With the condition that the combined firm keeps certain employment, tax and charitable commitments to her state, Connecticut Insurance Commissioner Susan Cogswell has approved the acquisition of Travelers Property Casualty Corp. in Hartford by St. Paul Companies. Inc. of Minnesota.
Cogswell took the companies up on their promise to keep the combined St. Paul Travelers’ general commercial lines, personal lines, surety and construction operations in Hartford and to maintain employment around the current 5,900 mark after the anticipated 24 month transition period.
Seventy-five percent of these employees currently work in the segments that will remain in Hartford. While some cuts will be made, these will be made up with other jobs transferred from Maryland, company officials vowed.
The companies also promised to contribute $3.5 million a year to Connecticut charities through 2006, up from the $2.7 million they gave in 2003. The City of Hartford can continue to expect about $32 million in tax revenues after the merger.
For three years following the merger, the merged company must report its business operations and levels of employment in Connecticut.
The transaction still must be approved by several other states. Federal regulators approved the deal in December. Shareholders are scheduled to vote on March 19. Officials estimate the final merger should occur in June.
When it does happen, Travelers and all of its subsidiaries will survive as wholly-owned subsidiaries of St. Paul. The new company will be known as St. Paul Travelers. It will have combined assets, premiums and shareholders’ equity of $109 billion, $14.5 billion and $20.2 billion respectively. The new company will rank second in domestic commercial lines property casualty lines and fifth overall among domestic property casualty insurers. It will be among the top three commercial insurers in 40 states and D.C.
During public hearings, company officials promised that there will be no major disruptions in the marketplace as a result of the merger and that the number of independent agents they contract will not be decreased as a result..
Company officials said they expect annual after tax savings of $228 million by 2006 as a result of the merger. They also anticipate “revenue synergies” of $55 million in 2004 and up to $160 million in 2006.
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