Travelers 2006 Annual Report Download - page 40

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RATINGS
Ratings are an important factor in setting the Company’s competitive position in the insurance
marketplace. The Company receives ratings from the following major rating agencies: A.M. Best Company
(A.M. Best), Fitch Ratings (Fitch), Moody’s Investors Service (Moody’s) and Standard & Poor’s Corp.
(S&P). Rating agencies typically issue two types of ratings: claims-paying (or financial strength) ratings
which assess an insurer’s ability to meet its financial obligations to policyholders and debt ratings which
assess a company’s prospects for repaying its debts and assist lenders in setting interest rates and terms for
a company’s short and long term borrowing needs. Agency ratings are not a recommendation to buy, sell or
hold any security, and they may be revised or withdrawn at any time by the rating organization. Each
agency’s rating should be evaluated independently of any other agency’s rating. The system and the
number of rating categories can vary widely from rating agency to rating agency. Customers usually focus
on claims-paying ratings, while creditors focus on debt ratings. Investors use both to evaluate a company’s
overall financial strength. The ratings issued on the Company or its subsidiaries by any of these agencies
are announced publicly and are available on the Company’s website and from the agencies.
The Company’s insurance operations could be negatively impacted by a downgrade in one or more of
the Company’s financial strength ratings. If this were to occur, there could be a reduced demand for
certain products in certain markets. Additionally, the Company’s ability to access the capital markets could
be impacted and higher borrowing costs may be incurred.
Claims—Paying Ratings
The following table summarizes the current claims-paying (or financial strength) ratings of the
Travelers Reinsurance Pool, Travelers C&S of America, Northland Pool, Travelers Personal single state
companies, Travelers Europe, Discover Reinsurance Company, Afianzadora Insurgentes, S.A. de C.V., St.
Paul Guarantee Insurance Company and St. Paul Travelers Insurance Company Limited by A.M. Best,
Moody’s, S&P and Fitch as of February 23, 2007. The table also presents the position of each rating in the
applicable agency’s rating scale.
A.M. Best Moody’s S&P Fitch
Travelers Reinsurance Pool(a)(b).. A+ (2nd of 16) Aa3 (4th of 21) AA- (4th of 21) AA- (4th of 24)
Travelers C&S of America ........ A+ (2nd of 16) Aa3 (4th of 21) AA- (4th of 21) AA- (4th of 24)
Northland Pool(c)............... A (3rd of16) ———
First Floridian Auto andHome
Ins. Co........................ A- (4th of 16)——AA- (4th of 24)
First Trenton Indemnity Company. A (3rd of 16)— — AA- (4th of 24)
The Premier Insurance Co. of MA .A (3rd of 16)— — —
Travelers Europe................ A+ (2nd of 16)Aa3 (4th of21) AA- (4th of 21) —
Discover Reinsurance Company ...A-(4th of 16) — — —
Afianzadora Insurgentes,
S.A. de C.V.(d)................ A- (4th of 16)———
St. Paul Guarantee Insurance
Company..................... A (3rd of16) ———
St. Paul Travelers Insurance
Company Limited............. A (3rd of16) ———
(a)The Travelers Reinsurance Pool consists of: The Travelers Indemnity Company, The Charter Oak
Fire Insurance Company, The Phoenix Insurance Company, The Travelers Indemnity Company of
Connecticut, The Travelers Indemnity Company of America, Travelers Property Casualty Company of
America, Travelers Commercial Casualty Company, TravCo Insurance Company, The Travelers
Home and Marine Insurance Company, Travelers Casualty and Surety Company, The Standard Fire