Filed by: Travelers Property Casualty Corp. pursuant to
Rule 425 of the Securities Act of 1933 and deemed filed
pursuant to Rule 14a-12 of the Securities Exchange Act
of 1934
Subject Company: Travelers Property Casualty Corp.
Commission File No.: 1-31266
This filing contains certain forward-looking information about Travelers
Property Casualty Corp. ("Travelers"), The St. Paul Companies, Inc. ("The St.
Paul") and the combined company after completion of the transactions that are
intended to be covered by the safe harbor for "forward-looking statements"
provided by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that are not historical facts. Words
such as "expect", "feel", "believe", "will", "may", "anticipate", "plan",
"estimate", "intend", "should" and similar expressions are intended to identify
forward-looking statements. These statements include, but are not limited to,
financial projections and estimates and their underlying assumptions; statements
regarding plans, objectives and expectations with respect to future operations,
products and services; and statements regarding future performance. Such
statements are subject to certain risks and uncertainties, many of which are
difficult to predict and generally beyond the control of Travelers and The St.
Paul, that could cause actual results to differ materially from those expressed
in, or implied or projected by, the forward-looking information and statements.
Some other risks and uncertainties include, but are not limited to: those
discussed and identified in public filings with the Securities and Exchange
Commission (the "SEC") made by Travelers and The St. Paul; the inability to
obtain price increases due to competition or otherwise; losses due to foreign
currency exchange rate fluctuations and losses in investment portfolios, which
could be adversely impacted by adverse developments in U.S. and global financial
markets, interest rates and rates of inflation; weakening U.S. and global
economic conditions; insufficiency of, or changes in, loss reserves; the
occurrence of catastrophic events, both natural and man-made, including
terrorist acts, with a severity or frequency exceeding our expectations;
exposure to, and adverse developments involving, environmental claims and
related litigation; the impact of claims related to exposure to potentially
harmful products or substances, including, but not limited to, lead paint,
silica and other potentially harmful substances; adverse changes in loss cost
trends, including inflationary pressures in medical costs and auto and home
repair costs; developments relating to coverage and liability for mold claims;
the effects of corporate bankruptcies on surety bond claims; adverse
developments in the cost, availability and/or ability to collect reinsurance;
the ability of our subsidiaries to pay dividends to us; adverse outcomes in
legal proceedings; judicial expansion of policy coverage and the impact of new
theories of liability; the impact of legislative actions, including federal and
state legislation related to asbestos liability reform; larger than expected
assessments for guaranty funds and mandatory pooling arrangements; a downgrade
in claims-paying and financial strength ratings; the loss or significant
restriction on the ability to use credit scoring in the pricing and underwriting
of policies; amendments and changes to the risk-based capital requirements; the
ability to achieve the cost savings and synergies contemplated by the proposed
merger; the effect of regulatory conditions, if any, imposed by regulatory
agencies; the reaction of Travelers' and The St. Paul's customers and
policyholders to the transaction; the ability to promptly and effectively
integrate the businesses of Travelers and The St. Paul; and diversion of
management time on merger-related issues.
Readers are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. Neither Travelers nor The St.
Paul undertakes any obligation to republish revised forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures in Travelers' and The St. Paul's various
SEC reports, including but not limited to Annual Reports on Form 10-K for the
year ended December 31, 2002 and Quarterly Reports on Form 10-Q for the
reporting periods of 2003.
This filing may be deemed to be solicitation material in respect of the
proposed merger of Travelers and The St. Paul. In connection with the proposed
transaction, a registration statement on Form S-4 will be filed with the SEC.
SHAREHOLDERS OF TRAVELERS AND SHAREHOLDERS OF THE ST. PAUL ARE ENCOURAGED TO
READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE
REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED MERGER. The final joint proxy statement/prospectus will be mailed
to shareholders of Travelers and shareholders of The St. Paul. Investors and
security holders will be able to obtain the documents free of charge at the
SEC's website, www.sec.gov, from Travelers Property Casualty Corp., One Tower
Square, Hartford, Connecticut 06183, Attention: Investor Relations, or from The
St. Paul Companies, Inc., 385 Washington Street, Saint Paul, Minnesota 55102,
Attention: Investor Relations.
Travelers, The St. Paul and their respective directors and executive
officers and other members of management and employees may be deemed to
participate in the solicitation of proxies in respect of the proposed
transactions. Information regarding Travelers' directors and executive officers
is available in Travelers' proxy statement for its 2003 annual meeting of
shareholders, which was filed with the SEC on March 17, 2003, and information
regarding The St. Paul's directors and executive officers is available in The
St. Paul's proxy statement for its 2003 annual meeting of shareholders, which
was filed on March 28, 2003, as supplemented by the Additional Materials filed
pursuant to Schedule 14A of the Securities Exchange Act of 1934, as amended, on
April 7, 2003. Additional information regarding the interests of such potential
participants will be included in the joint proxy statement/prospectus and the
other relevant documents filed with the SEC when they become available.
The following is a transcript of a voicemail sent to employees of
Travelers:
# # #
TRAVELERS MERGER ANNOUNCEMENT
Good morning, everybody. This is Bob Lipp calling you all to let you know of a
very exciting development for our company, that actually is being released to
the public this morning.
Yesterday, the St. Paul Companies and Travelers signed a definitive agreement to
merge the two companies. This merger will approximately double the size of the
Travelers' Commercial business and will position the combined company as the
second largest Commercial company in the United States.
Since Personal Lines really exists at Travelers and is not duplicated at St.
Paul, we will continue to be the second largest distributor of Personal Lines
through independent agents.
Now, details of this transaction are all going to be available on the website
this morning. You'll have the press release and the analyst presentation that
will be given at 9:00 a.m. Eastern time, and we encourage you all to go through
that for more details and information.
Both companies, just to mention a few, are coming together basically on market
capitalization; the timing of this transaction is expected to close probably in
the second quarter of next year, of `04, because of necessary regulatory
approvals.
Now, why are we so excited about this combination and what does it mean for our
various publics? In the first place, the combination in the marketplace should
be very positive for our agents and their customers. We have a new and improved
product line, when you look at both product lines being combined; the emphasis
at the St. Paul has been very much in the specialized industry area, and that
will combine very well with our more generalized and geographic approach at the
Travelers. In addition, the two companies are very complementary in terms of
their geographic concentration. We become a real national company through
combining the Travelers concentration in the East, Northeast and Mid-Atlantic
states, with St. Paul's concentration in the Southeast and in the Midwest. In
fact, after this is done, we will be number one in terms of Commercial writing
in 22 states in the United States, number two in 13 states, and number three in
8 additional states. A very powerful national franchise.
The financial strengths, as you'll see in the analyst presentation, are very
impressive; premium will be approximately $20 billion between the combined
companies. That's up from about $13 billion at the Travelers. And
capitalization, so important in today's marketplace for our agents, the
financial strength and stability being $26 billion in combined capital, with
about $20 billion of that being in equity.
In addition, we have wonderful combination between the two companies because we
both prize the same cultural attributes. What's important in Travelers is the
underwriting, the risk-taking, the direct claims activity, the servicing of
customers -- in other words, if you do the right thing, you do it properly and
you worry about the customers, and you know your numbers, and you're responsible
as far as service -- that's the kind of things that is very much consistent with
the St. Paul philosophy also.
In addition, they have really, in the last couple of years under Jay Fishman,
have really reemphasized what I would suggest are the same areas that are our
primary areas of emphasis at Travelers. That's the small, the medium-sized
business that plays such a large part at our company. The business strategies
are actually very similar in their approach to independent agents and brokers as
the primary distributors of the products.
And there's lots of experience, both managements are absolutely first rate, and
that's what counts.
And finally, as far as shareholders, and I think as far as employees, we can
personally say that it's going to be a very bright future. We're going to be
strong, we're really almost, as I say, doubling the size of our Commercial
business, we're number two now in the entire United States as far as Commercial
business, and number two through independent agents on Personal Lines side, and
it should be very positive in terms of future earnings and stability as a
company.
By the way, the name of the company will be The St. Paul Travelers Companies,
the actual corporate headquarters will be in St. Paul, but the operating
headquarters, in a sense, will be both Personal and Commercial Lines will be
based in Hartford. And so there presumably will be, I would say, little
disruption in terms of the way we are doing business at the present time. And it
really is a nice merger in that sense between the two companies.
Let me also mention some of the management changes which, again, you will read
about, again, very positive. I'll be working with Jay Fishman. Jay, as many of
you know, was with the Travelers and ran the company for several years, and
eventually went to St. Paul a couple of years ago to take that company over. Jay
will become CEO of the combined company when we come together, I will become the
Executive Chairman, and will work very closely with Jay in his executive role.
In addition, Chuck Clark, who is currently President of Travelers, will become
Vice Chairman of The St. Paul Travelers Companies; Doug Elliott will become
Chief Executive Officer of the combined Commercial and Personal business; Mike
Miller, who comes from St. Paul, will become Chief Executive Officer of the
Specialty business; Marita Zaritus, who is CEO of St. Paul's Commercial
insurance operations will become an EVP of the combined company. And also, Brian
McLean and Tim Yessman, who was--, Tim was previously at Travelers, many of you
know him, will share responsibilities as far as the combined claim operation.
And obviously, more announcements to be made later.
So actually, in wrapping up, and I will, I can tell you that we're very excited
about this, we think it's going to be a huge plus as far as our agents, and I
guess that's really what will be the plus, as far as the success of this
company, it takes the Travelers to an entirely new level in terms of size and
stability, earnings power and strength, and we think in this day and age in the
property and casualty business that's extremely important and very much desired
by our agents and, in turn, their customers.
So with that very brief summary, let me say good-bye, and basically, please do
make reference over the website to the press release; we intend to have another
All Company Call tomorrow, probably around 10:00, and we will get you out on
e-mail as to the exact time, at which time we will again discuss, and Jay
Fishman will be with us to discuss his plans and thoughts for the entire
companies. So with that, congratulations to everybody, I think it's going to be
an exciting development for the company, and we will talk to you tomorrow.