Travelers 2005 Annual Report Download - page 69

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named SPC and its former subsidiary, Adams Acquisition Corp., as defendants, alleging that they aided
and abetted the alleged breach of fiduciary duty. On March18, 2004, TPC and SPC announced that all of
these lawsuits had been settled, subject to court approval. Before court approval of the settlement,
additional shareholder litigation was commenced, as described below. On September 12, 2005, plaintiffs
voluntarily withdrew their complaints without prejudice.
Beginning in August 2004, followingpost-merger announcements by the Company, various
shareholders of the Company commenced fourteen putative class action lawsuits against the Company and
certain of its current and former officers and directors in the United States District Court for the District
of Minnesota. Plaintiff shareholders alleged that certain disclosures relating to the April 2004 merger
between TPCand SPC contained false or misleading statements with respect to the value of SPC’s loss
reserves in violation of federal securities laws. These actions were consolidated under the caption Inre
St. Paul Travelers Securities Litigation I, and a lead plaintiff and lead counsel were appointed. An additional
putative class action based on the same allegations was brought in New York State Supreme Court. This
action was subsequently transferred to the District of Minnesota and was consolidated with In re St. Paul
Travelers Securities Litigation I. On June24, 2005, the lead plaintiff filed an amended consolidated
complaint. The complaint did not specify damages. On August 23, 2005, the Company and the other
defendants in In re St. Paul Travelers Securities Litigation I moved to dismiss the amended consolidated
complaint. On November 22, 2005, the parties reached an agreement to settle the case. The settlement also
encompasses the Henzel, Vozzolo and Farina cases described above. On December 28, 2005, the Court
approved the settlement.
Three other actions against the Company and certain of its current and former officers and directors
are pending in the United States District Court for the District of Minnesota. Two of these actions, which
were originally captioned Kahn v. The St. Paul Travelers Companies, Inc., et al. (Nov. 2, 2004) and
Michael A. Bernstein Profit Sharing Plan v. The St. Paul Travelers Companies, Inc., et al. (Nov. 10, 2004), are
putative class actions brought by certain shareholders of the Company against the Company and certain of
its current and former officers and directors. These actions have been consolidated as In re St. Paul
Travelers Securities Litigation II , and a lead plaintiff and lead counsel have been appointed. On July 11,
2005, the lead plaintiff filed an amended consolidated complaint. The amended consolidated complaint
alleges violations of federal securities laws in connection with the Company’s alleged failure to make
disclosure relating to the practice of paying brokers commissions on a contingent basis, the Company’s
alleged involvement in a conspiracy to rig bids and the Company’s allegedly improper use of finite
reinsurance products. On September 26, 2005, the Company and the other defendants in In re St.Paul
Travelers Securities Litigation II moved to dismiss the amended consolidated complaint for failure to state a
claim. In the third of these actions, an alleged beneficiary of the Company’s 401(k) savings plan
commenced a putative class action against the Company and certain of its current and former officers and
directors captioned Spiziri v. The St. Paul Travelers Companies, Inc., et al. (Dec. 28, 2004). The complaint
alleges violations of the Employee Retirement Income Security Act based on allegations similar to those in
In re St. Paul Travelers Securities Litigation I. On June1, 2005, the Company and the other defendants in
Spiziri moved to dismiss the complaint. On January 4, 2006, the parties in Spiziri entered into a stipulation
of settlement. The settlement remains subject to court approval.
In addition, two derivative actions have been brought in the United States District Court for the
District of Minnesota against all of the Company’s current directors and certain of the Company’s former
Directors, naming the Company as a nominal defendant: Rowe v. Fishman, et al. (Oct. 22, 2004) and
Clark v. Fishman, et al. (Nov. 18, 2004). The derivative actions have been consolidated for pretrial
proceedings as Rowe, et al. v. Fishman, et al. and a consolidated derivative complaint has been filed. The
consolidated derivative complaint asserts state law claims, including breach of fiduciary duty, based on
allegations similar to those alleged in Inre St. Paul Travelers Securities Litigation I and II described above.