St. Paul to Buy Travelers for $16.4 Billion

St. Paul Cos. on Monday agreed to buy larger rival Travelers Property Casualty Corp. for $16.4 billion in stock, creating the second-largest commercial property insurer in the country.

The new company would have an unmatched presence among commercial line insurers in nearly half of all U.S. states, with more than $100 billion in assets and $15.6 billion in combined premiums. Only American International Group Inc. would be larger.

The deal also represents a homecoming of sorts for St. Paul Chairman and Chief Executive Jay Fishman, who once served as Travelers’ top executive when it was a unit of Citigroup Inc.

The company would retain St. Paul’s corporate headquarters in St. Paul, Minn. Fishman would serve as CEO, and Lipp as chairman. Travelers directors would have a slight numerical edge on the new board.

The combined firm would instantly become the leading provider of commercial insurance lines in 22 states and a top three provider in 43. The deal combines Traveler’s strength in underwriting small to mid-sized general commercial companies with St. Paul’s concentration in specialty lines used by construction and oil and gasoline firms.

Investors seemed to welcome the deal. Shares of St. Paul rose 97 cents to $37.74; Travelers Class A shares were unchanged at $16.03. Both trade on the New York Stock Exchange.

The transaction represents one of the largest property and casualty insurance industry mergers since Citigroup bought Travelers in 1998 for $38.6 billion.