Abstract
Traveler's ratings indicated that the merger with St Paul Companies Inc is to benefit both the companies in the long run. Traveler's enjoys brand identity and A.M Best Co., the assessing firm gave a positive overview of the business.
Traveler's occupies a position among the 10 biggest companies dealing with casualty and property in the United States of America. It has net premium worth $8 billion. The company is reputed for extending varied products and for being highly skilled in risk management. The group is particularly famous in the middle as well as the national market sectors. Lately, the company merged with Citicorp, which is well known for providing credits card facilities and banking services. Traveler's also enjoys cross-selling benefits and has multiple competitive advantages. The parent company is Citigroup.
Traveler's ratings were done by A.M Best Co. (established 1899). The rating was changed from A++, to A+. This rating was done for Travelers Property Casualty Pool. This rating was allotted a stable outlook.
St Paul Companies was also declared a stable outlook and was rated as A pertaining to its financial strength.
Debt ratings of Traveler's Insurance Group Holdings Inc:
The debt rating was changed from “aa-” to “a” pertaining to senior notes and assigned “a+” from “a-” pertaining to subordinate notes.
Ratings on “trust preferred securities” and debt ratings for St Paul Companies Inc.:
St Paul Companies Inc after the merger is known by the name St Paul Travelers Companies Inc.
Debt ratings:
For senior notes-
Rating was changed from “bbb+” to “a”.
For subordinated notes-
Rating changed from “bbb” to “a-”.
Trust preferred securities:
In case of the above, rating was changed from “bbb-” to “bbb+”.
Preferred stock:
Rating was changed to “bbb+” from “bbb-”.
Since the Traveler's ratings were upgraded, this proves that the company has flexibility in finances. Even though St Paul Companies and Traveler's PC Pool have different underwriters. A.M Best hopes to see the ratings of financial strength of these two companies to meet at a common point in near future. The rating agency is also anticipating that the combination of capital base, dividends and earnings would render greater support to meet the prerequisites of cash flow and offer financial leverage.