Fitch Downgrades St. Paul Debt to 'BBB'; Changes Rating Watch to Positive.

Business Editors

CHICAGO--(BUSINESS WIRE)--Jan. 30, 2004

Fitch Ratings has downgraded the long-term and senior debt ratings on The St. Paul Companies, Inc. (SPC) to 'BBB' from 'BBB+' (see complete ratings listed below) and has concurrently changed its Rating Watch status to Positive from Evolving.

Fitch's rating action follows its review of SPC's fourth quarter earnings which included approximately $525 million of adverse reserve development and other charges in the company's discontinued lines of business.

In November 2003, Fitch had placed its ratings on SPC on Rating Watch Positive following the company's announcement that it intends to merge with Travelers Property Casualty Corp. (TAP) in a transaction that is expected to close in the second quarter 2004.

On Jan. 23, 2004, Fitch changed its Rating Watch on SPC to Evolving from Positive to reflect downside risk to SPC's ratings due to Fitch's concerns about the company's reserve adequacy. Fitch's rating action followed SPC's pre-announcement that it would report a $350 million pre-tax reserve charge in its medical malpractice lines when it reported fourth quarter 2003 earnings.

At that time, Fitch said that it intended to complete a further review of SPC's reserve adequacy, prior to the consummation of SPC's merger with TAP and upon completion of this review, would either retain its current ratings of SPC, or downgrade the ratings. Fitch also said that in either case upon completion of the review it expected to move the Rating Watch back to Positive to reflect the ultimate favorable impact of the proposed merger on SPC's ratings.