- The Washington Times - Monday, November 17, 2003

MINNEAPOLIS (AP) — Travelers Property Casualty Corp. is combining with the St. Paul Companies Inc. in a $16 billion stock deal that will create one of the nation’s biggest business insurers.

The new company will be known as St. Paul Travelers Companies and is expected to have total assets of $107 billion, the companies announced yesterday.

Company officials said the deal would create the nation’s second-largest business insurer behind American International Group, providing policies for commercial liability, commercial property and workers’ compensation. It should also expand the companies’ geographic reach.

“We are absolutely convinced we are far better together than we ever would be alone,” said Jay S. Fishman, the chairman and chief executive of the St. Paul Companies.

Mr. Fishman came to the St. Paul from Travelers in 2001, and will be chief executive of the combined company, which will be based in St. Paul, Minn. Travelers, based in Hartford, Conn., was spun off from New York financial services giant Citigroup last year.

Travelers’ strength is in commercial lines of insurance, but it also has an extensive line of personal insurance products that the St. Paul lacks. Both the commercial and personal insurance lines of the combined company will be consolidated under the Travelers brand and will be based in Hartford.

The St. Paul’s strength is in specialty commercial lines.

“I can’t think of any company that brings the breadth of product of these two institutions with the market size that has resulted,” Mr. Fishman said.

Robert I. Lipp, chairman and chief executive of Travelers, will serve as the company’s executive chairman until Jan. 1, 2006, when Mr. Fishman is expected to add the chairman title.

The companies described the deal as a merger of equals and said it was structured so that neither side got a premium for their shares.

Under the terms of the proposed agreement, Travelers shareholders would receive 0.4334 shares of St. Paul stock for each share of Travelers stock. That was worth about $15.94 at Friday’s closing price of $36.77 for St. Paul stock. Travelers A shares closed at $16.03 a share on Friday and its B shares closed at $16.06 a share.

St. Paul shares climbed 97 cents yesterday to $37.74 on the New York Stock Exchange, giving the company a value of $8.6 billion. Travelers A shares were unchanged at $16.03. The company’s market capitalization is $16.1 billion.

The combined company expects to pay a dividend of 88 cents a share. Mr. Fishman said St. Paul shareholders will receive a special dividend of $1.16 before the deal’s closing, expected in the second quarter of 2004.

Executives project savings from the merger of up to $225 million by 2006. They expect to take a restructuring charge of $350 million at closing.

Travelers spokesman Keith Anderson said no layoffs are planned. The company employs 5,800 people in the greater Hartford area.

The transaction is subject to approval by shareholders and federal regulators.


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