A.M. Best Affirms Ratings of St. Paul Travelers Insurance Companies and Several Subsidiaries; Downgrades Rating of First Floridian.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of St. Paul Travelers Insurance Companies (St. Paul Travelers) and its property/casualty members. Concurrently, A.M. Best has affirmed the debt ratings of "a-" on senior debt, "bbb+" on subordinated debt, "bbb" on trust preferred securities, "bbb" on preferred stock and AMB-1 on commercial paper of The St. Paul Travelers Companies, Inc. (NYSE:STA) (St. Paul, MN).

Additionally, A.M. Best has downgraded the FSR to A- (Excellent) from A (Excellent) and assigned an ICR of "a-" to First Floridian Auto and Home Insurance Company (Tampa, FL). A.M. Best has also affirmed the FSRs of A (Excellent) and assigned ICRs of "a" to The Premier Insurance Company of Massachusetts (Worcester, MA) and TNC Insurance Group and its property/casualty members. In addition, A.M. Best has affirmed the FSR of A (Excellent) and the ICRs of "a" of Travelers of New Jersey Group and its property/casualty members. The outlook for all ratings is stable. (See link below for a detailed list of the ratings.)

The affirmation of St. Paul Travelers' ratings reflect its strong risk-adjusted capitalization, superior earnings power and dominant market profile in commercial, specialty and personal lines. The ratings also acknowledge the group's strategic focus on profitability emphasizing both underwriting and financial discipline, geographic and product diversification, as well as superior technology, which is improving its underwriting effectiveness and ability to service its agents and customers. In addition, the ratings consider the benefits that have been derived through the integration of St. Paul's and Travelers' operations. The ratings also recognize the $1.2 billion of capital contributions the group received in 2005 that was made possible by The St. Paul Travelers Companies, Inc.'s divestiture of Nuveen Investments, Inc. These capital contributions, combined with significant earnings despite sizable catastrophe losses and asbestos reserve development, substantially improved the group's statutory surplus in 2005.

The ratings also recognize the financial flexibility provided by The St. Paul Travelers Companies, Inc., which has ready access to capital markets. A planned $2.0 billion share repurchase program, announced in the second quarter of 2006, will likely lower the substantial $1.6 billion of liquid funds held at St. Paul Travelers' holding companies at year-end 2005, though A.M. Best expects these funds to remain above $1.0 billion. The St. Paul Travelers Companies, Inc.'s debt-to-total capital of 21.0% at year-end 2005, which is within acceptable levels for the current ratings, should be relatively unaffected in 2006.

Offsetting these positive factors has been the substantial volatility of St. Paul Travelers' reserves in recent years, particularly at St. Paul with regard to run-off and ongoing businesses, as well as asbestos and environmental (A&E) reserve development at both St. Paul and Travelers. While A.M. Best is significantly more comfortable with the adequacy of St. Paul Travelers' reserves--particularly its core reserves for continuing operations, given its strengthening of reserves in recent years--the potential for further reserve development still remains. This has been considered in A.M. Best's evaluation of St. Paul Travelers' risk-adjusted capitalization, which is regarded as strong. Furthermore, being among the largest commercial insurers and national property underwriters, St. Paul Travelers has significant exposure to potential terrorist-related losses and natural catastrophes, although it has an extensive management program in place to manage its spread of risk and limit its exposure to a single event.

St. Paul Travelers, as well as other insurers and brokers, has received subpoenas and other information requests in recent months from regulators and attorneys general in several states relating to certain business practices. Moreover, the group has recently received inquiries from the Securities and Exchange Commission regarding certain reserve adjustments totaling $1.6 billion recorded by St. Paul Travelers in the second quarter of 2004, as well as the April 2004 merger between St. Paul and Travelers. Despite these factors, A.M. Best considers the group favorably positioned and sufficiently well-capitalized to absorb the above challenges and those posed by the recent softening of property/casualty markets.

The downgrading of the FSR of First Floridian Auto and Home Insurance Company reflects the decline of the company's risk-adjusted capitalization in recent years. Despite profitable operating performance, the company's surplus growth has been impeded over the past five years as a result of sizable stockholder dividends paid to the parent and substantial catastrophe losses in 2004 and 2005. Slowed surplus growth over these years occurred during a period of substantial premium growth, which has resulted in significantly increased underwriting leverage measures and substantially lower stand-alone risk-adjusted capitalization that no longer supports the company's FSR of A (Excellent).

For a complete list of The St. Paul Travelers Companies, Inc.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/053003stpaultravelers.pdf.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.