Fitch Revises Debt Rtgs & Affirms IFS Rtgs Upon St. Paul/Travelers Merger Completion.Business Editors NEW YORK--(BUSINESS WIRE)--April 1, 2004 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has taken several rating actions in response to the closing of the merger between Travelers Property Casualty Corp (Travelers) and The St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery Companies, Inc (St. Paul). (See below for a complete list of the actions.) The merger creates the nation's second largest commercial lines insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. and largest independent agency writer. First, the insurer financial strength (IFS) ratings of the members of Travelers' primary 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. pool (Travelers Pool) were removed from Rating Watch Negative and 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. at 'AA'. The Rating Outlook is Stable. This rating action reflects Fitch's expectations that the Travelers Pool and St. Paul's
A shortage in funds set aside as a reserve for a specific purpose. For example, during a recession a firm may find the reserve fund covering allowance for bad debts deficient when the amount of bad debts exceeds expectations. continue among the St. Paul Pool's operating companies operating company A business that engages in transactions with outsiders. , Fitch fitch: see polecat. anticipates that a meaningful level could be absorbed by cash at the combined organization's lead holding company and/or dividends from the members of the Travelers Pool without jeopardizing the overall organization's strong financial position. Second, Fitch removed from Rating Watch and revised the debt ratings of the three holding companies that emerged upon the closing. These include Travelers, its wholly-owned subsidiary Travelers Group Holding Corp (TIGHI), and The St. Paul Travelers Companies The Travelers Companies (NYSE: TRV) is the second largest underwriter of commercial property casualty and personal insurance in the United States. The company is headquartered in St. Paul, Minnesota and has major operations in Hartford, Connecticut. (SPTC SPTC Southern Pacific Transportation Company SPTC Satellite Production Test Center (DoD) SPTC Specified Period of Time Contract , previously St. Paul). Both Travelers' and TIGHI's long-term issuer ratings and senior debt have been removed from Rating Watch Negative and downgraded to 'A-' from 'A'. SPTC's long-term issuer rating and senior debt have been removed from Rating Watch Positive and upgraded to 'A-' from 'BBB'. For all debt ratings, the Rating Outlook is Stable. The revision of the debt ratings of the holding companies considers both the differing quality cash flows emerging from the Travelers Pool versus the St Paul Pool as well as the combined organization's moderately high financial leverage. Additionally, SPTC has guaranteed the debt obligations of Travelers and TIGHI. The ratio of debt plus preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to total capital at SPTC is approximately 24.5% at April 1, 2004. This compares to a ratio of 19.5% at Travelers and 39.8% at St Paul at year-end 2003. Merger-related concerns relate to continued exposure to adverse development from long-tailed liabilities, including asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. at both underwriting pools and run-off liabilities at the St. Paul Pool, as well as the risks associated with integrating the businesses and realizing planned expense savings and cross selling opportunities. However, Fitch recognizes management's experience and successful track record at integrating businesses, the generally favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. fit of the organizations' commercial books of business from a product and geographic perspective, common operating platform that provides for the prospect of increased penetration of the agency network and the opportunity for meaningful expense savings. At year-end 2003, 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 $64.9 billion and $12 billion, respectively, and St. Paul, Minnesota-based St. Paul reported GAAP assets and shareholders equity of $39.6 billion and $6.2 billion, respectively.
Entity/Issue/Type Action Rating/Outlook
Travelers Property Casualty Group insurance companies (see below
for list)
-- Insurer financial strength Affirm 'AA'/Stable
-- Removed from Rating Watch Negative.
Travelers Insurance Group Holdings Corp.
-- Long-term issuer Downgrade 'A-'/Stable
-- Senior Debt Downgrade 'A-'/Stable
-- Commercial Paper Withdrawn 'F1'
-- L-T and senior debt removed from Rating Watch Negative.
Travelers Property Casualty Corp.
-- Convertible junior sub notes Downgrade 'BBB+'/Stable
-- Removed from Rating Watch Negative.
St. Paul Travelers Companies (previously named The St. Paul
Companies, Inc.)
-- Long-term issuer Upgrade 'A-'/Stable;
-- 7.13% senior notes due 2005 Upgrade 'A-'/Stable;
-- 7.88% senior notes due 2005 Upgrade 'A-'/Stable;
-- 5.75% senior notes due 2007 Upgrade 'A-'/Stable;
-- 8.13% senior notes due 2010 Upgrade 'A-'/Stable;
-- $800 million commercial paper Affirm 'F2'
-- All L-T ratings listed above are removed from Rating Watch
Positive
St. Paul Capital Trust I
-- 7.6% Trust preferred Upgrade 'BBB+'/Stable
-- Removed from Rating Watch Positive.
MMI Capital Trust I
-- 7.625% Trust preferred Upgrade 'BBB+'/Stable
-- Removed from Rating Watch Positive.
USF&G Capital Trust I
-- 8.5% Trust preferred Upgrade 'BBB+'/Stable
-- Removed from Rating Watch Positive.
USF&G Capital Trust II
-- 8.47% Trust preferred Upgrade 'BBB+'/Stable
-- Removed from Rating Watch Positive.
USF&G Capital Trust III
-- 8.312% Trust preferred Upgrade 'BBB+'/Stable
-- Removed from Rating Watch Positive.
Members of the Travelers Property/Casualty Group:
The Automobile Insurance Company of Hartford
The Charter Oak Fire Insurance Company
Farmington Casualty Company
First Floridian Auto and Home Insurance Company
First Trenton Indemnity Company
The Phoenix Insurance Company
Red Oak Insurance Company
The Standard Fire Insurance Company
TravCo Insurance Company
The Travelers Casualty and Surety Company
Travelers Casualty & Surety Company of America
Travelers Casualty & Surety Company of Canada
Travelers Casualty and Surety Company of Illinois
Travelers Casualty Company of Connecticut
Travelers Commercial Insurance Company
Travelers Excess and Surplus Lines Ins. Co.
The Travelers Home and Marine Insurance Company
The Travelers Indemnity Company
The Travelers Indemnity Company of America
The Travelers Indemnity Company of Connecticut
The Travelers Indemnity Company of Illinois
Travelers Lloyd's Insurance Company
Travelers Lloyd's of Texas Insurance Company
The Travelers Indemnity Company of Missouri
Travelers Personal Security Insurance Company
Travelers Property Casualty Insurance Company
Travelers Property Casualty Insurance Company of Illinois
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