UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 11-K
1 ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1999

TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from to

Commission File No: 0-16882

A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:

THE COMMERCE GROUP, INC. 401(k) PLAN

B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:

THE COMMERCE GROUP, INC.
211 Main Street
Webster, MA 01570

TABLE OF CONTENTS

Page

Report of Independent
Auditors...................................................... 1

Financial Statements:
Statement of Net Assets Available for Benefits as of
December 31, 1999 ........................................ 2
Statement of Net Assets Available for Benefits as of
December 31, 1998 ........................................ 3
Statement of Changes in Net Assets Available for Benefits
for the Year ended December 31, 1999 .................... 4
Statement of Changes in Net Assets Available for Benefits
for the Period from September 1, 1998 (Date of Inception)
through December 31, 1998................................ 5
Notes to Financial Statements ............................. 6

Supplemental Schedules as of and for the Period Ended December 31, 1999:
Line 27a - Schedule of Assets Held for Investment Purposes.. 10
Line 27d - Schedule of Reportable Transactions.............. 11

Consent of Independent Auditors................................. 12

Signatures ..................................................... 13

REPORT OF INDEPENDENT AUDITORS

The Benefits Committee
The Commerce Group, Inc.

We have audited the accompanying statements of net assets available for
benefits of The Commerce Group, Inc. 401(k) Plan (the Plan) as of December
31, 1999 and 1998, and the related statements of changes in net assets
available for benefits for the year ended December 31, 1999 and for the
period from September 1, 1998 (date of inception) through December 31,
1998. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards 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. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan
at December 31, 1999 and 1998, and the changes in its net assets available
for benefits for the year ended December 31, 1999 and the period September
1, 1998 (date of inception) through December 31, 1998, in conformity with
accounting principles generally accepted in the United States.

Our audit was performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment purposes as of December 31, 1999,
and reportable transactions for the year then ended, are presented for
purposes of additional analysis and are not a required part of the
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's management.
The Fund information in the statements of net assets available for benefits
and the statements of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the
net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and fund information
have been subjected to auditing procedures applied in our audits of the
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.

June 26, 2000

The Commerce Group, Inc. 401 (k) Plan
Statement of Net Assets Available for Benefits
December 31, 1999

Common
Stock of Mutual
Employer Funds

Assets:
Investments, at fair value
Merrill Lynch Funds:
Commerce Group, Inc. Common Stock Fund
(cost: $238,920) ............................................... $ 237,017
Retirement Preservation Trust (cost: $272,023) ....................
Corporate Bond Fund (cost: $464,461) .............................. $ 447,424
Capital Fund (cost: $120,790) ..................................... 113,846
Basic Value Fund (cost: $502,800) ................................ 492,702
Global Allocation Fund (cost: $103,002) ........................... 103,938
S & P 500 Index Fund (cost: $371,014) ............................. 417,318
MFS Massachusetts Investors Growth Stock Fund
(cost: $633,682)................................................ 771,229
GAM International Fund (cost: $400,493)................................ 471,736
Lord Abbett Developing Growth Fund (cost: $616,727)................... 820,321
Cash......................................................................
Accrued investment income.................................................

Net assets available for benefits............................... $ 237,017 $ 3,638,514

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Net Assets Available for Benefits
December 31, 1999

Common Cash and Accrued
Collective Contribution Investment
Trust Receivable Income Total

Assets:
Investments, at fair value
Merrill Lynch Funds:
Commerce Group, Inc. Common Stock Fund
(cost: $238,920)........................... $ 1,560 $ 238,577
Retirement Preservation Trust
(cost: $272,023)........................... $ 272,023 2,111 274,134
Corporate Bond Fund (cost: $464,461).......... 3,709 451,133
Capital Fund (cost: $120,790)................. 859 114,705
Basic Value Fund (cost: $502,800)............ 3,767 496,469
Global Allocation Fund
(cost: $103,002)........................... 841 104,779
S & P 500 Index Fund (cost: $371,014)......... 2,812 420,130
MFS Massachusetts Investors Growth Stock Fund
(cost: $633,682)........................... 4,627 775,856
GAM International Fund (cost: $400,493)........... 3,415 475,151
Lord Abbett Developing Growth Fund
cost: $616,727)............................. 5,341 825,662
Cash................................................. $18,579 18,579
Accrued investment income............................ 895 895

Net assets available for benefits......... $ 272,023 $29,042 $ 19,474 $4,196,070

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Net Assets Available for Benefits
December 31, 1998

Common
Stock of Mutual
Employer Funds
Assets:

Investments, at fair value
Merrill Lynch Funds:
Commerce Group, Inc. Common Stock Fund
(cost: $72,765)......................................... $ 84,556
Retirement Preservation Trust (cost: $59,901).
Corporate Bond Fund (cost: $124,232)......................... $123,885
Capital Fund (cost: $43,220)................................. 44,767
Basic Value Fund (cost: $112,262)........................... 117,424
Global Allocation Fund (cost: $24,421)....................... 23,873
S & P 500 Index Fund (cost: $76,032)......................... 82,701
MFS Massachusetts Investors Growth Stock Fund
(cost: $167,276)........................................ 182,462
GAM International Fund (cost: $119,359).......................... 124,842
Lord Abbett Developing Growth Fund
(cost: $170,744)......................................... 205,467
Cash................................................................
Accrued investment income...........................................

Net assets available for benefits........................ $ 84,556 $905,421

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Net Assets Available for Benefits
December 31, 1998

<capion>
Common Cash and Accrued
Collective Contribution Investment
Trust Receivable Income Total
Assets:

Investments, at fair value
Merrill Lynch Funds:
Commerce Group, Inc. Common
Stock Fund (cost: $72,765)........... $ 2,911 $ 87,467
Retirement Preservation Trust
(cost: $59,901)..................... $ 59,901 5,119 65,020
Corporate Bond Fund
(cost: $124,232).................... 8,855 132,740
Capital Fund (cost: $43,220)............. 2,420 47,187
Basic Value Fund
(cost: $112,262)..................... 8,190 125,614
Global Allocation Fund
(cost: $24,421)...................... 1,947 25,820
S & P 500 Index Fund
(cost: $76,032)...................... 5,128 87,829
MFS Massachusetts Investors Growth
Stock Fund (cost: $167,276).......... 10,939 193,401
GAM International Fund
(cost: $119,359)..................... 8,644 133,486
Lord Abbett Developing Growth Fund
(cost: $170,744)..................... 11,914 217,381
Cash............................................ $ 3,692 3,692
Accrued investment income....................... 204 204

Net assets available for benefits... $ 59,901 $ 66,067 $ 3,896 $1,119,841

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Year ended December 31, 1999

Merrill Lynch Funds

Commerce
Group, Inc. Retirement Corporate
Common Stock Preservation Bond Capital
Fund Trust Fund Fund

Additions to net assets
attributed to:
Dividends......................... $ 6,896 $ 8,716 $ 17,185 $ 11,676
Net realized investment
gains (losses)................. (645) - (649) (422)
Net appreciation
(depreciation) in fair
value of investments............ (13,694) - (16,690) (8,491)
Other additions................... - - - -
(7,443) 8,716 (154) 2,763
Participant contributions......... 139,993 182,544 290,642 72,109

Total additions.................. 132,550 191,260 290,488 74,872

Deductions to net assets
attributed to:
Benefits paid to participants..... 4,779 10,256 9,170 1,715

Net increase before
transfers.................. 127,771 181,004 281,318 73,157

Transfers between funds at
participants' election, net....... 13,143 (8,847) 16,847 (7,655)
Transfers from other plans............ 10,196 36,957 20,228 2,016
Net increase.................... 151,110 209,114 318,393 67,518

Net assets available for
benefits at beginning
of period........................ 87,467 65,020 132,740 47,187
Net assets available for
benefits at end of period......... $ 238,577 $ 274,134 $ 451,133 $ 114,705

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Year ended December 31, 1999

Merrill Lynch Funds
MFS
Massachusetts
Global S & P 500 Investors
Basic Value Allocation Index Growth Stock
Fund Fund Fund Fund

Additions to net assets
attributed to:
Dividends...................... $ 36,467 $ 11,920 $ 8,298 $ 56,617
Net realized investment
gains (losses).............. 1,445 164 499 5,316
Net appreciation
(depreciation) in fair
value of investments....... (15,260) 1,484 39,635 122,361
Other additions................ - - 3,013 -
22,652 13,568 51,445 184,294
Participant contributions...... 287,727 60,215 238,516 372,404

Total additions............... 310,379 73,783 289,961 556,698

Deductions to net assets
attributed to:
Benefits paid to
participants................ 7,691 1,619 3,363 22,170

Net increase before
transfers ................. 302,688 72,164 286,598 534,528

Transfers between funds at
participants' election,net....... 23,209 6,795 18,740 (9,382)
Transfers from other plans......... 44,958 - 26,963 57,309
Net increase................. 70,855 78,959 332,301 582,455

Net assets available for benefits
at beginning of period......... 125,614 25,820 87,829 193,401
Net assets available for
benefits at end of period...... $ 496,469 $104,779 $ 420,130 $775,856

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Year ended December 31, 1999

Lord Abbett Cash
GAM Developing and Accrued
International Growth Investment
Fund Fund Income Total

Additions to net assets
attributed to:
Dividends.............................. $ - $ 19,523 $ 691 $ 177,989
Net realized investment
gains (losses)...................... (2,580) 8,902 - 12,030
Net appreciation (deprecia-
tion) in fair value of
investments ........................ 65,760 168,871 - 343,976
Other additions....................... - 7 - 3,020
63,180 197,303 691 537,015
Participant contributions............. 280,771 403,697 - 2,328,618

Total additions...................... 343,951 601,000 691 2,865,633

Deductions to net assets
attributed to:
Benefits paid to participants......... 16,113 18,479 (14,712) 80,643

Net increase before
transfers ..................... 327,838 582,521 15,403 2,784,990

Transfers between funds at
participants' election, net .......... (26,882) (25,968) - -
Transfers from other plans................ 40,709 51,728 175 291,239
Net increase........................ 341,665 608,281 15,578 3,076,229

Net assets available for benefits
at beginning of period................ 133,486 217,381 3,896 1,119,841
Net assets available for
benefits at end of period............. $ 475,151 $ 825,662 $19,474 $ 4,196,070

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Period from September 1, 1998 through December 31, 1998

Merrill Lynch Funds

Commerce
Group, Inc. Retirement Corporate
Common Stock Preservation Bond Capital
Fund Trust Fund Fund

Additions to net assets
attributed to:
Dividends.......................... $ 581 $ 677 $ 994 $ 736
Net realized investment
gains (losses)................. 15 - (1) -
Net appreciation
(depreciation) in fair
value of investments............ 11,791 - (347) 1,547
12,387 677 646 2,283
Participant contributions.......... 44,360 155,275 81,847 27,295

Total additions................... 56,747 155,952 82,493 29,578

Deductions to net assets
attributed to:
Benefits paid to participants...... 94 45 131 -

Net increase before
transfers.................... 56,653 155,907 82,362 29,578

Transfers between funds at
participants' election, net......... 5,440 (95,590) 27,600 -
Transfers from other plans.............. 25,374 4,703 22,778 17,609
Net increase...................... 87,467 65,020 132,740 47,187

Net assets available for
benefits at beginning
of period....................... - - - -
Net assets available for
benefits at end of period........ $ 87,467 $ 65,020 $132,740 $ 47,187

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Period from September 1, 1998 through December 31, 1998

Merrill Lynch Funds
MFS
Massachusetts
Global S & P 500 Investors
Basic Value Allocation Index Growth Stock
Fund Fund Fund Fund

Additions to net assets
attributed to:
Dividends........................ $ 1,587 $ 1,944 $ 3,060 $ 12,855
Net realized investment
gains (losses)............... 24 (2) 24 43
Net appreciation
(depreciation) in fair
value of investments........... 5,162 (548) 6,669 15,186
6,773 1,394 9,753 28,084
Participant contributions........ 85,145 23,677 63,288 98,847

Total additions................. 91,918 25,071 73,041 126,931

Deductions to net assets
attributed to:
Benefits paid to
participants.................. 238 - 269 168

Net increase before
transfers................. 91,680 25,071 72,772 126,763

Transfers between funds at
participants' election, net...... 15,128 (40) 288 15,721
Transfers from other plans........... 18,806 789 14,769 50,917
Net increase................... 125,614 25,820 87,829 193,401

Net assets available for
benefits at beginning
of period........................ - - - -
Net assets available for
benefits at end of period.......... $125,614 $ 25,820 $ 87,829 $ 193,401

The accompanying notes are an integral part of these financial statements.

The Commerce Group, Inc. 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits
For the Period from September 1, 1998 through December 31, 1998

Lord Abbett Cash
GAM Developing and Accrued
International Growth Investment
Fund Fund Income Total

Additions to net assets
attributed to:
Dividends....................... $ - $ - $ 204 $ 22,638
Net realized investment
gains (losses)............... 3 534 - 640
Net appreciation
(depreciation) in
fair value of
investments.................... 5,483 34,723 - 79,666
5,486 35,257 204 102,944
Participant
contributions.................. 92,362 146,679 - 818,775

Total additions................. 97,848 181,936 204 921,719

Deductions to net assets
attributed to:
Benefits paid to
participants..................... 141 278 (292) 1,072

Net increase before
transfers................. 97,707 181,658 496 920,647

Transfers between funds
at participants'
election, net................... 15,389 16,064 - -
Transfers from other
plans........................... 20,390 19,659 3,400 199,194
Net increase................... 133,486 217,381 3,896 1,119,841

Net assets available for
benefits at beginning
of period........................ - - - -
Net assets available
for benefits at end of period... $ 133,486 $ 217,381 $ 3,896 $1,119,841

The accompanying notes are an integral part of these financial statements.

THE COMMERCE GROUP, INC. 401 (k) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999

NOTE A - Description of Plan

1. General

The Commerce Group, Inc. 401(k) Plan (the "Plan") was adopted by The
Commerce Group, Inc. (the "Company") effective September 1, 1998. It is
subject to many of the reporting and disclosure, minimum coverage, vesting,
fiduciary responsibility and civil enforcement provisions of the Employee
Retirement Income Security Act of 1974. The Plan is a voluntary retirement
savings account which allows each participant to direct the investment of
their account balances among options which include money market funds and
mutual funds, one of which consists entirely of the common stock of the
Company. The Plan may be amended and/or terminated by the Company at any
time; however, no such event may adversely affect the rights of
Participants in the Plan with respect to contributions made prior to the
date of such event. All administrative expenses of the Plan are paid for
by the Company.

2. Investment Options Available to Plan Participants

The Company has a Trust Agreement with Merrill Lynch Trust Co., FSB
("Merrill Lynch") as Trustee, providing for the management, investment and
reinvestment of Plan assets. The investment options available to Plan
Participants are as follows:

a. Commerce Group, Inc. Common Stock Fund - The fund invests in the
common stock of the Company.
b. Merrill Lynch Retirement Preservation Trust - Seeks to provide
preservation of capital, liquidity and current income levels that
are typically higher than those by money market funds.
c. Merrill Lynch Corporate Bond Fund - Seeks a high level of current
income and as a secondary objective, the fund seeks capital
appreciation.
d. Merrill Lynch Capital Fund - Seeks the highest total investment
return consistent with prudent risk through a fully managed
investment policy in equity, fixed income and convertible
securities.
e. Merrill Lynch Basic Value Fund - Seeks capital appreciation and
secondary income by investing primarily in large cap equities
that appear to be undervalued.
f. Merrill Lynch Global Allocation Fund - Seeks high total investment
return utilizing U.S. and foreign equity, fixed income and money
market securities. The investment approach provides the fund
with the opportunity to benefit from anticipated shifts in the
relative performance of different types of securities and
different markets.
g. Merrill Lynch S&P 500 Index Fund - The fund is a passive mutual
fund which invests in the largest 500 U.S. publicly traded
companies.
h. MFS Massachusetts Investors Growth Stock Fund - Seeks long-term
growth of capital through companies believed to have better than
average long-term growth potential. Emphasis is placed on high-
quality companies with characteristics such as: strong
management, history of consistent long-term earnings growth and
market leadership.
i. GAM International Fund - Seeks long-term capital appreciation
primarily in equity securities in foreign countries, focusing on
Canada, the United Kingdom, continental Europe and the Pacific
Basin.
j. Lord Abbett Developing Growth Fund - Seeks to provide long-term
capital appreciation by primarily investing in the stocks of
small companies with above average long-term rates, strong
management, undervalued assets and companies with exciting
prospects.

THE COMMERCE GROUP, INC. 401 (k) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999

3. Eligibility

Employees of the Company become eligible to participate in the Plan
after (1) three months of service with the Company, and, (2) upon
attaining 18 years of age (changed from 21 years of age effective December
31, 1998). Employees cease to be eligible to participate in the Plan upon
termination of their employment with the Company.

4. Contributions

Eligible employees may contribute a portion of their pay to the Plan on
a tax deferred basis, so that the eligible employee is not taxed on the
money they contribute until funds are distributed. Eligible employees are
allowed to contribute from 1% up to a maximum of 15% of their covered
compensation, subject to annual maximum limits imposed by the Internal
Revenue Service. Eligible employees may also contribute up to 100% of
their pretax cash bonus which they may be eligible to receive twice yearly
or the same percentage as is applied to their regular pay, also subject to
a maximum dollar amount on all contributions allowable by the Internal
Revenue Code. Eligible employees may also make rollover contributions
under the Plan from another qualified plan or an individual retirement
account.

5. Vesting

Because participants' account balances consist solely of amounts they
have deferred from their own compensation (and the investment income
derived therefrom) participating employees are 100% vested in their
accounts at all times.

6. Distributions

Participating employees may withdraw funds from the Plan prior to
retirement only in the circumstance of a demonstrated financial hardship.
Upon termination of employment for reasons other than death, disability or
retirement, former participants may also request an eligible rollover
distribution.

7. Federal Income Tax Status

The trust established under the Plan is qualified under Section 401(a)
of the Internal Revenue Code and intends to continue as a qualified trust.
The Plan received a favorable determination letter from the Internal
Revenue Service dated August 4, 1999. The Plan Administrator continues to
believe that the Plan is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code. Accordingly, a
provision for federal income taxes has not been made.

8. Risks and Uncertainties

The Plan provides for various investment options in registered
investment companies. Investment securities are exposed to various risks,
such as interest rate, market and credit risks. Due to the level of risks
associated with investment securities, it is reasonably possible that
changes in their values will occur in the near term and that such changes
could materially affect Participants' account balances and the amounts
reported in the statement of net assets available for benefits.

THE COMMERCE GROUP, INC. 401 (k) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999

Note B - Significant Accounting Policies

1. Basis of Accounting

The financial statements of the Plan have been prepared on the
accrual basis. All expenses associated with the administration of
the Plan, with the exception of the charge for partial or total
distribution from a participating employee's account, are paid
directly by the Company and accordingly, are not reflected in the
accompanying statements.

2. Valuation of Investments

The Plan's investments, including the common stock of the
Company, are stated at fair value, based on quoted market prices.
The shares of the registered investment companies are valued at
quoted market prices which represent the net asset values of the
shares held by the Plan at December 31, 1998 and 1999. The Merrill
Lynch Retirement Preservation Trust is valued at cost which
approximates fair value.

3. Use of Estimates

The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.

Note C - Investments

Accumulated unrealized gains at December 31, 1999 and 1998 and
at September 1, 1998 and the net increase in unrealized gains in
1998 and 1999 were as follows:

Unrealized gains at September 1, 1998....... $ 0
Unrealized gains at December 31, 1998...... 79,666
Net increase in unrealized gains.... $ 79,666

Unrealized gains at December 31, 1998....... $ 79,666
Unrealized gains at December 31, 1999....... 423,642
Net increase in unrealized gains..... $ 343,976

The proceeds from sales of investments, the cost of investments sold and net
realized investment gains determined on an average cost basis were as follows:

Proceeds Cost of Net Realized
From Investments Investment
Sales Sold Gains(Losses)

Year ended December 31, 1999

Common stock of employer..... $ 6,662 $ 7,307 $ (645)
Common/Collective trust...... 43,811 43,811 0
Mutual funds................. 222,497 209,822 12,675
Total............. $ 272,970 $ 260,940 $ 12,030

Period ended December 31, 1998

Common stock of employer...... $ 94 $ 79 $ 15
Common/Collective trust....... 106,876 106,876 0
Mutual funds.................. 7,478 6,853 625
Total............. $ 114,448 $ 113,808 $ 640

THE COMMERCE GROUP, INC. 401 (k) PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999

Note D - American Commerce Insurance Company 401(k) Plan

On January 29, 1999, the Company, in a joint venture with AAA Southern
New England, acquired Automobile Club Insurance Company, whose name was
changed to American Commerce Insurance Company ("American Commerce") upon
completion of the acquisition.

American Commerce maintains a separate 401(k) plan for the benefit of
substantially all of its employees. Subsequent to December 31, 1999, the
Directors of American Commerce voted to merge the American Commerce 401(k)
plan with the Company's Plan on January 1, 2001.

Note E - Year 2000 Compliance (unaudited)

The year 2000 issue existed primarily because most computer programs
were originally coded to recognize only the last two digits in the date
field. If not addressed and corrected, many systems could have failed and
produced erroneous results. The impact of this could have lead to a
material adverse impact upon the Plan. As a result, considerable effort
took place to assess the impact and determine whether to replace and/or
reprogram the systems in order for the systems to distinguish the intended
year. The Company initiated the Century Change project to address all
internal/external systems, software, third parties and vendors, including
those that impacted the Plan, in dealing with year 2000 compliance.

The Century Change project, enlisted both a redeployment of internal
resources and additional external consultant resources, involved the
development of a formal plan to address the Year 2000 problem and
progressed in accordance with that plan. The Company's plan, which was
designed to avoid any material adverse business production issues,
organized corporate systems into four sub-categories: Data Exchange,
AS400 Systems/Programs, PC Applications and PC Based Vendor Purchased
Application Software. Different sub-plans were established for each
category with the same Year 2000 objective in mind. Internal changes were
completed in accordance with specified delivery dates as outlined in the
plan. No processing problems have been encountered to date during the
year 2000, regarding these computer programs.

The Company reviewed the Century Change status of vendors who performed
outside processing, those whose software the Company used for internal
processing and those third parties with whom the Company did significant
business. Accordingly, the Company recognized that year 2000 non-
compliance could materially adversely affect the Company and the Plan. As
a result, the Company contacted all significant related third parties in
an effort to determine year 2000 compliance. This program included
sending out questionnaires to our major business partners, regarding their
year 2000 readiness. Based on the responses received, the Company did not
anticipate any material impact on its operations or financial condition.
Merrill Lynch indicated to the Plan, that the system that supports the
Plan was fully renovated, completed production testing and underwent
certification testing. While the Company took what it believed to be
appropriate safeguards, there could be no assurances that the failure of
third parties to be year 2000 compliant would not have a material adverse
impact on the Plan. During 2000, no processing problems have been
encountered to-date with services or products provided by third parties
which impact the Plan.

The Company's Executive Committee, as well as the Plan, reviewed issues
dealing with identifying possible year 2000 worst case scenarios and
developed contingency plans to respond to the likelihood of these
scenarios. Contingency plans were developed, where deemed appropriate, for
all material systems and relationships of the Plan. No problems (worst
case or otherwise) have been encountered during the year 2000, and it has
not been necessary to activate any contingency plans.

THE COMMERCE GROUP, INC. 401(k) PLAN
EIN NO.: 04-2599931 Plan No: 002
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1999

Units/ Current
Investments Shares Cost Value

Merrill Lynch Funds:
Commerce Group, Inc. Common Stock Fund....... 9,072 $ 238,920 $ 237,017
Retirement Preservation Trust................ 272,023 272,023 272,023
Corporate Bond Fund.......................... 40,898 464,461 447,424
Capital Fund................................. 3,557 120,790 113,846
Basic Value Fund............................. 12,945 502,800 492,702
Global Allocation Fund....................... 7,419 103,002 103,938
S & P 500 Index Fund......................... 23,159 371,014 417,318
MFS Massachusetts Investors Growth Stock Fund.. 37,935 633,682 771,229
GAM International Fund......................... 14,668 400,493 471,736
Lord Abbett Developing Growth Fund............. 40,094 616,727 820,321
Total Investments................. 461,770 $3,723,912 $ 4,147,554

THE COMMERCE GROUP, INC. 401(k) PLAN
EIN NO.: 04-2599931 Plan No: 002
Line 27d - Schedule of Reportable Transactions
For the Year ended December 31, 1999

Purchases Dispositions
Number of Number of Gain
Units/Shares Cost Units/Shares Proceeds (Loss)

Type II: Series of security transactions in excess
of 5% of plan assets:
Commerce Group, Inc.
Common Stock Fund.................. 6,967 173,641 280 6,662 (645)
Retirement Preservation Trust........ 242,183 242,183 30,061 30,061 0
Corporate Bond Fund.................. 32,069 360,835 1,757 19,628 (649)
Capital Fund......................... 2,567 88,358 304 10,033 (422)
Basic Value Fund..................... 10,359 410,098 500 20,675 1,445
Global Allocation Fund............... 5,728 81,278 175 2,485 164
S & P 500 Index Fund................. 18,147 300,948 378 6,233 499
MFS Massachusetts Investors
Growth Stock Fund.................. 29,114 509,144 2,647 48,055 5,316
GAM International Fund............... 12,693 340,947 2,189 57,232 (2,580)
Lord Abbett Developing
Growth Fund....................... 30,104 495,237 3,300 58,156 8,902

There were no type I, III, or IV reportable transactions for the
year ended December 31, 1999.

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-62367) pertaining to The Commerce Group, Inc. 401(k) Plan
of our report dated June 26, 2000, with respect to the financial statements
and schedules of The Commerce Group, Inc. 401(k) Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1999.

Boston, Massachusetts
June 26, 2000

SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.

Dated: June 26, 2000

THE COMMERCE GROUP, INC. 401(k) PLAN

By
(Randall V. Becker)
Treasurer and Chief Accounting Officer