Pursuant to Rule 424(b)(2)
Registration No. 333-2682
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 23, 1996)
$200,000,000
Travelers/Aetna Property Casualty Corp.
[LOGO]
$200,000,000 6 1/4% NOTES DUE OCTOBER 1, 1999
------------
Travelers/Aetna Property Casualty Corp. ("TAP") is offering $200,000,000
aggregate principal amount of its 6 1/4% Notes due October 1, 1999 (the
"Notes"). Interest on the Notes is payable semiannually on April 1 and October 1
of each year, commencing April 1, 1997. The Notes may not be redeemed prior to
maturity. See "Description of Notes."
The Notes will be issued in fully registered form in denominations of $1,000
or integral multiples thereof. The Notes will be initially represented by one or
more global notes registered in the name of The Depository Trust Company ("DTC")
or its nominee. Beneficial interests in the Notes will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Owners of beneficial interests in Notes will be entitled to
physical delivery of Notes in certificated form equal in principal amount to
their respective beneficial interests only under the limited circumstances
described herein. See "Description of Notes--Book-Entry Notes."
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Same-Day Funds Settlement System of DTC and, to the
extent that secondary market trading activity in the Notes is effected through
the facilities of DTC, such trades will be settled in immediately available
funds. All payments of principal and interest will be made by TAP in immediately
available funds. See "Description of Notes--Same-Day Settlement and Payment."
SEE "RISK FACTORS" BEGINNING ON PAGE 13 OF THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
NOTES OFFERED HEREBY.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE><CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Note 99.829% .213% 99.616%
Total $199,658,000 $426,000 $199,232,000
</TABLE>
(1) Plus accrued interest from October 1, 1996 to the date of delivery.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $75,000.
------------
The Notes are offered by the Underwriters named herein, subject to prior
sale, when, as and if accepted by the Underwriters and subject to certain
conditions. It is expected that delivery of the Notes in book-entry form will be
made through the facilities of DTC on or about October 9, 1996.
------------
SMITH BARNEY INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS SECURITIES
October 4, 1996
<PAGE>
Following the initial distribution of the Notes, Smith Barney Inc. ("Smith
Barney"), an indirect wholly owned subsidiary of Travelers Group Inc.
("Travelers Group") and an affiliate of TAP, may offer and sell previously
issued Notes in the course of its business as a broker-dealer. This Prospectus
Supplement, together with an appropriate Prospectus, may be used by Smith Barney
in connection with offers and sales of an indeterminate amount of Notes in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Smith Barney may act as principal or agent in such
transactions.
----------------
FOR NORTH CAROLINA INVESTORS: THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF
THIS DOCUMENT.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
S-2
<PAGE>
SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus Supplement and the accompanying Prospectus.
Travelers/Aetna Property Casualty Corp., a Delaware corporation ("TAP"), was
formed in January 1996 to hold the property and casualty insurance subsidiaries
of The Travelers Insurance Group Inc. ("TIGI"), an indirect wholly owned
subsidiary of Travelers Group Inc. The information contained in this Prospectus
Supplement and the accompanying Prospectus gives effect to the April 2, 1996
acquisition (the "Acquisition") by TAP of the domestic property and casualty
insurance subsidiaries of Aetna Life and Casualty Company ("Aetna") and to the
other Transactions described under "Recent History." TAP is a holding company
and has no direct operations. TAP's principal asset is the capital stock of its
insurance subsidiaries. As used in this Prospectus Supplement and the
accompanying Prospectus, unless the context otherwise requires, "Travelers P&C"
refers to The Travelers Indemnity Company ("Travelers Indemnity") and its
subsidiaries; "Aetna P&C" refers to The Aetna Casualty and Surety Company
("Aetna Casualty") and The Standard Fire Insurance Company ("Standard Fire") and
their subsidiaries; and the "Company" means, subsequent to the Acquisition, TAP
together with its consolidated subsidiaries (comprised of Travelers P&C and
Aetna P&C), and, prior to the Acquisition, the combined business of Travelers
P&C and Aetna P&C operating as wholly owned subsidiaries of TIGI and Aetna,
respectively. Consolidated financial statements presented in the accompanying
Prospectus for TAP for periods prior to the Acquisition consist of financial
statements for Travelers Indemnity and its subsidiaries. Statistical data
provided in this Prospectus Supplement and the accompanying Prospectus for the
"Company" for all periods prior to the Acquisition is based on combined data for
Travelers P&C and Aetna P&C. See "Glossary of Selected Insurance Terms" in the
accompanying Prospectus for the definitions of certain insurance-related terms.
Unless otherwise indicated, financial information and operating statistics
applicable to the Company set forth in this Prospectus Supplement and the
accompanying Prospectus are based on United States generally accepted accounting
principles ("GAAP") and not statutory accounting practices. In conformity with
industry practice, data derived from A.M. Best Company, Inc. ("A.M. Best") and
the National Association of Insurance Commissioners ("NAIC") sources, generally
used herein for industry comparisons, are based on statutory accounting
practices.
THE COMPANY
The Company is the fourth largest property and casualty insurance company in
the United States, based on 1995 direct written premiums published by A.M. Best,
after giving effect to the Acquisition and recent industry consolidation. The
Company provides a wide range of commercial and personal property and casualty
insurance products and services to businesses, government units, associations
and individuals. Commercial coverages and personal coverages accounted for 76%
and 24%, respectively, of the Company's combined net written premiums in 1995 of
$10.5 billion (including premium equivalents for Travelers P&C).
On April 2, 1996, TAP acquired the domestic property and casualty insurance
subsidiaries of Aetna. The Company believes that the businesses of Aetna P&C and
Travelers P&C provide complementary product offerings and distribution systems.
The Company believes that it can effectively integrate these businesses, which
will enable it to capitalize on the strengths of Travelers P&C and Aetna P&C and
to create a stronger leadership position in the property and casualty insurance
industry. The Company further believes that it has the following competitive
advantages: (i) brand names that are among the most broadly recognized in the
industry; (ii) a management team selected from the most qualified professionals,
primarily at Travelers P&C and Aetna P&C, including certain senior managers who
have worked together for several years at Travelers P&C and have achieved
significant increases in profitability at Travelers P&C through cost reductions,
effective underwriting and pricing practices and catastrophe exposure management
policies; (iii) nationally leading market shares in several important commercial
and personal product lines; and (iv) a strong financial position.
S-3
<PAGE>
The Company is the third largest writer of commercial lines insurance in the
United States based on 1995 direct written premiums published by A.M. Best,
after giving effect to the Acquisition and recent industry consolidation. The
Company's commercial lines ("Commercial Lines") offers a broad array of property
and casualty insurance and insurance-related services. The Company distributes
its commercial products through approximately 6,000 brokers and independent
agencies located throughout the United States. The commercial coverages marketed
by the Company include workers' compensation, general liability (including
product liability), multiple peril, commercial automobile, property (including
fire and allied lines), fidelity and surety and several other miscellaneous
coverages. The Company underwrites specialty coverages including general
liability for selected product liability risks, medical malpractice, umbrella
and excess liability coverage, directors and officers liability insurance,
errors and omissions insurance, fidelity and surety and fiduciary liability
insurance and other professional liability insurance. In addition, the Company
offers various risk management services, generally including claims settlement,
loss control and engineering services, to businesses that choose to self-insure
certain exposures, to states and insurance carriers that participate in state
involuntary workers' compensation pools and to employers seeking to manage
workers' compensation medical and disability costs. In 1995, Commercial Lines
generated combined net written premiums of approximately $5.1 billion and, for
Travelers P&C, premium equivalents of $2.8 billion. See "Business--Commercial
Lines" in the accompanying Prospectus.
The Company is the largest writer of personal lines insurance through
independent agents and the seventh largest writer of personal lines insurance
overall in the United States based on 1995 direct written premiums published by
A.M. Best, after giving effect to the Acquisition and recent industry
consolidation. The Company's personal lines ("Personal Lines") primarily offers
personal automobile and homeowners insurance. The Company distributes its
Personal Lines products through approximately 5,500 independent agents located
throughout the United States. The Company is pursuing a number of initiatives to
broaden its distribution of Personal Lines products, including developing
special products for affinity groups, employee groups and other sponsoring
organizations and establishing co-marketing arrangements with other insurers.
Travelers P&C has recently begun marketing personal automobile and homeowners
insurance through the independent agents of Primerica Financial Services
("PFS"), an affiliate of the Company. This program was established in 28 states
as of June 30, 1996, and is expected to reach approximately 75% of all states by
the end of 1996. PFS agents are currently selling approximately 3,500 new
automobile and homeowners policies each month. In 1995, Personal Lines generated
combined net written premiums of approximately $2.5 billion. See
"Business--Personal Lines" in the accompanying Prospectus.
-------------------
The Company's executive offices are located at One Tower Square, Hartford,
Connecticut 06183 and its telephone number is (860) 277-0111.
S-4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........... $200 million aggregate principal amount of 6 1/4% Notes due October 1,
1999.
Interest Payments............ Interest on the Notes is payable semiannually in cash on April 1 and
October 1 of each year, commencing April 1, 1997.
Maturity Date................ October 1, 1999
Ranking...................... The Notes will constitute unsecured senior indebtedness of TAP,
ranking pari passu with TAP's obligations under all other
unsubordinated unsecured indebtedness, including borrowings under the
Credit Agreement (as defined), and senior in right of payment to all
existing and future subordinated indebtedness of TAP. At June 30,
1996, TAP had outstanding $1.331 billion of unsecured senior
indebtedness. At October 4, 1996, TAP has no indebtedness outstanding
that ranks senior to the indebtedness to be evidenced by the Notes nor
does it have outstanding any borrowings under the Credit Agreement.
Because the assets of its subsidiaries constitute effectively all of
the assets of TAP, and because the subsidiaries do not guarantee
payment of principal of and interest on the Notes, claims of holders
of Notes effectively will be subordinated to the claims of creditors
of such subsidiaries. At June 30, 1996, TAP's subsidiaries had on a
combined basis $35 million of indebtedness and $42.291 billion of
total liabilities, excluding indebtedness.
Covenants.................... The Indenture contains covenants that, among other things, limit the
ability of TAP and its subsidiaries to incur indebtedness secured by
voting stock of its subsidiaries and limit TAP's ability to engage in
mergers, consolidations and sales of substantially all of its assets.
See "Description of Securities-- Covenants" in the accompanying
Prospectus.
Use of Proceeds.............. The proceeds from the sale of the Notes offered hereby will be used by
TAP for general corporate purposes. See "Use of Proceeds."
</TABLE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the matters set forth under the caption "Risk Factors" in the
accompanying Prospectus before purchasing the Notes offered hereby.
S-5
<PAGE>
RECENT HISTORY
On or before April 2, 1996, the following transactions took place (all of
the transactions described herein under "--The Capitalization of TAP and the
Acquisition" and "--The Financing of the Acquisition" are collectively referred
to as the "Transactions"):
The Capitalization of TAP and the Acquisition
. TIGI contributed all the outstanding shares of common stock of
Travelers Indemnity to TAP.
. TAP filed a restated certificate of incorporation and effected a
recapitalization as a result of which TIGI's shares of TAP common stock
were converted into shares of Class B Common Stock and the authorized
capital of TAP was changed as is described under "Description of
Capital Stock" in the accompanying Prospectus.
. TAP acquired all of the outstanding shares of common stock of Aetna
Casualty and Standard Fire for a purchase price of approximately $4.16
billion in cash. As a result, TAP owns directly 100% of the common
stock of Aetna Casualty and Standard Fire. Obligations under insurance
policies in effect at the time of the consummation of the Transactions
were not affected as a result of the Transactions.
. TIGI contributed approximately $1.1 billion to TAP.
The Financing of the Acquisition
The $4.16 billion purchase price for the Acquisition including transaction
costs, plus capital contributions totalling $710 million to Aetna P&C, were
funded as follows:
. $1.1 billion from the purchase of Class B Common Stock by TIGI.
. $540 million from the purchase of shares of Series Z Preferred Stock by
Travelers Group.
. $525 million from the purchase of 33,000,515 shares of Class A Common
Stock by the Private Investors (as described under "Certain
Transactions--Private Investors" in the accompanying Prospectus).
. $2.65 billion from borrowings by TAP under the Credit Agreement dated
as of March 15, 1996 among TAP and a syndicate of banks for which
Citibank, N.A. is acting as administrative agent (the "Credit
Agreement").
. $18 million from the settlement of receivables from Aetna.
The Permanent Financing
. TAP issued commercial paper of which $631 million was outstanding on
June 30, 1996 (the "Commercial Paper Offering").
. TAP issued 35,435,740 shares of its Class A Common Stock (the "Equity
Offering"), and an additional 3,543,574 shares of its Class A Common
Stock pursuant to the exercise of an over-allotment option, in an
initial public offering for aggregate net proceeds of approximately
$926 million.
S-6
<PAGE>
. TAP issued $200 million of 7 3/4% Notes due April 15, 2026 and $500
million of 6 3/4% Notes due April 15, 2001 in a public offering (the
"Debt Offering").
. TAP issued approximately $825 million of 8.08% Junior Subordinated
Deferrable Interest Debentures to a subsidiary trust which in turn
issued $800 million of preferred securities in a public offering (the
"First Trust Preferred Securities Offering") and $103 million of 8%
Junior Subordinated Deferrable Interest Debentures to a second
subsidiary trust which in turn issued $100 million of preferred
securities in a public offering (together with the First Trust
Preferred Securities Offering, the "Trust Preferred Securities
Offerings").
All of the net proceeds from the Commercial Paper Offering, the Equity
Offering, the Debt Offering and the Trust Preferred Securities Offerings were
used to repay in full the borrowings under the Credit Agreement and to redeem in
full the Series Z Preferred Stock. TAP elected to reduce the amounts available
to be borrowed under the Credit Agreement to $1.2 billion.
See "Certain Transactions," "Description of Capital Stock" and "Certain
Indebtedness" in the accompanying Prospectus for a more detailed description of
certain of the financing transactions described above.
USE OF PROCEEDS
The proceeds from the sale of the Notes offered hereby will be used by TAP
for general corporate purposes, which may include capital contributions to
subsidiaries of TAP and/or the reduction or refinancing of borrowings of TAP or
its subsidiaries.
S-7
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the years indicated. For purposes of computing the ratio of earnings to fixed
charges, "earnings" consist of interest expense and income from continuing
operations before Federal income taxes and fixed charges. "Fixed charges"
consist of interest expense and an imputed interest component of rental expense.
There was no interest expense for the years 1991 through 1995.
<TABLE><CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
---------------- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges........ N/A(a) 17.53 7.56 5.29 N/A(b) 7.68
</TABLE>
- ------------
(a) For the six months ended June 30, 1996, TAP's earnings were not sufficient
to cover fixed charges by $236 million. During the second quarter of 1996,
TAP recorded charges related to the acquisition and integration of Aetna
P&C. These charges resulted primarily from anticipated costs of the
Acquisition and the application of TAP's strategies, policies and practices
to Aetna P&C reserves and include: $323 million after tax ($497 million
before tax) in reserve increases, net of reinsurance, related primarily to
cumulative injury claims other than asbestos (CIOTA) as well as insurance
products involving financial guarantees, and assumed reinsurance; $45
million after tax ($69 before tax) in uncollectible reinsurance and other
receivables; and a $23 million after-tax ($35 million before tax) provision
for lease and severance costs of Travelers Indemnity related to the
restructuring plan for the Acquisition.
(b) For the year ended December 31, 1992, TAP's earnings were not sufficient to
cover fixed charges by $354 million.
S-8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of TAP at June 30, 1996
and as adjusted to give effect to the issuance and sale of the Notes, the
issuance and sale of additional long-term debt of TAP after June 30, 1996
through the date hereof, and the application of the proceeds from each of these
transactions to the repayment of short-term borrowings, as if such transactions
had occurred on June 30, 1996.
<TABLE><CAPTION>
AT JUNE 30, 1996
--------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
<S> <C> <C>
(DOLLARS IN MILLIONS)
Long-term Debt................................................................. $ 700 $ 1,100
Commercial Paper............................................................... 631 231
----------- -----------
Total debt................................................................. 1,331 1,331
----------- -----------
TAP-Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary
Trusts holding solely Junior
Subordinated Debt Securities................................................... 900 900
Stockholders' equity:
Common Stock:
Class A, $.01 par value, 700 million shares authorized,
71,979,829 shares issued and outstanding................................. 1 1
Class B, $.01 par value, 700 million shares authorized,
328,020,170 shares issued and outstanding................................ 3 3
Additional paid-in capital..................................................... 5,456 5,456
Retained earnings.............................................................. 300 300
Unrealized investment gains, net of taxes...................................... -- --
----------- -----------
Total stockholders' equity................................................. 5,760 5,760
----------- -----------
Total capitalization....................................................... $ 7,991 $ 7,991
----------- -----------
----------- -----------
</TABLE>
S-9
<PAGE>
DESCRIPTION OF NOTES
The following description of the terms of the Notes offered hereby (referred
to in the Prospectus as the "Offered Securities") supplements the description of
the general terms of Securities set forth in the accompanying Prospectus, to
which description reference is hereby made. The following summary of the Notes
is qualified in its entirety by reference thereto and to the Indenture referred
to therein.
The Notes will be issued under the Indenture described in the accompanying
prospectus dated as of April 19, 1996 (the "Indenture"), between TAP and
Citibank, N.A. as Trustee (the "Trustee"). The Notes will be limited to $200
million in aggregate principal amount. As a result of the offering of the Notes,
as of October 4, 1996, $900 million aggregate principal amount of debt
securities remains currently available to be offered by TAP under the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part. The Notes will be issued only in fully registered form
without coupons, in denominations of $1,000 and integral multiples thereof.
Initially, the Notes will be issued in the form of one or more global notes
(each, a "Book-Entry Note") registered in the name of DTC or its nominee, as
described below. The Notes will bear interest from October 1, 1996, at the
annual rate set forth on the cover page of this Prospectus Supplement. The Notes
will mature on October 1, 1999. Interest on the Notes will be payable
semiannually on April 1 and October 1 of each year, commencing April 1, 1997, to
the persons in whose names the Notes are registered at the close of business on
the preceding March 15 or September 15, respectively. The Notes will not be
redeemable prior to maturity and will not be subject to any sinking fund.
Principal of and interest on the Notes will be payable at the office or
agency of TAP to be maintained in the Borough of Manhattan, The City of New
York, initially at the Corporate Trust Office of the Trustee, 111 Wall Street,
Fifth Floor, New York, New York; provided, however, that at the option of TAP,
payment of interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the register of holders of
Notes. Notwithstanding the foregoing, payments of principal of and interest on
Book-Entry Notes will be made as described below.
The Notes will constitute unsecured senior indebtedness of TAP, ranking pari
passu with TAP's obligations under all other unsubordinated unsecured
indebtedness, including borrowings under the Credit Agreement, and senior in
right of payment to all existing and future subordinated indebtedness of TAP. At
June 30, 1996, TAP had outstanding $1.331 billion of unsecured senior
indebtedness. At October 4, 1996, TAP has no indebtedness outstanding that ranks
senior to the indebtedness to be evidenced by the Notes nor does it have
outstanding any borrowings under the Credit Agreement. Because the assets of its
subsidiaries constitute effectively all of the assets of TAP, and because the
subsidiaries do not guarantee payment of principal of and interest on the Notes,
claims of holders of Notes effectively will be subordinated to the claims of
creditors of such subsidiaries. At June 30, 1996, TAP's subsidiaries had on a
combined basis $35 million of indebtedness and $42.291 billion of total
liabilities excluding indebtedness.
A change of control of TAP involving Travelers Group failing to own and
control, directly or indirectly, more than 50% of the combined voting power of
the outstanding Common Stock of TAP constitutes an event of default under the
Credit Agreement, allowing the lenders thereunder to declare all amounts
immediately due and payable. In addition, upon a change of control of Travelers
Group involving the acquisition of more than 35% of Travelers Group's voting
stock by any person or group (other than employee benefit plans or subsidiaries
or senior executive officers or directors of Travelers Group) or a majority of
Travelers Group's board of directors ceasing during any 36-month period to be
continuing directors, any lender may withdraw from the Credit Agreement and have
its loans repaid. The Notes do not contain any change of control provisions.
Therefore, in the event indebtedness under the Credit Agreement is accelerated
upon a change of control of TAP or of Travelers Group as described above, such
indebtedness would be payable prior to the indebtedness under the Notes. See
"Certain Indebtedness--Bank Debt" in the accompanying Prospectus.
S-10
<PAGE>
The occurrence of a default in payment of any debt of TAP that results from
borrowings in excess of $50 million or any interest thereon for a period longer
than the specified period of grace, which default shall have resulted in
acceleration of the maturity of such debt without such acceleration having been
rescinded after due notice to TAP of such default, constitutes an event of
default under the Indenture with respect to the Notes, allowing the Trustee or
Holders of at least 25% in principal amount of the outstanding Notes to declare
the Notes to be immediately due and payable. See "Description of Securities" in
the accompanying Prospectus.
The Indenture permits the defeasance of debt securities issued thereunder
upon the satisfaction of the conditions described under "Description of
Securities--Defeasance and Discharge" in the accompanying Prospectus. The Notes
are subject to these defeasance provisions.
BOOK-ENTRY NOTES
The Notes initially will be issued in the form of one or more Book-Entry
Notes, which will be deposited with, or on behalf of, DTC and registered in the
name of DTC or its nominee. Except as set forth below, Book-Entry Notes may not
be transferred except as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC or by DTC or any nominee to a successor of
DTC or a nominee of such successor.
Principal and interest payments on the Notes represented by one or more
Book-Entry Notes will be made by TAP to DTC or its nominee, as the case may be,
as the registered owner of the related Book-Entry Note or Notes. TAP expects
that DTC or its nominee, upon receipt of any payment of principal or interest in
respect of Book-Entry Notes, will credit immediately the accounts of the related
participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interests in such Book-Entry Notes as shown on
the records of DTC. Neither TAP nor the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of Book-Entry Notes,
or for maintaining, supervising or reviewing any records relating to such
beneficial interests. TAP also expects that payments by participants to owners
of beneficial interests in Book-Entry Notes held through such participants will
be governed by standing customer instructions and customary practices, as is the
case with securities registered in "street name." Such instructions will be the
responsibility of such participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by TAP within 90 days,
TAP will issue Notes in certificated form in exchange for beneficial interests
in the Book-Entry Notes. In addition, TAP may at any time determine not to have
its Notes represented by one or more Book-Entry Notes, and, in such event, will
issue Notes in certificated form in exchange for beneficial interests in
Book-Entry Notes. In any such instance, an owner of a beneficial interest in a
Book-Entry Note will be entitled to physical delivery in certificated form of
Notes equal in principal amount to such beneficial interest and to have such
Notes registered in its name. Notes so issued in certificated form will be
issued in denominations of $1,000 or any amount in excess thereof that is an
integral multiple of $1,000 and will be issued in registered form only, without
coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by TAP in
immediately available funds. The Notes will trade in the Same-Day Funds
Settlement System of DTC, and, to the extent that secondary market trading
activity in the Notes is effected through the facilities of DTC, such trades
will be settled in immediately available funds.
S-11
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions in the Terms Agreement dated
October 4, 1996, which incorporates by reference the Underwriting Agreement
Basic Provisions dated April 23, 1996 (together, the "Underwriting Agreement"),
each Underwriter named below (collectively, the "Underwriters") has severally
agreed to purchase from TAP, and TAP has agreed to sell to such Underwriter, the
principal amount of Notes set forth opposite the name of such Underwriter below.
<TABLE><CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
- -------------------------------------------------------------------------------------- ----------------
<S> <C>
Smith Barney Inc...................................................................... $100,000,000
Donaldson, Lufkin & Jenrette Securities Corporation................................... 50,000,000
UBS Securities LLC.................................................................... 50,000,000
----------------
Total........................................................................... $200,000,000
----------------
----------------
</TABLE>
The Underwriters are obligated to take and pay for all of the Notes if any
are taken. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriter may be increased or the Underwriting Agreement may be
terminated.
The Underwriters have advised TAP that they propose initially to offer the
Notes to the public at the respective public offering prices set forth on the
cover page of this Prospectus Supplement, and to certain dealers at a price that
represents a concession not in excess of .200% of the principal amount of the
Notes under the public offering price. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of .100% of the principal amount
to certain other dealers. After the initial offering, the public offering price
and such concessions may be changed by the Underwriters.
The Underwriting Agreement provides that TAP will indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, and to make certain contributions in respect
thereof.
TAP does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or the existence of trading markets for, the Notes.
Smith Barney is an indirect wholly owned subsidiary of Travelers Group and
an affiliate of TAP. The offering of the Notes will comply with the requirements
of Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") regarding a NASD member firm's underwriting securities of
an affiliate. Certain of the Underwriters and their affiliates have in the past
provided, and may in the future provide, investment and/or commercial banking
services to Travelers Group and certain of its subsidiaries, including TAP, in
the ordinary course of business.
James Dimon, a Director of TAP, is Chairman of the Board, Chief Executive
Officer and a member of the executive committee of Smith Barney and is also a
Director, Chief Executive Officer and Chairman of the Board of Smith Barney
Holdings Inc., the immediate parent company of Smith Barney. See "Management" in
the accompanying Prospectus. Smith Barney acted as financial advisor to TIGI in
connection with the Acquisition.
This Prospectus Supplement together with an applicable Prospectus may also
be used by Smith Barney in connection with offers and sales of the Notes in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Smith Barney may act as principal or agent in such
transactions. Smith Barney has no obligation to make a market in any of the
Notes and may discontinue any market-making activities at any time without
notice, at its sole discretion.
S-12
<PAGE>
LEGAL MATTERS
The validity of the Notes will be passed upon for TAP by James M. Michener,
General Counsel of TAP, Hartford, Connecticut and for the Underwriters by Dewey
Ballantine, New York, New York. Mr. Michener, Senior Vice President, General
Counsel and Secretary of TAP, beneficially owns, or has rights to require under
Travelers Group employee benefit plans, an aggregate of less than 1% of the
common stock of Travelers Group. Mr. Michener owns less than 1% of the Common
stock of TAP. Dewey Ballantine has from time to time acted as counsel for
Travelers Group and certain of its subsidiaries and may do so in the future.
EXPERTS
The consolidated financial statements and financial statement schedules of
TAP and its subsidiaries, as of December 31, 1995 and 1994, and for each of the
years in the three-year period ended December 31, 1995, included in the
accompanying Prospectus and elsewhere in the Registration Statement, have been
included therein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere therein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1995
consolidated financial statements of TAP and its subsidiaries refers to a change
in the method of accounting for certain investments in debt and equity
securities in 1994.
The combined financial statements of Aetna P&C, as of December 31, 1995 and
1994, and for each of the years in the three-year period ended December 31,
1995, included in the accompanying Prospectus and elsewhere in the Registration
Statement, have been included therein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere therein, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering
the December 31, 1995 combined financial statements of Aetna P&C refers to
changes to the methods of accounting for certain investments in debt and equity
securities, workers' compensation life table indemnity reserves and
retrospectively rated reinsurance contracts in 1993.
S-13
<PAGE>
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NO DEALER, SALESPERSON OR ANY
OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY $200,000,000
REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING Travelers/Aetna Property Casualty Corp.
PROSPECTUS, IN CONNECTION WITH THE [LOGO]
OFFER CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, AND, IF GIVEN OR MADE,
ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY
TRAVELERS/AETNA PROPERTY CASUALTY 6 1/4% NOTES DUE OCTOBER 1, 1999
CORP. OR ANY UNDERWRITER, DEALER OR
AGENT. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF
TRAVELERS/AETNA PROPERTY CASUALTY
CORP. SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary............................... S-3
Recent History........................ S-6 ---------
Use of Proceeds....................... S-7
Ratio of Earnings to Fixed Charges.... S-8 PROSPECTUS SUPPLEMENT
Capitalization........................ S-9
Description of Notes.................. S-10 OCTOBER 4, 1996
Underwriting.......................... S-12
Legal Matters......................... S-13 (INCLUDING PROSPECTUS
Experts............................... S-13 DATED APRIL 23, 1996)
PROSPECTUS ---------
Available Information................. 2
Incorporation of Certain Documents by
Reference............................ 3
Prospectus Summary.................... 4
Risk Factors.......................... 13
Recent History........................ 22
Use of Proceeds....................... 22
Capitalization........................ 23
Unaudited Pro Forma Financial
Information.......................... 24 Smith Barney Inc.
Selected Historical Financial Donaldson, Lufkin & Jenrette
Information........................... 30 Securities Corporation
Recent Operating Results.............. 31 UBS Securities
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 32
Business.............................. 58
Management............................ 91
Ownership of Common Stock............. 104
Certain Transactions.................. 105
Description of Capital Stock.......... 111
Certain Indebtedness.................. 117
Description of Securities............. 119
Plan of Distribution.................. 125
ERISA Matters......................... 126
Legal Matters......................... 126
Experts............................... 126
Glossary of Selected Insurance
Terms................................. G-1
Index to Financial Statements......... F-1
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