SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): February 19, 1997 ----------------- __________ ALLMERICA PROPERTY & CASUALTY COMPANIES, INC. ------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 0-20668 04-3164595 -------- ------- ---------- (State or Other (Commission File Number) (I.R.S. Employer Jurisdiction I.D. Number) of Incorporation) __________ 440 Lincoln Street, Worcester, Massachusetts 01653 -------------------------------------------- --------- (Address of Principal Executive Offices) (Zip Code) (508) 855-1000 ------------------------------------------------ Registrant's Telephone Number, including area code Page 1 of 6 pages Exhibit Index on page 6

Item 5. Other Events On February 19, 1997, Allmerica Property & Casualty Companies, Inc. ("Allmerica P&C"), APY Acquisition, Inc., a wholly owned subsidiary of AFC ("Merger Sub") and Allmerica Financial Corporation ("AFC") entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which AFC will acquire all of the outstanding shares of Common Stock, $1.00 par value, of Allmerica P&C (the "Allmerica P&C Common Stock") that AFC and its subsidiaries do not currently own. Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Allmerica P&C (the "Merger"), resulting in Allmerica P&C becoming a wholly owned subsidiary of AFC. Each outstanding share of Allmerica P&C Common Stock other than shares owned by AFC or its subsidiaries or by persons who properly perfect their appraisal rights under the Delaware General Corporation Law, will be converted into the right to receive, at the election of the holder, one of the following (collectively, the "Merger Consideration"): (i) (x) 0.4 (the "Standard Exchange Ratio") of a share of the Common Stock, $.01 par value of AFC ("AFC Common Stock") and (y) an amount in cash, without interest, equal to $17.60 (the "Standard Cash Consideration"); provided, however, that (1) in the event the average closing price of AFC Common Stock for the ten consecutive trading days ending on the fifth trading day prior to the effective date of the Merger (the "Average Stock Price") is less than $36.00, the Standard Cash Consideration shall be equal to (A) $32.00 less (B) the Standard Exchange Ratio multiplied by the Average Stock Price and (2) in the event the Average Stock Price is greater than $41.00, the Standard Cash Consideration shall be equal to (A) $34.00 less (B) the Standard Exchange Ratio multiplied by the Average Stock Price (collectively, the "Standard Consideration"); or (ii) 0.85714 (the "Stock Exchange Ratio") of a share of AFC Common Stock (the "Stock Consideration"); provided, however, that (1) in the event the Average Stock Price is less than $36.00, the Stock Exchange Ratio shall be equal to $32.00 divided by the Average Stock Price and (2) that in the event the Average Stock Price is greater than $41.00, the Stock Exchange Ratio shall be equal to $34.00 divided by the Average Stock Price; or (iii) cash, without interest, in an amount equal to $33.00 (the "Cash Consideration"); provided, however, that (1) in the event the Average Stock Price is less than $36.00, the Cash Consideration shall be equal to $32.00 and (2) in the event the Average Stock Price is more than $41.00, the Cash Consideration shall be equal to $34.00. The maximum number of shares of AFC Common Stock to be issued in the Merger is approximately 9.67 million shares. The form of payment of the Merger Consideration will be prorated in the event the Cash Consideration or the Stock Consideration is over subscribed. Immediately prior to the consummation of the Merger, the Certificate of Incorporation of Allmerica P&C will be amended to authorize a Class B Common Stock of Allmerica P&C, $5.00 par value (the "Class B Common Stock"). Immediately prior to the consummation of the Merger, each share of Allmerica P&C Common Stock owned by AFC and its subsidiaries will be exchanged for one share of Class B Common Stock (the "Recapitalization"). SMA Financial Corp. ("SMA"), a wholly owned subsidiary of AFC, is the holder of 59.5% of the outstanding shares of Allmerica P&C Common Stock. AFC will cause SMA to execute, as a stockholder of Allmerica P&C, a written consent of shareholders (a) adopting the Merger Agreement and approving the Merger and (b) approving the amendment to the certificate of incorporation of the Company to authorize the issuance of the Class B Common Stock pursuant to the Recapitalization. The respective obligation of each party to the Merger Agreement to effect the Merger is subject to the fulfillment of various conditions, including (i) that all necessary approvals from insurance regulatory authorities and other governmental authorities shall have been obtained, (ii) that the Form S-4 filed to register the AFC Common Stock to be issued in connection with the Merger shall have been declared effective by the Securities and Exchange Commission and that such shares shall have been approved for listing on the New York Stock Exchange (the "NYSE") and (iii) that the Recapitalization -2-

shall have been completed. Additionally, (i) the obligation of Allmerica P&C to effect the Merger is subject to fulfillment of the conditions (a) that each of AFC and Merger Sub shall have performed in all material respects its agreements contained in the Merger Agreement and that the representations and warranties of each contained therein shall have remained true and correct as of the effective time of the Merger and (b) that the Special Committee of the Board of Directors of Allmerica P&C (the "Special Committee") shall have received a fairness opinion from Salomon Brothers Inc to the effect that the Merger Consideration is fair, from a financial point of view, to the holders of Allmerica P&C Common Stock (other than AFC and its subsidiaries) and such fairness opinion shall not have been withdrawn and (ii) the obligation of AFC to effect the Merger is subject to fulfillment of the conditions (a) that Allmerica P&C shall have performed in all material respects its agreements contained in the Merger Agreement and that the representations and warranties of Allmerica P&C contained therein shall have remained true and correct as of the effective time of the Merger and (b) that AFC shall have received a fairness opinion from Merrill Lynch, Pierce, Fenner & Smith Incorporated to the effect that the Merger is fair, from a financial point of view, to AFC and such fairness opinion shall not have been withdrawn. The Merger Agreement may be terminated and the Merger may be abandoned (i) by the mutual consent of AFC, Merger Sub and, with the consent of the Special Committee, Allmerica P&C, at any time prior to the Effective Time, (ii) by action of the Board of Directors of either AFC or, with the consent of the Special Committee, Allmerica P&C if (a) the Merger shall not have been consummated by September 30, 1997, or (b) a United States federal or state court of competent jurisdiction or United States federal or state governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable or (c) insurance regulatory authorities shall have issued an order or ruling or taken other action denying approval of the transactions contemplated by this Agreement, and such order, ruling or other action shall have become final and nonappealable, (iii) by action of the Board of Directors of Allmerica P&C (with the consent of the Special Committee) if, prior to the Effective Time, (a) the Board of Directors of Allmerica P&C determines in good faith, upon advice of counsel, that notwithstanding a binding commitment to consummate the Merger pursuant to the Merger Agreement entered into in the proper exercise of their fiduciary duties, failure to terminate the Merger Agreement would likely be a breach of such fiduciary duties by reason of an alternative proposal with respect to Allmerica P&C being made, (b) there has been a material breach of any of the covenants or agreements set forth in the Merger Agreement on the part of AFC or (c) the Board of Directors of the Purchaser shall have withdrawn or modified in a manner materially adverse to the Company its approval or recommendation of the Merger Agreement or the Merger, (iv) by the Special Committee on behalf of Allmerica P&C at any time prior to the Effective Time if the Special Committee withdraws or materially modifies or changes its recommendation of the Merger Agreement or the Merger and the Special Committee determines in good faith, upon advice of counsel, that notwithstanding a binding commitment to consummate the Merger pursuant to the Merger Agreement entered into in the proper exercise of their fiduciary duties, failure to terminate the Merger Agreement would likely be a breach of such fiduciary duties by reason of an alternative proposal with respect to Allmerica P&C being made or (v) by action of the Board of Directors of AFC, at any time prior to the Effective Time if (a) the Board of Directors of Allmerica P&C and the Special Committee shall have withdrawn or modified in a manner materially adverse to AFC its approval or recommendation of the Merger Agreement or the Merger, or (b) there has been a breach by Allmerica P&C of any representation or warranty contained in the Merger Agreement which would have or would be reasonably likely to have a material adverse effect on Allmerica P&C or (c) there has been a material breach of any of the covenants or agreements set forth in the Merger Agreement on the part of Allmerica P&C. The foregoing summary description of the terms of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement, which is incorporated by reference as Exhibit 1 hereto. A copy of the joint press release of AFC and Allmerica P&C announcing the Merger Agreement is attached hereto as Exhibit 2 and is incorporated by reference herein. -3-

Item 7. Financial Statements and Exhibits Exhibit 1* Agreement and Plan of Merger dated February 19, 1997 among AFC, Allmerica P&C and Merger Sub. Exhibit 2 Joint press release of AFC and Allmerica P&C dated February 19, 1997 announcing the Merger Agreement. *Incorporated by reference to Exhibit 1 to the Current Report on Form 8-K of Allmerica Financial Corporation (Commission File Number 1-13754) dated February 19, 1997. -4-

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ALLMERICA PROPERTY & CASUALTY COMPANIES, INC. By: /s/ John F. Kelly ----------------------------------- Title: Vice President Date: February 19, 1997 -5-

Exhibit Index Page ------------- ---- Exhibit 2 Joint press release of AFC and Allmerica P&C dated February 19, 1997 announcing the Merger Agreement. 7 -6-

EXHIBIT 2 ALLMERICA FINANCIAL CORPORATION, ALLMERICA PROPERTY & CASUALTY COMPANIES, INC. ANNOUNCE DEFINITIVE MERGER AGREEMENT Worcester, Mass., February 19, 1997 -- Allmerica Financial Corporation (NYSE:AFC) and Allmerica Property & Casualty Companies, Inc. (NYSE:APY) announced the signing of a definitive merger agreement in which Allmerica Financial will acquire the 40.5% of Allmerica P&C, or 24.2 million shares, that it is does not already own, for approximately $800 million, or $33.00 per share. "Allmerica P&C is vital to our success, and remains central to our core strategy of offering clients a range of financial security and insurance protection products," said John F. O'Brien, chief executive officer at Allmerica Financial Corporation. "This combination allows Allmerica Financial to allocate capital more flexibly among operations, and will enable us to further focus attention on enhancing long-term shareholder value." Under the terms of the transaction, shareholders of Allmerica P&C will have the right to receive $17.60 in cash and 0.40 shares of Allmerica Financial common stock in exchange for each share of Allmerica P&C. However, if Allmerica Financial's 10-day average closing stock price prior to the consummation of the merger falls below $36.00 per share or increases above $41.00 per share, the cash component of the merger consideration will be adjusted so that the value received by Allmerica P&C shareholders in the exchange is no less than $32.00 per share and no greater than $34.00 per share. Additionally, in lieu of receiving the specified combination of cash and stock, shareholders of Allmerica P&C may elect to receive consideration either entirely in the form of cash or entirely in common shares of Allmerica Financial. However, these elections will be limited by aggregate amounts of Allmerica Financial common stock and cash issuable in the merger. An aggregate of approximately 9.67 million shares of Allmerica Financial common stock will be issued to Allmerica P&C shareholders in the merger transaction. Consummation of the merger is subject to customary terms and conditions, including review by insurance regulators and the Securities and Exchange Commission, and is expected to be completed by the third quarter of 1997. Allmerica Financial Corporation, headquartered in Worcester, Mass., is the holding company for a diversified group of insurance and financial services companies with total assets of $19 billion. Allmerica Financial markets insurance and retirement savings products, as well as group benefit programs, to individual and institutional clients. Through Allmerica P&C, Allmerica Financial offers property and casualty insurance products nationally through an independent agent network. Allmerica P&C is among the top 30 property and casualty insurers in the United States, based on net written premium. Allmerica P&C is regionally-focused in the Northeast and Michigan, and operates through two primary subsidiaries, The Hanover Insurance Company and Citizens Corporation (NYSE: CZC). CONTACTS Investors Media --------- ----- Jean Peters Michael F. Buckley Vice President, Investor Relations Director, Public Information (508) 855-3599 (508) 855-3099