TRAVELERS AND ST. PAUL PLAN MERGER

TRAVELERS AND ST. PAUL PLAN MERGER

The St. Paul Companies and Travelers Property Casualty have signed a definitive merger agreement creating the nation’s second largest commercial insurer. The combined company, to be known as The St. Paul Travelers Companies, will have net written premiums of approximately $20 billion. Commercial lines and personal lines business will be consolidated under the Travelers brand and based in Hartford. The specialty insurance lines, to be known as St. Paul Specialty, will be based in Saint Paul. Corporate headquarters also will be in Saint Paul.

Both St. Paul and Travelers have been big deal makers in the past. Among the most significant: Travelers acquired Aetna’s P-C operations in 1996 and St. Paul acquired USF&G in 1998.

Jay Fishman, who will be chief executive officer of the new company, has already run both St. Paul and Travelers. He served as CEO of Travelers Property Casualty from 1998 until 2001 (during the period that Travelers was owned by Citicorp) before joining St. Paul as chairman and CEO.

Atlantic Mutual agrees to sell commercial business to OneBeacon

Atlantic Mutual has agreed in principle to the sale of its Atlantic Specialty Insurance Company subsidiary to OneBeacon Insurance Company. The sale will include the renewal rights to its commercial insurance business and the unearned premiums on the acquired book. The overall gross written premium for this business totals approximately $450 million.

“This transaction will allow Atlantic Mutual to go forward as a well capitalized writer of affluent personal lines with a premium to surplus ratio lower than one to one,” said Klaus Dorfi, chairman and CEO of Atlantic Mutual. “At the same time our commercial business represents a very complementary fit for OneBeacon.”

Target, Lloyd’s launch agents liability program

Target Insurance Services and Lloyd’s of London have entered into a partnership to provide insurance agents and brokers professional liability insurance. The program will be offered to property and casualty agents and brokers with at least $1 million in annual written premium. Target also will offer supplemental employment practices liability coverage to agencies with up to 15 employees.

The program will be offered in selected states on an excess and surplus lines basis. Maximum limits of liability are $1 million per claim and $1 million aggregate. Optional employment practices liability coverage will be offered on a claims-made and reported basis.

Under the agreement, Target will have underwriting, quoting, binding, and policy issuance authority on behalf of Lloyd’s.

The Hartford plans acquisition of CNA’s group benefits business

The Hartford Financial Services Group has agreed to acquire CNA’s group life and accident, short-term and long-term disability and certain specialty businesses, excluding group long term care. The Hartford, which provides group benefits through its subsidiary Hartford Life and Accident, expects the acquisition of CNA’s group benefits business to contribute earned premiums of approximately $1 billion in 2004.

Hartford’s total cost for the acquisition is expected to be around $600 million.

“This will enable Hartford Life to increase the scale of its group life and disability operations and expand its distribution capacity,” said Ramani Ayer, chairman and CEO of The Hartford. “As we have said, The Hartford will continue to pursue strategic acquisitions to add to our current operations.”

Stephen W. Lilienthal, chairman and CEO of CNA, said the sale “enables us to sharpen our operational focus and move forward on our recently announced capital plan.”

Fireman’s Fund will offer Volvo program

Fireman’s Fund Insurance Company is one of several carriers that will offer insurance coverage under the Care by Volvo Insurance Services program, which provides Volvo customers information about automobile and homeowners insurance. Insurance products marketed through the Volvo program are sold through a licensed agency for all participating carriers.

AIG Private Client Group offers yacht coverage

AIG Private Client Group, a division of the property and casualty insurance subsidiaries of American International Group (AIG), introduced yacht insurance as part of its portfolio of coverages for high net worth clients. The policy includes customized coverage with flexible deductible options.

Among the other features are: availability of coverage worldwide; large limit capacity; and access to AIG Private Client Group’s concierge level claim services.

Other products provided by AIG Private Client Group include: automobile, homeowners, private collections, excess liability, excess flood, kidnap and ransom, and aviation. The group also provides clients access to art collection management, security and residential services.

Copyright Rough Notes Co., Inc. Jan 2004

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