A.M. Best Co. Affirms Travelers Property Casualty Group Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 19, 2001 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the A++ (Superior) financial strength rating of the Travelers PC Pool, Hartford, CT. The rating applies to the 25-member pool, led by the Travelers Indemnity Company, and four reinsured affiliates. The rating also applies to Travelers Casualty and Surety Company of America, which A.M. Best considers to be a core member of the Travelers Group. A.M. Best has also affirmed the financial strength ratings of the other Travelers Property Casualty Group companies as listed below. Concurrently, A.M. Best has affirmed the "aa-" senior debt rating of Travelers Property Casualty Corp. ("Travelers P&C") and the "a+" rating of the trust preferred securities issued by Travelers P&C Capital I and II. These rating actions follow the announcement earlier today by Citigroup that it intends to carve-out 20% of its holdings in Travelers Property Casualty Company( TAP), the group's parent, in an initial public offering and subsequently spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. the remaining shares through a pro-rata distribution of TAP's common stock to Citigroup's shareholders in a tax-free transaction. Robert Lipp, a well-respected executive and former chairman of TAP, will assume the role of Chairman and Chief Executive Officer, providing strong leadership to the group during its transition. The IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. transaction is expected to occur in the first quarter of 2002. The spin-off, which is subject to the receipt of a positive ruling by the Internal Revenue Service for its qualification as a tax-free exchange tax-free exchange An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged. , is expected to be completed by the fourth of 2002. The ratings reflect Travelers P&C's dominant market profile, superior earnings power, strong capitalization, conservative capital management and focused management group. Travelers P&C's significant franchise has contributed to its leading position in the property/casualty industry, ranking among the top five insurers in the U.S. with a 3.4% market share. The public listing of Travelers P&C recognizes the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing environment and provides the group enhanced flexibility to pursue business opportunities in the wake of severe market dislocation dislocation, displacement of a body part, usually a bone. When a bone is dislocated, the ends of opposing bones are usually forced out of connection with one another. In the process, bruising of tissues and tearing of ligaments may occur. following the events of September 11th. In addition, its direct access to the capital markets as an independent publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. should provide Travelers P&C with a strong platform through which it can continue to take advantage of industry consolidation. The group's strategy focuses on profitability, emphasizing both underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and financial discipline. The success of this approach is exemplified by the group's exceptionally strong earnings performance in recent years, with returns on both revenue and equity surpassing industry norms by a wide margin. These ratios underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. Travelers P&C's effective expense management, catastrophe and asbestos and environmental (A&E) mitigation strategies and adherence to strict underwriting and reserving discipline. Aiding its excellent performance in the last several years have been the contribution of investment income that is derived from a strong capital base as well as the company's long-tail reserves. Supported by its strong earnings base, Travelers P&C has exhibited excellent capitalization as it has methodically me·thod·i·cal also me·thod·ic adj. 1. Arranged or proceeding in regular, systematic order. 2. Characterized by ordered and systematic habits or behavior. See Synonyms at orderly. reduced financial leverage from its peak level in 1996 when it acquired Aetna's property and casualty operations. Under the revised corporate structure, A.M. Best anticipates a change in the group's dividend policy that would enable it to retain a greater share of its earnings, thereby providing for further improvement in the group's capitalization. Barring a significant acquisition, A.M. Best expects that debt plus preferred to capital will not exceed 20% over the near- to medium-term. These favorable considerations are tempered by Travelers P&C's anticipated separation from Citigroup, a leading financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. concern, which through its affiliation had provided the group certain intangible benefits. However, distribution agreements will be provided which will enable Travelers P&C to continue to access Citigroup's vast customer network. In addition, A.M. Best has modest concerns with regard to the potential distraction created by the transaction, particularly during this favorable market cycle. Further offsetting the positive attributes of the rating is Travelers P&C's ongoing exposure to A&E and other cumulative injury claims (CIOTA CIOTA counterintelligence operational tasking authority (US DoD) CIOTA Cumulative Injury Other Than Asbestos (insurance) ). However, Travelers P&C has aggressively pursued policy buyouts to remove future liabilities and A.M. Best believes that Travelers P&C's A&E and CIOTA reserves have been conservatively estimated. As a recognized market leader, A.M. Best expects Travelers P&C to benefit from the current favorable market environment by generating profitable growth. A stable outlook has therefore been assigned to the company's rating. A.M. Best's ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. of Citigroup's other insurance subsidiaries, including those of its Travelers Life Insurance subsidiaries, which are not part of this transaction, are unaffected by this announcement. Travelers Property Casualty Corp., headquartered in Hartford, Connecticut “Hartford” redirects here. For other uses, see Hartford (disambiguation). Hartford is the capital of the State of Connecticut. It is located in Hartford County on the Connecticut River, north of the center of the state. , is an insurance holding company which, through its subsidiaries, provides a broad array of commercial and personal property and casualty insurance products to a diverse group of retail and commercial clients. At September 30, 2001, the company reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). assets of $55.6 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $ 11 billion. The following financial strength ratings have been affirmed: -- Travelers Property and Casualty Pool A++ (Superior) -- Associates Insurance Group A+ (Superior) -- TNC Insurance Group A+ (Superior) -- First Trenton Group A (Excellent) -- First Floridian Auto & Home A (Excellent) -- Premier Insurance Co of MA A (Excellent) -- Triton Insurance Company A (Excellent) The following debt ratings have been affirmed: Travelers Property Casualty Corp. -- "aa-" rating on $500 million 6.75% Notes, due 2001; -- "aa-" rating on $150 million 6.75% Notes, due 2006; -- "aa-" rating on $200 million 7.75% Notes, due 2026. Travelers P&C Capital I -- "a+" rating on $800 million 8.08% Guaranteed Trust Preferred Securities, due 2036 Travelers P&C Capital II -- "a+" rating on $100 million 8.00% Guaranteed Trust Preferred Securities, due 2036 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. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion