Combined Company Will be a Leading Provider of Commercial and Personal
Property Casualty Insurance Distributed Through Independent Agents and Brokers
Merger of Equals Enhances Growth Opportunities
Combined Company Will Have Total Shareholders' Equity of $20 Billion
SAINT PAUL, Minn., and HARTFORD, Conn., Nov. 17 /PRNewswire-FirstCall/ --
The St. Paul Companies, Inc. (NYSE: SPC) and Travelers Property Casualty Corp.
(NYSE: TAP.A and TAP.B) today announced that they have signed a definitive
merger agreement that will create the nation's second largest commercial
insurer, to be known as The St. Paul Travelers Companies. The combined company
will be a leading provider of property casualty insurance products distributed
through independent agents and brokers and one of the largest financial
services companies in the United States. It is expected to have total assets
of $107 billion, shareholders' equity of $20 billion, total capital of $26
billion and net written premiums of $20 billion. With unparalleled product
breadth and geographic reach, the combined entity will be uniquely positioned
as the property casualty insurer of choice for agents, brokers and customers
across the United States.
The Board of Directors of each company has unanimously agreed to the
tax-free, stock-for-stock merger. Under the terms of the merger agreement,
holders of Travelers Class A and Class B common stock will each receive 0.4334
St. Paul common shares for each Travelers share. 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 amounting to The St. Paul's current indicated annual rate of $1.16
per share. The transaction is subject to 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.
The St. Paul Travelers Companies will remain a Minnesota corporation and
will have its corporate headquarters in Saint Paul, Minnesota. 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 combined company's commercial lines and personal lines business
will be consolidated under the Travelers brand and based in Hartford,
Connecticut. The company will also continue to own The St. Paul's nearly 80
percent interest in Nuveen Investments, an asset management company serving
affluent and high net worth investors.
Jay S. Fishman, 51, chairman and chief executive officer of The St. Paul,
will serve as chief executive officer of the combined company, reporting to
the new Board of Directors. Robert I. Lipp, 65, chairman and chief executive
officer of Travelers, 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.
Mr. Fishman said, "This transaction represents a unique and compelling
opportunity to create one of the nation's largest and strongest property and
casualty insurers, with enhanced prospects for strong and consistent earnings
growth. At a time of industry consolidation, we are putting together two
outstanding companies with excellent brands and reputations, and similar
operating discipline and underwriting skills, to create a significantly larger
and more diversified enterprise with a greater ability to assume and manage
risk.
"From a financial standpoint," Mr. Fishman continued, "I expect the
transaction to enhance growth opportunities and enable the combined company to
benefit from improved efficiencies and economies of scale."
Mr. Lipp said, "We are very excited about the combination of these two
financially strong industry leaders. This transaction brings together two
companies with similar performance-based cultures and highly complementary
product offerings and geographic reach. With efficient operations, a sound
balance sheet, superior technology and a strong national distribution network,
the combined company will be well positioned for the long-term in an
environment that favors stability and strength."
The combined company will have a leading position in national accounts,
which is a traditional strength of Travelers, and in the highly attractive
middle market and small commercial agency businesses. The combination will
also benefit from The St. Paul's expertise and focus in specialty lines. The
company will rank #2 in domestic commercial lines, #2 in agent distributed
personal lines, #5 overall among domestic property and casualty companies, and
will be one of the top three commercial insurers in 42 states and the District
of Columbia, according to direct written premium data compiled by AM Best.
Mr. Lipp continued, "Jay and I look forward to working very closely with
the seasoned and talented management teams at The St. Paul and Travelers, to
see that the combined company achieves its full potential. I am particularly
eager to collaborate with Jay on strategic issues once the companies are
combined, as we map out a long-term strategy to further solidify the company's
position as a leading agency-based insurer."
The companies also announced today that Charles J. Clarke, president of
Travelers, will become vice chairman of The St. Paul Travelers Companies.
Douglas G. Elliot, currently chief operating officer of Travelers, will become
chief executive officer of the combined general commercial and personal lines
businesses. T. Michael Miller, executive vice president and chief executive
officer of Specialty Commercial at The St. Paul, will become chief executive
officer of the combined specialty insurance operations. Marita Zuraitis, chief
executive officer of The St. Paul's commercial insurance operations, will
become executive vice president of the combined company, initially focused on
the integration process. She will also work with Mr. Fishman on operational
strategy. Brian MacLean, executive vice president of claim at Travelers and
Timothy M. Yessman, chief executive officer of claim at The St. Paul, will
both become executive vice presidents in the combined claim operation. John A.
MacColl, currently vice chairman of The St. Paul, will continue as a vice
chairman of the combined company.
As a result of the combination, The St. Paul Travelers Companies, its
shareholders, employees, agents, and customers should benefit from its:
-- 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.
-- Successful track record in integrating businesses.
-- Enhanced growth opportunities, with greater diversity and stability of
earnings.
-- Greater efficiencies and economies of scale.
Strong Commitments To Saint Paul and Hartford "We are committed to maintaining a strong presence in both Saint Paul and
Hartford, where the two companies have long played meaningful financial, civic
and philanthropic roles in their respective home cities," Mr. Fishman and Mr.
Lipp said. "We are confident that this transaction will yield tangible
benefits to both communities. Saint Paul will serve as the corporate
headquarters of our significantly larger and stronger financial services
company and also will be home to our specialty lines business. At the same
time, Hartford will be the base of operations for our commercial lines and
personal lines businesses."
Travelers was advised by Citigroup Global Markets and Lehman Brothers.
Simpson Thacher & Bartlett LLP acted as Travelers' legal counsel. The St. Paul
was advised in the transaction by Goldman Sachs and Merrill Lynch. Davis Polk
& Wardwell acted as legal counsel for The St. Paul.
Webcast: http://travelers.com/investor/ or http://stpaul.com
The managements of The St. Paul and Travelers will discuss the proposed
merger via webcast at 9 a.m. (EST) today. Following the live event, an audio
playback of the webcast will be available and the slide presentation will be
archived at the web sites noted above. To listen to the webcast or the
playback, click on one of the links above.
About The St. Paul Companies
The St. Paul Companies is headquartered in Saint Paul, Minnesota, and
provides commercial property-liability insurance and asset management
services. The St. Paul reported 2002 revenue from continuing operations of
$8.92 billion and total assets of $39.96 billion, and ranks No. 207 on the
2002 Fortune 500 list of largest U.S. companies. For additional information
about The St. Paul's quarterly results, go to the Investor Relations section
of The St. Paul's web site: www.stpaul.com.
About Travelers Property Casualty Corp.
Travelers Property Casualty Corp. (NYSE: TAP.A. and TAP.B) is a leading
provider of a wide range of insurance products. The Company is the second
largest writer of homeowners and auto insurance through independent agents.
Travelers is the third largest commercial lines insurer, providing a broad
range of insurance products including workers' compensation, integrated
disability, property, liability, specialty lines, surety bonds, inland/ocean
marine, and boiler and machinery. For more information on Travelers products,
see www.travelers.com.
CONTACTS:
For The St. Paul Companies
Media: Shane Boyd
651.310.3846
shane.boyd@stpaul.com
Investors: Laura Gagnon
651.310.7696
laura.gagnon@stpaul.com
For Travelers Property Casualty Corp.
Media: Keith Anderson
860.954.6390
Institutional Investors: Maria Olivo
860.277.8330
Individual Investors: Marc Parr
860.277.0779
This release 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.
SOURCE The St. Paul Companies, Inc. and Travelers Property Casualty Corp.
-0- 11/17/2003
/CONTACT: Media, Shane Boyd, +1-651-310-3846, shane.boyd@stpaul.com, or
Investors, Laura Gagnon, +1-651-310-7696, laura.gagnon@stpaul.com, both of St.
Paul Companies; or Media, Keith Anderson, +1-860-954-6390, or Institutional
Investors, Maria Olivo, +1-860-277-8330, or Individual Investors, Marc Parr,
+1-860-277-0779, all for Travelers Property Casualty Corp./
/Web site: http://www.stpaul.comhttp://travelers.com /
CO: St. Paul Companies, Inc.; Travelers Property Casualty Corp.
ST: Connecticut, Minnesota
IN: INS
SU: TNM MAV
SR-BE
-- NYM071 --
9723 11/17/200305:52 ESThttp://www.prnewswire.com