Fitch: Travelers Property Casualty Rtgs Unaffected by Renewal Rights Transaction.Business Editors NEW YORK--(BUSINESS WIRE)--Sept. 4, 2003 Fitch's 'AA' Insurer Financial Strength ratings of the members of the Travelers Property Casualty Group (Travelers) and the 'A' senior debt and long-term issuer ratings of Travelers Insurance Group Holdings Corp. are unaffected by the planned purchase of the renewal rights to a portion of Royal & Sun Alliance USA's book of business. (RSA (1) (Rural Service Area) See MSA. (2) (Rivest-Shamir-Adleman) A highly secure cryptography method by RSA Security, Inc., Bedford, MA (www.rsa.com), a division of EMC Corporation since 2006. It uses a two-part key. ). The transaction was announced earlier today and consists of the ability to acquire up to $1.5 billion of net premium written in return for a purchase price of $25 million plus a contingency currently estimated to be $35-$40 million. The renewal rights are in lines of business similar to Travelers existing book, namely standard personal and middle market commercial lines, national account and marine businesses. Fitch expects that the RSA business ultimately written by Travelers will fall short of $1.5 billion. Operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. will be only moderately impacted on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, and ultimately, will likely be offset by earnings retention. Fitch views Travelers' capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. as strong and possessing a cushion Cushion In the context of project financing, the extra amount of net cash flow remaining after expected debt service. cushion See call protection. at the 'AA' insurer financial strength level. Fitch also recognizes the company's history of successfully integrating acquisitions. Hartford-based Travelers reported GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). assets 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 $66 billion and $11.3 billion, respectively, at June 30, 2003 and net income of $781 million for the six months ended June 30, 2003. Entity/Issue/Type Rating/Outlook Travelers Property Casualty Group Insurer Financial Strength 'AA' / Stable Travelers Insurance Group Holdings Corp. Long-term issuer 'A' / Stable Senior Debt 'A' / Stable Commercial Paper 'F1' Travelers Property Casualty Corp. Convertible Junior Sub. Notes 'A-' / Stable Travelers Capital I & II Capital Securities 'A-' / Stable |
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