Audio The Historical Society's Nina Archabal talks with MPR's Dan Olson Dan Harr of the Hartford Courant talks with Dan Olson More from MPR St. Paul Companies merging with Travelers (11/17/2003) Your Voice Join the conversation with other MPR listeners in the News Forum.

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Local officials relieved The St. Paul is staying put
by Dan Olson, Minnesota Public Radio
November 17, 2003

St. Paul officials are breathing a sigh of relief that, for the moment at least, the new St. Paul Travelers Insurance company will be headquartered here. That decision was part of Monday's announcement of the merger of St. Paul Companies and Travelers Insurance, to create the nation's second largest business insurer. Analysts say the proposed merger buys the company some time in an environment where change is the order of the day.

St. Paul, Minn. — Insurance company mergers are nothing new for Hartford, Connecticut, the home of Travelers Insurance and other big insurance companies. Dan Haar, a business columnist for The Hartford Courant, says people there have grown numb to announcements about insurance company changes. He says insurance company mergers, acquisitions and downsizing over the past decade have cost the city thousands of jobs.

A decade ago, he says, Travelers employed more than 11,000 people. The company's ranks since then have been thinned by nearly half. Haar thinks both St. Paul and Hartford still need to be concerned about how future mergers or acquisitions could affect employees of the new company.

"Globally, the experts say there are still too many of these companies, and the buyers are likely to be the big European companies," says Haar. "But that's a ways off for this company, and right now we need to worry about where the jobs are going to be."

Mike Dion, an insurance industry analyst for the New York City-based investment banking firm Sandler O'Neill and Partners, says the merger should bring some stability for employees, at least for now. He says a new St. Paul Travelers, the country's second largest insurance company, is a less likely target for acquisition than smaller companies.

We all lost a lot when we lost Honeywell. I think we worry a lot whenever we hear that there may be mergers, and corporate headquarters may be moved. But we're very, very glad that a company named The St. Paul will be staying in Minnesota. - Nina Archabal, Minnesota Historical Society

"I would be very surprised if someone were to come in from the outside to try to break up this merger -- by trying to buy one or the other, or in fact, the combined entity -- assuming the transaction goes forward," says Dion. "I think there's probably other properties out there that are undervalued, that have their own reserve issues and concerns about balance sheets, that perhaps may look to partner up with a larger company that helps with some of those issues."

Insurance company officials are trying to put the jobs worries to rest. They say the 2,700 St. Paul Company employees will remain here, and Travelers jobs will remain in Hartford.

St. Paul Mayor Randy Kelly says he talked with The St. Paul's CEO Jay Fishman before the announcement. Kelly says he thinks the merger is a good move.

"Given what's happening with financial institutions around the world, that St. Paul Companies needed to get bigger," says Kelly. "We think that this will position that now second-largest insurance company in the United States to be even more competitive globally. And we're delighted to keep the global headquarters here in St. Paul."

The St. Paul Companies is one of the city's largest property taxpayers, and one of Minnesota's most generous donors. Last year, the company gave $10.8 million to causes ranging from affordable housing to minority scholarships.

Minnesota Historical Society director Nina Archabal says The St. Paul gave them money for a new exhibit to open next year about the Mississippi River. Archabal says General Mills' acquisition, and the relocation of Minneapolis-based Honeywell a few years ago shows the impact of Minnesota companies leaving the state.

"One only has to look a little ways over at Honeywell to look at the impact on their giving to this community -- long-time, very generous corporation very dedicated to the neighborhood that surrounded it. And we all lost a lot when we lost Honeywell," says Archabal. "I think we worry a lot whenever we hear that there may be mergers, and corporate headquarters may be moved. But we're very, very glad that a company named The St. Paul will be staying in Minnesota."

The new St. Paul Travelers Companies board of directors includes all current outside directors of both companies, along with St. Paul Companies CEO Jay Fishman and a Travelers executive, resulting in a total of 12 directors from Travelers and 11 from The St. Paul.

(The St. Paul Companies is an underwriter of programming on Minnesota Public Radio)

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