St. Paul Travelers Companies, after earlier refusing comment, has denied it is in merger talks with Zurich Financial Services Group.

The St. Paul, Minn.-based company issued a statement Sunday denying that discussions were going on with Zurich, saying such reports "are not true."

"While the company also affirmed that its policy is to avoid any comment on, or response to, market rumors or speculation, the factual and definitive manner in which the reports were made, both nationally and internationally, has prompted the company to provide this clarification," St. Paul-Travelers said.

The report of talks was made by The Wall Street Journal and picked up by other publications.

An analyst, who was quoted in National Underwriter Friday, said the possibility of merger talks could signal that St. Paul Travelers is having difficulty expanding.

David Small, an analyst for Bear Stearns, reacting to the Wall Street Journal article, said such talks could be an indication that the insurer was seeking a European partner to help it grow.

Such a move would mean more restructuring for St. Paul, but would mean following the American International Group model to balance U.S. risks with European ones, he said.

If the two insurers merged, it would make the combined group the second largest property-casualty carrier based on net written premium behind State Farm, and the largest commercial lines writer, eclipsing AIG.

St. Paul Travelers currently stands fourth behind Allstate, followed by Zurich in fifth place in rankings based on net premiums written for 2004.

Special Reports /

St. Paul Denies Merger Talks

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