S&P’s Revises Travelers PC Outlook

November 28, 2002

Standard & Poor’s has affirmed its ‘A-‘ counterparty credit and senior debt ratings 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, Travelers).

At the same time, Standard & Poor’s also said that it revised the company’s outlook to negative from stable.

“The ratings outlook was revised to negative due to concern over the insurer’s asbestos exposure and its potential effect on the company’s prospective capital position,” Standard & Poor’s credit analyst Michael Gross said. The company is presently conducting an in-depth study related to the adequacy of its present $950 million in asbestos reserves relative to current and expected market conditions, claims, and settlements. This study should be completed by January.

The ratings affirmations reflect the consolidated company’s very strong and competitive market positions in both the commercial and personal lines of the property/casualty marketplace, consistent underwriting and expense control discipline, and very strong capital strength.

Standard & Poor’s maintains a negative outlook due to the uncertainty related to Travelers’ ultimate asbestos exposure and its effect on the company’s prospective capital strength for the current ratings. The insurer’s fundamental market positions and growth are expected to remain very strong.

Travelers is expected to demonstrate a significant increase in premium written in 2002 and 2003 attributable to both organic growth as well as material rate increases. Operating earnings are expected to remain very strong with the commercial combined ratio expected to remain less than 100 percent, while personal lines combined ratio will be between 98 percent-102 percent. The investment portfolio asset allocation should remain relatively unchanged and no material realized investment losses are expected.

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