St. Paul Travelers to Sell Stake in Nuveen

St. Paul Travelers Cos., the second-largest U.S. commercial insurer, said Friday that it would sell its $2.8-billion controlling stake in money manager Nuveen Investments Inc. through a secondary offering and other transactions.

Nuveen will buy $600 million of its shares from St. Paul Travelers and the remaining shares will be sold through Merrill Lynch & Co. and Morgan Stanley affiliates, the St. Paul, Minn.-based insurer said. St. Paul Travelers is selling “to strengthen its capital position,” spokeswoman Joan Palm said.

St. Paul Travelers said in January that it wanted to sell its interest in Nuveen, the largest U.S. manager of closed-end municipal bond funds. The sale would increase the insurer’s cash after it sets aside $922 million for asbestos claims in the fourth quarter.

“The timing is pretty poor for a secondary offering,” said James Ellman, president of Sea Cliff Capital in San Francisco, which manages $50 million in assets including shares of St. Paul Travelers. “You had a seller that had to sell.”

The stock sale may drive down the price of Nuveen shares because some investors had hoped St. Paul Travelers would sell its stake to one buyer, Ellman said. It isn’t an ideal time for a public offering because of a Securities and Exchange Commission investigation into a hedge fund affiliate of Nuveen, he said.