Fitch Places Travelers on Rating Watch Negative Following Merger Notification

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Fitch Ratings has placed the ‘AA’ Insurer Financial Strength (IFS) 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. on Rating Watch Negative. The action follows this week’s announcement that Travelers and The St. Paul Companies, Inc. (SPC) plan to merge through a tax-free exchange of stock.

Fitch reportedly expects that Travelers’ IFS and senior debt ratings will either be affirmed or downgraded by one notch upon the close of the transaction. The merger will reportedly create the nation’s second largest commercial lines insurer and the largest independent agency writer in the U.S.

Concurrent with its rating actions on Travelers, Fitch placed its ratings of SPC on Rating Watch — Positive, including SPC’s ‘BBB+’ long-term senior debt rating.

The downward pressure on Travelers’ ratings reflects:

— The merger with a lower rated entity.

— Moderately higher financial and operating leverage of the combined companies.

— Greater exposure to adverse development from long-tailed liabilities;

— including asbestos and SPC’s run-off lines of business.

— Risks associated with integrating the businesses and/or that planned expense savings and cross selling opportunities are not fully realized.

However, Fitch recognizes Travelers’ experience and successful track record at integrating businesses and expects that the merged company’s enhanced scale will bolster its competitive position and that expense savings will be generated through the consolidation of various operations.

On a pro-forma basis Fitch expects the merged companies run-rate operating earnings-based interest and preferred dividend coverage will approximate 9 times and that its debt plus preferred securities capital ratio (on an equity-credit adjusted basis) will approximate 22% or moderately higher than Travelers’ stand-alone ratio of 20% at Sept. 30, 2003. On a tangible capital basis, debt plus preferred securities to capital will approximate 28%, reflecting $5.4 billion of goodwill, $2 billion of which will be created by this merger.

Fitch plans to resolve the Rating Watch concurrent with the transaction close.

Hartford-based Travelers reported GAAP assets and shareholders’ equity of $63.5 billion and $11.5 billion, respectively, at Sept. 30, 2003 and net income of $1.2 billion for the nine months ended Sept. 30, 2003.

Entity/Issue/Type Action Rating

Travelers Property Casualty Group

— Insurer Financial Strength Placed on Rating Watch Negative ‘AA’.

Travelers Insurance Group Holdings Corp.

— Long-term issuer Placed on Rating Watch Negative ‘A’;

— Senior Debt Placed on Rating Watch Negative ‘A’;

— Commercial Paper Affirm ‘F1’.

Travelers Property Casualty Corp.

— Convertible Junior Sub. Notes Placed on Rating Watch Negative ‘A-‘.

Members of the Travelers Property/Casualty Group:

The Automobile Insurance Company of Hartford

The Charter Oak Fire Insurance Company