St. Paul-Travelers Marriage Gains Connecticuts Blessing
After Travelers Property Casualty Corp. and The St. Paul Companies Inc. made guarantees that their consolidation would not hurt the town where Travelers is headquartered, Connecticut regulators signed off on a merger of the two insurers to create a new personal and commercial insurance giant.
The next step for the merging carriers is to secure approvals from their respective shareholders. Both companies will seek the blessings of their shareholders during shareholder meetings scheduled for this Friday, March 19.
The two carriers cleared the merger with Connecticut regulators by guaranteeing that their level of employment, charitable donations and tax commitment in Hartford, Conn., would remain stable.
"One of the criteria we have when we look at the change of control is public interest, and public interest would include things like staffing levels and continued charitable giving in Hartford," said Connecticut Insurance Commissioner Susan Cogswell.
She told National Underwriter that the two companies assured her that their general commercial lines, surety and personal lines will remain in Hartford, and that the area's staffing level (currently around 5,900), will remain stable after an anticipated two-year transition period.
"We all realize that these are two very financially strong companies, and we know the management very well from both companies," Commissioner Cogswell said. However, she added that she was looking specifically at the public commitment from Travelers and The St. Paul, "because Travelers is a very significant entity and employer in the state of Connecticut, particularly in Hartford."
She said the two companies gave her assurances regarding the stable employment level in the Hartford region after the merger. "They had sent me a commitment letter addressing those topics, and they confirmed them during the hearing process last month. Travelers Chairman and Chief Executive Robert Lipp had even commented that this would be an opportunity for growth in Hartford," Ms. Cogswell said.
The two companies also assured her that the number of independent agents with which they contract in the region will not be altered after the merger.
A Travelers' representative, Marlene Ibsen, told NU that the two companies expect that, ultimately, the staffing level will stay the same after the 24-month integration period. "Now, that doesn't necessarily translate into a commitment for no layoffs. It means there could be some layoffs, offset by new hiring and new positions being created in Hartford," she said.
The two companies also assured that after the merger, the annual aggregate charitable donation to the Hartford region by the combined entity will be $3.5 million in 2004, compared to $2.7 million that Travelers gave in 2003. The two companies said they will maintain the increased charity level through at least 2005 and 2006. Furthermore, the Hartford municipal government is also expected to continue to receive about $32 million in tax revenues after the merger.
Commissioner Cogswell's decision was announced a couple of weeks after Minnesota insurance regulators granted their own approval to The St. Paul, which is headquartered in Minnesota. (The only part of the merger where the Minnesota regulators have jurisdiction is the change-in-control in four small Travelers units domiciled in Minnesota. These units will now be merged into The St. Paul.)
"We received Minnesota's approval on Feb. 19, and we now have Connecticut's approval. We are very much on track," said a St. Paul representative, Joan Palm. She said approvals from Connecticut and Minnesota were viewed as "two cornerstones we needed to turn."
Federal regulators cleared the deal in December, but "we still need to finish up with a few additional states where the two companies' businesses are domiciled, including Texas, Delaware and Iowa," Ms. Palm said.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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