Best Affirms FSR for Travelers PC Pool

April 19, 2005

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Travelers Property Casualty Pool (Travelers PC Pool) (Hartford, Conn.).

Concurrently, A.M. Best has affirmed the debt ratings of “a-” on senior debt, “bbb+” on subordinated debt, “bbb” on trust preferred securities, “bbb” on preferred stock and AMB-1 on commercial paper of The St. Paul Travelers Companies Inc. (St. Paul Travelers) (St. Paul, Minn.) and its subsidiaries.

A.M. Best has removed these ratings from under review and assigned them a stable outlook. The ratings had been placed under review with negative implications pending St. Paul Travelers’ planned divestiture of its 78 percent equity ownership of Nuveen Investments Inc. (Nuveen).

A.M. Best also has affirmed the financial strength rating of A (Excellent) of the St. Paul Companies (St. Paul). The outlook for this rating is stable. Additionally, A.M. Best has assigned issuer credit ratings of “aa-” to Travelers PC Pool and its rating unit members and “a” to St. Paul Companies and its rating unit members. These ratings also have been assigned a stable outlook.

These rating actions follow St. Paul Travelers receiving net cash proceeds of approximately $1.9 billion from a secondary stock offering and related stock sales as part of its divestiture of Nuveen. Approximately $400 million of these proceeds were received by St. Paul Fire & Marine related to its ownership in Nuveen, with the holding company having received the balance of $1.5 billion. Additional net proceeds of approximately $500 million are expected to be received by the holding company from the divesture of remaining shares and other forward stock sales related to the Nuveen divestiture over the next several months, but by Dec. 23, 2005, at the latest.

The rating actions recognize approximately $1.7 billion of the holding company’s proceeds from the Nuveen divestiture will be contributed to St. Paul Travelers’ insurance subsidiaries—primarily the St. Paul Companies—following the conclusion of St. Paul Travelers’ exploration and analysis of strategic alternatives for combining its major insurance pools. This study is expected to be completed within the next several months.

St. Paul Travelers’ divestiture of Nuveen has already resulted in a substantial improvement in holding company liquidity and tangible net worth through a significant reduction in goodwill and increase in cash.

The transaction and subsequent contributions from the holding company are expected to provide St. Paul Companies with a sizable capital cushion in the event of further adverse loss reserve development, reduce the potential need for further capital support from Travelers PC Pool and enable dividends from the Travelers PC Pool to build holding company liquidity.

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