St. Paul Travelers and Kemper Reach Co-Surety Settlement

June 17, 2005

St. Paul Travelers Companies and The Kemper Insurance Companies have reached a settlement in connection with certain surety bonds that St. Paul Travelers and Kemper issued as co-sureties.

The bonds were issued on behalf of a large construction contractor engaged in various projects, including the Boston-based central artery project known as the Big Dig.

Under the settlement, Kemper made a payment to St. Paul Travelers in exchange for which Kemper was released from any further financial obligations to St. Paul Travelers relating to these bonds.The insurers did not disclose the amount of the payment.

This settlement, together with St. Paul Travelers’ previously recorded co-surety reserves, approximates the company’s estimate of Kemper’s share of the losses related to the bonded projects. St. Paul Travelers said it continues to believe its reserves related to the bonded projects are appropriate.

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