The St. Paul Travelers Companies, Inc. - Company Profile, Information, Business Description, History, Background Information on The St. Paul Travelers Companies, Inc.



385 Washington Street
Saint Paul
Minnesota
55102-1309
U.S.A.
Company Perspectives

We begin 2006 with distinct advantages. We have an impressive, broad national reach--built upon excellent relationships with our distributors at a local level--making us a "go-to" market in our agents' and brokers' offices. While our relationships are deep in many individual product lines, they do not always reflect the breadth of insurance products and services that we offer. Therefore, one of our best opportunities for growth lies in our ability to increase distributor access to our range of products, which is among the broadest in the industry. We are pursuing strategies designed to make it easier for distributors to tap into our many products and services. These strategies are based upon the foundation of offering quality products and services, delivered at competitive prices.

History of The St. Paul Travelers Companies, Inc.


The St. Paul Travelers Companies, Inc. is Minnesota's oldest business corporation and one of the oldest insurance companies in the United States. Known as The St. Paul Companies, Inc. prior to its acquisition of Travelers Property Casualty Corp. in April 2004, the company is one of the leading providers of commercial and personal property and casualty insurance in the United States. St. Paul Travelers distributes its insurance products principally through U.S. independent agents and brokers, ranking as the second largest writer of automobile and homeowners insurance through this channel. The firm remains headquartered in Saint Paul, Minnesota, with a major secondary base in Hartford, Connecticut, where Travelers had its home; additional offices are located in the United Kingdom, Ireland, and Canada.

Early History

In the years preceding the founding of The St. Paul, people living in the Minnesota Territory were insured primarily by agents representing eastern insurance companies. Most wintertime claims and claim payments had to wait for spring, when travel and communication resumed.

In 1853 Alexander Wilkin, the secretary of the territory, and The St. Paul's first and youngest president, approached his neighbors, George and John Farrington, with the idea of starting a Saint Paul, Minnesota-based insurance company. The need for local fire insurance was particularly great, and George Farrington, a local banker, saw the opportunity to stem the flow of cash out of the territory. Farrington introduced a bill of incorporation in the territorial legislature that same year, and St. Paul Mutual Insurance Company was incorporated.

The St. Paul was to operate as a mutual company, but it also sold traditional, or stock, policies. Mutual policyholders were to share in both the profits and losses of the company; stock policyholders would not. The company's charter permitted it "to make insurance on all descriptions of property against loss or damage by fire," and "to make insurance on all descriptions of boats and vessels, the cargoes and freights thereof."

The company needed to sell $100,000 of insurance to raise the capital to begin business. To accomplish this end, the company's ten founders each applied for $10,000 policies on their own property. Shortly thereafter it was discovered that none of the founders possessed property worth $10,000. The members of the board rejected their own applications and rewrote them for $5,000 each. In February 1854 the company issued its first policy, a mutual policy for $800. It insured the home and furnishings of Robert A. Smith, the territory's librarian and private secretary to Governor Willis A. Gorman, who in turn purchased the company's first stock policy.

The St. Paul sustained its first fire loss in April 1855 when a row of offices and a bakery burned to the ground, resulting in $3,000 in claims. This loss was followed by a much greater problem, the panic of 1857, in which many New York companies folded. In Saint Paul all but three of the local banks were forced to close. The St. Paul and other insurance companies were forced to accept "notes of indebtedness" as premium payments. These notes could not be converted into cash to cover day-to-day operating expenses and, as a result, 47 fledgling insurance companies closed. The St. Paul, faced with severe cash flow problems, elected not to issue any new policies for a time and was forced to sell its office furniture to maintain operations.

A period of stagnation occurred starting in 1861, during the Civil War. The St. Paul's president, Alexander Wilkin, died on a Mississippi battlefield. He was succeeded by James C. Burbank, the company's first full-time president, in April 1865. Also in 1865, The St. Paul reorganized as a stock company and changed its name to St. Paul Fire and Marine Insurance Company. One of Burbank's first duties was to oversee The St. Paul's expansion into the Canadian market. By 1866 the company was writing business in Manitoba. A shareholder-elected board voted to pay semiannual dividends, and in July 1867 the company issued its first stock dividend, of $1.50 per share. Following the Civil War, The St. Paul grew. It constructed a new corporate headquarters. A model for fire-resistant structures of the future, the building was built of metal and stone.

Reputation Grows Out of the Great Chicago Fire of 1871 and the San Francisco Earthquake of 1906

In 1871 the Great Chicago Fire strained the company's resources. The fire left 275 people dead and 100,000 people homeless and destroyed more than 17,000 buildings. More than 200 insurance companies experienced fire-related losses and many were financially ruined; about one-quarter of the 200 companies went out of business and most that survived paid as little as four cents on the dollar to settle their claims. At a meeting of The St. Paul's board, it was agreed that all claims would be paid in full. President Burbank predicted that this decision ultimately would bring a return as word got out that the company was covering its losses. In that year claims submitted by policyholders exceeded by 165 percent the amount the company collected in premiums. The St. Paul paid a total of $140,000 to cover losses. The St. Paul's assets were greatly reduced, and it paid no dividends that year. The company's sales did improve as a result of the decision to pay all claims, however, and The St. Paul recouped its losses.

Burbank died in 1876, and the company's secretary, Charles H. Bigelow, was elected president. Shortly thereafter The St. Paul was faced with the insurance price war of 1877. The insurance market was becoming more competitive as the country grew and prospered. The result was too many insurance companies offering lower prices to compete. Under Bigelow's leadership the company dropped unprofitable agencies, introduced new products such as cyclone insurance and crop hail coverage, and instituted more stringent guidelines in accepting new customers. The St. Paul rode out the price war intact, without lowering its rates. Insurance buyers were not only affected by the price; product and service diversity were also important to a successful business plan.

During the late 19th century, the company expanded into new types of insurance coverage. The San Francisco Earthquake and Fire of 1906 took a heavy toll on The St. Paul's new product development plans, however. Claims in excess of $1.2 million were paid, in full, and the company's reputation grew. In 1911 Charles Bigelow died, and his son, Frederic Bigelow, succeeded him as president. In the years following Frederic Bigelow's appointment, the United States prepared for World War I. The St. Paul adjusted its charter to include losses incurred resulting from acts of war. In 1917 The St. Paul covered the loss of 260 vessels, totaling more than $4 million, most of which was repaid by Germany over 50 years. During the war The St. Paul began overseas expansion in a modest fashion, when it began to issue policies in Great Britain to cover losses incurred as a result of bomb damage, but in a relatively short period of time the British government cut the rates charged by U.S. companies by about 50 percent. The St. Paul, however, continued to insure against bomb damage in England for the duration of the war. The St. Paul also added automobile insurance to its product line during this period.

As a result of massive losses incurred during World War I, most European insurance companies were all but paralyzed. The St. Paul became a charter member of the American Foreign Insurance Association (AFIA), a group of companies that pooled its resources, and with combined capital of $135 million, began to market insurance abroad. The company was soon doing business in 25 foreign markets, and another period of diversification and new product development began.

Throughout the 1920s The St. Paul introduced all-risk coverage for the jewelry trade and for other "priceless objects" of artistic and historical significance. The policy insured items in transit from almost every known risk, except theft, because fire and marine insurance companies were prohibited from writing liability coverage. The St. Paul's leadership decided, therefore, that a liability company was needed, and in 1926 a subsidiary, St. Paul Mercury Indemnity Company, was formed. The St. Paul also added aircraft insurance and surety bonds to its product line in 1929.

After serving as The St. Paul's president for 27 years, Frederic Bigelow became chairman in 1938, and Charles F. Codere became The St. Paul's fifth president. Shortly thereafter, the United States entered into World War II. At the onset of the war, U.S. insurance companies wrote marine insurance through a specially formed syndicate, but as losses grew, the U.S. government assumed the burden of covering the staggering war losses. The War Damage Corporation, a company financed by the federal government and run by private insurance companies, wrote more than nine million policies and collected close to $250 million in premiums by the war's end.

Continuing to Diversify in Postwar Period

In 1948 Codere became chairman, and A. B. Jackson was elected The St. Paul's new president. Codere and Jackson worked well together, and the company greatly expanded its product lines and services. Liability insurance was offered to real estate brokers, insurance agents, and hospitals. The St. Paul refined its package policy program, allowing its agents to offer more and diverse coverage in one policy. Package policies had been introduced during World War II to provide the military with an insurance package to cover liability, shipping, and fire insurance. This method of issuing coverage continued after the war, with The St. Paul offering packages for a variety of commercial risks. Jackson also was instrumental in the organization of two new associations to insure nuclear reactors.

In 1957, with the acquisition of the Western Life Insurance Company of Helena, Montana, The St. Paul broke into the life insurance market. By 1964 Western Life sales had more than doubled. The St. Paul's agents were now able to sell all forms of insurance, sales volume continued to increase, and The St. Paul acquired several general agencies, which sold the insurance products of many different companies, to work with its independent agents more effectively. Management training programs were also initiated in 1958, computers were installed in 1956 to speed up the handling and processing of information, and in 1961 The St. Paul rebuilt and enlarged its offices.



When Codere retired in 1963, Jackson succeeded him and Ronald M. Hubbs became The St. Paul's next president. During the 1960s the emphasis was on customer service. Hubbs was instrumental in the development of more than 40 property and liability service centers nationwide. Each center was self-contained; it had its own underwriters, risk management staff, marketing, claims and policy services, and office support personnel. The company believed decentralization would bring it closer to its customers.

In 1968 The St. Paul reorganized. St. Paul Fire and Marine Insurance Company became The St. Paul Companies, Inc. The name St. Paul Fire and Marine Insurance Company was retained for the property-liability insurance subsidiary. In the years following the reorganization, The St. Paul Companies diversified its insurance-related business and branched into other areas of consumer and business services.

In 1970 St. Paul Guardian Insurance Company was formed to market personal lines of insurance. Two years later St. Paul Investment Management Company, an investment management firm, was started, and in 1973 St. Paul Life Insurance Company, whose purpose was to market life insurance through independent agents representing St. Paul Fire and Marine, was formed.

In 1973 Jackson retired as chairman. He was succeeded by Hubbs, and Carl B. Drake became the eighth president of The St. Paul Companies. Less than one year later, The St. Paul acquired John Nuveen & Co., a trader, marketer, underwriter, and distributor of securities. Nuveen was founded in Chicago in 1898 and had been a pioneer in tax-exempt bonds for individual investors, which it introduced in 1961. The St. Paul also added St. Paul Risk Services Inc., which provided consulting services to self-insure institutions and firms, and St. Paul Surplus Lines, which again broadened the coverage offered by St. Paul Fire and Marine.

In the midst of this growth the public was becoming more concerned about the quality of the products and services it was receiving. This concern, combined with changes in the medical field--in particular, new drugs, transplants, the growth of large group medical practices and group medical plans, and less personal doctor-patient relationships--contributed to an increased number of medical liability claims. Insurance companies selling malpractice coverage began to suffer massive losses. Medical cases often took years to settle, and court awards continued to grow.

The St. Paul, the largest carrier of medical liability insurance, stopped accepting new policies for a short time. When the company began to write new business again, it based premiums on the practitioners' past record. This "claims made" standard had been used in other types of liability for many years. It led to more accurate pricing and seemed to stabilize the market. The company also raised its malpractice premiums. The company later created a medical services division, which brought together The St. Paul's underwriting, marketing, and administrative expertise in healthcare-related fields. The company introduced simplified language policies, starting with its personal liability catastrophe coverage, with the hope that it would reduce claims.

Period of Retrenchment

In 1980 Chairman Drake refocused mainly on insurance-related businesses. The company began to divest most non-insurance subsidiaries (with the exception of the John Nuveen asset management and investment banking unit) and resumed expansion of its insurance-related interests. Under a new president, Robert J. Haugh, these divestitures were completed by 1984, when The St. Paul's net loss was $210 million. The company then undertook a new series of acquisitions. Among these purchases were Seaboard Surety Company, a provider of fidelity and surety bonds, and Swett & Crawford Group, a Los Angeles-based wholesale broker in excess and surplus lines. Atwater McMillian (renamed St. Paul Specialty Underwriting in 1988), a company handling specialty risk accounts and surplus lines, was formed in 1981.

During the 1980s more demanding consumers, an evolving marketplace, and government deregulation resulted in another price war that hurt The St. Paul's liability business. During the same years The St. Paul also expanded its involvement in European markets. The company acquired the London-based Minet Holdings PLC in 1988, making The St. Paul the seventh largest insurance brokerage firm in the world. Shortly after the Minet acquisition, The St. Paul established St. Paul (U.K.) Limited.

On May 1, 1990, Haugh retired and was replaced by The St. Paul's new chairman, president, and CEO, Douglas W. Leatherdale, who continued the company's strategy for an increasing presence in the European market. The St. Paul also formed Minet Europe Holdings Limited, as part of the Minet Group, to manage the expansion of The St. Paul's European market.

After two and a half bitter years of litigation and regulatory oversight, The St. Paul in mid-1990 successfully ended an attempted hostile takeover by Alleghany Corporation. In May 1992 The St. Paul completed an initial public offering for the highly successful, and newly renamed, The John Nuveen Company, selling eight million shares at $18 per share and leaving The St. Paul with a 74 percent stake (which increased to 77 percent by mid-1997). For the year, John Nuveen enjoyed record revenues of $221 million, 23 percent higher than the previous year, but The St. Paul as a whole did not fare as well. Record catastrophic storms that year, including Hurricanes Andrew and Iniki and Typhoon Omar, led to a record $445 million in catastrophe losses, which when coupled with a $365 million write-down on the goodwill associated with the continuously troubled Minet Group subsidiary, resulted in the worst operating loss in company history: $333.8 million.

In May 1993 The St. Paul launched a restructuring of its U.S. underwriting businesses (known collectively as St. Paul Fire and Marine Insurance), partly in response to the losses of the previous year. Nearly two dozen departments were streamlined into three new entities: St. Paul Specialty, which housed such niche underwriting operations as medical services; St. Paul Personal & Business, responsible for underwriting personal insurance for individuals and commercial insurance for small business owners; and St. Paul Commercial, responsible for midsized commercial customers. In August 1993 the St. Paul Personal & Business unit was bolstered through the $420 million purchase of Economy Fire & Casualty from Kemper Corporation. With no repeat of the spate of catastrophic 1992 storms, The St. Paul returned to profitability in 1993, posting record operating earnings of $386.6 million, with records following for 1994 ($413.9 million) and 1995 ($464.9 million) as well.

Results for 1996 were not nearly so rosy, as the company suffered its second worst catastrophe losses in history, $207 million, stemming in large part from an East Coast blizzard, flooding in the West and Southwest, and Hurricane Fran. In July of that year, St. Paul Fire and Marine strengthened its position in the small to midsized commercial underwriting market with the purchase of Northbrook Holdings, Inc. from Allstate Insurance Company for $190 million. Then in December The St. Paul decided to sell its loss-making Minet Group, finally unloading it in May 1997 to the insurance brokerage firm Aon, based in Chicago. Meanwhile, John Nuveen added $13.6 billion to its assets under management through the acquisitions of Flagship Resources in January 1997 and of Rittenhouse Financial Services in July 1997. St. Paul International Underwriting, the underwriter of non-U.S. property and liability insurance, was active as well, opening new offices in France, Germany, Canada, Mexico, and South Africa and acquiring the Botswana General Insurance Company of South Africa in October 1997.

In the rapidly consolidating insurance industry of the 1990s, The St. Paul Companies continued to be on the side of the acquirers. With the company's strong balance sheet backing him, Leatherdale next engineered a blockbuster deal: the April 1998 acquisition of USF&G Corporation for approximately $3.9 billion in stock and assumed debt. In buying the Baltimore-based USF&G, a firm founded in 1896, The St. Paul propelled itself from the 13th to the eighth largest property and casualty insurer in the nation. The companies' operations meshed well geographically, with The St. Paul's strength in the Midwest, and USF&G's in the South and Northeast. To integrate the USF&G operations, The St. Paul launched an 18-month plan to slash 2,600 jobs from the combined workforce.

The St. Paul barely eked out a profit of $89.3 million in 1998 as it again suffered catastrophic losses--$418.7 million pretax from a battery of hurricanes, tornadoes, and other storms. In the wake of these results, Leatherdale elected to focus the company on the more profitable commercial side of its business, and more specifically the specialty commercial sector, jettisoning several individual insurance units over a two-year period. The St. Paul sold its personal property and casualty lines to MetLife Auto & Home for $600 million in 1999, its nonstandard auto insurance unit to the Prudential Insurance Company of America in 2000 for $200 million, and its Fidelity & Guaranty Life Insurance unit to the U.K.-based Old Mutual PLC for $635 million in 2001. In the meantime, The St. Paul bolstered its healthcare business in April 2000 by acquiring MMI Companies for $320 million in cash and debt. MMI, based in Deerfield, Illinois, specialized in services for the healthcare industry, including clinical risk management, operational-consulting services, and insurance and reinsurance in the United States and London. Later in 2000 The St. Paul elected to sell an unprofitable subsidiary of MMI, Unionamerica Insurance Co., a London-based unit focusing on medical-liability reinsurance. In what turned out to be the final deal of the Leatherdale era, The St. Paul acquired Toronto-based London Guarantee Insurance Company, Canada's second largest specialty property and casualty insurer, for $80 million in late 2001.

2001 and Beyond: The Fishman/Travelers Era

As a result of the terrorist attacks on the United States of September 11, 2001, The St. Paul incurred claims totaling approximately $941 million. This propelled the firm into a net loss for the year of $1.09 billion. Shortly after 9/11, in the middle of the following month, Jay S. Fishman was brought onboard as chairman and CEO, succeeding Leatherdale. Fishman had been the head of Travelers Insurance Group, a unit of Citigroup Inc., but elected to leave for an opportunity to run his own company rather than wait for a chance to succeed Citigroup's Chairman and CEO Sanford Weill.

Fishman quickly put his stamp on The St. Paul. In a reversal of one of his predecessor's moves, The St. Paul once again began seeking out general commercial property and casualty business, concentrating on small and midsize businesses, ones with revenues under $500 million. The company also substantially reduced its international operations, retaining only its businesses in the United Kingdom, Canada, and Mexico, and in December 2001 began a gradual pullout from medical-malpractice insurance, a business in which it was paying out more in claims than it was collecting in premiums. In reinsurance, the company narrowed the types of reinsurance it offered and then converted the remaining reinsurance operation into a separate Bermuda company with The St. Paul as a major investor. Fishman also slashed about 1,100 jobs from the workforce. On the downside, The St. Paul reached a settlement in a legacy asbestos case inherited through the takeover of USF&G. In mid-2002 the company settled a case involving Western Asbestos, agreeing to a $987 million payment, which resulted in a net charge of $380 million for 2002.

Fishman's blockbuster move, however, was the $17.9 billion stock-swap acquisition of Travelers Property Casualty Corp., Fishman's old company, which Citigroup had spun off into a separate company in 2002. Announced in November 2003 and completed in April 2004, the deal created the second biggest commercial property and casualty insurer in the United States, trailing only American International Group, Inc. It also brought homeowners and auto insurance back into The St. Paul fold and combined Travelers' more extensive general commercial lines with The St. Paul's stronger specialty insurance business. Upon the deal's completion The St. Paul changed its name to The St. Paul Travelers Companies, Inc. and retained its Saint Paul headquarters, and Travelers became a subsidiary while staying based in Hartford, Connecticut. Fishman remained CEO but temporarily relinquished the chairmanship to Robert I. Lipp, head of Travelers. In late 2005 Fishman succeeded Lipp as chairman.

As St. Paul Travelers moved ahead with integration plans that included cutting 3,000 jobs from the combined workforce of 30,000 and aims to save $350 million in annual operating costs, the merger got off to a rough start. In July 2004 the company announced a reserve charge of $1.625 billion, a charge about twice as large as analysts had been expecting, that officials said was needed to reconcile differing accounting treatments at the two merged entities. The company also lost some commercial business as independent agents who had been selling products of The St. Paul chafed at the more stringent underwriting policies and sales practices of Travelers. Moreover, the string of major storms that hit the southeastern United States in 2004 resulted in before-tax claims of $612 million at St. Paul Travelers. Net income thus totaled just $955 million on revenues of $22.54 billion.

In 2005 the combination of catastrophic claims and special charges was even higher than the previous year. The former figure, largely attributable to the devastation wrought by Hurricane Katrina, amounted to $1.5 billion after-tax, while the company also added $548 million to its asbestos reserves. Needing to raise cash, St. Paul Travelers elected to sell off its majority stake in Nuveen, garnering $2.4 billion in the process. Coupled with improving performance in the company's core operations, the Nuveen divestment helped St. Paul Travelers bump up its net income for the year to $1.62 billion.

The year 2006 started out inauspiciously, as a U.S. Circuit Court of Appeals ruling exposed the company to potential additional asbestos liabilities of more than $1 billion in a case involving ACandS Inc., a former distributor and installer of asbestos products. As St. Paul Travelers continued to wrestle with its asbestos claims and made plans for the prospect of another round of devastating hurricanes and tropical storms, surprising speculation about another merger emerged. In March 2006 the Wall Street Journal reported that St. Paul Travelers was in the early stages of discussing a takeover of Zurich Financial Services, one of Europe's largest insurers and a firm that was also a major U.S. property and casualty insurer. Any such deal promised to be highly complex and take months to complete, but in the meantime St. Paul Travelers issued a denial that any such talks were taking place.

Principal Subsidiaries

Travelers Property Casualty Corp.; The Standard Fire Insurance Company; The Travelers Indemnity Company; The Northland Company; The Phoenix Insurance Company; Travelers Casualty and Surety Company; St. Paul Guarantee Insurance Company (Canada); St. Paul Fire and Marine Insurance Company; St. Paul Mercury Insurance Company; United States Fidelity and Guaranty Company; St. Paul Reinsurance Company Limited (U.K.); USF&G Financial Services Corporation.

Principal Divisions

Commercial Lines; Specialty Lines; Personal Lines.

Principal Competitors

American International Group, Inc.; The Chubb Corporation; The Hartford Financial Services Group, Inc.; Nationwide Mutual Insurance Company; Allianz AG; Zurich Financial Services; AXA; ING Groep N.V.

Chronology
Key Dates
1853 St. Paul Mutual Insurance Company is founded by Alexander Wilkin and George and John Farrington, based in Saint Paul, Minnesota.
1865 Company reorganizes as a stock company and renames itself St. Paul Fire and Marine Insurance Company (The St. Paul).
1871 The St. Paul enhances its reputation by paying, in full, all claims from the Great Chicago Fire.
1926 Firm begins offering liability coverage through a newly formed subsidiary, St. Paul Mercury Indemnity Company.
1957 With acquisition of the Western Life Insurance Company, The St. Paul enters the life insurance market.
1968 Company reorganizes under a holding company, The St. Paul Companies, Inc.
1974 John Nuveen & Co. is acquired.
1992 Record losses from catastrophic storms, particularly Hurricane Andrew, and a goodwill write-down connected with a troubled U.K. subsidiary send The St. Paul into a net loss for the year.
1998 In a deal valued at approximately $3.9 billion, The St. Paul acquires USF&G Corporation.
2001 The St. Paul's losses stemming from the terrorist attacks on September 11, 2001 total $941 million.
2004 In a $17.9 billion deal, The St. Paul acquires Travelers Property Casualty Corp. and then renames itself The St. Paul Travelers Companies, Inc.
2005 Nuveen is divested.
Additional Details
Public Company
Incorporated: 1853 as St. Paul Mutual Insurance Company
Employees: 31,900
Total Assets: $113.19 billion (2005)
Stock Exchanges: New York
Ticker Symbol: STA
NAIC: 524126 Direct Property and Casualty Insurance Carriers; 524130 Reinsurance Carriers
Further Reference
DePass, Dee, "Fishman: 'I'm Going As Fast As I Can': The St. Paul's New CEO Says Significant Changes Are Coming," Minneapolis Star Tribune, October 24, 2001, p. 1D.
------, "St. Paul Companies to Sell Life Insurance Unit for $635 Million," Minneapolis Star Tribune, April 27, 2001, p. 3D.
------, "The St. Paul Companies Will Buy USF&G Corp.," Minneapolis Star Tribune, January 20, 1998, p. 7B.
------, "The St. Paul Cos. Plans to Grow by Shrinking," Minneapolis Star Tribune, January 11, 1999, p. 1D.
------, "The St. Paul Finds New CEO in New York," Minneapolis Star Tribune, October 12, 2001, p. 1D.
------, "St. Paul-Travelers Merger Creates Insurance Giant," Minneapolis Star Tribune, November 18, 2003, p. 1A.
Dorfman, John R., "Laughing in the Storm," Forbes, November 7, 1983, p. 270.
Dykewicz, Paul, "St. Paul Restructures Comp, Reinsurance," Journal of Commerce and Commercial, May 6, 1993, p. 10A.
Fletcher, Meg, "St. Paul, Alleghany Truce Could Curtail Hostile Insurer Bids," Business Insurance, June 4, 1990, pp. 3, 45.
Francis, Theo, and Robin Sidel, "St. Paul Agrees to Stock Deal with Travelers," Wall Street Journal, November 18, 2003, p. C1.
Hays, Daniel, "St. Paul Travelers Loses $1B-Plus Asbestos Decision," National Underwriter Property and Casualty-Risk and Benefits Management, January 10, 2006, p. 7.
"A History of the St. Paul," St. Paul, Minn.: The St. Paul Companies, 1988.
Kunz, Virginia Brainard, "Fires, Hurricanes, Diamonds, Elephants: St. Paul Companies' Colorful History," Ramsey County (Minn.) History, Fall 1996, pp. 3-32.
Laing, Jonathan R., "Sins of St. Paul," Barron's, May 16, 2005, pp. 32, 34.
Lee, Thomas, "$800 Million Hit for St. Paul Travelers," Minneapolis Star Tribune, September 24, 2005, p. 1D.
Moylan, Martin J., "St. Paul Cos.' Restructuring Puzzles Analysts, Worries Staff," Journal of Commerce and Commercial, November 24, 1993, p. 8A.
Mullins, Ronald Gift, "Aon Acquires Minet Group from St. Paul," Journal of Commerce and Commercial, April 14, 1997, p. 10A.
------, "St. Paul Says '92 Big Storms Cost Company $305 Million," Journal of Commerce and Commercial, January 21, 1993, p. 11A.
"An Old-Fashioned Marriage," Economist, November 22, 2003, p. 70.
Oster, Christopher, and Paul Beckett, "St. Paul Cos. Names Fishman of Citigroup As Chief Executive," Wall Street Journal, October 12, 2001, p. C13.
Phelps, David, "The St. Paul Aims to Sharpen Focus: MetLife Pays $600 Million for Unit," Minneapolis Star Tribune, July 13, 1999, p. 1D.
St. Anthony, Neal, "Sale of Unit May Mean New Opportunities for St. Paul," Minneapolis Star Tribune, July 16, 1999, p. 1D.
"St. Paul Cos.: Bucking an Industry Trend by Moving More Deeply into Insurance," Business Week, February 28, 1983, pp. 92+.
Schifrin, Matthew, "The Artful Contrarian," Forbes, February 17, 1992, p. 184.
Scism, Leslie, "St. Paul to Pay $2.8 Billion for USF&G," Wall Street Journal, January 20, 1998, p. A3.
Singer, Jason, Charles Fleming, and Dennis K. Berman, "Prospect of Trans-Atlantic Merger Reflects Ferment Among Insurers," Wall Street Journal, March 17, 2006, pp. A1, A9.
Stavro, Barry, "Risk Is Relative," Forbes, March 10, 1986, p. 63.
Treaster, Joseph B., "Citi Man Is Thinking Big but Thriftily in the Midwest," New York Times, March 27, 2002, p. C1.
------, "$16 Billion Deal Joins St. Paul and Travelers," New York Times, November 18, 2003, p. C1.
Willoughby, Jack, "Winning Policies," Barron's, September 8, 2003, p. 23.
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425 1 dec1803_425.htm


Filed by The St. Paul Companies, Inc. Pursuant to Rule 425 Under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934

Subject Company: Travelers Property Casualty Corp.

Commission File No.: 333-111072

This filing contains certain forward-looking information about Travelers Property Casualty Corp. (“Travelers”), The St. Paul Companies, Inc. (“The St. Paul”) and the combined company after completion of the transactions that are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as “expect”, “feel”, “believe”, “will”, “may”, “anticipate”, “plan”, “estimate”, “intend”, “should” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Travelers and The St. Paul, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Some other risks and uncertainties include, but are not limited to: those discussed and identified in public filings with the Securities and Exchange Commission (the “SEC”) made by Travelers and The St. Paul; the inability to obtain price increases due to competition or otherwise; losses due to foreign currency exchange rate fluctuations and losses in investment portfolios, which could be adversely impacted by adverse developments in U.S. and global financial markets, interest rates and rates of inflation; weakening U.S. and global economic conditions; insufficiency of, or changes in, loss reserves; the occurrence of catastrophic events, both natural and man-made, including terrorist acts, with a severity or frequency exceeding our expectations; exposure to, and adverse developments involving, environmental claims and related litigation; the impact of claims related to exposure to potentially harmful products or substances, including, but not limited to, lead paint, silica and other potentially harmful substances; adverse changes in loss cost trends, including inflationary pressures in medical costs and auto and home repair costs; developments relating to coverage and liability for mold claims; the effects of corporate bankruptcies on surety bond claims; adverse developments in the cost, availability and/or ability to collect reinsurance; the ability of our subsidiaries to pay dividends to us; adverse outcomes in legal proceedings; judicial expansion of policy coverage and the impact of new theories of liability; the impact of legislative actions, including federal and state legislation related to asbestos liability reform; larger than expected assessments for guaranty funds and mandatory pooling arrangements; a downgrade in claims-paying and financial strength ratings; the loss or significant restriction on the ability to use credit scoring in the pricing and underwriting of policies; amendments and changes to the risk-based capital requirements; the ability to achieve the cost savings and synergies contemplated by the proposed merger; the effect of regulatory conditions, if any, imposed by regulatory agencies; the reaction of Travelers’ and The St. Paul’s customers and policyholders to the transaction; the ability to promptly and effectively integrate the businesses of Travelers and The St. Paul; and diversion of management time on merger-related issues.

Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. Neither Travelers nor The St. Paul undertakes any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in Travelers’ and The St. Paul’s various SEC

reports, including but not limited to Annual Reports on Form 10-K for the year ended December 31, 2002 and Quarterly Reports on Form 10-Q for the reporting periods of 2003.

This filing may be deemed to be solicitation material in respect of the proposed merger of Travelers and The St. Paul. On December 10, 2003, The St. Paul filed with the SEC a registration statement on Form S-4, including the preliminary joint proxy statement/prospectus constituting a part thereof. SHAREHOLDERS OF TRAVELERS AND SHAREHOLDERS OF THE ST. PAUL ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE DEFINITIVE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN, OR WILL CONTAIN, IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final joint proxy statement/prospectus will be mailed to shareholders of Travelers and shareholders of The St. Paul. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov, from Travelers Property Casualty Corp., One Tower Square, Hartford, Connecticut 06183, Attention: Investor Relations, or from The St. Paul Companies, Inc., 385 Washington Street, Saint Paul, Minnesota 55102, Attention: Investor Relations.

Travelers, The St. Paul and their respective directors and executive officers and other members of management and employees may be deemed to participate in the solicitation of proxies in respect of the proposed transactions. Information regarding Travelers’ directors and executive officers is available in Travelers’ proxy statement for its 2003 annual meeting of shareholders, which was filed with the SEC on March 17, 2003, and information regarding The St. Paul’s directors and executive officers is available in The St. Paul’s proxy statement for its 2003 annual meeting of shareholders, which was filed on March 28, 2003, as supplemented by the Additional Materials filed pursuant to Schedule 14A of the Securities Exchange Act of 1934, as amended, on April 7, 2003. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC as they become available.

###

The attached slide presentation may be used by The St. Paul as additional solicitation material in connection with the proposed transaction and supplements the slide presentation that was filed by The St. Paul on November 17, 2003.

###

The St. Paul Travelers
Companies

Setting the Property/Casualty
Market Standard

Cautionary Statement

Any comments made regarding future expectations, trends and market conditions, including pricing and loss cost trends as well as other topics, may be considered forward-looking under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ from our current expectations. The St. Paul Companies and Travelers assume no duty to update forward looking statements. Factors that could cause actual results to differ are described under “Cautionary Statement regarding Forward—Looking Statements” in St. Paul’s registration statement on Form S-4, filed with the SEC.


1


The St. Paul Travelers Companies
Setting The Property/Casualty Market Standard

Ø The “Go-To” National Market Company

Ø Financial Strength

Ø Compatible Cultures and Track Record of Successful Transactions

Ø Paramount Objective —Driving Value Creation for Shareholders

Ø Management Appointments and Integration Planning


2

The St. Paul Travelers Companies
Summary of Merger Terms

Exchange Ratio 0.4334 St. Paul shares per Travelers share (Class A and B)

Structure Tax-free merger

Dividend Policy Ongoing dividend at the annual rate of $0.88 per share;
Special cash dividend to SPC shareholders of record date prior to closing

New Corporate Name The St. Paul Travelers Companies

Global Headquarters Saint Paul, Minnesota

Management Robert Lipp, Chairman
Jay Fishman, CEO (Chairman, 1/1/06)

Board Composition 12 Travelers Directors
11 St. Paul Directors

Expected Closing Second quarter 2004

Approvals Required Normal regulatory and shareholder approvals for both companies

3

The “Go-To”
National Market Company


The St. Paul Travelers Companies
Total Net Premiums Written

($ in billions)

2003 Estimated

St. Paul

Travelers

Combined

General Commercial Lines 3.0 6.2 9.2

Specialty Commercial Lines 4.5 1.9 6.4

Total Commercial Lines 7.5 8.1 15.6

Personal Lines — 5.0 5.0

Total Company NPW $7.5 $13.1 $20.6

5

Source: Management estimates.

The St. Paul Travelers Companies Market Share

Commercial Lines Personal Lines – Agency Only

1 AIG 8.8% 1 Progressive 13.1%

2 St. Paul Travelers 7.6% 2 St. Paul Travelers 6.8%

2 Zurich/Farmers 6.5% 3 Hartford 4.7%

3 Travelers 4.4% 4 SAFECO 4.4%

4 CNA 3.8% 5 Erie Ins Group 3.4%

5 Liberty Mutual 3.7% 6 Mercury General 2.7%

6 St. Paul 3.2% 7 CNA 2.7%

7 Chubb 3.1% 8 Chubb 2.6%

8 Hartford 2.9% 9 Auto-Owner Ins 2.6%

9 CA Comp Fund 2.7% 10 Allmerica 2.4%

10 ACE 2.3%

Source: A.M. Best. Based on 2002 direct premium written, excluding other accident & health.

6

The St. Paul Travelers Companies
Commercial Lines Ranking by Product

St. Paul Travelers Combined


Commercial Auto Liability 4 3 1

Commercial Multi-Peril 12 2 1

Commercial P&C 6 3 2

Fidelity and Surety 2 1 1

Fire 8 4 4

Other Liability 4 7 2

Worker’s Comp 10 5 4

Source: A.M. Best.

7

The St. Paul Travelers Companies
Commercial Lines Geographic Penetration

St. Paul Travelers Combined Geographic Diversification

Source: A.M. Best. Based on 2002 direct premiums written. The following A.M. Best lines of business are included in the definition of "Commercial Lines" as shown in the chart: Fire, Allied Lines, Ocean Marine, Inland Marine, Earthquake, Workers' Compensation, Other Liability, Products Liability, Burglary & Theft, Boiler & Machinery, Commercial Multi-Peril (Liability & Non-Liability), Commercial Auto Liability, Commercial Auto, Physical 8 Damage, and Commercial Auto No-Fault.
(1) Includes District of Columbia.

8

The St. Paul Travelers Companies
Geographic Penetration

Geographic Combination

____________________
Source: OneSource U.S. Insurance P&C Database: Schedule T.

9

The St. Paul Travelers Companies
Geographic Penetration

Geographic Combination


10

The St. Paul Travelers Companies
The “Go-To” Company for Independent Agents

Commercial Lines Agency Preference Personal Lines Agency Preference

Goldman Sachs Survey, August 18, 2003. Source:

11

The St. Paul Travelers Companies
The “Go-To” Company for Independent Agents



12

Note: excludes Marsh, Aon, and Willis. Excludes National Accounts, Discover, Gulf, Northland, American Equity, and Associates

The St. Paul Travelers Companies
The “Go-To” Company for Independent Agents


Travelers Top 100 Agents

St. Paul Top 100 Agents

Less than 50 percent overlap



13


The St. Paul Travelers Companies
The “Go-To” Company for Independent Agents


An Initial Perspective on Agency Concentration – Top 30 B.I. (1)

St. Paul Travelers Rank
(number of brokers)
Combined
Market
Share Number of
Brokers
Included #1 #2 #3 #4
18% - 21% 1 1
15% - 18% 3 1 2
12% - 15% 3 1 2
10% - 12% 0
8% - 10% 2 1 1
6% - 8% 3 1 1 1
4% - 6% 1 1
2% - 4% 2 1 1
<2% 0


Source: Agent survey.

(1) Excludes Marsh, Aon and Willis.

14


Financial Strength

The St. Paul Travelers Companies
Second Largest U.S. Insurer by Shareholders’ Equity


($ in billions)

Rank
Company Name
Common
Shareholders’
Equity
1 American International Group $68.2
2 St. Paul Travelers Companies(1) 20.2
2 Allstate 19.4
3 Travelers 11.5
4 Hartford 11.3
5 Chubb Corporation 8.5
6 ACE Limited 8.3
7 CNA Financial Corporation 7.5
8 XL Capital Limited 7.4
9 St. Paul 6.3
10 Cincinnati Financial 5.8
11 SAFECO Corporation 4.9
12 Progressive Corporation 4.6


Source: Company filings.
Note: Statistics as of September 30, 2003.
(1) Reflects pro forma purchase accounting adjustments. See Form S-4 filed December 10, 2003.

16


The St. Paul Travelers Companies
Summary Financial Information

($ IN BILLIONS, except per share amounts)

2003 Estimated (First Call)
St. Paul
Travelers

Revenues $ 8.1 $ 14.9
Operating income 0.8 1.7

At September 30, 2003
Pro Forma
(1)
Investment assets 22.7 37.8 60.8
Total assets 40.4 63.5 109.1
Shareholders’ equity 6.3 11.5 20.2
Book Value Per Share 30.19
Statutory Surplus 13.0
NPW / Surplus 1.48 x
Reserves / Surplus 2.62 x


Source: Company filings.
(1) Reflects pro forma purchase accounting adjustments. See Form S-4 filed December 10, 2003.

17


The St. Paul Travelers Companies
Strong Capital Base


($ in billions)


Leverage
St. Paul
Travelers
Pro Forma
(1)
Conventional Debt (2) $2.2 $2.7 $5.0
Total Debt 3.6 2.7 6.4
Total Capital 9.8 14.2 26.6
Conventional Debt (2) / Capital 22.7 % 18.9 % 19.0 %

Financial Strength Ratings (as of November 14, 2003)


Moody’s A1 Aa3

S&P A+ AA-

A.M. Best A A++

Fitch NR AA
Source: Company filings.
Note: Financial statistics as of September 30, 2003, except as noted.
(1) Reflects pro forma purchase accounting adjustments. See Form S-4 filed December 10, 2003.
(2) Excludes mandatory convertibles and hybrid securities.

18


The St. Paul Travelers Companies
Investment Portfolio

Compatible Cultures and Track
Record of Successful Transactions

The St. Paul Travelers Companies
Highly Compatible Cultures


» Both companies pursuing similar business strategies – an emphasis on independent agents and brokers

» Focus on underwriting, claims and actuarial disciplines

» Expense control – spend it like it’s your own

» Commitment to performance measurement and accountability at every level

» Profitability is more important than market share

21


The St. Paul Travelers Companies
Strong Combined Team Dedicated to Value Creation


» Proven experience in integrating businesses

• Primerica / Travelers (1993)

• Travelers / Aetna P&C (1995)

• St. Paul / USF&G (1998)

• Travelers / Citicorp (1999)

• Reliance Surety (2000)

• RSA Financial Professional renewal rights (2002)

• Kemper renewal rights (2003)

• RSA renewal rights (2003)

• Atlantic Mutual renewal rights (2003)


22

Paramount Objective – Driving
Value Creation for Shareholders

The St. Paul Travelers Companies
Estimated Financial Impact


($ in millions)

Travelers 2004 First Call net operating income estimates (1) $2,035
St. Paul 2004 First Call net operating income estimates (1) 1,052

Combined 2004 First Call net operating income estimate(1) $3,087


Estimated Annualized After-tax Adjustments (2)

Purchase GAAP adjustment(3) ($260) - ($220)
Expense savings 88 - 228
Revenue synergies 110 - 160

Note: For illustrative purposes.
(1) Estimates based on First Call consensus for Travelers and St. Paul; assumed to be based on a fully diluted share base. Combined reflects addition of Travelers and St. Paul estimates, without adjustment.
(2) Reflective of phase-in period.
(3) See Form S-4 filed December 10, 2003.
24


The St. Paul Travelers Companies
Significant Cost Savings


» Initial expected realized cost savings of $228 million after-tax projected by 2006

» Projected to be 7-9% of controllable expenses

» Restructuring charge at the time of closing – initial estimate $300 - $400 million

Note: Assumes closing on June 30, 2004.

25

Management Appointments and Integration Planning

Management Announcements on November 17


Robert Lipp Chairman
Jay Fishman Chief Executive Officer
Charles Clarke Vice Chairman
John MacColl Vice Chairman & General Counsel
Douglas Elliot CEO, General Commercial & Personal Lines
T. Michael Miller CEO, Specialty Commercial
William Heyman EVP, Chief Investment Officer
Brian MacLean EVP, Claim
Timothy Yessman EVP, Claim
Marita Zuritas EVP, Merger Integration & Operational Strategy
Tim Schwertfeger Chairman & CEO, Nuveen Investments


27


Management Announcements on December 2


Jay Benet EVP & Chief Financial Officer
Andy Bessette EVP & Chief Administrative Officer
William Bloom SVP & Chief Information Officer
Thomas Bradley Financial Related Activities & Financial Reporting
John Clifford SVP, Human Resources
Irwin Ettinger Vice Chairman
Samuel Liss EVP, Strategic Development
Jim Michener Senior Legal Officer for the combined insurance operations
Mario Olivo EVP, Financial Planning & Analysis and Investor Relations
Kent Urness Chief Executive Officer, International
Michael Connly SVP, Information Technology
Diane Bengston Senior HR Officer for General Commercial and Personal Lines
Stewart Morrison Investments
Laura Gagnon Investor Relations


28


General Commercial and Personal Lines
Management Announcements on December 16


John Albano National Accounts
Dennis Crosby Middle Market
Pete Higgins Middle Market
Larry Illion Small Commercial
Marc Schmittlein Small Commercial
Joe Lacher Personal Lines
Scott Belden Ceded Reinsurance



29


Specialty Commercial
Management Announcements on December 16


Bill Cunningham Construction
Rich DeSimone Global Marine
Geo Estes Discover Re
Bob Fellows Canadian Operations
Rick Gustafson Oil & Gas
Peter Hayden Ireland Operations
Martin Hudson UK Operations and Lloyd’s Operations
John Kearns Financial & Professional Services
Michael Klein Public Sector
Chris Longo Specialty Excess and Umbrella
Kae Lovaas Public Sector & Strategic Initiatives
Kevin Nish CAT Risk
Bill Rohde Technology
Rick Smith Foreign Risk Services and Global Accounts
Doreen Spadorcia Surety/Bond
Kevin Rehnberg SVP, Specialty Commercial
Kent Urness EVP, Specialty Commercial
Greg Vezzosi SVP, Specialty Commercial
Chris Watson Gulf


30


The St. Paul Travelers Integration Planning Process


» Organizational dimensions

• All U.S. and Canadian insurance underwriting field structures

• Corporate staff

• Claim infrastructure and organization

• Home office underwriting support

• Systems infrastructure and organization

• Subsidiary operations

• Run-off operations

» Tactical as well as operational focus

» Financial integration


» Integration planning to be completed at closing. Integration expected to be completed in 18-24 months, including movement to end state systems


31


The St. Paul Travelers Planning Process
Team Structure





32


The St. Paul Travelers Companies
Setting the Property/Casualty Market Standard


» The “Go-To” National Market Company

» Financial Strength

» Compatible Cultures and Track Record of Successful Transactions

» Paramount Objective Driving Value Creation



33


This filing may be deemed to be solicitation material in respect of the proposed merger of Travelers and The St. Paul. In connection with the proposed transaction, a registration statement on Form S-4 has been filed with the SEC. SHAREHOLDERS OF TRAVELERS AND SHAREHOLDERS OF THE ST. PAUL ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT IS PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final joint proxy statement/prospectus will be mailed to shareholders of Travelers and shareholders of The St. Paul. Investors and security holders will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov, from Travelers Property Casualty Corp., One Tower Square, Hartford, Connecticut 06183, Attention: Investor Relations, or from The St. Paul Companies, Inc., 385 Washington Street, Saint Paul, Minnesota 55102, Attention: Investor Relations.

Travelers, The St. Paul and their respective directors and executive officers and other members of management and employees may be deemed to participate in the solicitation of proxies in respect of the proposed transactions. Information regarding Travelers’ directors and executive officers is available in Travelers’ proxy statement for its 2003 annual meeting of shareholders, which was filed with the SEC on March 17, 2003, and information regarding The St. Paul’s directors and executive officers is available in The St. Paul’s proxy statement for its 2003 annual meeting of shareholders, which was filed on March 28, 2003, as supplemented by the Additional Materials filed pursuant to Schedule 14A of the Securities Exchange Act of 1934, as amended, on April 7, 2003. Additional information regarding the interests of such potential participants is included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.


###

The attached fact sheet may be used by The St. Paul as additional solicitation material in connection with the proposed transaction and supplements the fact sheet that was filed by The St. Paul on November 17, 2003.
###

THE ST. PAUL TRAVELERS COMPANIES, INC.

Second Largest Commercial Insurer in the United States

The combined company and its shareholders, employees, agents, and customers should benefit from:
Considerable financial strength
Depth and breadth of product offerings
Strong distribution presence with enhanced geographic coverage across the U.S.
Experienced and well-regarded management team
Strong underwriting culture
Successful track record in integrating businesses
Enhanced growth opportunities, with greater diversity and stability of earnings
Greater efficiencies and economies of scale
With 2002 direct written premiums of $20B, The St. Paul Travelers Companies will be:

#1 agency-based insurance company*
#2 in domestic commercial lines*
#2 in agent distributed personal lines*
#5 overall among domestic property and casualty companies*
#8 in personal lines*
*based on AM Best Rankings
The St. Paul Companies

Headquartered in St. Paul, MN, The St. Paul is the 14 largest U.S. property and casualty insurer
Sixth largest commercial lines insurer, specialty- and industry-focused
International operations in U.K., Ireland, Canada, Mexico
Nearly 80% ownership in Nuveen Investments, an asset management company
9,700 employees and 4,000 licensed agents
Investment assets of $22.7 billion
9 month ROE: 17.0%
Financial strength ratings: A.M. Best: A, Moody’s: A1, S&P: A+
Debt ratings: S&P: BBB+, Moody’s: A3, Fitch: BBB+
Travelers Property Casualty

Headquartered in Hartford, CT, Travelers is the fifth largest U.S. Property and Casualty Insurer
Second largest writer of homeowners and auto insurance through independent agents
Third largest commercial lines insurer
Eighth largest personal lines insurer
21,500 employees and 10,500 licensed agents
Investment assets of $37.8 billion
Nine month ROE: 16.3%
Financial strength ratings: A.M. Best: A++, Moody’s: Aa3, S&P AA-, Fitch: AASenior Debt rating: Moody’s: A2, S&P: A-, Fitch: A








2003 Projected Net Written Premium by Business Unit
($ in billions)


St. Paul
Companies Travelers Combined





General Commercial Lines:
National $ 0.3 $ 0.8 $ 1.1
Middle market 1.7 3.3 5.0
Small commercial 1.0 2.1 3.1




Total General Commercial $ 3.0 $ 6.2 $ 9.2
Specialty Commercial Lines:
Construction $ 0.8 $ 0.5 $ 1.3
Surety 0.5 0.5 1.0
Financial & Professional Services 0.4 0.3 0.7
Technology 0.3 _ 0.3
Public Sector 0.2 _ 0.2
Oil and Gas 0.2 _ 0.2
Specialty Programs 0.2 _ 0.2
Umbrella/E&S Group 0.2 _ 0.2
Personal CAT Risk 0.1 _ 0.1
Gulf _ 0.6 0.6
International 0.6 _ 0.6
Lloyd’s 0.7 _ 0.7
Other 0.3 – 0.3




Total Specialty Commercial Lines $ 4.5 $ 1.9 $ 6.4




Total Commercial Lines $ 7.5 $ 8.1 $ 15.6
Total Personal Lines _ 5.0 5.0




Total Insurance Premiums $ 7.5 $ 13.1 $ 20.6






2002 Net Written Premium Distribution by Line




Source: Company reports.









Commercial Lines Diversification in U.S.



Source: A.M. Best. Based on 2002 direct premiums written. The following A.M. Best lines of business are included in the definition of "Commercial Lines" as shown in the charts: Fire, Allied Lines, Ocean Marine, Inland Marine, Earthquake, Workers' Compensation, Other Liability, Products Liability, Burglary & Theft, Boiler & Machinery, Commercial Multi-Peril (Liability & Non-Liability), Commercial Auto Liability, Commercial Auto, Physical Damage, and Commercial Auto No-Fault. (1) Includes District of Columbia.

Principal Terms of the Transaction

The transaction is a tax-free, stock-for-stock merger.
Under terms of the merger, holders of Travelers class A and class B common stock will receive 0.4334 The St. Paul common shares for each of their shares.
The combined company is expected to pay dividends at the annual rate of $0.88 per share. In addition, The St. Paul expects to pay a special dividend to its shareholders prior to the closing so that in 2004, shareholders of The St. Paul will receive dividends at The St. Paul’s current rate of $1.16 per share.

The transaction is subject to certain customary closing conditions, including the approval by the shareholders of both companies as well as certain regulatory approvals. The transaction is expected to close in the second quarter of 2004.
Corporate headquarters in Saint Paul, Minnesota. The St. Paul Travelers Companies will remain a Minnesota corporation.
Commercial and personal lines businesses to be consolidated under the Travelers brand, and will be based in Hartford, Connecticut.
The specialty insurance lines, which will be known as St. Paul Specialty, will be based in Saint Paul. The St. Paul’s international business will continue to be based in London.
The company will also continue to own a nearly 80 percent stake in Nuveen Investments, an asset management company serving affluent and high net worth investors.
Jay Fishman will serve as chief executive officer of the combined company; Bob Lipp will serve as the company’s executive chairman until January 1, 2006, at which time it is anticipated that Mr. Fishman will become chairman as well as chief executive officer.
The new Board of Directors will consist of all current outside directors of both companies, as well as Mr. Lipp and Mr. Fishman, resulting in a total of 12 directors from Travelers and 11 from The St. Paul.
###

https://www.sec.gov/Archives/edgar/data/86312/000095010303002386/dec1803_425.htm

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