A.M. Best Ups Ratings for New St. Paul Travelers Pool

July 14, 2005

Insurance ratings standard-bearer A.M. Best Co. has assigned a financial strength rating of “A+” (superior) and an issuer credit rating of “aa-” to the members of the newly formed pool, St. Paul Travelers Insurance Cos., headquartered in St. Paul.

This rating action follows the St. Paul Travelers Cos. Inc.’s announcement that it has combined the St. Paul and Travelers pools, forming a new pool effective July 1, 2005, retroactive to Jan. 1, 2005. The company also announced it had merged Gulf Insurance Co., the lead company of the former Gulf Insurance Group, with and into Travelers Indemnity Co., the lead company of the new pool, effective July 1, 2005. The 28 participants in the new pool, 17 reinsured affiliates and Travelers Casualty and Surety of America constitute the 46 members of A.M. Best’s new rating unit, St. Paul Travelers Insurance Cos.

As a result of the new pooling agreement, A.M. Best has upgraded the financial strength ratings to “A+” (superior) from “A” (excellent) and the issuer credit ratings to “aa-” from “a” of the 18 members of the former St. Paul Cos. Best also affirmed the financial strength ratings of “A+” (superior) and issuer credit ratings of “aa-” of the 24 members of the former Travelers Property Casualty Pool. The agency also upgraded the financial strength ratings to “A+” (superior) from “A-” (excellent) and issuer credit ratings to “aa-” from “a-” of four members of the former Gulf.

Best said the upgraded ratings of the members of the former St. Paul and Gulf groups reflect their combining with the larger, higher-rated and more strongly capitalized group of companies, the former Travelers. St. Paul Travelers’ rating reflects the combined groups’ strong capitalization, superior earnings power and dominant market profile in commercial, specialty and personal lines. In addition, Best said, the rating recognizes that about $1.7 billion of proceeds from St. Paul Travelers’ divestiture of Nuveen Investments Inc. will be contributed to its insurance subsidiaries in the third quarter of 2005.

Best said these contributions are expected to provide St. Paul Travelers with a sizable capital cushion in the event of further adverse loss reserve development.

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