Travelers 2004 Annual Report Download - page 13

PART I
Item 1. BUSINESS
The St. Paul Travelers Companies, Inc. (together with its consolidated subsidiaries, the Company) is a
holding company principally engaged, through its subsidiaries, in providing a wide range of commercial and
personal property and casualty insurance products and services to businesses, government units, associations and
individuals. It also has a presence in the asset management industry through its 79% majority ownership of
Nuveen Investments, Inc. (Nuveen Investments). The Company, known as The St. Paul Companies, Inc. (SPC)
prior to its merger with Travelers Property Casualty Corp. (TPC), is incorporated as a general business
corporation under the laws of the state of Minnesota and is one of the oldest insurance organizations in the
United States, dating back to 1853. The principal executive offices of the Company are located at 385
Washington Street, St. Paul, Minnesota 55102, and the telephone number is [phone].
On April 1, 2004, TPC merged with a subsidiary of SPC, as a result of which TPC became a wholly-owned
subsidiary of SPC, and SPC changed its name to The St. Paul Travelers Companies, Inc. For accounting
purposes, this transaction was accounted for as a reverse acquisition with TPC treated as the accounting acquirer.
Accordingly, this transaction was accounted for as a purchase business combination, using TPC’s historical
financial information and applying fair value estimates to the acquired assets, liabilities and commitments of SPC
as of April 1, 2004. Beginning on April 1, 2004, the results of operations and financial condition of SPC were
consolidated with TPC’s results of operations and financial condition. Accordingly, all financial information
presented herein for the twelve months ended December 31, 2004 reflects the accounts of TPC for the three
months ended March 31, 2004 and the consolidated accounts of SPC and TPC for the nine months ended
December 31, 2004. The financial information presented herein for the prior year periods reflects the accounts of
TPC. In connection with the merger, each issued and outstanding share of TPC class A and class B common
stock (including the associated preferred stock purchase rights) was exchanged for 0.4334 of a share of the
Company’s common stock. All share and per share amounts for all prior periods have been restated to reflect the
exchange of TPC’s common stock, par value $0.01 per share, for the Company’s common stock without
designated par value, except with regard to share information related to the TPC initial public offering in 2002.
TPC is a Connecticut corporation that was formed in 1979 and, prior to its March 2002 initial public
offering of class A common stock (IPO), was an indirect wholly-owned subsidiary of Citigroup Inc. (together
with its consolidated subsidiaries, Citigroup). TPC was reorganized in connection with its IPO in March 2002.
Pursuant to the reorganization, which was completed on March 19, 2002, TPC’s consolidated financial
statements were adjusted to exclude the accounts of certain formerly wholly-owned TPC subsidiaries, principally
The Travelers Insurance Company and its subsidiaries (being the former U.S. life insurance operations of TPC),
certain other wholly-owned non-insurance subsidiaries of TPC and substantially all of TPC’s assets and certain
liabilities not related to the property casualty insurance business.
In the IPO, on March 21, 2002, TPC issued 231 million shares* of its class A common stock, representing
approximately 23% of TPC’s common equity. After the IPO, Citigroup Inc. beneficially owned all of the 500
million shares* of TPC’s outstanding class B common stock, each share of which was entitled to seven votes,
and 269 million shares* of TPC’s class A common stock, each share of which was entitled to one vote,
representing at the time 94% of the combined voting power of all classes of TPC’s voting securities and 77% of
the equity interest in TPC. On August 20, 2002, Citigroup made a tax-free distribution to its stockholders (the
Citigroup Distribution), of a portion of its ownership interest in TPC, which, together with the shares issued in
the IPO, represented more than 90% of TPC’s common equity and more than 90% of the combined voting power
of TPC’s outstanding voting securities. Citigroup received a private letter ruling from the Internal Revenue
Service that the Citigroup Distribution was tax-free to Citigroup, its stockholders and TPC. As part of the ruling
* Share amounts are unadjusted for the merger of TPC and SPC.
1