A.M. Best Places Ratings of Travelers and St. Paul Under Review.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 17, 2003

A.M. Best Co. has placed the financial strength and debt ratings of Travelers Property Casualty Corp. (NYSE:TAP.A and TAP.B) (Travelers) (Hartford, CT) under review with negative implications. As Travelers is currently assigned A.M. Best's highest rating, the negative implications signal that the rating could either be lowered or remain the same. The ratings of The St. Paul Companies, Inc. (NYSE:SPC) (St. Paul) (St. Paul, MN) have been placed under review with positive implications. These rating actions follow today's announcement that the two companies plan to merge through a tax-free exchange of stock. Both the Travelers PC Pool and the St. Paul Companies pool will be maintained separately.

The negative implications assigned to Travelers reflect the planned combination of the two organizations, taking into consideration the pro forma financial leverage, the added goodwill brought on by this transaction, higher holding company cash requirements and the execution risk involved in such a transaction. This action also considers the additional cyclicality and business risk associated with the combined entity whose earnings will be more susceptible to changes in the commercial lines marketplace. Lastly, this action recognizes the relative size of these two organizations and the differential in their current ratings.

Conversely, the positive rating implications on St. Paul reflect the proposed merging with a higher-rated organization that is less financially and operationally leveraged.

The combined organization would possess significant market share, ranking second in the U.S. among both commercial lines and personal lines agency companies. A.M. Best expects the combined companies to benefit from potentially better agency penetration through the ability to offer complementary products, Travelers being particularly strong in general commercial lines and St. Paul in specialty commercial lines. The merger will also result in greater geographic spread and diversification of business within commercial lines--Travelers presence being particularly strong in the Northeast and Atlantic regions, and St. Paul in the Midwest and South. In addition, the merger should afford significant expense savings potential through integration. Offsetting these positive factors are the challenges and risks of integrating the companies in terms of operations, systems and personnel. It should be noted, however, that the managements of both companies have significant experience in this regard, having previously been involved in the successful merger of other large insurance organizations.

Based on pro forma capitalization at Sept. 30, 2003, financial leverage for the combined companies totals approximately 25% (including hybrid securities) which is five points higher than Travelers on a stand-alone basis and more than 13 points lower than St. Paul's significant existing leverage. Subsequent to the merger, A.M. Best expects that financial leverage will be lowered closer to the 20% level over the next few years.

The larger capital base of the combined companies, coupled with expected earnings and operating company dividend capability, should provide better coverage of fixed costs associated with financial leverage and other cash flow needs in 2004 and beyond, particularly those of St. Paul. Holding company liquidity at the end of 2004 is expected to exceed what either St. Paul or Travelers maintained in 2003. Combined subsidiary dividends in 2004 are not expected to materially exceed the sum of the level of dividends previously anticipated to be up streamed individually by each company in 2004.

A.M. Best's ratings review will focus on the organization's combined earnings capability and balance sheet strength, including adequacy for both core and asbestos and environmental loss reserves, the collectability of reinsurance recoverables and the combined entity's catastrophe exposure, both natural and man-made. The review will also consider potential agency disruption and its impact on production, as well as the cultural, management and expense issues associated with the integration. A.M. Best expects to conclude its review upon the close of the transaction.

For a comprehensive list of St. Paul Companies' financial strength and debt ratings, please visit www.ambest.com/press/111701stpaul.pdf.

For a comprehensive list of Travelers Property Casualty Corp.'s financial strength and debt ratings, please visit www.ambest.com/press/111701travelers.pdf.

For a list of A.M. Best's debt ratings, please visit http://www.ambest.com/ratings/debtrating/companies.html

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.