ---------         ---------          ---------
     Segment income before income taxes and minority
      interest                                                  53.9                94.8             106.6              169.3
Adjustments to segment income:
   Net realized investment gains, net of amortization          (19.1)                0.7             (27.1)             130.9
   Other items                                                 (11.0)               --               (11.0)              --
                                                           ---------           ---------         ---------          ---------
Income from continuing operations before taxes and
  minority interest                                        $    23.8           $    95.5         $    68.5          $   300.2
                                                           =========           =========         =========          =========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                            IDENTIFIABLE ASSETS                  DEFERRED ACQUISITION COSTS
--------------------------------------------------------------------------------------------------------------------------------
                                                    (UNAUDITED)                                (UNAUDITED)
                                                     JUNE 30,           DECEMBER 31,             JUNE 30,          DECEMBER 31,
(In millions)                                          2000                 1999                  2000                 1999
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                 <C>                   <C>                  <C>
   Risk Management                                  $   532.1             $   542.0             $     4.5           $     6.0
                                                    ---------             ---------             ---------           ---------
     Asset Accumulation
      Allmerica Financial Services                   24,134.3              23,410.7               1,322.1             1,213.1
      Allmerica Asset Management                      1,903.1               1,381.1                   0.3                 0.4
                                                    ---------             ---------             ---------           ---------
         Subtotal                                    26,037.4              24,791.8               1,322.4             1,213.5
   Corporate                                                                   --                                        --
                                                    ---------             ---------             ---------           ---------
      Total                                         $26,569.5             $25,333.8             $ 1,322.4           $ 1,219.5
                                                    =========             =========             =========           =========
</TABLE>


9. COMMITMENTS AND CONTINGENCIES

Litigation
In July 1997, a lawsuit on behalf of a putative class was instituted in
Louisiana against AFC and certain of its subsidiaries, including FAFLIC, by
individual plaintiffs alleging fraud, unfair or deceptive acts, breach of
contract, misrepresentation, and related claims in the sale of life insurance
policies. In October 1997, the plaintiffs voluntarily dismissed the Louisiana
suit and filed a substantially similar action in Federal District Court in
Worcester, Massachusetts. In early November 1998, the Company and the
plaintiffs entered into a settlement agreement. The court granted preliminary
approval of the settlement on December 4, 1998. On May 19, 1999, the court
issued an order certifying the class for settlement purposes and granting final
approval of the settlement agreement. FAFLIC recognized a $31.0 million pre-tax
expense during the third quarter of 1998 related to this litigation. Although
the Company believes that this expense reflects appropriate recognition of its
obligation under the settlement, this estimate assumes the availability of
insurance coverage for certain claims, and the estimate may be revised based on
the amount of reimbursement actually tendered by AFC's insurance carriers, if
any, and based on changes in the Company's estimate of the ultimate cost of the
benefits to be provided to members of the class.

The Company has been named a defendant in various other legal proceedings
arising in the normal course of business. In the Company's opinion, based on
the advice of legal counsel, the ultimate resolution of these proceedings will
not have a material effect on the Company's consolidated financial statements.
However, liabilities related to these proceedings could be established in the
near term if estimates of the ultimate resolution of these proceedings are
revised.

<PAGE>
FIRST ALLMERICA
FINANCIAL LIFE
INSURANCE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholder of
First Allmerica Financial Life Insurance Company

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, comprehensive income, shareholder's equity
and cash flows present fairly, in all material respects, the financial position
of First Allmerica Financial Life Insurance Company (the "Company") at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
February 1, 2000
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
 FOR THE YEARS ENDED DECEMBER 31,
 (IN MILLIONS)                                      1999      1998      1997
 -------------                                      ----      ----      ----
 <S>                                              <C>       <C>       <C>
 REVENUES
     Premiums...................................  $  954.5  $1,969.5  $1,980.4
     Universal life and investment product
       policy fees..............................     359.3     296.6     237.3
     Net investment income......................     503.1     593.9     619.5
     Net realized investment gains..............     100.3      60.9      76.3
     Other income...............................     107.3     100.0      81.5
                                                  --------  --------  --------
         Total revenues.........................   2,024.5   3,020.9   2,995.0
                                                  --------  --------  --------
 BENEFITS, LOSSES AND EXPENSES
     Policy benefits, claims, losses and loss
       adjustment expenses......................   1,056.3   1,803.0   1,763.9
     Policy acquisition expenses................     240.9     449.6     421.8
     Sales practice litigation..................     --         31.0     --
     Loss from cession of disability income
       business.................................     --        --         53.9
     Restructuring costs........................     --          9.0     --
     Other operating expenses...................     346.3     419.7     404.0
                                                  --------  --------  --------
         Total benefits, losses and expenses....   1,643.5   2,712.3   2,643.6
                                                  --------  --------  --------
 Income from continuing operations before
  federal income taxes..........................     381.0     308.6     351.4
                                                  --------  --------  --------
 FEDERAL INCOME TAX EXPENSE (BENEFIT)
     Current....................................      88.7      74.6      74.4
     Deferred...................................       4.3     (15.4)     14.2
                                                  --------  --------  --------
         Total federal income tax expense.......      93.0      59.2      88.6
                                                  --------  --------  --------
 Income from continuing operations before
  minority interest.............................     288.0     249.4     262.8
     Minority interest..........................     (39.9)    (55.0)    (79.4)
                                                  --------  --------  --------
 Income from continuing operations..............     248.1     194.4     183.4
 (Loss) income from operations of discontinued
  business (less applicable income taxes
  (benefit) of $(10.1), $(7.0) and $8.9 for the
  years ended December 31, 1999, 1998 and 1997,
  respectively)                                      (17.2)    (13.5)     16.6

 Loss on disposal of group life and health
  business, including provision of $72.2 for
  operating losses during phase-out period for
  the year ended December 31, 1999 (less
  applicable income tax benefit of $16.4)            (30.5)    --        --
                                                  --------  --------  --------
 Net income.....................................  $  200.4  $  180.9  $  200.0
                                                  ========  ========  ========
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-1
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
 DECEMBER 31,
 (IN MILLIONS, EXCEPT PER SHARE DATA)                        1999       1998
 ------------------------------------                      ---------  ---------
 <S>                                                       <C>        <C>
 ASSETS
   Investments:
     Fixed maturities at fair value (amortized cost of
       $3,721.6 and $7,520.8)............................  $ 3,660.7  $ 7,683.9
     Equity securities at fair value (cost of $27.9 and
       $253.1)...........................................       51.4      397.1
     Mortgage loans......................................      521.2      562.3
     Policy loans........................................      170.5      154.3
     Real estate and other long-term investments.........      177.0      163.1
                                                           ---------  ---------
         Total investments...............................    4,580.8    8,960.7
                                                           ---------  ---------
   Cash and cash equivalents.............................      279.3      504.0
   Accrued investment income.............................       73.3      141.0
   Deferred policy acquisition costs.....................    1,219.5    1,161.2
   Reinsurance receivable on unpaid losses, benefits and
     unearned premiums...................................      480.3    1,136.4
   Deferred federal income taxes.........................       18.1       19.4
   Premiums, accounts and notes receivable...............       81.0      510.5
   Other assets..........................................      199.6      530.6
   Closed Block assets...................................      772.3      803.1
   Separate account assets...............................   17,629.6   13,697.7
                                                           ---------  ---------
         Total assets....................................  $25,333.8  $27,464.6
                                                           =========  =========
 LIABILITIES
   Policy liabilities and accruals:
     Future policy benefits..............................  $ 2,825.0  $ 2,802.2
     Outstanding claims, losses and loss adjustment
       expenses..........................................      218.8    2,815.9
     Unearned premiums...................................        6.6      843.2
     Contractholder deposit funds and other policy
       liabilities.......................................    2,025.5    2,637.0
                                                           ---------  ---------
         Total policy liabilities and accruals...........    5,075.9    9,098.3
                                                           ---------  ---------
   Expenses and taxes payable............................      512.0      681.9
   Reinsurance premiums payable..........................       17.9       50.2
   Trust instruments supported by funding obligations....       50.6     --
   Short-term debt.......................................     --          221.3
   Closed Block liabilities..............................      842.1      872.0
   Separate account liabilities..........................   17,628.9   13,691.5
                                                           ---------  ---------
         Total liabilities...............................   24,127.4   24,615.2
                                                           ---------  ---------
   Minority interest.....................................     --          532.9
   Commitments and contingencies (Notes 16 and 21)
 SHAREHOLDER'S EQUITY
   Common stock, $10 par value, 1 million shares
     authorized, 500,001 shares issued and outstanding...        5.0        5.0
   Additional paid-in capital............................      569.0      444.0
   Accumulated other comprehensive (loss) income.........      (14.9)     169.2
   Retained earnings.....................................      647.3    1,698.3
                                                           ---------  ---------
         Total shareholder's equity......................    1,206.4    2,316.5
                                                           ---------  ---------
         Total liabilities and shareholder's equity......  $25,333.8  $27,464.6
                                                           =========  =========
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-2
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
 FOR THE YEARS ENDED DECEMBER 31,
 (IN MILLIONS)                                      1999      1998      1997
 -------------                                    --------  --------  --------
 <S>                                              <C>       <C>       <C>
 COMMON STOCK...................................  $    5.0  $    5.0  $    5.0
                                                  --------  --------  --------
 ADDITIONAL PAID-IN CAPITAL
     Balance at beginning of period.............     444.0     453.7     392.4
     Capital contribution from parent...........     125.0     --         61.3
     Loss on change of interest-Allmerica P&C...     --         (9.7)    --
                                                  --------  --------  --------
     Balance at end of period...................     569.0     444.0     453.7
                                                  --------  --------  --------

 ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
     Net unrealized (depreciation) appreciation
       on investments:
     Balance at beginning of period.............     169.2     209.3     131.4
     (Depreciation) appreciation during the
       period:
       Net (depreciation) appreciation on
         available-for-sale securities..........    (298.2)    (82.4)    170.9
       Benefit (provision) for deferred federal
         income taxes...........................     105.0      28.9     (59.8)
       Minority interest........................      31.8      13.4     (33.2)
                                                  --------  --------  --------
     Distribution of subsidiaries (Note 3)......     (22.7)    --        --
                                                  --------  --------  --------
                                                    (184.1)    (40.1)     77.9
                                                  --------  --------  --------
     Balance at end of period...................     (14.9)    169.2     209.3
                                                  --------  --------  --------
 RETAINED EARNINGS
     Balance at beginning of period.............   1,698.3   1,567.4   1,367.4
     Net income.................................     200.4     180.9     200.0
     Dividend to shareholder....................     --        (50.0)    --
     Distribution of subsidiaries (Note 3)......  (1,251.4)    --        --
                                                  --------  --------  --------
     Balance at end of period...................     647.3   1,698.3   1,567.4
                                                  --------  --------  --------
         Total shareholder's equity.............  $1,206.4  $2,316.5  $2,235.4
                                                  ========  ========  ========
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-3
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
 FOR THE YEARS ENDED DECEMBER 31,
 (IN MILLIONS)                                  1999     1998     1997
 -------------                                 -------  -------  ------
 <S>                                           <C>      <C>      <C>
 Net income..................................  $ 200.4  $ 180.9  $200.0
 Other comprehensive (loss) income:
     Net (depreciation) appreciation on
       available-for-sale securities.........   (298.2)   (82.4)  170.9
     Benefit (provision) for deferred federal
       income taxes..........................    105.0     28.9   (59.8)
     Minority interest.......................     31.8     13.4   (33.2)
     Distribution of subsidiaries (Note 3)...    (22.7)   --       --
                                               -------  -------  ------
         Other comprehensive (loss) income...   (184.1)   (40.1)   77.9
                                               -------  -------  ------
 Comprehensive (loss) income.................  $ (16.3) $ 140.8  $277.9
                                               =======  =======  ======
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-4
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
 FOR THE YEARS ENDED DECEMBER 31,
 (IN MILLIONS)                                   1999       1998       1997
 -------------                                 ---------  ---------  ---------
 <S>                                           <C>        <C>        <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
     Net income..............................  $   200.4  $   180.9  $   200.0
     Adjustments to reconcile net income to
       net cash provided by operating
       activities:
         Minority interest...................       39.9       55.0       79.4
         Net realized gains..................     (100.9)     (62.7)     (77.8)
         Net amortization and depreciation...       31.5       20.7       31.6
         Deferred federal income taxes.......       20.7      (15.4)      14.2
         Sales practice litigation expense...     --           31.0     --
         Loss from exiting reinsurance
           pools.............................     --           25.3     --
         Payment related to exiting
           reinsurance pools.................     --          (30.3)    --
         Loss from cession of disability
           income business...................     --         --           53.9
         Payment related to cession of
           disability income business........     --         --         (207.0)
         Loss from disposal of group life and
           health business...................       30.5     --         --
         Change in deferred acquisition
           costs.............................     (181.6)    (185.8)    (189.7)
         Change in premiums and notes
           receivable, net of reinsurance
           payable...........................      (41.8)      56.7      (15.1)
         Change in accrued investment
           income............................        8.3        0.8        7.1
         Change in policy liabilities and
           accruals, net.....................      (15.6)     168.1     (134.9)
         Change in reinsurance receivable....      (46.3)    (115.4)      27.2
         Change in expenses and taxes
           payable...........................       79.4       (3.3)      49.4
         Separate account activity, net......        5.5      (48.5)    --
         Other, net..........................       18.5      (63.8)      20.4
                                               ---------  ---------  ---------
             Net cash provided by (used in)
               operating activities..........       48.5       13.3     (141.3)
                                               ---------  ---------  ---------
 CASH FLOWS FROM INVESTING ACTIVITIES
         Proceeds from disposals and
           maturities of available-for-sale
           fixed maturities..................    2,801.0    1,715.2    2,892.9
         Proceeds from disposals of equity
           securities........................      422.9      285.3      162.7
         Proceeds from disposals of other
           investments.......................       30.3      120.8      116.3
         Proceeds from mortgages matured or
           collected.........................      131.2      171.2      204.7
         Purchase of available-for-sale fixed
           maturities........................   (2,227.3)  (2,374.5)  (2,596.0)
         Purchase of equity securities.......      (78.9)    (119.9)     (67.0)
         Purchase of other investments.......     (140.6)    (274.4)    (175.0)
         Capital expenditures................      (29.2)     (22.3)     (15.3)
         Purchase of minority interest in
           Citizens Corporation..............     --         (195.9)    --
         Distribution of subsidiaries........     (202.2)    --         --
         Other investing activities, net.....     --           26.7        1.3
                                               ---------  ---------  ---------
             Net cash provided by (used in)
               investing activities..........      707.2     (667.8)     524.6
                                               ---------  ---------  ---------
</TABLE>

                                      F-5
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
 <S>                                           <C>        <C>        <C>
 CASH FLOWS FROM FINANCING ACTIVITIES
         Deposits and interest credited to
           contractholder deposit funds......    1,514.6    1,419.2      457.6
         Withdrawals from contractholder
           deposit funds.....................   (2,037.5)    (625.0)    (647.1)
         Change in trust agreements supported
           by funding agreements.............       50.6     --         --
         Change in short-term debt...........     (180.9)     188.3       (5.4)
         Change in long-term debt............     --           (2.6)      (0.1)
         Dividend paid to shareholder........     --          (50.0)      (9.4)
         Contribution from parent............       36.0     --            0.1
         Subsidiary treasury stock purchased,
           at cost...........................     (350.0)      (1.0)    (140.0)
                                               ---------  ---------  ---------
             Net cash (used in) provided by
               financing activities..........     (967.2)     928.9     (344.3)
                                               ---------  ---------  ---------
 Net change in cash and cash equivalents.....     (211.5)     274.4       39.0
 Net change in cash held in the Closed
  Block......................................      (13.2)      15.7       (1.0)
 Cash and cash equivalents, beginning of
  period.....................................      504.0      213.9      175.9
                                               ---------  ---------  ---------
 Cash and cash equivalents, end of period....  $   279.3  $   504.0  $   213.9
                                               =========  =========  =========
 SUPPLEMENTAL CASH FLOW INFORMATION
     Interest paid...........................  $     3.1  $     7.3  $     3.6
     Income taxes paid.......................  $    24.0  $   135.3  $    66.3
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.

                                      F-6
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.  BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

First Allmerica Financial Life Insurance Company ("FAFLIC" or the "Company") is
organized as a stock life insurance company, and is a wholly-owned subsidiary of
Allmerica Financial Corporation ("AFC").

Prior to July 1, 1999, the consolidated financial statements of FAFLIC included
the accounts of its wholly-owned life insurance subsidiary Allmerica Financial
Life Insurance and Annuity Company ("AFLIAC"), its non-insurance subsidiaries
(principally brokerage and investment advisory services), Allmerica Property and
Casualty Companies, Inc. ("Allmerica P&C") (an 85.0%-owned non-insurance holding
company), and various other non-insurance subsidiaries.

Effective July 1, 1999, AFC made certain changes to its corporate structure
(Note 3). These changes included the transfer of the Company's ownership of
Allmerica P&C and its subsidiaries, as well as several other non-insurance
subsidiaries from the Company to AFC. In exchange, AFC contributed capital to
the Company and agreed to maintain the Company's statutory surplus at specified
levels during the following 6 years. Comparability between current and prior
period financial statements and footnotes has been significantly impacted by the
Company's divestiture of these subsidiaries during 1999, as disclosed in Note 3.

The Closed Block (Note 1B) assets and liabilities at December 31, 1999 and 1998
are presented in the consolidated balance sheets as single line items. The
contribution from the Closed Block is included in the consolidated statements of
income in other income. Unless specifically stated, all disclosures contained
herein supporting the consolidated financial statements at December 31, 1999,
1998 and 1997, and the years then ended exclude the Closed Block related
amounts. All significant intercompany accounts and transactions have been
eliminated.

On or about December 3, 1998, the Company acquired all of the outstanding common
stock of Citizens Corporation (formerly an 82.5% owned non-insurance subsidiary
of The Hanover Insurance Company ("Hanover"), a wholly-owned subsidiary of
Allmerica P&C) that it did not already own in exchange for cash of $195.9
million (Note 4). The acquisition has been recognized as a purchase. The
minority interest acquired totaled $158.5 million. A total of $40.8 million
representing the excess of the purchase price over the fair values of the net
assets acquired, net of deferred taxes, has been allocated to goodwill and is
being amortized over a 40-year period.

Prior to the July 1, 1999 changes in AFC's corporate structure, minority
interest relates to the Company's investment in Allmerica P&C and its only
significant subsidiary, Hanover. Hanover's wholly-owned subsidiary is Citizens
Corporation, the holding company for Citizens. Minority interest also includes
an amount related to the minority interest in Citizens Corporation.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

B.  CLOSED BLOCK

The Company established and began operating a closed block ("the Closed Block")
for the benefit of the participating policies included therein, consisting of
certain individual life insurance participating policies,

                                      F-7
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

individual deferred annuity contracts and supplementary contracts not involving
life contingencies which were in force as of FAFLIC's demutualization on
October 16, 1995; such policies constitute the "Closed Block Business". The
purpose of the Closed Block is to protect the policy dividend expectations of
such FAFLIC dividend paying policies and contracts. Unless the Commonwealth of
Massachusetts Insurance Commissioner ("the Insurance Commissioner") consents to
an earlier termination, the Closed Block will continue to be in effect until the
date none of the Closed Block policies are in force. FAFLIC allocated to the
Closed Block assets in an amount that is expected to produce cash flows which,
together with future revenues from the Closed Block Business, are reasonably
sufficient to support the Closed Block Business, including provision for payment
of policy benefits, certain future expenses and taxes and for continuation of
policyholder dividend scales payable in 1994 so long as the experience
underlying such dividend scales continues. The Company expects that the factors
underlying such experience will fluctuate in the future and policyholder
dividend scales for Closed Block Business will be set accordingly.

Although the assets and income allocated to the Closed Block inure solely to the
benefit of the holders of policies included in the Closed Block, the excess of
Closed Block liabilities over Closed Block assets as measured on a GAAP basis
represent the expected future post-tax income from the Closed Block which may be
recognized in income over the period the policies and contracts in the Closed
Block remain in force.

If the actual income from the Closed Block in any given period equals or exceeds
the expected income for such period as determined at the inception of the Closed
Block, the expected income would be recognized in income for that period.
Further, any excess of the actual income over the expected income would also be
recognized in income to the extent that the aggregate expected income for all
prior periods exceeded the aggregate actual income. Any remaining excess of
actual income over expected income would be accrued as a liability for
policyholder dividends in the Closed Block to be paid to the Closed Block
policyholders. This accrual for future dividends effectively limits the actual
Closed Block income recognized in income to the Closed Block income expected to
emerge from operation of the Closed Block as determined at inception.

If, over the period the policies and contracts in the Closed Block remain in
force, the actual income from the Closed Block is less than the expected income
from the Closed Block, only such actual income (which could reflect a loss)
would be recognized in income. If the actual income from the Closed Block in any
given period is less than the expected income for that period and changes in
dividends scales are inadequate to offset the negative performance in relation
to the expected performance, the income inuring to shareholders of the Company
will be reduced. If a policyholder dividend liability had been previously
established in the Closed Block because the actual income to the relevant date
had exceeded the expected income to such date, such liability would be reduced
by this reduction in income (but not below zero) in any periods in which the
actual income for that period is less than the expected income for such period.

C.  VALUATION OF INVESTMENTS

In accordance with the provisions of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("Statement No. 115"), the Company is required to classify its investments into
one of three categories: held-to-maturity, available-for-sale or trading. The
Company determines the appropriate classification of debt securities at the time
of purchase and reevaluates such designation as of each balance sheet date.

Debt securities and marketable equity securities are classified as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a separate
component of shareholders' equity. The amortized cost of debt securities is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in investment income.

                                      F-8
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts and reserves. Reserves on mortgage loans are based on
losses expected by the Company to be realized on transfers of mortgage loans to
real estate (upon foreclosure), on the disposition or settlement of mortgage
loans and on mortgage loans which the Company believes may not be collectible in
full. In establishing reserves, the Company considers, among other things, the
estimated fair value of the underlying collateral.

Fixed maturities and mortgage loans that are delinquent are placed on
non-accrual status, and thereafter interest income is recognized only when cash
payments are received.

Policy loans are carried principally at unpaid principal balances.

During 1997, the Company adopted a plan to dispose of all real estate assets. As
of December 31, 1999, there were 2 properties remaining in the Company's real
estate portfolio, both of which are being actively marketed. These assets are
carried at the estimated fair value less costs of disposal. Depreciation is not
recorded on these assets while they are held for disposal.

Realized investment gains and losses, other than those related to separate
accounts for which the Company does not bear the investment risk, are reported
as a component of revenues based upon specific identification of the investment
assets sold. When an other than temporary impairment of the value of a specific
investment or a group of investments is determined, a realized investment loss
is recorded. Changes in the valuation allowance for mortgage loans are included
in realized investment gains or losses.

D.  FINANCIAL INSTRUMENTS

In the normal course of business, the Company enters into transactions involving
various types of financial instruments, including debt, investments such as
fixed maturities, mortgage loans and equity securities, investment and loan
commitments, swap contracts and interest rate futures contracts. These
instruments involve credit risk and also may be subject to risk of loss due to
interest rate fluctuation. The Company evaluates and monitors each financial
instrument individually and, when appropriate, obtains collateral or other
security to minimize losses.

Derivative financial instruments are accounted for under three different
methods: fair value accounting, deferral accounting and accrual accounting.
Interest rate swap contracts used to hedge interest rate risk are accounted for
using a combination of the fair value method and accrual method, with changes in
fair value reported in unrealized gains and losses in equity consistent with the
underlying hedged security, and the net payment or receipt on the swaps reported
in net investment income. Foreign currency swap contracts used to hedge the
foreign currency exchange risk associated with investment securities are
accounted for using a combination of the fair value method and accrual method,
with changes in fair value reported in unrealized gains and losses in equity
consistent with the underlying hedged security, and the net payment or receipt
on the swaps reported in net investment income. Foreign currency swap contracts
used to hedge foreign currency exchange risk associated with funding agreements
are accounted for using the fair value method, with changes in fair value
reported in other operating income consistent with the underlying hedged trust
obligation liability. Futures contracts used to hedge interest rate risk are
accounted for using the deferral method, with gains and losses deferred in
unrealized gains and losses in equity and recognized in earnings in conjunction
with the earnings recognition of the underlying hedged item. Default swap
contracts entered into for investment purposes are accounted for using the fair
value method, with changes in fair value, if any, reported in realized
investment gains and losses in earnings. Premium paid to the Company on default
swap contracts is reported in net investment income in earnings. Other swap
contracts entered into for investment purposes are accounted for using the fair
value method, with changes in fair value reported in realized investment gains
and

                                      F-9
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

losses in earnings. Any ineffective swaps or futures hedges are recognized
currently in realized investment gains and losses in earnings.

E.  CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.

F.  DEFERRED POLICY ACQUISITION COSTS

Acquisition costs consist of commissions, underwriting costs and other costs,
which vary with, and are primarily related to, the production of revenues.
Property and casualty, group life and group health insurance business
acquisition costs are deferred and amortized over the terms of the insurance
policies. Acquisition costs related to universal life products, variable
annuities and contractholder deposit funds are deferred and amortized in
proportion to total estimated gross profits from investment yields, mortality,
surrender charges and expense margins over the expected life of the contracts.
This amortization is reviewed annually and adjusted retrospectively when the
Company revises its estimate of current or future gross profits to be realized
from this group of products, including realized and unrealized gains and losses
from investments. Acquisition costs related to fixed annuities and other life
insurance products are deferred and amortized, generally in proportion to the
ratio of annual revenue to the estimated total revenues over the contract
periods based upon the same assumptions used in estimating the liability for
future policy benefits.

Deferred acquisition costs for each life product and property and casualty line
of business are reviewed to determine if they are recoverable from future
income, including investment income. If such costs are determined to be
unrecoverable, they are expensed at the time of determination. Although
realization of deferred policy acquisition costs is not assured, the Company
believes it is more likely than not that all of these costs will be realized.
The amount of deferred policy acquisition costs considered realizable, however,
could be reduced in the near term if the estimates of gross profits or total
revenues discussed above are reduced. The amount of amortization of deferred
policy acquisition costs could be revised in the near term if any of the
estimates discussed above are revised.

G.  PROPERTY AND EQUIPMENT

Property, equipment and leasehold improvements are stated at cost, less
accumulated depreciation and amortization. Depreciation is provided using the
straight-line or accelerated method over the estimated useful lives of the
related assets which generally range from 3 to 30 years. Amortization of
leasehold improvements is provided using the straight-line method over the
lesser of the term of the leases or the estimated useful life of the
improvements.

H.  SEPARATE ACCOUNTS

Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of certain pension, variable annuity
and variable life insurance contractholders. Assets consist principally of
bonds, common stocks, mutual funds, and short-term obligations at market value.
The investment income, gains and losses of these accounts generally accrue to
the contractholders and, therefore, are not included in the Company's net
income. Appreciation and depreciation of the Company's interest in the separate
accounts, including undistributed net investment income, is reflected in
shareholder's equity or net investment income.

                                      F-10
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

I.  POLICY LIABILITIES AND ACCRUALS

Future policy benefits are liabilities for life, health and annuity products.
Such liabilities are established in amounts adequate to meet the estimated
future obligations of policies in force. The liabilities associated with
traditional life insurance products are computed using the net level premium
method for individual life and annuity policies, and are based upon estimates as
to future investment yield, mortality and withdrawals that include provisions
for adverse deviation. Future policy benefits for individual life insurance and
annuity policies are computed using interest rates ranging from 2 1/2% to 6.0%
for life insurance and 2% to 9 1/2% for annuities. Estimated liabilities are
established for group life and health policies that contain experience rating
provisions. Mortality, morbidity and withdrawal assumptions for all policies are
based on the Company's own experience and industry standards. Liabilities for
universal life, variable universal life and variable annuities include deposits
received from customers and investment earnings on their fund balances, less
administrative charges. Universal life fund balances are also assessed mortality
and surrender charges. Liabilities for variable annuities include a reserve for
benefit claims in excess of a guaranteed minimum fund value.

Liabilities for outstanding claims, losses and loss adjustment expenses ("LAE")
are estimates of payments to be made on property and casualty and health
insurance for reported losses and LAE and estimates of losses and LAE incurred
but not reported. These liabilities are determined using case basis evaluations
and statistical analyses and represent estimates of the ultimate cost of all
losses incurred but not paid. These estimates are continually reviewed and
adjusted as necessary; such adjustments are reflected in current operations.
Estimated amounts of salvage and subrogation on unpaid property and casualty
losses are deducted from the liability for unpaid claims.

Premiums for property and casualty insurance are reported as earned on a
pro-rata basis over the contract period. The unexpired portion of these premiums
is recorded as unearned premiums.

Contractholder deposit funds and other policy liabilities include
investment-related products such as guaranteed investment contracts ("GICs"),
deposit administration funds and immediate participation guarantee funds and
consist of deposits received from customers and investment earnings on their
fund balances.

All policy liabilities and accruals are based on the various estimates discussed
above. Although the adequacy of these amounts cannot be assured, the Company
believes that it is more likely than not that policy liabilities and accruals
will be sufficient to meet future obligations of policies in force. The amount
of liabilities and accruals, however, could be revised in the near term if the
estimates discussed above are revised.

J.  PREMIUM AND FEE REVENUE AND RELATED EXPENSES

Premiums for individual life and health insurance and individual and group
annuity products, excluding universal life and investment-related products, are
considered revenue when due. Property and casualty insurance premiums are
recognized as revenue over the related contract periods. Benefits, losses and
related expenses are matched with premiums, resulting in their recognition over
the lives of the contracts. This matching is accomplished through the provision
for future benefits, estimated and unpaid losses and amortization of deferred
policy acquisition costs. Revenues for investment-related products consist of
net investment income and contract charges assessed against the fund values.
Related benefit expenses include annuity benefit claims in excess of a
guaranteed minimum fund value, and net investment income credited to the fund
values after deduction for investment and risk charges. Revenues for universal
life products consist of net investment income, with mortality, administration
and surrender charges assessed against the fund values. Related benefit expenses
include universal life benefit claims in excess of fund values and net
investment income credited to universal life fund values. Certain policy charges
that represent compensation for services

                                      F-11
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to be provided in future periods are deferred and amortized over the period
benefited using the same assumptions used to amortize capitalized acquisition
costs.

K.  FEDERAL INCOME TAXES

AFC and its domestic subsidiaries (including certain non-insurance operations)
file a consolidated United States federal income tax return. Entities included
within the consolidated group are segregated into either a life insurance or
non-life insurance company subgroup. The consolidation of these subgroups is
subject to certain statutory restrictions on the percentage of eligible non-life
tax losses that can be applied to offset life company taxable income. Prior to
the merger on July 16, 1997, Allmerica P&C and its subsidiaries filed a separate
United States federal income tax return.

The Board of Directors has delegated to AFC management, the development and
maintenance of appropriate federal income tax allocation policies and
procedures, which are subject to written agreement between the companies. The
Federal income tax for all subsidiaries in the consolidated return of AFC is
calculated on a separate return basis. Any current tax liability is paid to AFC.
Tax benefits resulting from taxable operating losses or credits of AFC's
subsidiaries are not reimbursed to the subsidiary until such losses or credits
can be utilized by the subsidiary on a separate return basis.

Deferred income taxes are generally recognized when assets and liabilities have
different values for financial statement and tax reporting purposes, and for
other temporary taxable and deductible differences as defined by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("Statement No. 109"). These differences result primarily from loss and LAE
reserves, policy reserves, policy acquisition expenses, and unrealized
appreciation or depreciation on investments.

L.  NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement No. 133"), which establishes
accounting and reporting standards for derivative instruments. Statement No. 133
requires that an entity recognize all derivatives as either assets or
liabilities at fair value in the statement of financial position, and
establishes special accounting for the following three types of hedges: fair
value hedges, cash flow hedges, and hedges of foreign currency exposures of net
investments in foreign operations. This statement is effective for fiscal years
beginning after June 15, 2000. The Company is currently assessing the impact of
the adoption of Statement No. 133.

In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use" ("SoP 98-1"). SoP 98-1 requires that
certain costs incurred in developing internal-use computer software be
capitalized and provides guidance for determining whether computer software is
to be considered for internal use. This statement is effective for fiscal years
beginning after December 15, 1998. In the second quarter of 1998, the Company
adopted SoP 98-1 effective January 1, 1998, resulting in an increase in pre-tax
income of $12.4 million through December 31, 1998. The adoption of SOP 98-1 did
not have a material effect on the results of operations or financial position
for the three months ended March 31, 1998.

In December 1997, the AICPA issued Statement of Position 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments" ("SoP 97-3").
SoP 97-3 provides guidance on when a liability should be recognized for guaranty
fund and other assessments and how to measure the liability. This statement
allows for the discounting of the liability if the amount and timing of the cash
payments are fixed

                                      F-12
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and determinable. In addition, it provides criteria for when an asset may be
recognized for a portion or all of the assessment liability or paid assessment
that can be recovered through premium tax offsets or policy surcharges. This
statement is effective for fiscal years beginning after December 15, 1998. The
adoption of this statement did not have a material effect on the results of
operations or financial position of the Company.

In June 1997, the FASB issued Statement No. 131, "Disclosures About Segments of
an Enterprise and Related Information" ("Statement No. 131"). This statement
establishes standards for the way that public enterprises report information
about operating segments in annual financial statements and requires that
selected information about those operating segments be reported in interim
financial statements. This statement supersedes Statement No. 14, "Financial
Reporting for Segments of a Business Enterprise". Statement No. 131 requires
that all public enterprises report financial and descriptive information about
their reportable operating segments. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. This statement
is effective for fiscal years beginning after December 15, 1997. The Company
adopted Statement No. 131 for the first quarter of 1998, which resulted in
certain segment re-definitions, which have no impact on the consolidation
results of operations (See Note 15).

In June 1997, the FASB also issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("Statement No. 130"). Statement
No. 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
All items that are required to be recognized under accounting standards as
components of comprehensive income are to be reported in a financial statement
that is displayed with the same prominence as other financial statements. This
statement stipulates that comprehensive income reflect the change in equity of
an enterprise during a period from transactions and other events and
circumstances from non-owner sources. This statement is effective for fiscal
years beginning after December 15, 1997. The Company adopted Statement No. 130
for the first quarter of 1998, which resulted primarily in reporting unrealized
gains and losses on investments in debt and equity securities in comprehensive
income.

M.  RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation, resulting primarily from the reporting of Discontinued Operations
as disclosed in Note 2.

2.  DISCONTINUED OPERATIONS

During the second quarter of 1999, the Company approved a plan to exit its group
life and health insurance business, consisting of its Employee Benefit Services
("EBS") business, its Affinity Group Underwriters ("AGU") business and its
accident and health assumed reinsurance pool business ("reinsurance pool
business"). During the third quarter of 1998, the Company ceased writing new
premium in the reinsurance pool business, subject to certain contractual
obligations. Prior to 1999, these businesses comprised substantially all of the
former Corporate Risk Management Services segment. Accordingly, the operating
results of the discontinued segment, including its reinsurance pool business,
have been reported in the Consolidated Statements of Income as discontinued
operations in accordance with Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations -- Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" ("APB Opinion No. 30"). In the third quarter of 1999,
the operating results from the discontinued segment were adjusted to reflect the
recording of additional reserves related to accident claims from prior years. On
October 6, 1999, the Company entered into an agreement with Great-West Life and
Annuity Insurance Company of Denver,

                                      F-13
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which provides for the sale of the Company's EBS business effective March 1,
2000. The Company has recorded a $30.5 million loss, net of taxes, on the
disposal of its group life and health business. Subsequent to the June 30, 1999
measurement date, operations from the discontinued business generated losses of
approximately $8.7 million, net of taxes.

As permitted by APB Opinion No. 30, the Consolidated Balance Sheets have not
been segregated between continuing and discontinued operations. At December 31,
1999, the discontinued segment had assets of approximately $531.1 million
consisting primarily of invested assets, premiums and fees receivable, and
reinsurance recoverables, and liabilities of approximately $482.5 million
consisting primarily of policy liabilities. Revenues for the discontinued
operations were $361.1 million, $398.5 million, and $389.2 million for the years
ended December 31, 1999, 1998 and 1997, respectively.

3.  REORGANIZATION OF AFC CORPORATE STRUCTURE

AFC has made certain changes to its corporate structure effective July 1, 1999.
These changes included transfer of the Company's ownership of Allmerica P&C and
all of its subsidiaries, as well as certain other non-insurance subsidiaries,
from FAFLIC to AFC, referred to as the "distribution of subsidiaries". The
Company retained its ownership of its primary insurance subsidiary, AFLIAC and
certain broker dealer and investment management and advisory subsidiaries. AFC
contributed capital to FAFLIC in the amount of $125.0 million, consisting of
cash and securities of $36.0 million and $89.0 million, respectively, and agreed
to maintain the Company's statutory surplus at specified levels during the
following six years. In addition, any dividend from FAFLIC to AFC during 2000
and 2001 requires the prior approval of the Commonwealth of Massachusetts
Insurance Commissioner. This transaction was approved by the Commissioner on
May 24, 1999.

The equity of the subsidiaries transferred from FAFLIC on July 1, 1999 was
$1,274.1 million. As of June 30, 1999, the transferred subsidiaries had total
assets of $5,334.1 million, including cash and cash equivalents of $202.2
million, and total revenue of $1,196.5 million.

The Company's consolidated results of operations in 1999 include $107.2 million
of net income associated with these subsidiaries through June 30, 1999. The
unaudited pro forma information below presents consolidated results of
operations as if the reorganization had occurred at the beginning of 1998.

The following unaudited pro forma information is not necessarily indicative of
the consolidated results of operations of the Company had the transfer occurred
at the beginning of 1998, nor is it necessarily indicative of future results.

<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999    1998
-------------                                                 ------  ------
<S>                                                           <C>     <C>
Revenue.....................................................  $828.0  $750.2
                                                              ======  ======
Net realized capital (losses) gains included in revenue.....   (11.8)   19.6
                                                              ======  ======
Income from continuing operations before taxes..............   192.1   141.2
Income taxes................................................    51.2    41.2
                                                              ------  ------
Net income from continuing operations.......................  $140.9   100.0
(Loss) from operations of discontinued business (less
 applicable income taxes (benefit) of $(10.4), $(7.0) and
 $8.9 for the years ended December 31, 1999, 1998 and 1997,
 respectively...............................................   (17.2)  (13.5)
</TABLE>

                                      F-14
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999    1998
-------------                                                 ------  ------
<S>                                                           <C>     <C>
(Loss) on disposal of group life and health business,
 including provision of $72.2 for operating losses during
 phase-out period for the tear ended December 31, 1999 (less
 applicable income tax benefit of $16.4)....................   (30.5)   --
                                                              ------  ------
Net income..................................................  $ 93.2  $ 86.5
                                                              ======  ======
</TABLE>

4.  ACQUISITION OF MINORITY INTEREST OF CITIZENS CORPORATION

On December 3, 1998 Citizens Acquisition Corporation, a wholly-owned subsidiary
of the Allmerica P&C, completed a cash tender offer to acquire the outstanding
shares of Citizens Corporation common stock that AFC or its subsidiaries did not
already own at a price of $33.25 per share. Approximately 99.8% of publicly held
shares of Citizens Corporation common stock were tendered. On December 14, 1998,
the Company completed a short-form merger, acquiring all shares of common stock
of Citizens Corporation not purchased in its tender offer, through the merger of
its wholly-owned subsidiary, Citizens Acquisition Corporation with Citizens
Corporation at a price of $33.25 per share. Total consideration for the
transactions amounted to $195.9 million. The acquisition has been recognized as
a purchase. The minority interest acquired totaled $158.5 million. A total of
$40.8 million representing the excess of the purchase price over the fair values
of the net assets acquired, net of deferred taxes, has been allocated to
goodwill and is being amortized over a 40-year period.

The Company's consolidated results of operations include minority interest in
Citizens Corporation prior to December 3, 1998. The unaudited pro forma
information below presents consolidated results of operation as if the
acquisition had occurred at the beginning of 1997.

The following unaudited pro forma information is not necessarily indicative of
the consolidated results of operations of the combined Company had the
acquisition occurred at the beginning of 1997, nor is it necessarily indicative
of future results.

<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1998      1997
-------------                                                 --------  --------
<S>                                                           <C>       <C>
Revenue.....................................................  $3,006.6  $2,977.1
                                                              ========  ========
Net realized capital gains included in revenue..............  $   58.1  $   71.6
                                                              ========  ========
Income before taxes and minority interest...................     293.4     332.5
Income taxes................................................     (54.2)    (82.4)
Minority Interest:
  Equity in earnings........................................     (42.6)    (64.1)
                                                              --------  --------
Net income..................................................  $  196.6  $  186.0
                                                              ========  ========
</TABLE>

5.  OTHER SIGNIFICANT TRANSACTIONS

Effective January 1, 1999, Allmerica P&C entered into a whole account aggregate
excess of loss reinsurance agreement with a highly rated reinsurer. The
reinsurance agreement provides accident year coverage for the three years 1999
to 2001 for the Company's property and casualty business, and is subject to
cancellation or commutation annually at the Company's option. The program covers
losses and allocated loss adjustment

                                      F-15
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expenses, including those incurred but not yet reported, in excess of a
specified whole account loss and allocated LAE ratio. The annual and aggregate
coverage limits for losses and allocated LAE are $150.0 million and $300.0
million, respectively. The effect of this agreement on results of operations in
each reporting period is based on losses and allocated LAE ceded, reduced by a
sliding scale premium of 50.0-67.0% depending on the size of the loss, and
increased by a ceding commission of 20.0% of ceded premium. In addition, net
investment income is reduced for amounts credited to the reinsurer. Prior to the
AFC corporate reorganization, the Company recognized a net benefit of $16.9
million as a result of this agreement, based on year-to-date and annual
estimates of losses and allocated loss adjustment expenses for accident year
1999.

On October 29, 1998, the Company announced that it had adopted a formal
restructuring plan for its Risk Management business. As part of this initiative,
the segment consolidated its property and casualty field support activities from
fourteen regional branches into three hub locations. As a result of the
Company's restructuring initiative, it recognized a pretax loss of $9.0 million,
in the fourth quarter of 1998.

Approximately $4.8 million of this loss relates to severance and other employee
related costs resulting from the elimination of 306 positions, of which 207 and
106 employees had been terminated as of December 31, 1999 and 1998,
respectively. In addition, lease cancellations and contract terminations
resulted in losses of approximately $2.5 million and $1.7 million, respectively.
The Company made payments of approximately $4.2 million and $0.1 million through
June 30, 1999 and in 1998, respectively, related to this restructuring
initiative.

Effective July 1, 1998, the Company entered into a reinsurance agreement with a
highly rated reinsurer that cedes current and future underwriting losses,
including unfavorable development of prior year reserves, up to a $40.0 million
maximum, relating to the Company's reinsurance pool business. These pools
consist primarily of the Company's assumed stop loss business, small group
managed care pools, long-term disability and long-term care pools, student
accident and special risk business. The agreement is consistent with
management's decision to exit this line of business, which the Company expects
to run-off over the next three years. As a result of this transaction, the
Company recognized a $25.3 million pre-tax loss in the third quarter of 1998.
This loss is reported in 1999 as part of the discontinued operations of the
Company.

Effective January 1, 1998, the Company entered into an agreement with a highly
rated reinsurer to reinsure the mortality risk on substantially all of the
universal life and variable universal life blocks of business. The agreement did
not have a material effect on its results of operations or financial position.

In 1999, 1998 and 1997, Allmerica P&C redeemed 8,662.7, 3,289.5 and 5,735.3
shares, respectively, of its issued and outstanding common stock owned by AFC
for $350.0 million, $125.0 million and $195.0 million, respectively, thereby
increasing the Company's total ownership to 84.5% as of June 30, 1999. The
increases in the Company's ownership of Allmerica P&C through June 30, 1999, and
for 1998 and 1997 were 14.5%, 4.3% and 6.3%, respectively. The 1999 transaction
consisted of cash and cash equivalents. The 1998 transaction consisted of $124.0
million of securities and $1.0 million of cash. The 1997 transaction consisted
of $55.0 million of securities and $140.0 million of cash.

The merger of Allmerica P&C and a wholly-owned subsidiary of AFC was consummated
on July 16, 1997. Through the merger, AFC acquired all of the outstanding common
stock of Allmerica P&C that FAFLIC did not already own in exchange for cash of
$425.6 million and approximately 9.7 million shares of AFC stock valued at
$372.5 million. At consummation of this transaction AFC owned 59.5% through
FAFLIC and 40.5% directly. The merger has been recognized as a purchase. Total
consideration of approximately $798.1 million

                                      F-16
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

has been allocated to the minority interest in the assets and liabilities based
on estimates of their fair values. The minority interest acquired totaled $703.5
million. A total of $90.6 million representing the excess of the purchase price
over the fair values of the net assets acquired, net of deferred taxes, has been
allocated to goodwill and is being amortized over a 40-year period.

On April 14, 1997, the Company entered into an agreement in principle to cede
substantially all of the Company's individual disability income line of business
under a 100% coinsurance agreement with a highly rated reinsurer. The
coinsurance agreement became effective October 1, 1997. The transaction has
resulted in the recognition of a $53.9 million pre-tax loss in the first quarter
of 1997.

6.  INVESTMENTS

A.  SUMMARY OF INVESTMENTS

The Company accounts for its investments, all of which are classified as
available-for-sale, in accordance with Statement No. 115.

The amortized cost and fair value of available-for-sale fixed maturities and
equity securities were as follows:

<TABLE>
<CAPTION>
                                                             1999
                                          -------------------------------------------
                                                       GROSS       GROSS
DECEMBER 31,                              AMORTIZED  UNREALIZED  UNREALIZED    FAIR
(IN MILLIONS)                             COST (1)     GAINS       LOSSES     VALUE
-------------                             ---------  ----------  ----------  --------
<S>                                       <C>        <C>         <C>         <C>
U.S. Treasury securities and U.S.
 government and agency securities.......  $   62.6     $  1.0      $  0.5    $   63.1
States and political subdivisions.......      13.5        0.1         0.1        13.5
Foreign governments.....................      80.0        2.1         0.1        82.0
Corporate fixed maturities..............   3,206.5       63.2       116.9     3,152.8
Mortgage-backed securities..............     359.0        1.3        11.0       349.3
                                          --------     ------      ------    --------
Total fixed maturities..................  $3,721.6     $ 67.7      $128.6    $3,660.7
                                          ========     ======      ======    ========
Equity securities.......................  $   27.9     $ 24.7      $  1.2    $   51.4
                                          ========     ======      ======    ========
</TABLE>

<TABLE>
<CAPTION>
                                                             1998
                                          -------------------------------------------
                                                       GROSS       GROSS
DECEMBER 31,                              AMORTIZED  UNREALIZED  UNREALIZED    FAIR
(IN MILLIONS)                             COST (1)     GAINS       LOSSES     VALUE
-------------                             ---------  ----------  ----------  --------
<S>                                       <C>        <C>         <C>         <C>
U.S. Treasury securities and U.S.
 government and agency securities.......  $  192.8     $ 12.0      $ 24.5    $  180.3
States and political subdivisions.......   2,408.9       83.0         5.2     2,486.7
Foreign governments.....................     107.9        7.7         4.5       111.1
Corporate fixed maturities..............   4,293.3      167.8        81.9     4,379.2
Mortgage-backed securities..............     517.9       11.5         2.8       526.6
                                          --------     ------      ------    --------
Total fixed maturities..................  $7,520.8     $282.0      $118.9    $7,683.9
                                          ========     ======      ======    ========
Equity securities.......................  $  253.1     $151.1      $  7.1    $  397.1
                                          ========     ======      ======    ========
</TABLE>

(1) Amortized cost for fixed maturities and cost for equity securities.

                                      F-17
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with AFLIAC's voluntary withdrawal of its license in New York,
AFLIAC agreed with the New York Department of Insurance to maintain, through a
custodial account in New York, a security deposit, the market value of which
will at all times equal 102% of all outstanding general account liabilities of
AFLIAC for New York policyholders, claimants and creditors. At December 31,
1999, the amortized cost and market value of these assets on deposit in New York
were $196.4 million and $193.0 million, respectively. At December 31, 1998, the
amortized cost and market value of assets on deposit were $268.5 million and
$284.1 million, respectively. In addition, fixed maturities, excluding those
securities on deposit in New York, with an amortized cost of $18.3 million and
$105.4 million were on deposit with various state and governmental authorities
at December 31, 1999 and 1998, respectively.

There were no contractual fixed maturity investment commitments at December 31,
1999.

The amortized cost and fair value by maturity periods for fixed maturities are
shown below. Actual maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties, or the Company may have the right to put or sell the
obligations back to the issuers. Mortgage backed securities are included in the
category representing their ultimate maturity.

<TABLE>
<CAPTION>
                                                                     1999
                                                              -------------------
DECEMBER 31,                                                  AMORTIZED    FAIR
(IN MILLIONS)                                                   COST      VALUE
-------------                                                 ---------  --------
<S>                                                           <C>        <C>
Due in one year or less.....................................  $  224.4   $  225.7
Due after one year through five years.......................   1,324.0    1,328.4
Due after five years through ten years......................   1,409.1    1,369.9
Due after ten years.........................................     764.1      736.7
                                                              --------   --------
Total.......................................................  $3,721.6   $3,660.7
                                                              ========   ========
</TABLE>

Unrealized gains and losses on available-for-sale and other securities, are
summarized as follows:

<TABLE>
<CAPTION>
                                                                             EQUITY
FOR THE YEARS ENDED DECEMBER 31,                                FIXED      SECURITIES
(IN MILLIONS)                                                 MATURITIES  AND OTHER (1)  TOTAL
-------------                                                 ----------  -------------  ------
<S>                                                           <C>         <C>            <C>
1999
Net appreciation, beginning of year.........................    $ 79.0       $ 90.2      $169.2
                                                                ------       ------      ------
Net (depreciation) appreciation on available-for-sale
 securities.................................................    (254.4)      (122.3)     (376.7)
Net appreciation from the effect on deferred policy
 acquisition costs and on policy liabilities................      78.5       --            78.5
Provision for deferred federal income taxes and minority
 interest...................................................      72.1         64.7       136.8
Distribution of subsidiaries (See Note 3)...................      (5.6)       (17.1)      (22.7)
                                                                ------       ------      ------
                                                                (109.4)       (74.7)     (184.1)
                                                                ------       ------      ------
Net appreciation, end of year...............................    $(30.4)      $ 15.5      $(14.9)
                                                                ======       ======      ======
</TABLE>

                                      F-18
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                             EQUITY
FOR THE YEARS ENDED DECEMBER 31,                                FIXED      SECURITIES
(IN MILLIONS)                                                 MATURITIES  AND OTHER (1)  TOTAL
-------------                                                 ----------  -------------  ------
<S>                                                           <C>         <C>            <C>
1998
Net appreciation, beginning of year.........................    $122.6       $ 86.7      $209.3
                                                                ------       ------      ------
Net (depreciation) appreciation on available-for-sale
 securities.................................................     (99.3)         4.4       (94.9)
Appreciation due to Allmerica P&C purchase of minority in
 interest of Citizens.......................................      10.7         10.7        21.4
Net appreciation from the effect on deferred policy
 acquisition costs and on policy liabilities................       6.3       --             6.3
Provision for deferred federal income taxes and minority
 interest...................................................      38.7        (11.6)       27.1
                                                                ------       ------      ------
                                                                 (43.6)         3.5       (40.1)
                                                                ------       ------      ------
Net appreciation, end of year...............................    $ 79.0       $ 90.2      $169.2
                                                                ======       ======      ======

1997
Net appreciation, beginning of year.........................    $ 71.3       $ 60.1      $131.4
                                                                ------       ------      ------
Net appreciation (depreciation) on available-for-sale
 securities.................................................      83.2         (5.9)       77.3
Appreciation due to AFC purchase of minority interest of
 Allmerica P&C..............................................      50.7         59.6       110.3
Net depreciation from the effect on deferred policy
 acquisition costs and on policy liabilities................     (16.7)      --           (16.7)
Provision for deferred federal income taxes and minority
 interest...................................................     (65.9)       (27.1)      (93.0)
                                                                ------       ------      ------
                                                                  51.3         26.6        77.9
                                                                ------       ------      ------
Net appreciation, end of year...............................    $122.6       $ 86.7      $209.3
                                                                ======       ======      ======
</TABLE>

(1) Includes net (depreciation) appreciation on other investments of $(1.1)
million, $0.8 million, and $1.8 million, in 1999, 1998, and 1997, respectively.

B.  MORTGAGE LOANS AND REAL ESTATE

FAFLIC's mortgage loans are diversified by property type and location. Real
estate investments have been obtained primarily through foreclosure. Mortgage
loans are collateralized by the related properties and generally are no more
than 75% of the property's value at the time the original loan is made.

The carrying values of mortgage loans and real estate investments net of
applicable reserves were $533.6 million and $582.7 million at December 31, 1999
and 1998, respectively. Reserves for mortgage loans were $5.8 million and $11.5
million at December 31, 1999 and 1998, respectively.

During 1997, the Company committed to a plan to dispose of all real estate
assets. At December 31, 1999, there were 2 properties remaining in the Company's
real estate portfolio which are being actively marketed. Depreciation is not
recorded on these assets while they are held for disposal.

There were no non-cash investing activities, including real estate acquired
through foreclosure of mortgage loans, in 1999, 1998 and 1997.

There were no material contractual commitments to extend credit under commercial
mortgage loan agreements at December 31, 1999.

                                      F-19
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Mortgage loans and real estate investments comprised the following property
types and geographic regions:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                  1999    1998
-------------                                                 ------  ------
<S>                                                           <C>     <C>
Property type:
  Office building...........................................  $301.5  $304.4
  Residential...............................................    50.3    52.8
  Retail....................................................    92.2   108.5
  Industrial/warehouse......................................    83.6   110.0
  Other.....................................................    11.8    18.5
  Valuation allowances......................................    (5.8)  (11.5)
                                                              ------  ------
Total.......................................................  $533.6  $582.7
                                                              ======  ======
Geographic region:
  South Atlantic............................................  $132.2  $136.1
  Pacific...................................................   133.6   155.1
  East North Central........................................    62.5    80.5
  Middle Atlantic...........................................    50.3    61.2
  West South Central........................................    90.8    54.7
  New England...............................................    40.7    60.7
  Other.....................................................    29.3    45.9
  Valuation allowances......................................    (5.8)  (11.5)
                                                              ------  ------
Total.......................................................  $533.6  $582.7
                                                              ======  ======
</TABLE>

At December 31, 1999, scheduled mortgage loan maturities were as follows: 2000
-- $108.1 million; 2001 -- $33.9 million; 2002 -- $27.5 million; 2003 -- $40.6
million; 2004 -- $76.4 million; and $234.7 million thereafter. Actual maturities
could differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties and loans may be
refinanced. During 1999, the Company did not refinance any mortgage loans based
on terms which differed from those granted to new borrowers.

C.  INVESTMENT VALUATION ALLOWANCES

Investment valuation allowances which have been deducted in arriving at
investment carrying values as presented in the consolidated balance sheets and
changes thereto are shown below.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,                              BALANCE AT                           BALANCE AT
(IN MILLIONS)                                                 JANUARY 1   PROVISIONS  WRITE-OFFS  DECEMBER 31
-------------                                                 ----------  ----------  ----------  ------------
<S>                                                           <C>         <C>         <C>         <C>
1999
Mortgage loans..............................................    $11.5       $(2.4)      $ 3.3         $ 5.8
                                                                =====       =====       =====         =====
1998
Mortgage loans..............................................    $20.7       $(6.8)      $ 2.4         $11.5
                                                                =====       =====       =====         =====
1997
Mortgage loans..............................................    $19.6       $ 2.5       $ 1.4         $20.7
Real estate.................................................     14.9         6.0        20.9        --
                                                                -----       -----       -----         -----
Total.......................................................    $34.5       $ 8.5       $22.3         $20.7
                                                                =====       =====       =====         =====
</TABLE>

                                      F-20
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Provisions on mortgages during 1999 and 1998 reflect the release of redundant
specific reserves. Write-offs of $20.9 million to the investment valuation
allowance related to real estate in 1997 primarily reflect write downs to the
estimated fair value less costs to sell pursuant to the aforementioned 1997 plan
of disposal.

The carrying value of impaired loans was $18.0 million and $22.0 million, with
related reserves of $0.8 million and $6.0 million as of December 31, 1999 and
1998, respectively. All impaired loans were reserved for as of December 31, 1999
and 1998.

The average carrying value of impaired loans was $21.0 million, $26.1 million
and $30.8 million, with related interest income while such loans were impaired
of $2.1 million, $3.2 million and $3.2 million as of December 31, 1999, 1998 and
1997, respectively.

D.  FUTURES CONTRACTS

The Company purchases long futures contracts and sells short futures contracts
on margin to hedge against interest rate fluctuations associated with the sale
of Guaranteed Investment Contracts ("GICs") and other funding agreements. The
Company is exposed to interest rate risk from the time of sale of the GIC until
the receipt of the deposit and purchase of the underlying asset to back the
liability. The Company only trades futures contracts with nationally recognized
brokers, which the Company believes have adequate capital to ensure that there
is minimal danger of default. The Company does not require collateral or other
securities to support financial instruments with credit risk.

The notional amount of futures contracts outstanding was $37.1 million and $92.7
million at December 31, 1999 and 1998, respectively. The notional amounts of the
contracts represent the extent of the Company's investment but not future cash
requirements, as the Company generally settles open positions prior to maturity.
The maturity of all futures contracts outstanding is less than one year. The
fair value of futures contracts outstanding was $36.8 million and $92.5 million
at December 31, 1999 and 1998, respectively.

Gains and losses on hedge contracts related to interest rate fluctuations are
deferred and recognized in income over the period being hedged corresponding to
related guaranteed investment contracts. If instruments being hedged by futures
contracts are disposed, any unamortized gains or losses on such contracts are
included in the determination of the gain or loss from the disposition. Deferred
hedging losses were $0.9 million and $1.8 million in 1999 and 1998,
respectively. Gains and losses on hedge contracts that are deemed ineffective by
the Company are realized immediately. There was $0.1 million of gains realized
on ineffective hedges in 1998. There were no gains or losses in 1999 and 1997.

A reconciliation of the notional amount of futures contracts is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999       1998      1997
-------------                                                 ---------  ---------  ------
<S>                                                           <C>        <C>        <C>
Contracts outstanding, beginning of year....................  $    92.7  $  --      $(33.0)
New contracts...............................................      947.0    1,117.5    (0.2)
Contracts terminated........................................   (1,002.6)  (1,024.8)   33.2
                                                              ---------  ---------  ------
Contracts outstanding, end of year..........................  $    37.1  $    92.7  $ --
                                                              =========  =========  ======
</TABLE>

E.  FOREIGN CURRENCY SWAP CONTRACTS

The Company enters into foreign currency swap contracts with swap counterparties
to hedge foreign currency exposure on specific fixed income securities.
Additionally, in 1999, the Company entered into a foreign

                                      F-21
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

currency swap contract to hedge foreign currency exposure on specific fixed rate
funding agreements. Interest and principal related to foreign fixed income
securities and liabilities payable in foreign currencies, at current exchange
rates, are exchanged for the equivalent payment in U.S dollars translated at a
specific currency exchange rate. The primary risk associated with these
transactions is the inability of the counterparty to meet its obligation. The
Company regularly assesses the financial strength of its counterparties and
generally enters into forward or swap agreements with counterparties rated "A"
or better by nationally recognized rating agencies. The Company's maximum
exposure to counterparty credit risk is the difference between the foreign
currency exchange rate, as agreed upon in the swap contract, and the foreign
currency spot rate on the date of the exchange, as indicated by the fair value
of the contract. The fair values of the foreign currency swap contracts
outstanding were $(4.7) million and $1.2 million at December 31, 1999 and 1998,
respectively. Changes in the fair value of contracts hedging fixed income
securities are reported as an unrealized gain or loss, consistent with the
underlying hedged security. Changes in fair value of contracts hedging fixed
rate funding agreements are reported as other operating income, consistent with
the underlying hedged liability. The net decrease in other operating income
related to these contracts was $2.6 million in 1999. The Company does not
require collateral or other security to support financial instruments with
credit risk.

The difference between amounts paid and received on foreign currency swap
contracts is reflected in the net investment income related to the underlying
assets and is not material in 1999, 1998 and 1997. Any gain or loss on the
termination of swap contracts is deferred and recognized with any gain or loss
on the hedged transaction. The Company had no deferred gain or loss on foreign
currency swap contracts in 1999 or 1998.

A reconciliation of the notional amount of foreign currency swap contracts is as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999   1998    1997
-------------                                                 ------  -----  ------
<S>                                                           <C>     <C>    <C>
Contracts outstanding, beginning of year....................  $ 42.6  $42.6  $ 47.6
New contracts...............................................    52.9   --       5.0
Contracts expired...........................................   (24.0)  --     (10.0)
                                                              ------  -----  ------
Contracts outstanding, end of year..........................  $ 71.5  $42.6  $ 42.6
                                                              ======  =====  ======
</TABLE>

Expected maturities of foreign currency swap contracts outstanding at
December 31, 1999 are $8.3 million in 2000, $52.9 million in 2001 and $10.3
million thereafter. There are no expected maturities of such foreign currency
swap contracts in 2002, 2003 and 2004.

F.  INTEREST RATE SWAP CONTRACTS

The Company enters into interest rate swap contracts to hedge exposure to
interest rate fluctuations. Specifically, for floating rate GIC liabilities that
are matched with fixed rate securities, the Company manages the interest rate
risk by hedging with interest rate swap contracts. Under these swap contracts,
the Company agrees to exchange, at specified intervals, the difference between
fixed and floating interest amounts calculated on an agreed-upon notional
principal amount. As with foreign currency swap contracts, the primary risk
associated with these transactions is the inability of the counterparty to meet
its obligation. The Company regularly assesses the financial strength of its
counterparties and generally enters into forward or swap agreements with
counterparties rated "A" or better by nationally recognized rating agencies.
Because the underlying principal of swap contracts is not exchanged, the
Company's maximum exposure to counterparty credit risk is the difference in
payments exchanged, which at December 31, 1999 and 1998 were net payables of
$4.2 million and $3.9 million, respectively. The Company does not require
collateral or other security to support financial instruments with credit risk.

                                      F-22
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The net amount receivable or payable is recognized over the life of the swap
contract as an adjustment to net investment income. The decrease in net
investment income related to interest rate swap contracts was $7.0 million, $2.8
million and $0.4 million for the years ended December 31, 1999, 1998 and 1997,
respectively. The fair value of interest rate swap contracts outstanding was
$33.1 million and $(28.3) million at December 31, 1999 and 1998, respectively.
Changes in the fair value of contracts are reported as an unrealized gain or
loss, consistent with the underlying hedged security. Any gain or loss on the
termination of interest rate swap contracts accounted for as hedges are deferred
and recognized with the gain or loss on the hedged transaction. The Company had
no deferred gain or loss on interest rate swap contracts in 1999 or 1998.

A reconciliation of the notional amount of interest rate swap contracts is as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999      1998     1997
-------------                                                 --------  --------  ------
<S>                                                           <C>       <C>       <C>
Contracts outstanding, beginning of year....................  $1,112.6  $  244.1  $  5.0
New contracts...............................................     905.4     873.5   244.7
Contracts terminated........................................    (888.5)    --       --
Contracts expired...........................................     (80.0)     (5.0)   (5.6)
Distribution of subsidiaries (Note 3).......................     (23.6)    --       --
                                                              --------  --------  ------
Contracts outstanding, end of year..........................  $1,025.9  $1,112.6  $244.1
                                                              ========  ========  ======
</TABLE>

Expected maturities of interest rate swap contracts outstanding at December 31,
1999 are $44.0 million in 2000, $43.1 million in 2001, $83.5 million in 2002,
$536.0 million in 2003, and $319.3 million in 2004. There are no expected
maturities of such interest rate swap contracts thereafter.

G.  OTHER SWAP CONTRACTS

The Company enters into insurance portfolio-linked and credit default swap
contracts for investment purposes. Under the insurance portfolio-linked swap
contracts, the Company agrees to exchange cash flows according to the
performance of a specified underwriter's portfolio of insurance business. As
with interest rate swap contracts, the primary risk associated with insurance
portfolio-linked swap contracts is the inability of the counterparty to meet its
obligation. Under the terms of the credit default swap contracts, the Company
assumes the default risk of a specific high credit quality issuer in exchange
for a stated annual premium. In the case of default, the Company will pay the
counterparty par value for a pre-determined security of the issuer. The primary
risk associated with these transactions is the default risk of the underlying
companies. The Company regularly assesses the financial strength of its
counterparties and the underlying companies in default swap contracts, and
generally enters into forward or swap agreements with counterparties rated "A"
or better by nationally recognized rating agencies. Because the underlying
principal of swap contracts is not exchanged, the Company's maximum exposure to
counterparty credit risk is the difference in payments exchanged, which at
December 31, 1999, was not material to the Company. The Company does not require
collateral or other security to support financial instruments with credit risk.

The swap contracts are marked to market with any gain or loss recognized
currently. The fair values of swap contracts outstanding were $(0.3) million and
$(0.1) million at December 31, 1999 and 1998, respectively. The net amount
receivable or payable under insurance portfolio-linked swap contracts is
recognized when the contracts are marked to market. The net (decrease) increase
in realized investment gains related to these contracts was $(0.2) million, $1.0
million and $(1.4) million for the years ended December 31, 1999, 1998 and 1997,
respectively.

                                      F-23
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The stated annual premium under credit default swap contracts is recognized
currently in net investment income. The net increase to investment income
related to credit default swap contracts was $0.4 million and $0.2 million for
the years ended December 31, 1999 and 1998, respectively. There was no net
investment income recognized in 1997.

A reconciliation of the notional amount of other swap contracts is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999     1998    1997
-------------                                                 -------  ------  -------
<S>                                                           <C>      <C>     <C>
Contracts outstanding, beginning of year....................  $ 255.0  $ 15.0  $  58.6
New contracts...............................................     50.0   266.3    192.1
Contracts expired...........................................   (115.0)  (26.3)  (211.6)
Contracts terminated........................................    --       --      (24.1)
                                                              -------  ------  -------
Contracts outstanding, end of year..........................  $ 190.0  $255.0  $  15.0
                                                              =======  ======  =======
</TABLE>

Expected maturities of other swap contracts outstanding at December 31, 1999 are
as follows: $140.0 million in 2000 and $50.0 million in 2001. There are no
expected maturities of such other swap contracts in 2002, 2003, 2004 and
thereafter.

H.  OTHER

At December 31, 1999 and 1998, FAFLIC had no concentration of investments in a
single investee exceeding 10% of shareholder's equity.

7.  INVESTMENT INCOME AND GAINS AND LOSSES

A.  NET INVESTMENT INCOME

The components of net investment income were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999    1998    1997
-------------                                                 ------  ------  ------
<S>                                                           <C>     <C>     <C>
Fixed maturities............................................  $415.7  $509.6  $523.3
Mortgage loans..............................................    45.5    57.6    57.1
Equity securities...........................................     1.7     7.2    10.5
Policy loans................................................    12.7    11.9    10.9
Real estate and other long-term investments.................    14.4     7.0    31.5
Short-term investments......................................    26.6    15.6     9.9
                                                              ------  ------  ------
Gross investment income.....................................   516.6   608.9   643.2
Less investment expenses....................................   (13.5)  (15.0)  (23.7)
                                                              ------  ------  ------
Net investment income.......................................  $503.1  $593.9  $619.5
                                                              ======  ======  ======
</TABLE>

At December 31, 1999, the company had fixed maturities with a carrying value of
$1.0 million on non-accrual status. There were no mortgage loans on non-accrual
status at December 31, 1999. At December 31, 1998, there was one mortgage loan
on non-accrual status which had an outstanding principal balance of $4.3
million. This loan was restructured and fully impaired. There were no fixed
maturities on non-accrual status at December 31, 1998. The effect of
non-accruals, compared with amounts that would have been recognized in

                                      F-24
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accordance with the original terms of the investments, was a reduction in net
income by $1.4 million in 1999, and had no impact in 1998 and 1997.

The payment terms of mortgage loans may from time to time be restructured or
modified. The investment in restructured mortgage loans, based on amortized
cost, amounted to $18.8 million, $28.7 million and $40.3 million at
December 31, 1999, 1998 and 1997, respectively. Interest income on restructured
mortgage loans that would have been recorded in accordance with the original
terms of such loans amounted to $2.5 million, $3.3 million and $3.9 million in
1999, 1998 and 1997, respectively. Actual interest income on these loans
included in net investment income aggregated $1.8 million, $3.3 million and $4.2
million in 1999, 1998 and 1997, respectively.

There were no mortgage loans which were non-income producing for the year ended
December 31, 1999. There were, however, fixed maturities with a carrying value
of $0.3 million which were non-income producing for the year ended December 31,
1999.

Included in other long-term investments is income from limited partnerships of
$6.6 million in 1999, losses of $6.3 million in 1998, and income of $7.6 million
in 1997.

B.  NET REALIZED INVESTMENT GAINS AND LOSSES

Realized gains (losses) on investments were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999    1998   1997
-------------                                                 ------  ------  -----
<S>                                                           <C>     <C>     <C>
Fixed maturities............................................  $(52.0) $(11.6) $14.2
Mortgage loans..............................................     2.5     8.8   (1.2)
Equity securities...........................................   141.3    63.7   53.5
Real estate and other.......................................     8.5    --      9.8
                                                              ------  ------  -----
Net realized investment gains...............................  $100.3  $ 60.9  $76.3
                                                              ======  ======  =====
</TABLE>

The proceeds from voluntary sales of available-for-sale securities and the gross
realized gains and gross realized losses on those sales were as follows:

<TABLE>
<CAPTION>
                                                              PROCEEDS FROM
FOR THE YEARS ENDED DECEMBER 31,                                VOLUNTARY    GROSS   GROSS
(IN MILLIONS)                                                     SALES      GAINS   LOSSES
-------------                                                 -------------  ------  ------
<S>                                                           <C>            <C>     <C>
1999
Fixed maturities............................................    $1,480.5     $  9.2  $ 27.1
Equity securities...........................................       421.2      149.0     7.6

1998
Fixed maturities............................................    $  979.2     $ 17.9  $ 11.3
Equity securities...........................................       258.7       72.8     9.0

1997
Fixed maturities............................................    $1,870.7     $ 27.0  $ 15.9
Equity securities...........................................       144.9       55.5     1.2
</TABLE>

                                      F-25
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

C.  OTHER COMPREHENSIVE (LOSS) INCOME RECONCILIATION

The following table provides a reconciliation of gross unrealized (losses) gains
to the net balance shown in the Consolidated Statements of Comprehensive (Loss)
Income:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999      1998     1997
-------------                                                 --------  --------  ------
<S>                                                           <C>       <C>       <C>
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains arising during period,
 (includes $22.7 resulting from the distribution of
 subsidiaries in 1999, net of taxes (benefit) and minority
 interest of $(103.3) million, $(20.8) million and $123.7
 million in 1999, 1998 and 1997, respectively)..............  $ (121.9) $   (6.8) $115.5
Less: reclassification adjustment for (losses) gains
 included in net income (net of taxes and minority interest
 of $33.5 million, $21.5 million and $30.7 million in 1999,
 1998 and 1997, respectively)...............................     (62.2)     33.3    37.6
                                                              --------  --------  ------
Other comprehensive (loss) income...........................  $ (184.1) $  (40.1) $ 77.9
                                                              ========  ========  ======
</TABLE>

8.  FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS

Statement No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about certain financial
instruments (insurance contracts, real estate, goodwill and taxes are excluded)
for which it is practicable to estimate such values, whether or not these
instruments are included in the balance sheet. The fair values presented for
certain financial instruments are estimates which, in many cases may differ
significantly from the amounts which could be realized upon immediate
liquidation. In cases where market prices are not available, estimates of fair
value are based on discounted cash flow analyses which utilize current interest
rates for similar financial instruments which have comparable terms and credit
quality. Included in the fair value of fixed maturities are swap contracts used
to hedge fixed maturities with a fair value of $31.1 million and $(27.1) million
at December 31, 1999 and 1998, respectively. In addition, the Company held
futures contracts with a carrying value of $(0.9) million and $(1.8) million at
December 31, 1999 and 1998, respectively. The fair value of these contracts was
$36.8 million and $92.5 million at December 31, 1999 and 1998, respectively.

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:

CASH AND CASH EQUIVALENTS

For these short-term investments, the carrying amount approximates fair value.

FIXED MATURITIES

Fair values are based on quoted market prices, if available. If a quoted market
price is not available, fair values are estimated using independent pricing
sources or internally developed pricing models using discounted cash flow
analyses.

                                      F-26
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY SECURITIES

Fair values are based on quoted market prices, if available. If a quoted market
price is not available, fair values are estimated using independent pricing
sources or internally developed pricing models.

MORTGAGE LOANS

Fair values are estimated by discounting the future contractual cash flows using
the current rates at which similar loans would be made to borrowers with similar
credit ratings. The fair value of below investment grade mortgage loans is
limited to the lesser of the present value of the cash flows or book value.

POLICY LOANS

The carrying amount reported in the consolidated balance sheets approximates
fair value since policy loans have no defined maturity dates and are inseparable
from the insurance contracts.

INVESTMENT CONTRACTS (WITHOUT MORTALITY FEATURES)

Fair values for the Company's liabilities under guaranteed investment type
contracts are estimated using discounted cash flow calculations using current
interest rates for similar contracts with maturities consistent with those
remaining for the contracts being valued. Liabilities under individual fixed
annuity contracts are estimated based on current surrender values, supplemental
contracts without life contingencies reflect current fund balances, and other
individual contract funds represent the present value of future policy benefits.
All other liabilities are based on surrender values.

TRUST INSTRUMENTS SUPPORTED BY FUNDING OBLIGATIONS

Fair values are estimated using discounted cash flow calculations using current
interest rates for similar contracts with maturities consistent with those
remaining for the contracts being valued.

DEBT

The carrying value of short-term debt reported in the balance sheet approximates
fair value.

                                      F-27
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated fair values of the financial instruments were as follows:

<TABLE>
<CAPTION>
                                                                     1999                1998
                                                              ------------------  ------------------
DECEMBER 31,                                                  CARRYING    FAIR    CARRYING    FAIR
(IN MILLIONS)                                                  VALUE     VALUE     VALUE     VALUE
-------------                                                 --------  --------  --------  --------
<S>                                                           <C>       <C>       <C>       <C>
FINANCIAL ASSETS
  Cash and cash equivalents.................................  $  279.3  $  279.3  $  504.0  $  504.0
  Fixed maturities..........................................   3,660.7   3,660.7   7,683.9   7,683.9
  Equity securities.........................................      51.4      51.4     397.1     397.1
  Mortgage loans............................................     521.2     521.9     562.3     587.1
  Policy loans..............................................     170.5     170.5     154.3     154.3
                                                              --------  --------  --------  --------
                                                              $4,683.1  $4,683.8  $9,301.6  $9,326.4
                                                              ========  ========  ========  ========
FINANCIAL LIABILITIES
  Guaranteed investment contracts...........................  $1,316.0  $1,341.4  $1,791.8  $1,830.8
  Supplemental contracts without life contingencies.........      48.8      48.8      37.3      37.3
  Dividend accumulations....................................      88.1      88.1      88.4      88.4
  Other individual contract deposit funds...................      48.4      48.2      61.6      61.1
  Other group contract deposit funds........................     602.9     583.5     700.4     704.0
  Individual fixed annuity contracts........................   1,092.5   1,057.1   1,110.6   1,073.6
  Trust instruments supported by funding obligations........      50.6      49.6     --        --
  Short-term debt...........................................     --        --        221.3     221.3
                                                              --------  --------  --------  --------
                                                              $3,247.3  $3,216.7  $4,011.4  $4,016.5
                                                              ========  ========  ========  ========
</TABLE>

                                      F-28
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.  CLOSED BLOCK

Included in other income in the Consolidated Statements of Income in 1999, 1998
and 1997 is a net pre-tax contribution from the Closed Block of $13.8 million,
$10.4 million and $9.1 million, respectively. Summarized financial information
of the Closed Block as of December 31, 1999 and 1998 and for the periods ended
December 31, 1999, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                  1999    1998
-------------                                                 ------  ------
<S>                                                           <C>     <C>
Assets
  Fixed maturities, at fair value (amortized cost of $387.4
    and $399.1
    respectively)...........................................  $372.9  $414.2
  Mortgage loans............................................   136.3   136.0
  Policy loans..............................................   201.1   210.9
  Cash and cash equivalents.................................    22.6     9.4
  Accrued investment income.................................    14.0    14.1
  Deferred policy acquisition costs.........................    13.1    15.6
  Other assets..............................................    12.3     2.9
                                                              ------  ------
Total assets................................................  $772.3  $803.1
                                                              ======  ======
Liabilities
  Policy liabilities and accruals...........................  $835.2  $862.9
  Other liabilities.........................................     6.9     9.1
                                                              ------  ------
Total liabilities...........................................  $842.1  $872.0
                                                              ======  ======
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999    1998    1997
-------------                                                 ------  ------  ------
<S>                                                           <C>     <C>     <C>
Revenues
  Premiums and other income.................................  $ 52.1  $ 55.4  $ 58.3
  Net investment income.....................................    53.8    53.3    53.4
  Realized investment (loss) gain...........................    (0.6)    0.1     1.3
                                                              ------  ------  ------
Total revenues..............................................   105.3   108.8   113.0
                                                              ------  ------  ------
Benefits and expenses
  Policy benefits...........................................    88.9    95.0   100.5
  Policy acquisition expenses...............................     2.5     2.7     3.0
  Other operating expenses..................................     0.1     0.7     0.4
                                                              ------  ------  ------
Total benefits and expenses.................................    91.5    98.4   103.9
                                                              ------  ------  ------
Contribution from the Closed Block..........................  $ 13.8  $ 10.4  $  9.1
                                                              ======  ======  ======
</TABLE>

                                      F-29
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999     1998     1997
-------------                                                 -------  -------  -------
<S>                                                           <C>      <C>      <C>
Cash flows
  Cash flows from operating activities:
  Contribution from the Closed Block........................  $  13.8  $  10.4  $   9.1
  Change in:
    Deferred policy acquisition costs, net..................      2.5      2.6      2.9
    Premiums and other receivables..........................    --         0.3    --
    Policy liabilities and accruals.........................    (13.1)   (13.5)   (11.6)
    Accrued investment income...............................      0.1        -      0.2
    Deferred taxes..........................................    --         0.1     (5.1)
    Other assets............................................     (8.3)     2.4     (2.9)
    Expenses and taxes payable..............................     (2.9)    (2.9)    (2.0)
    Other, net..............................................      0.8     (0.1)    (1.2)
                                                              -------  -------  -------
  Net cash used in operating activities.....................     (7.1)    (0.7)   (10.6)
  Cash flows from investing activities:
    Sales, maturities and repayments of investments.........    139.0     83.6    161.6
    Purchases of investments................................   (128.5)  (106.5)  (161.4)
    Other, net..............................................      9.8      7.9     11.4
                                                              -------  -------  -------
  Net cash provided by (used in) investing activities.......     20.3    (15.0)    11.6
                                                              -------  -------  -------
Net increase (decrease) in cash and cash equivalents........     13.2    (15.7)     1.0
Cash and cash equivalents, beginning of year................      9.4     25.1     24.1
                                                              -------  -------  -------
Cash and cash equivalents, end of year......................  $  22.6  $   9.4  $  25.1
                                                              =======  =======  =======
</TABLE>

There were no valuation allowances on mortgage loans in the Closed Block at
December 31, 1999, 1998 or 1997, respectively.

Many expenses related to Closed Block operations are charged to operations
outside the Closed Block; accordingly, the contribution from the Closed Block
does not represent the actual profitability of the Closed Block operations.
Operating costs and expenses outside of the Closed Block are, therefore,
disproportionate to the business outside the Closed Block.

10.  DEBT

Short-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                  1999    1998
-------------                                                 ------  ------
<S>                                                           <C>     <C>
Short-term
  Commercial paper..........................................  $ --    $ 41.3
  Borrowings under bank credit facility.....................    --     150.0
  Repurchase agreements.....................................    --      30.0
                                                              ------  ------
Total short-term debt.......................................  $ --    $221.3
                                                              ======  ======
</TABLE>

                                      F-30
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAFLIC issues commercial paper primarily to manage imbalances between operating
cash flows and existing commitments. Commercial paper borrowing arrangements are
supported by a credit agreement. At December 31, 1999, there was no commercial
paper outstanding.

Effective December 4, 1998, the Company entered into a credit agreement that
expired on February 5, 1999. Borrowings under this agreement were unsecured and
incurred interest at a rate per annum equal to the eurodollar rate plus
applicable margin. Borrowings outstanding under this credit facility at
December 31, 1998 were $150.0 million. These borrowings were repaid in February
1999.

The company utilizes repurchase agreements to finance certain transactions and
had approximately $30 million in such agreements outstanding at December
31,1998. There were no repurchase agreements outstanding at December 31, 1999.

In 1999, there was no interest expense related to borrowings under the credit
agreement. Interest expense related to borrowings under the credit agreement was
approximately $0.7 million and $2.8 million in 1998 and 1997, respectively. All
interest expense is recorded in other operating expenses.

In October, 1995, AFC issued Senior Debentures with a face value of $200.0
million, pay interest at a rate of 7 5/8%, and mature on October 16, 2025. The
primary source of cash for repayment of the debt by AFC is dividends from FAFLIC
and Allmerica P&C.

11.  FEDERAL INCOME TAXES

Provisions for federal income taxes have been calculated in accordance with the
provisions of SFAS No. 109. A summary of the federal income tax expense
(benefit) on continuing operations in the consolidated statements of income is
shown below:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                  1999    1998    1997
-------------                                                 ------  ------  ------
<S>                                                           <C>     <C>     <C>
Federal income tax expense (benefit)
  Current...................................................  $88.7   $ 74.6  $74.4
  Deferred..................................................    4.3    (15.4)  14.2
                                                              -----   ------  -----
Total.......................................................  $93.0   $ 59.2  $88.6
                                                              =====   ======  =====
</TABLE>

The federal income taxes attributable to the consolidated results of continuing
operations are different from the amounts determined by multiplying income
before federal income taxes by the statutory federal income tax rate. The
sources of the difference and the tax effects of each were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999     1998    1997
-------------                                                 --------  ------  ------
<S>                                                           <C>       <C>     <C>
Expected federal income tax expense on continuing
  operations................................................   $133.9   $107.9  $122.9
  Tax-exempt interest.......................................    (24.2)   (38.9)  (37.9)
  Dividend received deduction...............................    --        (5.1)   (3.2)
  Changes in tax reserve estimates..........................     (8.7)     2.3     7.8
  Tax credits...............................................     (8.5)    (8.5)   (2.7)
  Other, net................................................      0.5      1.5     1.7
                                                               ------   ------  ------
Federal income tax expense on continuing operations.........   $ 93.0   $ 59.2  $ 88.6
                                                               ======   ======  ======
</TABLE>

                                      F-31
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The deferred income tax (asset) liability represents the tax effects of
temporary differences attributable to the Company's consolidated federal tax
return group. Its components were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                   1999       1998
-------------                                                 --------   --------
<S>                                                           <C>        <C>
Deferred tax (assets) liabilities
  AMT carryforwards.........................................  $ --       $ (16.8)
  Loss reserve discounting..................................   (283.5)    (406.6)
  Deferred acquisition costs................................    355.7      345.8
  Employee benefit plans....................................    (52.0)     (45.3)
  Investments, net..........................................    (19.5)     121.7
  Bad debt reserve..........................................    --          (1.8)
  Litigation reserve........................................     (6.0)     (10.9)
  Discontinued operations...................................    (11.7)     --
  Other, net................................................     (1.1)      (5.5)
                                                              -------    -------
Deferred tax asset, net.....................................  $ (18.1)   $ (19.4)
                                                              =======    =======
</TABLE>

Gross deferred income tax assets totaled $515.8 million and $486.9 millions at
December 31, 1999 and 1998, respectively. Gross deferred income tax liabilities
totaled $497.7 million and $467.5 million at December 31, 1999 and 1998,
respectively.

The Company believes, based on the its recent earnings history and its future
expectations, that the Company's taxable income in future years will be
sufficient to realize all deferred tax assets. In determining the adequacy of
future income, the Company considered the future reversal of its existing
temporary differences and available tax planning strategies that could be
implemented, if necessary. At December 31, 1999 there are no available
alternative minimum tax credit carryforwards.

The Company's federal income tax returns are routinely audited by the Internal
Revenue Services ("IRS"), and provisions are routinely made in the financial
statements in anticipation of the results of these audits. The IRS has examined
the FAFLIC/AFLIAC consolidated group's federal income tax returns through 1994.
The IRS has also examined the former Allmerica P&C consolidated group's federal
income tax returns through 1994. The Company has appealed certain adjustments
proposed by the IRS with respect to the federal income tax returns for 1992,
1993 and 1994 for the FAFLIC/AFLIAC consolidated group. Also, certain
adjustments proposed by the IRS with respect to FAFLIC/AFLIAC's federal income
tax returns for 1982 and 1983 remain unresolved. If upheld, these adjustments
would result in additional payments; however, the Company will vigorously defend
its position with respect to these adjustments. In the Company's opinion,
adequate tax liabilities have been established for all years. However, the
amount of these tax liabilities could be revised in the near term if estimates
of the Company's ultimate liability are revised.

12.  PENSION PLANS

FAFLIC, as the common employer for all AFC Companies ("affiliated Companies"),
provides multiple benefit plans to employees and agents of these affiliated
Companies, including retirement plans. The salaries of employees and agents
covered by these plans and the expenses of these plans are charged to the
affiliated Companies in accordance with an intercompany cost sharing agreement.

                                      F-32
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAFLIC provides retirement benefits to substantially all of its employees under
a defined benefit pension plan. This plan is based on a defined benefit cash
balance formula, whereby the Company annually provides an allocation to each
eligible employee based on a percentage of that employee's salary, similar to a
defined contribution plan arrangement. The 1999, 1998 and 1997 allocations were
based on 7.0% of each eligible employee's salary. In addition to the cash
balance allocation, certain transition group employees, who have met specified
age and service requirements as of December 31, 1994, are eligible for a
grandfathered benefit based primarily on the employees' years of service and
compensation during their highest five consecutive plan years of employment. The
Company's policy for the plans is to fund at least the minimum amount required
by the Employee Retirement Income Security Act of 1974.

Components of net periodic pension cost were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Service cost -- benefits earned during the year.............  $  19.3    $  19.0    $  19.9
Interest cost...............................................     26.5       25.5       23.5
Expected return on plan assets..............................    (38.9)     (34.9)     (31.2)
Recognized net actuarial loss...............................      0.4        0.4        0.1
Amortization of transition asset............................     (1.4)      (1.8)      (1.9)
Amortization of prior service cost..........................     (2.2)      (1.7)      (2.0)
                                                              -------    -------    -------
  Net periodic pension cost.................................  $   3.7    $   6.5    $   8.4
                                                              =======    =======    =======
</TABLE>

In 1999, subsequent to the AFC corporate reorganization, approximately $1.7
million of the net periodic pension cost was allocated to the distributed
subsidiaries.

The following table summarizes the status of the plan. At December 31, 1999 and
1998 the plans' assets exceeded their projected benefit obligations.

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                   1999       1998
-------------                                                 --------   --------
<S>                                                           <C>        <C>
Change in benefit obligations:
  Projected benefit obligation at beginning of year.........  $ 414.2    $ 370.4
  Service cost -- benefits earned during the year...........     19.3       19.0
  Interest cost.............................................     26.5       25.5
  Actuarial (gains) losses..................................    (44.4)      20.4
  Benefits paid.............................................    (22.9)     (21.1)
                                                              -------    -------
    Projected benefit obligation at end of year.............    392.7      414.2
                                                              -------    -------
</TABLE>

                                      F-33
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                   1999       1998
-------------                                                 --------   --------
<S>                                                           <C>        <C>
Change in plan assets:
  Fair value of plan assets at beginning of year............    441.6      395.5
  Actual return on plan assets..............................     51.9       67.2
  Benefits paid.............................................    (22.9)     (21.1)
    Fair value of plan assets at end of year................    470.6      441.6
  Funded status of the plan.................................     77.9       27.4
  Unrecognized transition obligation........................    (21.6)     (23.9)
  Unamortized prior service cost............................    (12.0)     (11.0)
  Unrecognized net actuarial gains..........................   (101.6)     (54.9)
                                                              -------    -------
    Net pension liability...................................  $ (57.3)   $ (62.4)
                                                              =======    =======
</TABLE>

As a result of AFC's merger with Allmerica P&C in 1997, certain pension
liabilities were reduced to reflect their fair value as of the merger date.
These pension liabilities were reduced by $8.9 million and $10.3 million in 1999
and 1998, respectively, which reflects fair value, net of applicable
amortization.

Determination of the projected benefit obligations was based on a weighted
average discount rate of 7.75% and 6.5% in 1999 and 1998, respectively, and the
assumed long-term rate of return on plan assets was 9.0% in both 1999 and 1998.
The actuarial present value of the projected benefit obligations was determined
using assumed rates of increase in future compensation levels ranging from 5.0%
to 5.5%. Plan assets are invested primarily in various separate accounts and the
general account of FAFLIC. Plan assets also include 796,462 shares and 973,262
shares of AFC Common Stock at December 31, 1999 and 1998, respectively, with a
market value of $44.3 million and $56.3 million at December 31, 1999 and 1998,
respectively.

The Company has a defined contribution 401(k) plan for its employees, whereby
the Company matches employee elective 401(k) contributions, up to a maximum
percentage determined annually by the Board of Directors. During 1999, 1998 and
1997, the Company matched 50% of employees' contributions up to 6.0% of eligible
compensation. The total expense related to this plan was $5.9 million, $5.6
million and $3.3 million in 1999, 1998 and 1997, respectively. In 1999,
subsequent to the AFC corporate reorganization, approximately $1.4 million of
the 401(k) expense was allocated to the distributed subsidiaries. In addition to
this plan, the Company has a defined contribution plan for substantially all of
its agents. The plan expense in 1999, 1998 and 1997 was $3.1 million, $3.0
million and $2.8 million, respectively.

On January 1, 1998, substantially all of the defined benefit and defined
contribution 401(k) plans previously provided by the affiliated Companies were
merged with the existing benefit plans of FAFLIC. The merger of benefit plans
resulted in a $5.9 million change of interest adjustment to additional paid-in
capital during 1998. The change of interest adjustment arose from FAFLIC's
forgiveness of certain Allmerica P&C benefit plan liabilities attributable to
Allmerica P&C's minority interest.

13.  OTHER POSTRETIREMENT BENEFIT PLANS

FAFLIC, as the common employer for all AFC Companies ("affiliated Companies"),
provides multiple postretirement medical and death benefit plans to employees,
agents and retirees of these affiliated Companies. The costs of these plans are
charged to the affiliated Companies in accordance with an intercompany cost
sharing agreement.

                                      F-34
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Generally, employees become eligible at age 55 with at least 15 years of
service. Spousal coverage is generally provided for up to two years after death
of the retiree. Benefits include hospital, major medical, and a payment at death
equal to retirees' final compensation up to certain limits. Effective
January 1, 1996, the Company revised these benefits so as to establish limits on
future benefit payments and to restrict eligibility to current employees. The
medical plans have varying copayments and deductibles, depending on the plan.
These plans are unfunded.

The plans' funded status reconciled with amounts recognized in the Company's
Consolidated Balance Sheets were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                                   1999       1998
-------------                                                 --------   --------
<S>                                                           <C>        <C>
Change in benefit obligation:
Accumulated postretirement benefit obligation at beginning
  of year...................................................  $  84.0    $  71.8
Service cost................................................      2.9        3.1
Interest cost...............................................      4.6        5.1
Actuarial (gains) losses....................................    (21.2)       7.6
Benefits paid...............................................     (3.5)      (3.6)
                                                              -------    -------
  Accumulated postretirement benefit obligation at end of
    year....................................................     66.8       84.0
                                                              -------    -------
Fair value of plan assets at end of year....................    --         --
                                                              -------    -------
Funded status of the plan...................................    (66.8)     (84.0)
Unamortized prior service cost..............................     (9.8)     (12.9)
Unrecognized net actuarial (gains) losses...................    (13.8)       7.5
                                                              -------    -------
  Accumulated postretirement benefit costs..................  $ (90.4)   $ (89.4)
                                                              =======    =======
</TABLE>

The components of net periodic postretirement benefit expense were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Service cost................................................   $  2.9     $  3.1     $  3.0
Interest cost...............................................      4.6        5.1        4.6
Recognized net actuarial loss (gain)........................      0.1        0.1       (0.1)
Amortization of prior service cost..........................     (2.3)      (2.4)      (2.7)
                                                               ------     ------     ------
Net periodic postretirement benefit cost....................   $  5.3     $  5.9     $  4.8
                                                               ======     ======     ======
</TABLE>

In 1999, subsequent to the AFC corporate reorganization, approximately $1.1
million of the net periodic postretirement cost was allocated to the distributed
subsidiaries.

As a result of AFC's merger with Allmerica P&C in 1997, certain postretirement
liabilities were reduced to reflect their fair value as of the merger date.
These postretirement liabilities were reduced by $4.6 million and $5.4 million
in 1999 and 1998, respectively, which reflects fair value, net of applicable
amortization.

For purposes of measuring the accumulated postretirement benefit obligation at
December 31, 1999, health care costs were assumed to increase 6.0% in 2000,
declining thereafter until the ultimate rate of 5.5% is reached in 2001 and
remains at that level thereafter. The health care cost trend rate assumption has
a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by

                                      F-35
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

one percentage point in each year would increase the accumulated postretirement
benefit obligation at December 31, 1999 by $4.1 million, and the aggregate of
the service and interest cost components of net periodic postretirement benefit
expense for 1999 by $0.6 million. Conversely, decreasing the assumed health care
cost trend rates by one percentage point in each year would decrease the
accumulated postretirement benefit obligation at December 31, 1999 by $3.6
million, and the aggregate of the service and interest cost components of net
periodic postretirement benefit expense for 1999 by $0.5 million.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75% and 6.5% at December 31, 1999 and
1998, respectively. In addition, the actuarial present value of the accumulated
postretirement benefit obligation was determined using an assumed rate of
increase in future compensation levels of 5.5% for FAFLIC agents.

On January 1, 1998, substantially all of the postretirement medical and death
benefits plans previously provided by the affiliated Companies were merged with
the existing benefit plans of FAFLIC. The merger of benefit plans resulted in a
$3.8 million change of interest adjustment to additional paid-in capital during
1998. The change of interest adjustment arose from FAFLIC's forgiveness of
certain Allmerica P&C benefit plan liabilities attributable to Allmerica P&C's
minority interest.

14.  DIVIDEND RESTRICTIONS

Massachusetts and Delaware have enacted laws governing the payment of dividends
to stockholders by insurers. These laws affect the dividend paying ability of
FAFLIC and AFLIAC, respectively.

Massachusetts' statute limits the dividends an insurer may pay in any twelve
month period, without the prior permission of the Commonwealth of Massachusetts
Insurance Commissioner, to the greater of (i) 10% of its statutory policyholder
surplus as of the preceding December 31 or (ii) the individual company's
statutory net gain from operations for the preceding calendar year (if such
insurer is a life company), or its net income for the preceding calendar year
(if such insurer is not a life company). In addition, under Massachusetts law,
no domestic insurer shall pay a dividend or make any distribution to its
shareholders from other than unassigned funds unless the Commissioner shall have
approved such dividend or distribution. During 1999 and 1997, no dividends were
declared by FAFLIC to AFC. During 1998, FAFLIC paid dividends of $50.0 million
to AFC. As of July 1, 1999, FAFLIC's ownership of Allmerica P&C, as well as
several non-insurance subsidiaries, was transferred from FAFLIC to AFC. Under an
agreement with the Commissioner, any dividend from FAFLIC to AFC for years 2000
and 2001 would require the prior approval of the Commissioner and may require
AFC to make additional capital contributions to FAFLIC.

Pursuant to Delaware's statute, the maximum amount of dividends and other
distributions that an insurer may pay in any twelve month period, without the
prior approval of the Delaware Commissioner of Insurance, is limited to the
greater of (i) 10% of its policyholders' surplus as of the preceding
December 31 or (ii) the individual company's statutory net gain from operations
for the preceding calendar year (if such insurer is a life company) or its net
income (not including realized capital gains) for the preceding calendar year
(if such insurer is not a life company). Any dividends to be paid by an insurer,
whether or not in excess of the aforementioned threshold, from a source other
than statutory earned surplus would also require the prior approval of the
Delaware Commissioner of Insurance. No dividends were declared by AFLIAC to
FAFLIC during 1999, 1998 or 1997. During 2000, AFLIAC could pay dividends of
$34.3 million to FAFLIC without prior approval.

                                      F-36
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.  SEGMENT INFORMATION

The Company offers Asset Accumulation financial products and services. Prior to
the AFC corporate reorganization, the Company offered financial products and
services in two major areas: Risk Management and Asset Accumulation. Within
these broad areas, the Company conducted business principally in three operating
segments. These segments were Risk Management, Allmerica Financial Services and
Allmerica Asset Management. In accordance with Statement No. 131, the separate
financial information of each segment is presented consistent with the way
results are regularly evaluated by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. A summary of
the Company's reportable segments is included below.

In 1999, the Company reorganized its Property and Casualty business and
Corporate Risk Management Services operations within the Risk Management
segment. Under the new structure, the Risk Management segment manages its
business through five distribution channels identified as Hanover North, Hanover
South, Citizens Midwest, Allmerica Voluntary Benefits and Allmerica Specialty.
During the second quarter of 1999, the Company approved a plan to exit its group
life and health business, consisting of its EBS business, its AGU business and
its reinsurance pool business. Results of operations from this business,
relating to both the current and the prior periods, have been segregated and
reported as a component of discontinued operations in the Consolidated
Statements of Income. Operating results from this business were previously
reported in the Allmerica Voluntary Benefits and Allmerica Specialty
distribution channels. Prior to 1999, results of the group life and health
business were included in the Corporate Risk Management Services segment, while
all other Risk Management business was reflected in the Property and Casualty
segment.

The Risk Management segment's property and casualty business is offered
primarily through the Hanover North, Hanover South and Citizens Midwest
distribution channels utilizing the Company's independent agent network
primarily in the Northeast, Midwest and Southeast United States, maintaining a
strong regional focus. Allmerica Voluntary Benefits focuses on worksite
distribution, which offers discounted property and casualty products through
employer sponsored programs, and affinity group property and casualty business.
Allmerica Specialty offers special niche property and casualty products in
selected markets. On July 1, 1999, AFC made certain changes to its corporate
structure as discussed in Note 3. As a result, FAFLIC distributed its interest
in the property and casualty business after that date.

The Asset Accumulation group includes two segments: Allmerica Financial Services
and Allmerica Asset Management. The Allmerica Financial Services segment
includes variable annuities, variable universal life and traditional life
insurance products distributed via retail channels as well as group retirement
products, such as defined benefit and 401(k) plans and tax-sheltered annuities
distributed to institutions. Through its Allmerica Asset Management segment, the
Company offers its customers the option of investing in GICs such as the
traditional GIC, synthetic GIC and other funding agreements. Funding agreements
are investment contracts issued to institutional buyers, such as money market
funds, corporate cash management programs and securities lending collateral
programs, which typically have short maturities and periodic interest rate
resets based on an index such as LIBOR. This segment is also a Registered
Investment Advisor providing investment advisory services, primarily to
affiliates, and to other institutions, such as insurance companies and pension
plans. As a result of the aforementioned change in the AFC corporate structure,
FAFLIC distributed its ownership of certain investment advisory business as of
July 1, 1999.

In addition to the three operating segments, the Company has a Corporate
segment, which consists primarily of cash, investments, corporate debt, Capital
Securities and corporate overhead expenses. Corporate overhead

                                      F-37
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expenses reflect costs not attributable to a particular segment, such as those
generated by certain officers and directors, Corporate Technology, Corporate
Finance, Human Resources and the Legal department.

Management evaluates the results of the aforementioned segments based on a
pre-tax and minority interest basis. Segment income is determined by adjusting
net income for net realized investment gains and losses, net gains and losses on
disposals of businesses, discontinued operations, extraordinary items, the
cumulative effect of accounting changes and certain other items which management
believes are not indicative of overall operating trends. While these items may
be significant components in understanding and assessing the Company's financial
performance, management believes that the presentation of segment income
enhances understanding of the Company's results of operations by highlighting
net income attributable to the normal, recurring operations of the business.
However, segment income should not be construed as a substitute for net income
determined in accordance with generally accepted accounting principles.

Summarized below is financial information with respect to business segments:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Segment revenues:
  Risk Management...........................................  $1,075.2   $2,220.8   $2,227.3
  Asset Accumulation
    Allmerica Financial Services............................     797.0      721.2      713.9
    Allmerica Asset Management..............................     144.5      121.7       91.1
                                                              --------   --------   --------
        Subtotal............................................     941.5      842.9      805.0
                                                              --------   --------   --------
  Corporate.................................................       0.4        2.3        4.7
  Intersegment revenues.....................................      (0.8)      (7.6)     (11.5)
                                                              --------   --------   --------
    Total segment revenues including Closed Block...........   2,016.3    3,058.4    3,025.5
                                                              --------   --------   --------
  Adjustment to segment revenues:
      Adjustment for Closed Block...........................     (92.1)     (98.4)    (102.6)
      Change in mortality...................................     --         --          (4.2)
      Net realized gains....................................     100.3       60.9       76.3
                                                              --------   --------   --------
  Total revenues............................................  $2,024.5   $3,020.9   $2,995.0
                                                              ========   ========   ========
</TABLE>

                                      F-38
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS)                                                       1999       1998       1997
-------------                                                     --------   --------   --------
Segment income (loss) before income taxes and minority interest:
<S>                                                               <C>        <C>        <C>
  Risk Management.............................................    $   85.1   $  149.7   $  174.2
  Asset Accumulation
    Allmerica Financial Services..............................       207.1      169.0      134.6
    Allmerica Asset Management................................        21.3       23.7       18.4
                                                                  --------   --------   --------
        Subtotal..............................................       228.4      192.7      153.0
                                                                  --------   --------   --------
  Corporate...................................................       (38.6)     (45.2)     (44.6)
    Segment income before income taxes and minority interest...      274.9      297.2      282.6
  Adjustments to segment income:
    Net realized investment gains, net of amortization........       106.1       52.2       78.5
    Sales practice litigation expense.........................       --         (31.0)     --
    Gain from change in mortality assumptions.................       --         --          47.0
    Loss on cession of disability income business.............       --         --         (53.9)
    Restructuring costs.......................................       --          (9.0)     --
    Other items...............................................       --          (0.8)      (2.8)
                                                                  --------   --------   --------
  Income before taxes and minority interest...................    $  381.0   $  308.6   $  351.4
                                                                  ========   ========   ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS)                                     1999        1998          1999           1998
-------------                                   ---------   ---------   ------------   ------------
                                                 IDENTIFIABLE ASSETS    DEFERRED ACQUISITION COSTS
<S>                                             <C>         <C>         <C>            <C>
Risk Management...............................  $   542.0   $ 6,216.8    $     6.0      $   167.5
Asset Accumulation
  Allmerica Financial Services................   23,410.7    19,407.3      1,213.1          993.1
  Allmerica Asset Management..................    1,381.1     1,810.9          0.4            0.6
                                                ---------   ---------    ---------      ---------
      Subtotal................................   24,791.8    21,218.2      1,213.5          993.7
  Corporate...................................     --            29.6       --             --
                                                ---------   ---------    ---------      ---------
    Total.....................................  $25,333.8   $27,464.6    $ 1,219.5      $ 1,161.2
                                                =========   =========    =========      =========
</TABLE>

16.  LEASE COMMITMENTS

Rental expenses for operating leases, including those related to the
discontinued operations of the Company, amounted to $22.2 million, $34.9 million
and $33.6 million in 1999, 1998 and 1997, respectively. These expenses relate
primarily to building leases of the Company. At December 31, 1999, future
minimum rental payments under non-cancelable operating leases were approximately
$39.9 million, payable as follows: 2000 - $14.1 million; 2001 -- $12.7 million;
2002 -- $8.1 million; 2003 -- $3.6 million, and $1.4 million thereafter. It is
expected that, in the normal course of business, leases that expire will be
renewed or replaced by leases on other property and equipment; thus, it is
anticipated that future minimum lease commitments will not be less than the
amounts shown for 2000.

                                      F-39
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17.  REINSURANCE

In the normal course of business, the Company seeks to reduce the losses that
may arise from catastrophes or other events that cause unfavorable underwriting
results by reinsuring certain levels of risk in various areas of exposure with
other insurance enterprises or reinsurers. Reinsurance transactions are
accounted for in accordance with the provisions of Statement of Financial
Accounting Standards No. 113, Accounting and Reporting for Reinsurance of Short
Duration and Long Duration Contracts.

Amounts recoverable from reinsurers are estimated in a manner consistent with
the claim liability associated with the reinsured policy. Reinsurance contracts
do not relieve the Company from its obligations to policyholders. Failure of
reinsurers to honor their obligations could result in losses to the Company;
consequently, allowances are established for amounts deemed uncollectible. The
Company determines the appropriate amount of reinsurance based on evaluation of
the risks accepted and analyses prepared by consultants and reinsurers and on
market conditions (including the availability and pricing of reinsurance). The
Company also believes that the terms of its reinsurance contracts are consistent
with industry practice in that they contain standard terms with respect to lines
of business covered, limit and retention, arbitration and occurrence. Based on
its review of its reinsurers' financial statements and reputations in the
reinsurance marketplace, the Company believes that its reinsurers are
financially sound.

Effective January 1, 1999, Allmerica P&C entered into a whole account aggregate
excess of loss reinsurance agreement with a highly rated insurer (See Note 5).
Prior to the AFC corporate reorganization, the Company was subject to
concentration of risk with respect to this reinsurance agreement, which
represented 10% or more of the Company's reinsurance business. Net premiums
earned and losses and loss adjustment expenses ceded under this agreement in
1999 were $21.9 million and $35.0 million, respectively. In addition, the
Company is subject to concentration of risk with respect to reinsurance ceded to
various residual market mechanisms. As a condition to the ability to conduct
certain business in various states, the Company is required to participate in
various residual market mechanisms and pooling arrangements which provide
various insurance coverages to individuals or other entities that are otherwise
unable to purchase such coverage voluntarily provided by private insurers. These
market mechanisms and pooling arrangements include the Massachusetts
Commonwealth Automobile Reinsurers ("CAR"), the Maine Workers' Compensation
Residual Market Pool ("MWCRP") and the Michigan Catastrophic Claims Association
("MCCA"). Prior to the AFC corporate reorganization, both CAR and MCCA
represented 10% or more of the Company's reinsurance business. As a servicing
carrier in Massachusetts, the Company ceded a significant portion of its private
passenger and commercial automobile premiums to CAR. Net premiums earned and
losses and loss adjustment expenses ceded to CAR in 1999, 1998 and 1997 were
$20.4 million and $21.4 million, $34.3 million and $38.1 million, and $32.3
million and $28.2 million, respectively. The Company ceded to MCCA premiums
earned and losses and loss adjustment expenses in 1999, 1998 and 1997 of $1.8
million and $30.6 million, $3.7 million and $18.0 million, and $9.8 million and
$(0.8) million, respectively.

On June 2, 1998, the Company recorded a $124.2 million one-time reduction of its
direct and ceded written premiums as a result of a return of excess surplus from
MCCA. This transaction had no impact on the total net premiums recorded by the
Company in 1998.

Because the MCCA is supported by assessments permitted by statute, and all
amounts billed by the Company to CAR, MWCRP and MCCA have been paid when due,
the Company believes that it has no significant exposure to uncollectible
reinsurance balances.

                                      F-40
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The effects of reinsurance were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Life and accident and health insurance premiums:
  Direct....................................................  $   53.5   $   51.4   $   55.9
  Assumed...................................................       0.7        0.7        0.6
  Ceded.....................................................     (50.0)     (47.8)     (29.1)
                                                              --------   --------   --------
Net premiums................................................  $    4.2   $    4.3   $   27.4
                                                              ========   ========   ========
Property and casualty premiums written:
  Direct....................................................  $1,089.0   $1,970.4   $2,068.5
  Assumed...................................................      27.3       58.8      103.1
  Ceded.....................................................    (135.4)     (74.1)    (179.8)
                                                              --------   --------   --------
Net premiums................................................  $  980.9   $1,955.1   $1,991.8
                                                              ========   ========   ========
Property and casualty premiums earned:
  Direct....................................................  $1,047.3   $1,966.8   $2,046.1
  Assumed...................................................      30.3       64.5      102.0
  Ceded.....................................................    (127.3)     (66.1)    (195.1)
                                                              --------   --------   --------
Net premiums................................................  $  950.3   $1,965.2   $1,953.0
                                                              ========   ========   ========
Life insurance and other individual policy benefits, claims,
  losses and loss adjustment expenses:
  Direct....................................................  $  391.9   $  359.5   $  397.4
  Assumed...................................................       0.1        0.3        0.4
  Ceded.....................................................     (39.2)     (49.5)     (79.4)
                                                              --------   --------   --------
Net policy benefits, claims, losses and loss adjustment
  expenses..................................................  $  352.8   $  310.3   $  318.4
                                                              ========   ========   ========
Property and casualty benefits, claims, losses and loss
  adjustment expenses:
  Direct....................................................  $  805.6   $1,588.2   $1,464.9
  Assumed...................................................      25.9       62.7      101.2
  Ceded.....................................................    (128.0)    (158.2)    (120.6)
                                                              --------   --------   --------
Net policy benefits, claims, losses, and loss adjustment
  expenses..................................................  $  703.5   $1,492.7   $1,445.5
                                                              ========   ========   ========
</TABLE>

                                      F-41
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18.  DEFERRED POLICY ACQUISITION COSTS

The following reflects the changes to the deferred policy acquisition asset:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Balance at beginning of year................................  $1,161.2   $  965.5   $  822.7
Acquisition expenses deferred...............................     419.2      638.2      614.3
Amortized to expense during the year........................    (240.9)    (449.6)    (472.6)
Adjustment for discontinued operations......................       3.4      ( 0.2)     --
Adjustment to equity during the year........................      39.3        7.3      (11.1)
Adjustment due to distribution of subsidiaries..............    (162.7)     --         --
Adjustment for cession of disability income insurance.......     --         --         (38.6)
Adjustment for revision of universal and variable universal
  life insurance mortality assumptions......................     --         --          50.8
                                                              --------   --------   --------
Balance at end of year......................................  $1,219.5   $1,161.2   $  965.5
                                                              ========   ========   ========
</TABLE>

At October 1, 1997, the Company revised the mortality assumptions for universal
life and variable universal life product lines. These revisions resulted in a
$50.8 million recapitalization of deferred policy acquisition costs.

19.  LIABILITIES FOR OUTSTANDING CLAIMS, LOSSES AND LOSS ADJUSTMENT EXPENSES

The Company regularly updates its estimates of liabilities for outstanding
claims, losses and loss adjustment expenses as new information becomes available
and further events occur which may impact the resolution of unsettled claims for
its property and casualty and its accident and health lines of business. Changes
in prior estimates are recorded in results of operations in the year such
changes are determined to be needed.

The liability for future policy benefits and outstanding claims, losses and loss
adjustment expenses related to the Company's accident and health business was
$601.3 million and $568.0 million at December 31, 1999 and 1998, respectively.
Accident and health claim liabilities were re-estimated for all prior years and
were increased by $51.2 million and $14.6 million in 1999 and 1998,
respectively. The increase in 1999 resulted from the Company's reserve
strengthening primarily in the EBS and reinsurance pool business. The 1998
increase also resulted from the Company's reserve strengthening, primarily in
the assumed reinsurance and stop loss only business.

                                      F-42
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table provides a reconciliation of the beginning and ending
property and casualty reserve for unpaid losses and loss adjustment expenses
(LAE):

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Reserve for losses and LAE, beginning of the year...........  $2,597.3   $2,615.4   $2,744.1
Incurred losses and LAE, net of reinsurance recoverable:
  Provision for insured events of the current year..........     795.6    1,609.0    1,564.1
  Decrease in provision for insured events of prior years...     (96.1)    (127.2)    (127.9)
                                                              --------   --------   --------
Total incurred losses and LAE...............................     699.5    1,481.8    1,436.2
                                                              --------   --------   --------
Payments, net of reinsurance recoverable:
  Losses and LAE attributable to insured events of current
    year....................................................     342.1      871.9      775.1
  Losses and LAE attributable to insured events of prior
    years...................................................     424.2      643.0      732.1
                                                              --------   --------   --------
Total payments                                                   766.3    1,514.9    1,507.2
Change in reinsurance recoverable on unpaid losses..........      44.3       15.0      (50.2)
Distribution of subsidiaries................................  (2,574.8)     --         --
Other (1)...................................................     --         --          (7.5)
                                                              --------   --------   --------
Reserve for losses and LAE, end of year.....................  $  --      $2,597.3   $2,615.4
                                                              ========   ========   ========
</TABLE>

(1) Includes purchase accounting adjustments.

As part of an ongoing process, the reserves have been re-estimated for all prior
accident years and were decreased by $96.1 million, $127.2 million and $127.9
million in 1999, 1998 and 1997, respectively, reflecting increased favorable
development on reserves for both losses and loss adjustment expenses.

Favorable development on prior years' loss reserves was $52.0 million, $58.9
million, and $87.2 million prior to the AFC corporate reorganization in 1999 and
for the years ended December 31, 1998 and 1997, respectively. Favorable
development on prior year's loss adjustment expense reserves was $44.1 million,
$68.3 million, and $40.7 million prior to the AFC corporate reorganization in
1999 and for the years ended December 31, 1998 and 1997, respectively. The
increase in favorable development 1998 is primarily attributable to claims
process improvement initiatives taken by the Company. The Company has lowered
claim settlement costs through increased utilization of in-house attorneys and
consolidation of claim offices.

This favorable development reflects the Company's reserving philosophy
consistently applied over these periods. Conditions and trends that have
affected development of the loss and LAE reserves in the past may not
necessarily occur in the future.

Due to the nature of the business written by the Risk Management segment, the
exposure to environmental liabilities is relatively small and therefore its
reserves are relatively small compared to other types of liabilities. Due to the
AFC corporate reorganization, the Company had no exposure for this item at
December 31, 1999. Loss and LAE reserves related to environmental damage and
toxic tort liability, included in the reserve for losses and LAE, were $49.9
million and $53.1 million, net of reinsurance of $14.2 million and $15.7 million
in 1998 and 1997, respectively. The Company does not specifically underwrite
policies that include this coverage, but as case law expands policy provisions
and insurers' liability beyond the intended coverage, the Company may be
required to defend such claims. The Company estimated its ultimate liability for
these claims based upon currently known facts, reasonable assumptions where the
facts are not known,

                                      F-43
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

current law and methodologies currently available. Although these claims are not
significant, their existence gives rise to uncertainty and is discussed because
of the possibility, however remote, that they may become significant. The
Company believes that, notwithstanding the evolution of case law expanding
liability in environmental claims, recorded reserves related to these claims are
adequate. In addition, the Company is not aware of any litigation or pending
claims that may result in additional material liabilities in excess of recorded
reserves. The environmental liability could be revised in the near term if the
estimates used in determining the liability are revised.

20.  MINORITY INTEREST

As a result of the Company's divestiture of certain of its subsidiaries
including its 84.5% ownership of the outstanding shares of the common stock of
Allmerica P&C effective July 1, 1999, there is no minority interest reflected on
the Consolidated Balance Sheets as of December 31, 1999. In prior years, the
Company's interest in Allmerica P&C was represented by ownership of 70.0% and
65.8% of the outstanding shares of common stock at December 31, 1998 and 1997,
respectively. Earnings and shareholder's equity attributable to minority
shareholders are included in minority interest in the consolidated financial
statements through the period ended June 30, 1999 and for the years ended
December 31, 1998 and 1997.

21.  CONTINGENCIES

REGULATORY AND INDUSTRY DEVELOPMENTS

Unfavorable economic conditions may contribute to an increase in the number of
insurance companies that are under regulatory supervision. This may result in an
increase in mandatory assessments by state guaranty funds, or voluntary payments
by solvent insurance companies to cover losses to policyholders of insolvent or
rehabilitated companies. Mandatory assessments, which are subject to statutory
limits, can be partially recovered through a reduction in future premium taxes
in some states. The Company is not able to reasonably estimate the potential
effect on it of any such future assessments or voluntary payments.

LITIGATION

In July 1997, a lawsuit on behalf of a putative class was instituted in
Louisiana against AFC and certain of its subsidiaries, including FAFLIC, by
individual plaintiffs alleging fraud, unfair or deceptive acts, breach of
contract, misrepresentation, and related claims in the sale of life insurance
policies. In October 1997, the plaintiffs voluntarily dismissed the Louisiana
suit and filed a substantially similar action in Federal District Court in
Worcester, Massachusetts. In early November 1998, the Company and the plaintiffs
entered into a settlement agreement. The court granted preliminary approval of
the settlement on December 4, 1998. On May 19, 1999, the court issued an order
certifying the class for settlement purposes and granting final approval of the
settlement agreement. FAFLIC recognized a $31.0 million pre-tax expense during
the third quarter of 1998 related to this litigation. Although the Company
believes that this expense reflects appropriate recognition of its obligation
under the settlement, this estimate assumes the availability of insurance
coverage for certain claims, and the estimate may be revised based on the amount
of reimbursement actually tendered by AFC's insurance carriers, and based on
changes in the Company's estimate of the ultimate cost of the benefits to be
provided to members of the class.

The Company has been named a defendant in various other legal proceedings
arising in the normal course of business. In the Company's opinion, based on the
advice of legal counsel, the ultimate resolution of these proceedings will not
have a material effect on the Company's consolidated financial statements.
However,

                                      F-44
<PAGE>
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

         (A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

liabilities related to these proceedings could be established in the near term
if estimates of the ultimate resolution of these proceedings are revised.

YEAR 2000

The Year 2000 issue resulted from computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities.

Although the Company does not believe that there is a material contingency
associated with the Year 2000 issue, there can be no assurance that exposure for
material contingencies will not arise.

22.  STATUTORY FINANCIAL INFORMATION

The Company is required to file annual statements with state regulatory
authorities prepared on an accounting basis prescribed or permitted by such
authorities (statutory basis). Statutory surplus differs from shareholder's
equity reported in accordance with generally accepted accounting principles
primarily because policy acquisition costs are expensed when incurred,
investment reserves are based on different assumptions, postretirement benefit
costs are based on different assumptions and reflect a different method of
adoption, life insurance reserves are based on different assumptions and income
tax expense reflects only taxes paid or currently payable. In 1999, 49 out of 50
states have adopted the National Association of Insurance Commissioners proposed
Codification, which provides for uniform statutory accounting principles. These
principles are effective January 1, 2001. The Company is currently assessing the
impact that the adoption of Codification will have on its statutory results of
operations and financial position.

Statutory net income and surplus are as follows:

<TABLE>
<CAPTION>
(IN MILLIONS)                                                   1999       1998       1997
-------------                                                 --------   --------   --------
<S>                                                           <C>        <C>        <C>
Statutory Net Income (Combined)
  Property and Casualty Companies...........................   $322.6    $  180.7   $  190.3
  Life and Health Companies.................................    239.0        86.4      191.2

Statutory Shareholder's Surplus (Combined)
  Property and Casualty Companies (See Note 3)..............   $--       $1,269.3   $1,279.6
  Life and Health Companies.................................    590.1     1,164.1    1,221.3
</TABLE>

23.  EVENTS SUBSEQUENT TO DATE OF INDEPENDENT ACCOUNTANTS' REPORT (UNAUDITED)

During the second quarter of 2000, AFC adopted a formal company-wide
restructuring plan. This plan is the result of a corporate initiative that began
in the fall of 1999, intended to reduce expenses and enhance revenues. As a
result of this restructuring plan, FAFLIC recognized a pre-tax restructuring
charge of $11.0 million for the quarter ended June 30, 2000. Approximately
$1.9 million of this charge relates to severance and other employee related
costs resulting from the elimination of positions. All levels of employees, from
staff to senior management, were affected by the restructuring. In addition,
approximately $9.1 million of this charge relates to other restructuring costs,
including one-time project costs.

                                      F-45
<PAGE>

PART II


UNDERTAKING TO FILE REPORTS
---------------------------

Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission ("SEC") such supplementary and
periodic information, documents, and reports as may be prescribed by any rule
or regulation of the SEC heretofore or hereafter duly adopted pursuant to
authority conferred in that section.

RULE 484 UNDERTAKING
--------------------

Article VIII of Registrant's Bylaws provides: Each Director and each Officer
of the Corporation, whether or not in office, (and his executors or
administrators), shall be indemnified or reimbursed by the Corporation
against all expenses actually and necessarily incurred by him in the defense
or reasonable settlement of any action, suit, or proceeding in which he is
made a party by reason of his being or having been a Director or Officer of
the Corporation, including any sums paid in settlement or to discharge
judgment, except in relation to matters as to which he shall be finally
adjudged in such action, suit, or proceeding to be liable for negligence or
misconduct in the performance of his duties as such Director or Officer; and
the foregoing right of indemnification or reimbursement shall not affect any
other rights to which he may be entitled under the Articles of Incorporation,
any statute, bylaw, agreement, vote of stockholders, or otherwise.

Insofar as indemnification for liability arising under the 1933 Act may be
permitted to Directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a Director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such Director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

REPRESENTATIONS PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
-------------------------------------------------------------------------------

The Company hereby represents that the aggregate fees and charges under the
Policy are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.

<PAGE>

                     CONTENTS OF THE REGISTRATION STATEMENT

This registration statement amendment comprises the following papers and
documents:

The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of ____ pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the 1933 Act.
Representations pursuant to Section 26(e) of the 1940 Act.
The signatures.

Written consents of the following persons:

     1.    Actuarial Consent
     2.    Opinion of Counsel
     3.    Consent of Independent Accountants

The following exhibits:

     1.    Exhibit 1  (Exhibits required by paragraph A of the instructions
                      to Form N-8B-2)

            (1) Certified copy of Resolutions of the Board of Directors of
                the Company dated June 1, 1996 authorizing the establishment of
                the Separate Account SPVL is filed herewith.

            (2) Not Applicable.

            (3) (a)   Underwriting and Administrative Services Agreement was
                      previously filed on April 16, 1998 in Post-Effective
                      Amendment No. 11 of the VEL II Account (Registration
                      No. 33-57792), and is incorporated by reference herein.

                (b)   General Agent's Agreement was previously filed in
                      Initial Registration Statement of VEL Account III
                      (Registration Statement No. 333-58385) on July 3, 1998,
                      and is incorporated by reference herein.

                (c)   Compensation Schedule was previously filed in Initial
                      Registration Statement of VEL Account III (Registration
                      Statement No. 333-58385) on July 3, 1998, and is
                      incorporated by reference herein.

            (4) Not Applicable.

            (5) (a)   Form of Contract;

                (b)   Accelerate Benefits Rider (LBR);

                (c)   Life Insurance 1035 Exchange Rider; and

                (d)   Guaranteed Death Benefit Rider are filed herewith.


<PAGE>

         (6)    Organizational documents of the Company were previously
                filed on November 5, 1996 Registration Statement No. 333-155569,
                and are incorporated by reference herein.

         (7)    Not Applicable.

         (8)    (a) Amendment dated June 1, 2000 to the Participation Agreement
                    between the Company and Allmerica Investment Trust is being
                    filed herewith. Participation Agreement between the Company
                    and Allmerica Investment Trust dated March 22, 2000 was
                    previously filed in April 2000 in Post-Effective Amendment
                    No. 9 of Registration Statement No. 33-71056/811-8130, and
                    is incorporated by reference herein.

                (b) Participation Agreement with T. Rowe Price International
                    Series, Inc. was previously filed on April 16, 1998 in
                    Post-Effective Amendment No. 8 (Registration Statement
                    No. 33-74184), and is incorporated by reference herein.

                (c) Amendment dated August 1, 2000 to the Variable Insurance
                    Products Fund Participation Agreement is being filed
                    herewith. Amendment dated March 29, 2000 and Amendment
                    dated November 13, 1998 to the Variable Insurance Products
                    Fund Participation Agreement was previously filed in April
                    2000 in Post-Effective Amendment No. 9 of Registration
                    Statement No. 33-71056/811- 8130, and is incorporated by
                    reference herein. Participation Agreement with Variable
                    Insurance Products Fund, as amended was previously filed on
                    April 16, 1998 in Post- Effective Amendment No. 8
                    (Registration Statement No. 33-74184), and is incorporated
                    by reference herein.

                (d) Amendment dated March 29, 2000 to the Delaware Group
                    Premium Fund Participation Agreement was previously filed
                    in April 2000 in Post-Effective Amendment No. 14 of
                    Registration Statement No. 33-57792/811-7466, and is
                    incorporated by reference herein. Participation Agreement
                    with Delaware Group Premium Fund, Inc. was previously filed
                    on April 16, 1998 in Post-Effective Amendment No. 11, and
                    is incorporated by reference herein.

                (e) Amendment dated August 1, 2000 to the Variable Insurance
                    Products Fund II Participation Agreement is being filed
                    herewith. Amendment dated March 29, 2000 and Amendment dated
                    October 4, 2999 to the Variable Insurance Products Fund II
                    Participation Agreement is filed herewith. Participation
                    Agreement with Variable Insurance Products Fund II, as
                    amended, was previously filed on April 16, 1998 in Post-
                    Effective Amendment No. 12, and is incorporated by reference
                    herein.

                (f) Fidelity Service Agreement was previously filed on
                    April 30, 1996, in Post-Effective Amendment No. 4
                    (Registration Statement No. 33-74184), and is incorporated
                    by reference herein.

                (g) An Amendment to the Fidelity Service Agreement was
                    previously filed on May 1, 1997 in Post-Effective Amendment
                    No. 6 (Registration Statement No. 33-74184), and is
                    incorporated by reference herein.

                (h) Service Agreement with Rowe Price-Fleming International,
                    Inc. was previously filed on April 16, 1998 in Post-
                    Effective Amendment No. 8 (Registration Statement
                    No. 33-74184), and is incorporated by reference herein.

                (i) Fidelity Service Contract was previously filed on May 1,
                    1997 in Post-Effective Amendment No. 6 (Registration
                    Statement No. 33-74184), and is incorporated by reference
                    herein.

         (9)    (a) BFDS Agreements for lockbox and mailroom services,
                    effective January 1, 1997, were previously filed on
                    April 16, 1998 in Post-Effective Amendment No. 12 of
                    the VEL II Account (Registration Statement No. 33-57792),
                    and are incorporated by reference herein.

                (b) Directors' Power of Attorney is filed herewith.

         (10)   Form of Application is filed herewith.

     2. Form of Contract and Contract riders are included in Exhibit 1(5) above.

     3. Opinion of Counsel is filed herewith.

<PAGE>



     4.  Not Applicable.

     5.  Not Applicable.

     6.  Actuarial Consent is filed herewith.

     7.  Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii)
         under the 1940 Act, which includes conversion procedures pursuant to
         Rule 6e-3(T)(b)(13)(v)(B) is filed herewith.

     8.  Consent of Independent Accountants is filed herewith.


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Initial Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Worcester, and Commonwealth of Massachusetts, on
the 31st day of August, 1999.

                            SEPARATE ACCOUNT SPVL OF
                FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

                             By: /s/ Charles F. Cronin
                                 ----------------------------
                                 Charles F. Cronin, Secretary


Pursuant to the requirements of the Securities Act of 1933, this Initial
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signatures                              Title                                                         Date
----------                              -----                                                         ----
<S>                                     <C>                                                           <C>
/s/ Warren E. Barnes                    Vice President and Corporate Controller                       August 31, 2000
------------------------------
Warren E. Barnes

Edward J. Parry*                        Director, Vice President and Chief Financial Officer
------------------------------

Richard M. Reilly*                      Director and Vice President
------------------------------

John F. O'Brien*                        Director, President and Chief Executive Officer
------------------------------

Bruce C. Anderson*                      Director and Vice President
------------------------------

Mark R. Colborn*                        Director and Vice President
------------------------------

John P. Kavanaugh*                      Director, Vice President and Chief Investment Officer
------------------------------

J. Kendall Huber*                       Director, Vice President and General Counsel
------------------------------

J. Barry May*                           Director
------------------------------

James R. McAuliffe*                     Director
------------------------------

Robert P. Restrepo, Jr.*                Director and Vice President
------------------------------

Eric A. Simonsen*                       Director and Vice President
------------------------------
</TABLE>

Sheila B. St. Hilaire, by signing her name hereto, does hereby sign this
document on behalf of each of the above-named Directors and Officers of the
Registrant pursuant to the Power of Attorney dated April 2, 2000 duly
executed by such persons.

/s/ Sheila B. St. Hilaire
------------------------------
Sheila B. St. Hilaire, Attorney-in-Fact


<PAGE>

                           FORM S-6 EXHIBIT TABLE

Exhibit 1(1)               Vote of the Board

Exhibit 1(5)(a)            Form of Contract

Exhibit 1(5)(b)            Accelerate Benefits Rider (LBR);

Exhibit 1(5)(c)            Life Insurance 1035 Exchange Rider;

Exhibit 1(5)(d)            Guaranteed Death Benefit Rider

Exhibit 1(8)(a)            Amendment dated June 1, 2000 to the AIT
                           Participation Agreement

Exhibit 1(8)(c)            Amendment dated August 1, 2000 to the Variable
                           Insurance Products Fund Participation Agreement

Exhibit 1(8)(e)            Amendment dated August 1, 2000 to the Variable
                           Insurance Products Fund II Participation Agreement

Exhibit 1(9)(b)            Directors' Power of Attorney

Exhibit 1(10)              Form of Application

Exhibit 3                  Opinion of Counsel

Exhibit 6                  Actuarial Consent

Exhibit 7                  Procedures Memorandum

Exhibit 8                  Consent of Independent Accountants