Travelers 2005 Annual Report Download - page 13

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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. The Company, known as The St. Paul Companies, Inc. (SPC) prior to its
merger with Travelers Property Casualty Corp. (TPC) in 2004, 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 ofApril 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 thenine months ended December 31, 2004. The financial
information presented herein for 2003 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 231million 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 269million 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 than90% 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
*Share amounts are unadjusted for the merger of TPC and SPC.