NU Online News Service, June 1, 3:29 p.m. EDT
The Travelers will replace its one-time parent Citigroup Inc. in representing the financial services sector on the Dow Jones Industrial Average, it was announced today.
The switch came on the same day an American industry icon, General Motors Corp., lost its place on the market barometer to Cisco Systems Inc.
Both moves are effective June 8, the Dow Jones Company said.
In a statement, Robert Thomson, managing editor of The Wall Street Journal and editor-in-chief for all of Dow Jones, said, "The selection of Travelers, a property and casualty insurance company, is intended to restore the financials industry to full representation in the Dow.
"When we removed American International Group Inc. last fall, we substituted Kraft Foods Inc. rather than another financial stock because the financials industry was then in great upheaval. That choice left financials underrepresented in the Dow, a deficiency we are now correcting."
He said the Dow was reluctant to remove Citigroup when the financial crisis was at its worst, but the move was made in the face of the bank's "substantial restructuring" and government involvement.
Mr. Thomson added that it is hoped after Citigroup "has refashioned itself that we will once again be able to consider it for inclusion."
GM was removed from the Dow after it entered bankruptcy reorganization today, which immediately disqualified it from inclusion on the Dow.
As for Cisco, Mr. Thomson said it is a fitting addition "because its communications and computer-networking products are vital to an economy and culture still adapting to the Information Age–just as automobiles were essential to America in the 20th Century."
Travelers, ironically, was once owned by Citigroup when the insurer merged with Citicorp in 1998. Travelers' p-c business was spun off from Citigroup in 2002. The following year the Hartford, Conn.-based insurer began its merger with St. Paul Companies, which was completed the following year. The company was known as the St. Paul Travelers until 2007 when it was re-named The Travelers Companies.
Travelers issued a statement late in the day saying, "We're pleased with the recognition associated with being included on this list of well-known companies."
(This story was updated on June 2 at 8:59 a.m. EDT)
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