Fitch Notes Travelers Rating Watch Status

February 2, 2004

On Nov. 17, 2003, Fitch Ratings placed the ‘AA’ insurer financial strength (IFS) ratings of the members of the Travelers Property Casualty Group and the ‘A’ long-term issuer and senior debt ratings of Travelers Insurance Group Holdings Corp. on Rating Watch Negative following Travelers announcement that it plans to merge with The St. Paul Companies, Inc. (SPC) through a tax free exchange of stock.

The placement of the ratings on Rating Watch Negative indicated that Fitch expected Travelers’ IFS and senior debt ratings would either be affirmed or downgraded by one notch upon the close of the transaction. The potential downward rating pressure embedded in this expectation mainly reflected that Travelers would be merging with a lower rated, albeit smaller, entity.

In a separate action last week, Fitch downgraded the long-term issuer and senior debt ratings of The St. Paul Companies, Inc. (SPC) to ‘BBB’ from ‘BBB+’ and revised its Rating Watch status to Positive from Evolving. This action is indicative of a deterioration in SPC’s stand-alone financial position.

As a result of such deterioration, and within the context of the consummation of the SPC/Travelers merger, Fitch views the likelihood of Travelers’ debt ratings being affirmed as significantly minimized and the likelihood of the ratings being downgraded as highly probable. In regards to Travelers’ IFS ratings, Fitch intends to continue to evaluate management’s integration plans.

Hartford-based Travelers reported GAAP assets and shareholders’ equity of $64.9 billion and $12 billion, respectively, year-end 2003 and net income of $1.68 billion for the year ended Dec. 31, 2003.

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