Travelers on CreditWatch

Standard & Poor’s Ratings Services said its “A-” counterparty credit rating on Travelers Property Casualty Corp. and its “AA-” counterparty credit and financial strength ratings on members of the Travelers Property Intercompany Pool and Travelers Casualty and Surety Co. of America, collectively referred to as Travelers, remain on CreditWatch with negative implications. These ratings were placed on CreditWatch on Nov. 17, 2003, when Travelers announced it intended to merge with The St. Paul Cos.

The ratings reflect the company’s continued very strong and competitive market positions in both the commercial and personal lines of the property/casualty marketplace. Travelers reported robust consolidated net operating earnings of $1.7 billion in 2003 despite relatively heavy catastrophe losses for the full year and significant reserve strengthening at its Gulf Insurance Co. subsidiary. The organization maintains a relatively conservative adjusted financial leverage and strong consolidated statutory capital.

Although the merger of the Travelers and St. Paul organizations will provide meaningful benefits related to scale and diversification, S&P maintains its overriding concerns about the adequacy of St Paul’s loss reserves and the inherent volatility of St. Paul’s operating results.