8-KOther Events

TRAVELERS COMPANIES, INC. 8-K Report (Apr 26, 2002)

Filed April 26, 2002For Securities:TRV

Summary

The St. Paul Companies, Inc. announced a significant strategic move to transfer its ongoing reinsurance operations to a new, Bermuda-based entity named Platinum Underwriters Holdings, Ltd. This new company plans to raise approximately $1 billion through an initial public offering (IPO) of 75.1% of its common shares. The transaction is designed to bolster capital for the reinsurance business while allowing The St. Paul to retain a substantial minority stake (24.9%) and continue benefiting from certain aspects of its reinsurance operations. Investors should note that Platinum will reinsure specific contracts commencing in 2002, with The St. Paul retaining liabilities and associated reserves for contracts prior to January 1, 2002. This move is expected to generate a net realized capital gain for The St. Paul, though the exact amount is contingent on the offering's success. The formation of Platinum and its subsequent IPO represent a move to isolate and capitalize on the reinsurance segment, potentially enhancing shareholder value and operational focus for The St. Paul.

Key Highlights

  • 1The St. Paul Companies is transferring its ongoing reinsurance operations to a new Bermuda-based reinsurer, Platinum Underwriters Holdings, Ltd.
  • 2Platinum Underwriters Holdings plans to conduct an Initial Public Offering (IPO) of 75.1% of its common shares, aiming to raise approximately $1 billion.
  • 3The St. Paul will retain a 24.9% stake in Platinum Underwriters Holdings, receiving this stake in exchange for transferring certain reinsurance contracts, renewal opportunities, and related assets.
  • 4Platinum will reinsure specific reinsurance contracts of St. Paul Fire and Marine Insurance Company and St. Paul Reinsurance Company Limited that commence in 2002.
  • 5The St. Paul will retain all reinsurance liabilities and associated assets/reserves for contracts that commenced prior to January 1, 2002.
  • 6The transaction is expected to result in a net realized capital gain for The St. Paul, dependent on the IPO's pricing and success.
  • 7The IPO is anticipated to close in approximately three months, subject to regulatory approvals and market conditions.

Frequently Asked Questions

The primary purpose is to transfer The St. Paul's ongoing reinsurance operations into a separate, newly formed entity. This allows Platinum to raise significant capital through an IPO to support its operations and potentially enhance the value of the reinsurance business.

The St. Paul Companies will retain a 24.9% stake in Platinum Underwriters Holdings. This stake is in exchange for the transfer of certain reinsurance contracts, renewal opportunities, and related assets of its reinsurance operation, St. Paul Re.

No, it does not. Platinum will reinsure contracts commencing in 2002. However, The St. Paul will retain all existing reinsurance liabilities and their associated assets and reserves for contracts that incepted prior to January 1, 2002.

The offering and subsequent closing are expected to occur in approximately three months, pending necessary regulatory approvals and prevailing market conditions.