Best Affirms Ratings for St. Paul Travelers Insurance Company Ltd.

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and assigned an issuer credit rating of “a” to St. Paul Travelers Insurance Company Limited (St. Paul) (United Kingdom). Both ratings have a stable outlook.

The ratings reflect the enhancement received from the implicit support of the parent St. Paul Travelers Companies Inc. (SPTC). The ratings also factor St. Paul’s excellent financial performance, excellent capitalization and strong niche business position.

St. Paul focuses on specialist lines, such as solicitors’ professional indemnity and selective commercial lines with less competition in the U.K. and Irish market.

A.M. Best expects that moderate rate reduction in the United Kingdom and stronger rate decreases in Ireland (of approximately 10%) are likely to lead to a deterioration in St. Paul’s combined ratio by 2% to 94%. Overall earnings are likely to remain excellent, with a return on premiums of 30%, as the deterioration in underwriting performance is offset by higher investment income.

A.M. Best expects St. Paul to maintain its excellent risk-adjusted capitalization through retained earnings in 2005 and believes the risk profile will benefit from the run off of discontinued business lines, such as medical malpractice and construction liability. However, the discontinued portfolio experienced adverse reserve development in 2004, and A.M. Best believes there is potential for further reserve strengthening.

St. Paul benefits from the globally recognized St. Paul Travelers brand and has a significant market share in its core commercial business lines including solicitors’ professional indemnity, public sector and technology.

A.M. Best expects a decrease of approximately 7% in gross written premiums to GBP 290 million (USD 553 million) in 2005, factoring a softening of rates in the commercial sector in the United Kingdom and Ireland.