HARTFORD, Conn. — September 4, 2003 — Travelers Property Casualty Corp. (NYSE: TAP.A and TAP.B) announced today that it has purchased the renewal rights to Royal & SunAlliance USA ‘s commercial lines national accounts, middle market and marine businesses, and standard and preferred personal lines businesses.
Effective immediately, Travelers will begin the preparation for offering renewal policies to Royal & SunAlliance's customers, agents and brokers for these targeted lines of business, subject to Travelers underwriting guidelines. The benefits of this transaction include:
- An attractive purchase price.
- An ability to acquire up to approximately $1.5 billion in new net written premiums.
- Accretive to earnings in 2004 and provides incremental net income of approximately $50 to $60 million in 2005.
- Expanded distribution network in Personal Lines of a potential 500 new agents, to complement our 6,500 personal lines agents offering standard and preferred products.
- Expanded presence in Commercial Lines.
“This is a very attractive transaction that enhances our Personal Lines distribution network and expands our presence in Commercial Lines. This transaction is consistent with our strategy of supplementing internal growth through selected acquisitions that complement our core businesses,” said Robert I. Lipp, Chairman and Chief Executive Officer. “Royal & SunAlliance's accounts are a great fit with ours, and we believe that their customers, agents and brokers will consider this an excellent opportunity to align themselves with Travelers. In addition, we look forward to welcoming many talented Royal & SunAlliance employees into the Travelers family to ensure a smooth transition for our new customers and to help us maintain and grow this business.
“Over the years, we have been very successful in acquiring and integrating books of business through renewal rights transactions. Our success is based on our ability to only write business that meets our underwriting standards and to achieve economies of scale by leveraging our claims handling, policy support centers, technology and infrastructure platforms,” said Mr. Lipp.
The purchase price will consist of a minimum payment of $25 million, with a potential additional payment contingent on the volume of business actually written. The additional payment is currently estimated to be in the range of $35 million to $40 million.
About Travelers Property Casualty
Travelers Property Casualty Corp. (NYSE: TAP.A and TAP.B) is a leading provider of a wide range of insurance products. The Company is the second largest writer of homeowners and auto insurance through independent agents. Travelers is the third largest commercial lines insurer, providing a broad range of insurance products including workers' compensation, integrated disability, property, liability, specialty lines, surety bonds, inland/ocean marine, and boiler and machinery. For more information on Travelers products, see www.travelers.com.
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This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Specifically, we have forward-looking statements about our earnings, incremental net income from the transaction, and our ability to integrate the transaction.
Many risks and uncertainties may impact the matters addressed in these forward-looking statements. Actual results may differ materially from those expressed or implied. In particular, any incremental net income resulting from the transaction depends, among other things, on our ability to renew a sufficient dollar amount of the policies and otherwise successfully integrate the business acquired into our organization. This, in turn is subject to a number of other factors, including, among others, the willingness of policyholders to renew their policies with us, and the willingness of their insurance agents and brokers to recommend that policyholders renew with us. For a discussion of other factors that could affect our business, see the information under the heading “Management's Discussion of Financial Condition and Results of Operations – Outlook” and “ – Forward Looking Statements” in our Annual Report on Form 10-K.”
Our forward-looking statements speak only as of the date made, and we undertake no obligation to update these forward-looking statements.