Moody's puts Travelers debt on review for downgrade

Moody's Investors Service has confirmed the insurance financial strength ratings of the rated subsidiaries of Travelers Property Casualty Corp. At the same time, the long-term debt ratings of Travelers Property Casualty Corp. and Travelers Insurance Group Holdings Inc. have been placed on review for possible downgrade.

The insurance financial strength ratings retain their current stable outlook.

The rating action follows Monday's announcement of a definitive merger agreement between The St. Paul Cos. Inc. and Travelers Property Casualty Corp., creating the nation's second-largest commercial insurer, to be known as The St. Paul Travelers Cos.

Regarding the decision to review Travelers debt ratings for possible downgrade, Moody's noted that the combined group would likely have higher financial leverage, at least over the near term, and that - in addition to the execution/integration risk posed by the transaction itself - there is elevated risk to the holding company as owner of St. Paul's relatively weaker operating insurers.

After the announced merger with The St. Paul Cos. is completed, Moody's said it is likely that a more traditional three-notch relationship between senior debt and insurance financial strength ratings would prevail.

Moody's said it believes that the prospective benefits to Travelers of the proposed merger with the St. Paul Cos. (in terms of greater market presence, scale and geographic diversification) would be offset by the incrementally increased underwriting risk profile of the combined companies, due, in part, to run-off portfolios at St. Paul Fire and Marine Insurance Co.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.