SEC REVIEWING ST. PAUL TRAVELERS' 2004 RESERVE ADJUSTMENTS, MERGER - ProgramBusiness

SEC REVIEWING ST. PAUL TRAVELERS’ 2004 RESERVE ADJUSTMENTS, MERGER

ST. PAUL, Minn. (BestWire) - The U.S. Securities and Exchange Commission is reviewing some reserve adjustments, totaling $1.63 billion, recorded by St. Paul Travelers Cos. during the second quarter of 2004. St. Paul Travelers (NYSE:STA) disclosed the SEC inquiry in a regulatory filing, in which the insurer said it had received a letter from the SEC's division of enforcement May 3 advising that its investigators are reviewing the 2004 adjustments as well as the April 2004 merger between St. Paul Cos. and Travelers Property Casualty Corp.

Published on May 19, 2006

The insurer, which recorded the adjustments as charges, said it stands by its accounting treatment of the reserves but left open the possibility that SEC staff may disagree. According to St. Paul Travelers, the SEC requested in July of 2004 information concerning adjustments to some of St. Paul's insurance reserves and reserves for reinsurance recoverables and premiums due from policyholders, and how those adjustments may relate to the company's reserves for periods before the merger. The company said it provided the requested information to SEC staff.

St. Paul and Travelers merged April 1, 2004 to create the second-largest property/casualty company in the United States, in a transaction valued at $16 billion.

Most units of St. Paul Travelers currently have Best's Financial Strength Ratings of A+ (Superior) or A (Excellent).

This week, the company posted a first-quarter profit of $1 billion, an increase of 374.5% over the same period a year ago (BestWire, May 2, 2006).

On the afternoon of May 9, St. Paul Travelers stock was trading at $45.29 a share, down 0.66% from the previous close.

(By David Dankwa, associate editor, BestWeek: David.Dankwa@ambest.com)

LOAD-DATE: May 10, 2006

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