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 WORCESTER, Mass., July 30 /PRNewswire/ -- Following a meeting of its board of directors, State Mutual Life Assurance Company of America (State Mutual), a mutual life insurance company, announced today that it is actively pursuing demutualization, the process by which a mutual life insurer becomes a company owned by stockholders. State Mutual said it has invited the board of directors of its affiliate, Allmerica Property & Casualty Companies, Inc. (Allmerica P & C) (NYSE: APY), to enter into discussions concerning a possible merger or consolidation of State Mutual and Allmerica P & C as a part of a plan of demutualization. State Mutual currently holds 57.4 percent of the common stock of Allmerica P & C, a holding company whose principal subsidiaries include The Hanover Insurance Company, Citizens Corporation, and Citizens Insurance Company of America.
 State Mutual said that it is considering several alternatives, including the creation of a public holding company which would own all the stock of State Mutual and the operating subsidiaries of Allmerica P & C. Shares of this holding company would be owned by the shareholders of Allmerica P& C and policyholders of State Mutual. Raising additional capital through a public offering by the holding company at the time of the demutualization is also being considered, State Mutual said.
 According to John F. O'Brien, State Mutual president and chief executive officer, "Demutualization affords several advantages for State Mutual policyholders, clients, and the company. The most significant of these advantages will be substantially improved access to the capital markets. Today, as a mutual company, such access is limited." Further, O'Brien stated, "State Mutual is currently in the best financial condition in its 149-year history. We have achieved five consecutive years of record operating results and have more than tripled our total contingency reserves to almost $700 million at Dec. 31, 1992. We believe that our strong financial condition, combined with enhanced access to the capital markets, will best position us to take advantage of the challenges and the opportunities ahead."
 State Mutual said that its consideration of demutualization is in the preliminary stages, and no specific transaction has been proposed to Allmerica P & C. In addition, any demutualization plan adopted by the State Mutual Board of Directors would be subject to approval by the Massachusetts Commissioner of Insurance, other regulators, and by the policyholders of State Mutual. State Mutual stated further that any transaction with Allmerica P & C would be subject to the review of several regulatory authorities, the Allmerica P & C Board of Directors, and a special committee of the State Mutual Board of Directors independent of Allmerica P & C. A demutualization would not be expected to be completed until the second half of 1994, State Mutual said.
 State Mutual is the fifth oldest life insurance company in the country and ranks among the 20 largest mutual life insurance companies in the United States. It is a member of a group of insurance and financial services companies known collectively as Allmerica Financial. The Allmerica Financial companies include: State Mutual; SMA Life Assurance Company; Allmerica Property & Casualty Companies, Inc.; The Hanover Insurance Company; Citizens Corporation; Citizens Insurance Company of America; Allmerica Trust Company, N.A.; Allmerica Investment Management Company, Inc.; 440 Financial Group of Worcester, Inc.; 440 Financial Distributors, Inc.
 -0- 7/30/93
 /CONTACT: Michael F. Buckley, Allmerica, 508-855-3099/

CO: Allmerica Financial ST: Massachusetts IN: INS SU:

DD -- NE006 -- 7700 07/30/93 11:35 EDT
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Publication:PR Newswire
Date:Jul 30, 1993

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