Travelers 2004 Annual Report Download - page 3

To St. Paul Travelers Shareholders,
The year 2004 was one of real progress for St. Paul
Travelers. Immediately upon the closing of our merger on
April 1, we went to work combining two companies into
a new entity – a best-in-class franchise, well positioned
for the future. We brought together our Commercial,
Specialty and Personal product offerings and our strong
management teams. We began the process of integrating
systems. We also successfully managed the business
within a changing marketplace and navigated through a
series of major hurricanes in Florida.
At the same time, 2004 was disappointing financially.
Profitability was negatively impacted by the Florida
hurricanes, asbestos and environmental reserve
increases and other reserve increases, including in
construction and surety, some of which were merger-
related. In addition, our top-line performance was
challenged by increased competition and the inevitable
complexities that come from integrating two established
underwriting organizations.
In 2004, we concentrated on positioning our insurance
businesses for the future, and in 2005, we are focused
on delivering performance that is more reflective of
our earnings power. Our recent decision to explore
alternatives for our majority ownership in Nuveen
Investments, an excellent franchise with an outstanding
track record, provides us with an opportunity to
concentrate fully on the property casualty insurance
industry and to significantly increase our financial
flexibility.
Our Progress
We made substantial progress on a number of fronts in
bringing together two companies to create a strong,
unified organization:
Management. We took steps to enhance the leadership
and organization of our company. We have an outstanding
team in place that is firmly committed to managing a
strong and cohesive organization focused on delivering
superior underwriting and claim services to our agents,
brokers and policyholders, and profitable growth to our
shareholders.
Underwriting Excellence. Delivering underwriting
excellence over a broad range of products and with local
market reach was a key strategic rationale behind our
merger. We now have a powerful platform with a deep
base of underwriting expertise in virtually every major
business line. This enhances our ability to understand
and respond to the needs of our marketplace so that
we may become an even stronger partner to our agents
and brokers in serving their customers and successfully
growing their businesses. Our broad range of products
and services and our ability to make them more
accessible on a local basis to our agents and brokers
creates a distinctive competitive advantage that will
be difficult for others to duplicate.
Being Local. Central to our success is having a local
presence with our agents and brokers. During 2004, we
organized into a number of regions across the country
and appointed knowledgeable, senior-level executives to
each region to enhance our local presence and to lead
our more than 20,000 field employees. We cover every
state and every principal metropolitan area. Being local
allows us to respond to our agents and brokers quickly
and enables our field leadership to develop meaningful
relationships with them. We are encouraging more
collaborative efforts among our many different product
areas at the local level to ensure that our agents and
brokers are aware of and have access to the full range
Letter to Shareholders
St. Paul Travelers 2004 Annual Report 1
Letter continues
Robert I. Lipp, Chairman, and Jay S. Fishman, President & CEO