<PAGE>
As filed with the Securities and Exchange Commission on June 18, 1998
REGISTRATION NO. 333-56249
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TRAVELERS PROPERTY CASUALTY CORP.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 06-1445591
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
</TABLE>
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
(860) 277-0111
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
------------------------------
JAMES M. MICHENER, ESQ.
TRAVELERS PROPERTY CASUALTY CORP.
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
(860) 277-0111
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
------------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
STEPHANIE B. MUDICK, ESQ. FREDERICK W. KANNER, ESQ. RICHARD J. SANDLER, ESQ.
TRAVELERS GROUP INC. DEWEY BALLANTINE LLP DAVIS POLK & WARDWELL
388 GREENWICH STREET 1301 AVENUE OF THE AMERICAS 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10013 NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10017
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Prospectus Supplement
(To Prospectus dated June , 1998)
8,918,395 SHARES
[LOGO]
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
All the shares of Class A Common Stock, $.01 par value per share (the "Class A
Common Stock"), of Travelers Property Casualty Corp., a Delaware corporation
(the "Company"), being offered hereby are being sold by certain stockholders of
the Company. The Class A Common Stock is listed on the New York Stock Exchange,
Inc. (the "NYSE") under the symbol "TAP." On June 17, 1998, the last sale price
of the Class A Common Stock as reported on the NYSE was $41 11/16 per share.
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 ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The shares of Class A Common Stock will be purchased from the Selling
Stockholders by J.P. Morgan Securities Inc. (the "Underwriter") at a price of
$ per share (resulting in $ aggregate net proceeds (before expenses)
to the Selling Stockholders). The Company will not receive any proceeds from the
sale of the Class A Common Stock. The Company will pay certain expenses of the
offering estimated at $230,000.
The shares of Class A Common Stock may be offered by the Underwriter from time
to time in one or more transactions (which may involve block transactions) on
the NYSE, in the over-the-counter market, through negotiated transactions or
otherwise at market prices prevailing at the time of the sale or at prices
otherwise negotiated, subject to prior sale, when, as and if delivered to and
accepted by the Underwriter. See "Underwriting."
The Company and the Selling Stockholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The shares are offered, subject to prior sale, when, as and if accepted by the
Underwriter and subject to approval of certain legal matters by counsel for the
Underwriter. It is expected that delivery of the shares of Class A Common Stock
will be made against payment therefor in immediately available funds on or by
June , 1998 at the office of J.P. Morgan Securities Inc., 60 Wall Street, New
York, New York.
J.P. Morgan & Co.
June , 1998
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND ANY INFORMATION OR
REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN OR THEREIN MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS RELATE SOLELY TO THE CLASS
A COMMON STOCK AND MAY NOT BE USED OR RELIED ON IN CONNECTION WITH ANY OTHER
OFFER OR SALE OF SECURITIES OF THE COMPANY. NEITHER THIS PROSPECTUS SUPPLEMENT
NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A SOLICITATION
OF ANY OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL
FOR SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS AT ANY TIME NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
Selling Stockholders........................... S-2
Underwriting................................... S-2
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Information by
Reference.................................... 3
The Company.................................... 4
<CAPTION>
PAGE
---------
<S> <C>
Recent Developments............................ 5
Risk Factors................................... 6
Use of Proceeds................................ 13
Selling Stockholders........................... 14
Plan of Distribution........................... 15
Legal Matters.................................. 16
Experts........................................ 17
</TABLE>
SELLING STOCKHOLDERS
The shares of Class A Common Stock being offered hereby are being sold by
Aetna Services, Inc. ("Aetna"), J.P. Morgan Capital Corporation ("J.P. Morgan
Capital") and Sixty Wall Street Fund, L.P. ("Sixty Wall Street") (collectively,
the "Selling Stockholders"). The following table sets forth information with
respect to the ownership of the Class A Common Stock by each Selling Stockholder
as of June 17, 1998. Information with respect to stock ownership (other than
percentage calculation) has been furnished to the Company by the respective
Selling Stockholders.
<TABLE>
<CAPTION>
SHARES OWNED NUMBER OF PERCENTAGE OF
PRIOR TO SHARES OWNED CLASS OWNED
STOCKHOLDER OFFERING SHARES TO BE SOLD AFTER OFFERING AFTER OFFERING
- ----------- ------------- ------------------ --------------- -------------------
<S> <C> <C> <C> <C>
Aetna Services, Inc. ...................... 4,270,697 4,270,697 0 *
J.P. Morgan Capital Corporation............ 4,598,410(2) 4,596,701 1,709(2) *
Sixty Wall Street Fund, L.P.(1)............ 50,997 50,997 0 *
------------- ------------------ ----- ---
Total.................................. 8,920,104 8,918,395 1,709 *
------------- ------------------ ----- ---
------------- ------------------ ----- ---
</TABLE>
- ------------------------------
* Less than 1%.
(1) Sixty Wall Street is an affiliate of J.P. Morgan Capital.
(2) Includes 1,709 shares acquired by Roberto G. Mendoza, a director of the
Company and a Vice Chairman and director of J.P. Morgan & Co. Incorporated,
the parent of J.P. Morgan Capital, Sixty Wall Street and J.P. Morgan
Securities Inc., and transferred to J.P. Morgan Capital.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus Supplement (the "Underwriting
Agreement"), the Underwriter has agreed to purchase, and the Selling
Stockholders have agreed to sell to it, the shares of Class A Common Stock.
Under the terms and conditions of the Underwriting Agreement, the Underwriter is
obliged to take and pay for all such shares, if any are taken.
S-2
<PAGE>
It is expected that all or a substantial portion of the shares of Class A
Common Stock offered hereby may be sold by the Underwriter to purchasers in one
or more transactions (which may involve block transactions) on the NYSE or on
other national securities exchanges on which the shares of Class A Common Stock
are traded or otherwise. The distribution of the shares may also be effected
from time to time in special offerings, exchange distributions and/or secondary
distributions pursuant to and in accordance with the rules of the NYSE or such
other exchanges, in the over-the-counter market, in negotiated transactions
through the writing of options on the shares (whether such options are listed on
an options exchange or otherwise), or in a combination of such methods at
prevailing market prices or at negotiated prices. The Underwriter may effect
such transactions by selling shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the Underwriter and/or the purchasers of such shares for whom they may act as
agents or to whom they may sell as principal.
In connection with the sale of the shares of Class A Common Stock the
Underwriter may receive compensation from purchasers of the shares for whom it
may act as agent or to whom it may sell as principal in the form of commissions
or discounts, in each case in amounts which will not exceed those customary in
the types of transactions involved. The Underwriter and any dealers that
participate in the distribution of the shares may be deemed to be underwriters,
and any discounts received by them from the Selling Stockholders and any
compensation received by them on resale of the shares by them may be deemed to
be discounts and commissions, under the Securities Act.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act.
The Underwriter, a member of the National Association of Securities Dealers,
Inc. (the "NASD") and an affiliate of J.P. Morgan Capital, one of the Selling
Stockholders, will participate in the distribution of the Class A Common Stock
offered hereby. Since J.P. Morgan Capital will receive in excess of 10% of the
net proceeds of the offering, the offering will conform with the requirements of
Rule 2710(c)(8) of the Conduct Rules of the NASD.
From time to time in the ordinary course of its business, the Underwriter
and its affiliates have engaged in and may in the future engage in commercial
and/or investment banking transactions with the Company and its affiliates.
Roberto G. Mendoza, a director of the Company, is a director of J.P. Morgan
& Co. Incorporated, the parent of J.P. Morgan Capital and Sixty Wall Street, two
of the Selling Stockholders, and J.P. Morgan Securities Inc. See "Selling
Stockholders" in the accompanying Prospectus.
S-3
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
P R O S P E C T U S
8,918,395 SHARES
[LOGO]
CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
---------
This Prospectus relates to the offering for resale of up to 8,918,395 shares of
Class A Common Stock, $.01 par value per share (the "Class A Common Stock"), of
Travelers Property Casualty Corp., a Delaware corporation (the "Company"). All
of the shares being registered may be offered for sale and sold from time to
time by certain stockholders of the Company named in this Prospectus. See
"Selling Stockholders." The Company will not receive any of the proceeds from
the sale of the Class A Common Stock. For information regarding the manner of
offering the Class A Common Stock, see "Plan of Distribution." No Class A Common
Stock may be sold without delivery of a Prospectus Supplement describing the
method and terms of the offering thereof.
The Class A Common Stock is listed on the New York Stock Exchange, Inc. (the
"NYSE") under the symbol "TAP." On June 17, 1998, the last sale price of the
Class A Common Stock as reported on the NYSE was $41 11/16 per share.
See "Risk Factors" beginning on page 6 for a discussion of certain factors that
should be considered by prospective purchasers of the Class A Common Stock
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. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
June , 1998
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY OTHER REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.
--------------
The Company owns, directly or indirectly, all of the outstanding voting
securities of certain property and casualty insurance companies domiciled in the
States of California, Connecticut, Florida, Illinois, Indiana, Massachusetts,
Missouri, New Jersey and Texas. State insurance regulatory laws require prior
approval by state insurance departments of any acquisition of control of a
domestic insurance company or of any company which controls a domestic insurance
company. "Control" is generally presumed to exist through the ownership of 10%
or more of the voting securities of a domestic insurance company or of any
company which controls a domestic insurance company. Any purchaser of shares of
Class A Common Stock representing 10% or more of the voting power of the Company
will be presumed to have acquired control of the domestic insurance subsidiaries
unless the relevant Insurance Commissioner, following application by such
purchaser in each insurance subsidiary's state of domicile, determines
otherwise. Accordingly, any purchase of shares of Class A Common Stock that
would result in a purchaser owning 10% or more of the voting power of the
Company would require prior action by all or some of the Insurance Commissioners
of the above-referenced states and certain jurisdictions outside of the United
States.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE CLASS A
COMMON STOCK, INCLUDING BY OVER-ALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING
SYNDICATE COVERING TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
--------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, DC 20549,
and at the Commission's regional offices at Seven World Trade Center, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material may also be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549 at prescribed rates. The Commission also maintains a site
on the World Wide Web, the address of which is http://www.sec.gov, that contains
reports, proxy and information statements and other information regarding
issuers, such as the Company, that file electronically with the Commission. The
Class A Common Stock is listed on the NYSE and such reports, proxy statements
and other information may also be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
This Prospectus constitutes a part of the Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
2
<PAGE>
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is made to such
Registration Statement for further information with respect to the Company and
the securities offered hereby. Any statement contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission or incorporated by reference herein are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed for a more complete description of the matter involved. Each
such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the Commission pursuant to the Exchange Act:
1. Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1997.
2. Quarterly Report on Form 10-Q of the Company for the quarterly
period ended March 31, 1998.
3. Current Report on Form 8-K of the Company dated April 21, 1998.
4. The description of the Class A Common Stock contained in the
Company's Registration Statement on Form 8-A, dated April 22, 1996 (File No.
1-14328), including any amendment or reports filed for the purpose of
updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities offered hereby shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein, or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon written or oral request of such person,
a copy of any and all of the documents referred to above which have been or may
be incorporated by reference herein, other than exhibits thereto (unless such
exhibits are specifically incorporated by reference in such documents). Requests
for such documents should be directed to Corporate Communications, Travelers
Property Casualty Corp., One Tower Square, Hartford, Connecticut 06183;
telephone number: (860) 277-0111. Unless otherwise indicated, the Company's
financial information set forth in this Prospectus is based on generally
accepted accounting principles ("GAAP").
3
<PAGE>
THE COMPANY
The Company is the seventh largest property and casualty group and the
fourth largest publicly owned property and casualty group in the United States
based on 1996 net written premiums published by A.M. Best Company ("A.M. Best").
The Company provides a wide range of commercial and personal property and
casualty insurance products ("Commercial Lines" and "Personal Lines,"
respectively) and services to businesses, government units, associations and
individuals. The Company's strategic objectives are to be a consistently
profitable market leader and a low-cost provider of property and casualty
insurance in the United States through disciplined underwriting and expense
management. Commercial Lines, which accounted for 60.7% of net written premiums
in 1997, includes workers' compensation, general liability, commercial
multi-peril, commercial automobile, property (including fire and allied lines),
fidelity and surety and several specialty lines. Personal Lines, which accounted
for the remaining 39.3% of net written premiums in 1997, includes primarily
personal automobile and homeowners insurance sold to individuals. At March 31,
1998, the Company had total assets and stockholders' equity of $51.9 billion and
$8.1 billion, respectively.
On April 2, 1996, the Company acquired all of the outstanding capital stock
of the property and casualty insurance subsidiaries of Aetna Services, Inc.
(formerly Aetna Life and Casualty Company) ("Aetna") for approximately $4.2
billion in cash (the "Acquisition"). At the time of the Acquisition, the Company
identified $300 million in projected annual pre-tax cost savings which it
targeted to be achieved by the end of 1997. During the second quarter of 1997,
the Company announced it had achieved its stated goal of $300 million in pre-tax
annualized expense savings. The Company will continue to concentrate on expense
savings as an important part of its operating strategy.
The Company believes it is well positioned in the property and casualty
insurance industry through its broadly recognized brand name and strong
financial position. As a result of its skilled management team, improved cost
structure and enhanced distribution and cross-selling capabilities, the Company
generated a return on equity of 17.2% for the year ended December 31, 1997 and
an annualized return on equity of 16.9% for the three months ended March 31,
1998.
The Company is the third largest writer of commercial lines insurance in the
United States based on 1996 net written premiums published by A.M. Best. The
Company's commercial lines strategy is to focus on its core product lines and
markets, with particular emphasis on industry and product specialization,
control of operating expenses to improve competitiveness and profitability and
development of new products and services. Industry specialties include
manufacturing, construction, transportation and financial services, and product
specialties include boiler and machinery insurance, inland and ocean marine
insurance and managed workers' compensation insurance.
The Company is the second largest writer of personal lines insurance through
independent agents and the eighth largest writer of personal lines insurance
overall in the United States based on 1996 net written premiums published by
A.M. Best. The Company's personal lines strategy includes the growth in sales
through independent agents in target markets, control of operating expenses to
improve competitiveness and profitability, continued expansion of alternative
marketing channels to broaden the distribution of personal lines products, and
management of exposure to catastrophe losses. The Company has expended resources
in both its independent agency and other distribution channels for personal
lines auto and homeowners products. Over the last year, the Company has
introduced new incentive programs for its independent agents, invested in an
agent direct mail marketing program to support their businesses and continued to
expand its alternative distribution channels, which include affinity group
sales, TRAVELERS SECURE-Registered Trademark- brand products sold through the
independent sales force of Primerica Financial Services, a unit of Travelers
Group Inc. ("Travelers Group"), and joint marketing arrangements with other
insurers. The Company's alternative distribution channels accounted for
approximately 35% of the new Personal Lines policies written in the three month
period ended March 31, 1998.
4
<PAGE>
Travelers Group, through The Travelers Insurance Group Inc., its indirect
wholly owned subsidiary ("TIGI"), owns approximately 83.3% of the Company's
outstanding shares of Common Stock (as defined herein) and controls
approximately 98.0% of the combined voting power of the Common Stock. Travelers
Group is a financial services holding company engaged, through its subsidiaries,
principally in four business segments: (i) Investment Services, including Asset
Management; (ii) Consumer Finance Services; (iii) Property & Casualty Insurance
Services (primarily through the Company); and (iv) Life Insurance Services. TIGI
is not a Selling Stockholder in the offering being made hereby.
The principal executive offices of the Company are located at One Tower
Square, Hartford, Connecticut 06183 and its telephone number is (860) 277-0111.
RECENT DEVELOPMENTS
On April 6, 1998, Travelers Group announced that it had entered into a
Merger Agreement with Citicorp. Pursuant to the Merger Agreement, Citicorp will
be merged with and into a newly formed wholly owned subsidiary of Travelers
Group (the "Merger"). Following the Merger, Travelers Group will change its name
to Citigroup Inc. ("Citigroup").
In order to consummate the Merger, Travelers Group has applied to the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board") to
become a bank holding company under the provisions of the Bank Holding Company
Act of 1956 (the "BHCA"). A bank holding company and its affiliates may not
engage in activities that are not permissible under the BHCA, including,
generally, insurance underwriting. However, under present rules, the Company's
existing businesses can be retained for at least a two-year period after the
Merger (the "BHCA Compliance Period"), which may be extended for three
additional one-year periods by the Federal Reserve Board if, in its judgment, an
extension would not be detrimental to the public interest.
Upon consummation of the Merger, and as a direct result of Travelers Group
becoming a bank holding company, the BHCA will impose certain restrictions on
the Company's operations going forward, including a prohibition on acquisitions
of property and casualty insurance underwriters. It is not expected that such
restrictions will impede the Company's existing businesses in any material
respect or preclude the Company from expanding its existing insurance
underwriting activities (other than by acquisition of certain insurance
underwriters). At this time, the Company believes that compliance with
applicable law by Travelers Group as a result of its being a bank holding
company following the Merger will not have a material adverse effect on the
Company's financial condition or results of operations.
There is pending federal legislation that would, if enacted, amend the BHCA
to authorize a bank holding company to own certain insurance underwriters. One
such proposal, H.R. 10, passed the House of Representatives on May 14, 1998.
That bill would amend the BHCA to make insurance underwriting a permissible
business for a bank holding company. There is no assurance that any such
legislation will be enacted. At the expiration of the BHCA Compliance Period,
Citigroup, together with the Company, will evaluate available alternatives in
order to comply with whatever laws are then applicable. Those alternatives may
include Citigroup divesting itself of certain insurance underwriting businesses,
including those of the Company, or ceasing to be a bank holding company subject
to the BHCA.
The Company and Travelers Group have announced that, upon consummation of
the Merger, Robert I. Lipp, currently Chairman and Chief Executive Officer of
the Company, would remain as Chairman of the Company and become Co-Chief
Executive Officer of Citigroup's Global Consumer Business, and Jay S. Fishman,
currently a Vice Chairman of the Company and Chief Executive Officer of
Commercial Lines, would be nominated to become Chief Executive Officer and
President of the Company, subject to approval of the Company's Board of
Directors.
5
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS BEFORE
PURCHASING SHARES OF THE CLASS A COMMON STOCK OFFERED HEREBY.
IN THIS DOCUMENT (AND IN CERTAIN DOCUMENTS THAT ARE INCORPORATED BY
REFERENCE IN THIS PROSPECTUS), THE COMPANY HAS MADE FORWARD-LOOKING STATEMENTS
REGARDING EVENTS AND CIRCUMSTANCES THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES.
FORWARD-LOOKING STATEMENTS INCLUDE THE INFORMATION CONCERNING POSSIBLE OR
ASSUMED FUTURE RESULTS OF OPERATIONS OF THE COMPANY. ALSO, WORDS SUCH AS
"BELIEVES," "EXPECTS," "ANTICIPATES" OR SIMILAR EXPRESSIONS ARE FORWARD-LOOKING
STATEMENTS. PROSPECTIVE INVESTORS SHOULD NOTE THAT MANY FACTORS, SOME OF WHICH
ARE DISCUSSED IN THIS DOCUMENT AND IN THE DOCUMENTS WHICH ARE INCORPORATED
HEREIN BY REFERENCE, COULD AFFECT THE FUTURE FINANCIAL RESULTS OF THE COMPANY
AND COULD CAUSE THOSE RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THIS
DOCUMENT. AMONG OTHERS, THESE FACTORS INCLUDE THE "RISK FACTORS" DESCRIBED
HEREIN.
FLUCTUATION AND UNCERTAINTY OF PROPERTY AND CASUALTY INSURANCE INDUSTRY RESULTS
The results of companies in the property and casualty insurance industry
historically have been subject to significant fluctuations and uncertainties.
The industry's profitability can be affected significantly by volatile and
unpredictable developments (including catastrophes); changes in reserves
resulting from general claims and legal environments as different types of
claims arise and judicial interpretations relating to the scope of insurers'
liability develop; fluctuations in interest rates and other changes in the
investment environment, which affect returns on invested capital; and
inflationary pressures that affect the size of losses. The demand for property
and casualty insurance can also vary significantly, generally rising as the
overall level of economic activity increases and falling as such activity
decreases. The property and casualty insurance industry historically has been
cyclical, and since the late 1980s premium rate competition has been a
significant cause of lower underwriting profitability. The Company's results of
operations may be adversely affected by these fluctuations.
CATASTROPHE LOSSES
Property and casualty insurers are subject to claims arising out of
catastrophes, which may have a significant effect on their results of operations
and financial condition. The Company has experienced, and can be expected in the
future to experience, catastrophe losses which may have a material adverse
effect on the Company's results of operations and financial condition.
Catastrophes can be caused by various events including hurricanes, windstorms,
earthquakes, hail, explosions, severe winter weather and fires, and the
incidence and severity of catastrophes are inherently unpredictable. The extent
of losses from a catastrophe is a function of both the total amount of insured
exposure in the area affected by the event and the severity of the event. Most
catastrophes are restricted to small geographic areas; however, hurricanes and
earthquakes may produce significant damage in large, heavily populated areas.
Although catastrophes can cause losses in a variety of the Company's property
and casualty lines, most of the Company's catastrophe-related claims in the past
have related to homeowners and commercial property coverages.
The Company generally seeks to reduce its exposure to catastrophe losses
through its selective underwriting practices and the purchase of catastrophe
reinsurance. There can be no assurance that the reinsurance purchased by the
Company will be adequate to protect the Company against material catastrophe
losses or that such reinsurance will continue to be available to the Company in
the future at commercially reasonable rates. States have from time to time
passed legislation that has the effect of limiting the ability of insurers to
manage risk, such as legislation prohibiting an insurer from withdrawing from
catastrophe-prone areas. While the Company attempts to limit its exposure to
acceptable levels, subject to restrictions imposed by insurance regulatory
authorities, it is possible that a catastrophic event or multiple catastrophic
events could have a material adverse effect on the Company. The Company also
participates in the Florida Hurricane Catastrophe Fund ("FHCF"), which is a
state-mandated catastrophe reinsurance fund. See "--Reinsurance Considerations."
6
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UNCERTAINTY REGARDING ADEQUACY OF PROPERTY AND CASUALTY LOSS RESERVES
The Company maintains property and casualty loss reserves to cover its
estimated ultimate liability for losses and loss adjustment expenses ("LAE")
with respect to reported and unreported claims incurred as of the end of each
accounting period. Reserves do not represent an exact calculation of liability,
but instead represent estimates, generally involving actuarial projections at a
given time, of what the Company expects the ultimate settlement and
administration of claims will cost based on its assessment of facts and
circumstances then known, estimates of future trends in claims severity,
frequency, judicial theories of liability and other factors. These variables are
affected by both internal and external events, such as changes in claims
handling procedures, economic inflation, judicial trends and legislative
changes. Many of these items are not directly quantifiable, particularly on a
prospective basis. Additionally, there may be significant reporting lags between
the occurrence of the insured event and the time it is actually reported to the
insurer. Reserve estimates are continually refined in a regular ongoing process
as experience develops and further claims are reported and settled. Adjustments
to reserves are reflected in the results of the periods in which such estimates
are changed. Because establishment of reserves is an inherently uncertain
process involving estimates of future losses, there can be no certainty that
currently established reserves will prove adequate in light of subsequent actual
experience.
The inherent uncertainties of estimating insurance reserves are generally
greater for casualty coverages (particularly reserves for asbestos losses), than
for property coverages, due primarily to the longer period of time that
typically elapses before a definitive determination of ultimate loss can be
made, changing theories of legal liability involving certain types of claims and
changing political climates.
UNCERTAINTY REGARDING ADEQUACY OF ENVIRONMENTAL AND ASBESTOS LOSS RESERVES
It is difficult to estimate the reserves for environmental and
asbestos-related claims due to the vagaries of court coverage decisions,
plaintiffs' expanded theories of liability, the risks inherent in major
litigation and other uncertainties. Conventional actuarial techniques are not
used to estimate such reserves.
For environmental claims, the Company estimates its financial exposure and
establishes reserves based upon an analysis of its historical claim experience
and the facts of the individual underlying claims. The unique facts presented in
each claim are evaluated individually and collectively. Due consideration is
given to the many variables presented in each claim, as discussed above.
The following factors are evaluated in projecting the ultimate reserve for
asbestos-related claims: available insurance coverage; limits and deductibles;
an analysis of each policyholder's potential liability; jurisdictional
involvement; past and projected future claim activity; past settlement values of
similar claims; allocated claim adjustment expense; potential role of other
insurance, and applicable coverage defenses, if any. Once the gross ultimate
exposure for indemnity and allocated claim adjustment expense is determined for
a policyholder by policy year, a ceded projection is calculated based on any
applicable facultative and treaty reinsurance and past ceded experience. In
addition, a similar review is conducted for asbestos property damage claims.
However, due to the relatively minor claim volume, these reserves have remained
at a constant level.
As a result of these processes and procedures, the reserves carried for
environmental and asbestos claims at March 31, 1998 are the Company's best
estimate of ultimate claims and claim adjustment expenses based upon known facts
and current law. However, the conditions surrounding the final resolution of
these claims continue to change. Currently, it is not possible to predict
changes in the legal and legislative environment and their impact on the future
development of asbestos and environmental claims. Such development will be
affected by future court decisions and interpretations and changes in Superfund
and other legislation. Because of these future unknowns, additional liabilities
may arise for amounts in excess of the current reserves. These additional
amounts, or a range of these additional amounts, cannot now be reasonably
estimated, and could result in a liability exceeding reserves by an amount that
would be material to the Company's operating results in a future period.
However, the Company believes that it is not likely that these claims will have
a material adverse effect on the Company's financial condition or liquidity.
7
<PAGE>
REINSURANCE CONSIDERATIONS
The Company uses reinsurance to help manage its exposure to property and
casualty risks. The availability and cost of reinsurance are subject to
prevailing market conditions, both in terms of price and available capacity,
which can affect the Company's business volume and profitability. Although the
reinsurer is liable to the Company to the extent of the reinsurance ceded, the
Company remains primarily liable as the direct insurer on all risks reinsured.
As a result, reinsurance ceded arrangements do not eliminate the Company's
obligation to pay all claims regardless of whether they have been ceded to
reinsurers. The Company is subject to credit risk with respect to its ability to
recover amounts due from reinsurers. The Company believes, based upon its review
of its reinsurers' financial statements and reputations in the reinsurance
marketplace, that the financial condition of its reinsurers is generally sound.
However, there can be no assurance that such reinsurers will remain sound until
they are called upon to pay amounts due, which may not occur for many years,
particularly in respect of environmental and asbestos claims, or that
reinsurance will be adequate to protect the Company against losses or that
reinsurance will continue to be available to the Company in the future at
commercially reasonable rates.
The Company also participates in FHCF, which is a state-mandated catastrophe
reinsurance fund. FHCF is primarily funded by premiums from the insurance
companies that write residential property business in Florida and, if
insufficient, by assessments on insurance companies that write other property
and casualty insurance in Florida, excluding workers' compensation. FHCF's
resources are limited to these contributions and to its borrowing capacity at
the time of a significant catastrophe. There can be no assurance that these
resources will be sufficient to meet the obligations of FHCF. The Company's
recovery of less than contracted amounts could have a material adverse effect on
the Company's results of operations in the event of a significant catastrophe in
Florida. However, the Company believes that it is not likely that the Company's
recovery of less than contracted amounts from FHCF would have a material adverse
effect on the Company's financial condition or liquidity.
As of December 31, 1997, the Company had ceded insurance losses and loss
adjustment expenses to Lloyd's of London ("Lloyd's"), one of the Company's
largest reinsurers, of $352 million. In 1996, Lloyd's restructured its
operations with respect to claims for years prior to 1993 and reinsured these
into Equitas Limited ("Equitas"). Approximately $266 million of the Company's
Lloyd's reinsurance recoverable at December 31, 1997 relates to Equitas
liabilities and is currently unrated. The remaining recoverable of $86 million
is from Lloyd's continuing market which was recently rated A (third highest of
fifteen ratings) by A.M. Best.
The impact of the Lloyd's restructuring on the collectibility of amounts
recoverable by the Company from Lloyd's cannot be quantified at this time. The
Company believes that an unfavorable impact on collectibility could have a
material adverse effect on the Company's operating results. However, the Company
believes that it is not likely that the outcome of these matters could have a
material adverse effect on the Company's financial condition or liquidity.
HOLDING COMPANY STRUCTURE; DIVIDEND RESTRICTIONS
The Company is a holding company and has no direct operations. The Company's
principal asset is the capital stock of its insurance subsidiaries. The Company
relies primarily on dividends from its subsidiaries to meet its obligations for
payment of interest and principal on outstanding debt obligations, dividends to
stockholders and corporate expenses. The ability of the insurance subsidiaries
to pay dividends to the Company in the future will depend on their statutory
surplus, on earnings and on regulatory restrictions. The Company's principal
insurance subsidiaries are domiciled in the State of Connecticut. Connecticut
law governing the payment of dividends by domestic insurance companies provides
that an insurer domiciled in Connecticut must obtain the prior approval of the
Connecticut Insurance Department for the declaration or payment of any dividend
that together with other distributions made within the preceding twelve months
exceeds the greater of (i) 10% of the insurer's surplus or (ii) the insurer's
net income for the twelve-month period ending the preceding December 31st, in
each case
8
<PAGE>
determined in accordance with statutory accounting practices. Such declaration
or payment is further limited by adjusted unassigned funds (surplus), as
determined in accordance with statutory accounting practices. The insurance
holding company laws of other states in which the Company's subsidiaries are
domiciled generally contain similar (although in certain instances somewhat more
restrictive) limitations on the payment of dividends. Dividend payments to the
Company from its insurance subsidiaries are limited to $805 million in 1998
without prior approval of the Connecticut Insurance Department. The inability of
a significant subsidiary to pay dividends to the Company in an amount sufficient
to meet debt service obligations would have a material adverse effect on the
Company. The ability of the Company to pay dividends on the Common Stock is also
subject to restrictions contained in the Company's revolving credit facility
and, subject to minimum ownership requirements, to the prior approval of
Travelers Group. See "--Control By and Relationship with Travelers Group;
Conflicts of Interest."
COMPLIANCE BY TRAVELERS GROUP WITH APPLICABLE LAW FOLLOWING MERGER WITH CITICORP
As a result of the Merger, Travelers Group will become a bank holding
company subject to regulation under the BHCA. In general, the activities of bank
holding companies are limited to banking, managing or controlling banks and
other activities that the Federal Reserve Board determines to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto. Section 4 of the BHCA provides that, with certain exceptions, insurance
underwriting is not closely related to banking or managing or controlling banks.
Under the BHCA in its current form, after two years from the date as of which it
becomes a bank holding company, Citigroup will be required to conform any
activities that are not considered to be closely related to banking under the
BHCA. This two-year period may be extended by the Federal Reserve Board for
three additional one-year periods, upon finding that such an extension would not
be detrimental to the public interest. Therefore, while the Merger is permitted
under current law, if the BHCA is not amended before the end of this period
(including any extensions), Citigroup may, among other things, be required to
divest itself of certain insurance underwriting businesses, including those of
the Company, or cease being a bank holding company subject to the BHCA. In
addition, upon consummation of the Merger, and as a direct result of Travelers
Group becoming a bank holding company, the BHCA will impose certain restrictions
on the Company's operations going forward, including a prohibition on
acquisitions of property and casualty insurance underwriters.
Various legislation, including proposals to overhaul the bank regulatory
system and expand the powers of bank holding companies, is from time to time
introduced in Congress. One such proposal, H.R. 10, passed the House of
Representatives on May 14, 1998. That bill would amend the BHCA to make
insurance underwriting a permissible business for a bank holding company.
Consequently, if H.R. 10 is enacted in its present form, Travelers Group would
not be under any obligation to conform its business to the current limitations
of the BHCA. However, there is no assurance that such legislation as currently
drafted, or any other similar legislation, will ultimately be enacted.
CONTROL BY AND RELATIONSHIP WITH TRAVELERS GROUP; CONFLICTS OF INTEREST
The Company's voting stock has been divided into two classes with different
voting rights that enable TIGI (the holder of all of the outstanding Class B
Common Stock, $.01 par value per share (the "Class B Common Stock")) to control
the Company. On all matters submitted to a vote of stockholders, holders of
Class A Common Stock are entitled to one vote per share and holders of Class B
Common Stock are entitled to ten votes per share. Both classes vote together as
a single class on all matters, subject to certain exceptions. Upon any transfer
of shares of Class B Common Stock to a person other than Travelers Group or its
subsidiaries (other than the Company or its subsidiaries), such shares will
automatically convert into shares of Class A Common Stock, except if shares of
Class B Common Stock representing more than a 50% economic interest in the
Company are so transferred and except in certain other limited circumstances.
The Class A Common Stock and the Class B Common Stock are collectively referred
to herein as the "Common Stock."
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<PAGE>
For so long as Travelers Group and its subsidiaries (excluding the Company
and its subsidiaries) continue beneficially to own shares of Common Stock
representing more than 50% of the combined voting power of the Common Stock,
Travelers Group, through TIGI, will control the Company and will be able to
elect all of the Company's directors and to determine the outcome of corporate
actions requiring stockholder approval, including, among other things, approving
or preventing a change of control of the Company, a business combination
involving the Company, the incurrence of certain indebtedness, the issuance of
additional Common Stock or other equity securities, subject to certain limited
exceptions, and the payment of dividends with respect to the Common Stock,
except as otherwise described herein. Pursuant to an Intercompany Agreement
between the Company and Travelers Group (the "Intercompany Agreement"), the
prior written consent of Travelers Group is required in connection with these
and other corporate actions by the Company until such time as Travelers Group
and its subsidiaries (except the Company and its subsidiaries) no longer control
at least 20% of the combined voting power of the outstanding Common Stock or
cease beneficially to own at least 20% of the outstanding shares of Common
Stock.
Pursuant to the Intercompany Agreement, the Company has agreed that to the
extent permitted by the principal national securities exchange in the United
States upon which the Common Stock is listed and so long as Travelers Group
controls at least 20% of the combined voting power of the outstanding Common
Stock or at least 50% of the issued and outstanding Common Stock, Travelers
Group or one of its affiliates (other than the Company and its subsidiaries) may
purchase its pro rata share (based on its then current percentage equity
interest in the Company) of any voting equity security issued by the Company
(excluding any such securities offered the Company pursuant to employee stock
options or other benefit plans, dividend reinvestment plans and other offerings
other than for cash). The exercise of such rights is currently prohibited by the
NYSE.
The Company has engaged in certain transactions, and is party to
arrangements, with Travelers Group and its affiliates, including the
Intercompany Agreement which governs certain relationships and transactions
between or among the Company, on the one hand, and Travelers Group and its
subsidiaries (other than the Company and its subsidiaries), on the other hand.
Certain of these arrangements required the approval of the Connecticut Insurance
Department. Pursuant to the Intercompany Agreement, among other things,
Travelers Group has granted to the Company and certain of its subsidiaries a
non-exclusive revocable license to use the "Travelers" name and certain
trademarks. Subject to Travelers Group's ability to revoke the license in
certain circumstances and to regulatory approval, the Intercompany Agreement
provides that: (i) within a limited time from the date on which Travelers Group
and its subsidiaries (excluding the Company and its subsidiaries) cease to
control more than 20% of the combined voting power of the outstanding Common
Stock, if the Company's name or any of its subsidiaries' names at such time
include the "Travelers" name, the Company and such subsidiaries are required to
change their names and will be required to discontinue the use of certain
related marks and (ii) after such date, the Company and its subsidiaries will
continue to have the right to use the "Travelers" name in connection with the
identification of property and casualty products for an initial five-year period
with an option to renew for an additional five years.
The Company may enter into other agreements with Travelers Group and its
other affiliates, which will not be the result of arms-length negotiations
between independent parties. Future arrangements and agreements with Travelers
Group and its affiliates to which the Company and its subsidiaries may become
party may be subject to the approval of the Connecticut Insurance Department or
other regulatory bodies. Conflicts of interest could arise in the future with
respect to material transactions involving Travelers Group or its affiliates
(other than the Company), on the one hand, and the Company, on the other hand.
Seven of the eight persons who are members of the Company's Board of Directors
also serve as directors of Travelers Group and certain members of the Company's
management who are full-time employees of the Company also hold certain offices
at Travelers Group and its other affiliates. Ownership interests of directors or
officers of the Company in common stock of Travelers Group or service as a
director or officer of both the Company and Travelers Group could create or
appear to create potential conflicts of interest
10
<PAGE>
when directors and officers are faced with decisions that could have different
implications for the Company and Travelers Group.
The Company's Restated Certificate of Incorporation (the "Charter") provides
that Travelers Group shall have no duty to refrain from (i) engaging in the same
or similar business activities or lines of business as the Company, (ii) doing
business with any client or customer of the Company, subject to any contractual
provision to the contrary, or (iii) employing or otherwise engaging any officer
or employee of the Company. Accordingly, neither Travelers Group nor any officer
or director of Travelers Group (except as provided in the Charter) will be
liable to the Company or to its stockholders for breach of any fiduciary duty by
reason of any such activities.
The failure of Travelers Group and its affiliates to maintain beneficial
ownership of more than 50% of the combined voting power of the Company's
outstanding voting stock would be an event of default under the Company's
revolving credit facility.
By virtue of its ownership of approximately 98.0% of the combined voting
power of the outstanding Common Stock and approximately 83.3% of the outstanding
shares of Common Stock, Travelers Group includes the Company in its consolidated
tax return for federal income tax purposes. Under applicable law, each member of
the Travelers Group consolidated group, which includes Travelers Group, the
Company and certain of Travelers Group's other subsidiaries, is jointly and
severally liable for the federal income tax liability of each other member of
the group and is also jointly and severally liable for pension and benefit
funding and termination liabilities of other group members, as well as certain
benefit plan taxes. If the Company were no longer to be included in Travelers
Group's consolidated group for federal tax purposes, there is no assurance that
the Company's tax position would be as favorable as it is at present.
In addition, by virtue of its controlling beneficial ownership of the
Company and the terms of a tax sharing agreement among the Company, TIGI and
Travelers Group (the "Tax Sharing Agreement"), Travelers Group will effectively
control all of the Company's tax decisions. Under the Tax Sharing Agreement,
Travelers Group will have sole authority to respond to and conduct all tax
proceedings (including tax audits) relating to the Company, to file all returns
on behalf of the Company and to determine the amount of the Company's liability
to (or entitlement to payment from) TIGI under the Tax Sharing Agreement. This
arrangement may result in conflicts of interests between the Company and
Travelers Group. For example, under the Tax Sharing Agreement, Travelers Group
may choose to contest, compromise or settle any adjustment or deficiency
proposed by the relevant taxing authority in a manner that may be beneficial to
Travelers Group and detrimental to the Company. In connection therewith,
however, Travelers Group is obligated under the Tax Sharing Agreement to act in
good faith with regard to all members included in the applicable returns.
REGULATION
The Company is subject to extensive regulation and supervision in the
jurisdictions in which it does business. Such regulation is generally designed
to protect the interests of policyholders, as opposed to stockholders and other
investors. Such regulation relates to authorized lines of business, capital and
surplus requirements, investment parameters, underwriting limitations,
transactions with affiliates, dividend limitations, changes in control, premium
rates and a variety of other financial and nonfinancial components of an
insurance company's business. The Company is also subject to regulatory and
legal proceedings that involve specific aspects of the conduct of the Company's
business.
The capacity for an insurance company's growth in premiums is in part a
function of its statutory surplus. Maintaining appropriate levels of statutory
surplus, as measured by statutory accounting practices and procedures, is
considered important by state insurance regulatory authorities and the private
agencies that rate insurers' claims-paying abilities and financial strength.
Failure to maintain certain levels of statutory surplus could result in
increased regulatory scrutiny, action by state regulatory authorities or a
downgrade by rating agencies.
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The National Association of Insurance Commissioners ("NAIC") has adopted a
system of assessing minimum capital adequacy, which system is applicable to the
Company's insurance subsidiaries. This system, known as risk-based capital
("RBC"), is used to identify companies that merit further regulatory action by
comparing adjusted surplus to the required surplus, which reflects the risk
profile of the insurer. At December 31, 1997, the RBC ratios of the Company's
insurance subsidiaries were in excess of levels that would require regulatory
action.
In recent years the state insurance regulatory framework has come under
increased federal scrutiny, and certain state legislatures have considered or
enacted laws that altered and, in many cases, increased state authority to
regulate insurance companies and insurance holding companies. Further, the NAIC
and state insurance regulators are reexamining existing laws and regulations,
specifically focusing on investment laws for insurers, modifications to holding
company regulations, codification of statutory accounting practices, RBC
guidelines, interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies are investigating the current
condition of the insurance industry in the United States to determine whether to
impose federal regulation. The Company cannot predict with certainty the effect
any proposed or future legislation or NAIC initiatives may have on the conduct
of the Company's business or the financial condition or results of operations of
the Company.
Congress has considered and continues to consider several proposals to
revise the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA" or "Superfund"). It is not possible to predict whether such proposed
legislation will be enacted, what form such legislation might take, or the
potential effects such legislation may have on the Company and its competitors.
COMPETITION
The property and casualty insurance business is highly competitive and the
Company believes that it will remain highly competitive with little prospect for
periods of dramatically improved pricing in the foreseeable future. The residual
effects of the recession in the early 1990s, coupled with a demand for low-cost,
high quality service, have created difficult conditions in the domestic property
and casualty market, as is evidenced by a leveling or reduction in premium rates
in certain lines of business in which the Company competes. The Company competes
with domestic and foreign insurers, some of which have greater financial
resources than the Company. Competition is based on many factors, including the
perceived overall financial strength of the insurer, pricing and other terms and
conditions of products offered, levels of customer service (including the speed
with which claims are paid) and experience in the business. The Company competes
with insurance companies that use captive agents or salaried employees to sell
their products. Because these companies generally do not pay commissions, they
may be able to obtain business at a lower cost than the Company, which sells its
products primarily through independent agents and brokers.
Several property and casualty insurers writing commercial lines of business,
including the Company, now offer products for alternative forms of risk
protection in addition to traditional insurance products. These products,
including large deductible programs and various forms of self-insurance that
utilize captive insurance companies and risk retention groups, have been
instituted in reaction to the escalating cost of insurance caused in part by
increased jury awards in third-party liability and workers' compensation cases.
It is not possible to predict how continued growth in alternative forms of risk
protection will affect the Company's future operations.
RATINGS
Claims-paying and financial strength ratings have become an increasingly
important factor in establishing the competitive position of insurance
companies. Each of the rating agencies reviews its ratings periodically, and
there can be no assurance that current ratings will be maintained in the future.
A significant downgrade in such ratings could have a material adverse effect on
the results of operations and financial condition of the Company. The ratings
are not in any way a measure of protection offered to investors in the Class A
Common Stock and should not be relied upon with respect to making an
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investment in the Class A Common Stock. The following table summarizes the
current claims-paying and financial strength ratings of the Company's
property-casualty insurance pools and Travelers Casualty and Surety Company of
America ("Travelers C&S of America") by A. M. Best, Duff & Phelps Corp. ("Duff &
Phelps"), Moody's Investor's Service Inc. ("Moody's") and Standard & Poor's
Ratings Group ("Standard & Poor's"). The table also presents the position of
each rating in the applicable agency's rating scale.
<TABLE>
<CAPTION>
STANDARD &
A. M. BEST DUFF & PHELPS MOODY'S POOR'S
------------------- -------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Travelers Property Casualty
pool(1).................. A (3rd of 15) AA- (4th of 18) Aa3 (4th of 19) A+ (5th of 18)
Gulf pool(2)............... A+ (2nd of 15) -- -- AA (3rd of 18)
Travelers C&S of America... A+ (2nd of 15) AA- (4th of 18) Aa3 (4th of 19) A+ (5th of 18)
</TABLE>
- ------------------------------
(1) The Travelers Property Casualty pool consists of The Travelers Indemnity
Company, Travelers Casualty and Surety Company, The Phoenix Insurance
Company, The Standard Fire Insurance Company, Travelers Casualty and Surety
Company of Illinois, Farmington Casualty Company, The Travelers Indemnity
Company of Connecticut, The Automobile Insurance Company of Hartford,
Connecticut, The Charter Oak Fire Insurance Company, The Travelers Indemnity
Company of America, The Travelers Indemnity Company of Missouri, Travelers
Casualty Company of Connecticut, Travelers Commercial Insurance Company, The
Travelers Indemnity Company of Illinois, Travelers Property Casualty
Insurance Company, TravCo Insurance Company, The Travelers Home and Marine
Insurance Company, Travelers Personal Security Insurance Company, Travelers
Property Casualty Insurance Company of Illinois and Travelers Excess and
Surplus Lines Company.
(2) The Gulf pool consists of Gulf Insurance Company, Gulf Insurance Company
U.K. Limited, Gulf Underwriters Insurance Company, Select Insurance Company,
Atlantic Insurance Company and Gulf Group Lloyds.
EFFECT ON PUBLIC MARKET OF STOCK ELIGIBLE FOR FUTURE SALE
All of the shares of Class A Common Stock sold hereby will be freely
tradeable without restrictions by persons other than "affiliates" of the
Company. All of the outstanding shares of Class B Common Stock held by TIGI will
continue to be "restricted securities" as defined in Rule 144 under the
Securities Act. Shares of Class B Common Stock will automatically convert into
shares of Class A Common Stock upon their transfer to any person other than
Travelers Group or any of its subsidiaries (other than the Company and its
subsidiaries), except if shares of Class B Common Stock representing more than a
50% economic interest in the Company are transferred and except in certain other
limited circumstances. To the extent such shares of Class B Common Stock are
"restricted securities" at the time of such transfer, the shares of Class A
Common Stock delivered upon such transfer will also be "restricted securities."
TIGI has registration rights with respect to its shares of Class B Common
Stock. Fund American Enterprises Holdings Inc. ("Fund American") and The Trident
Partnership, L.P. ("Trident"), which acquired shares of Class A Common Stock in
connection with the Acquisition (as defined herein), have registration rights
with respect to their remaining holdings of such shares, although such shares
are no longer "restricted securities" as defined in Rule 144 under the
Securities Act. See "Selling Stockholders." Travelers Group has indicated that
it does not currently intend to sell its shares of Class B Common Stock in the
near future. No prediction can be made as to the effect, if any, that future
sales of shares of Common Stock, or the availability of shares of Common Stock
for future sales, will have on the market price of the shares of Class A Common
Stock prevailing from time to time. Sales of substantial amounts of Common Stock
in the public market, or the perception that such sales could occur, could
adversely affect the prevailing market price of the Class A Common Stock or the
ability of the Company to raise capital through public offerings of its equity
securities. See "Plan of Distribution."
USE OF PROCEEDS
All of the shares of Class A Common Stock being offered hereby are being
offered by the Selling Stockholders. The Company will not receive any of the
proceeds from the sale of such Class A Common Stock by the Selling Stockholders.
13
<PAGE>
SELLING STOCKHOLDERS
The shares of Class A Common Stock which may be offered from time to time
hereby are being sold by Aetna Services, Inc. ("Aetna"), J.P. Morgan Capital
Corporation ("J.P. Morgan Capital") and Sixty Wall Street Fund, L.P. ("Sixty
Wall Street") (collectively, the "Selling Stockholders"). The following table
sets forth information with respect to the ownership of the Class A Common Stock
by each Selling Stockholder as of June 4, 1998. Information with respect to
stock ownership has been furnished to the Company by the respective Selling
Stockholders.
<TABLE>
<CAPTION>
MAXIMUM NUMBER
OF SHARES TO BE
STOCKHOLDER SHARES OWNED SOLD
- ----------- --------------- -------------------
<S> <C> <C>
Aetna Services, Inc. ................... 4,270,697 4,270,697
J.P. Morgan Capital Corporation......... 4,598,410(2) 4,596,701
Sixty Wall Street Fund, L.P.(1)......... 50,997 50,997
--------------- -------------------
Total............................... 8,920,104 8,918,395
--------------- -------------------
--------------- -------------------
</TABLE>
- ------------------------------
(1) Sixty Wall Street is an affiliate of J.P. Morgan Capital.
(2) Includes 1,709 shares acquired by Roberto G. Mendoza, a director of the
Company and a Vice Chairman and a director of J.P. Morgan & Co.
Incorporated, the parent of J.P. Morgan Capital and Sixty Wall Street, and
transferred to J.P. Morgan Capital. These shares are not subject to the
Shareholders Agreement referred to below.
The Selling Stockholders acquired the Class A Common Stock being offered
hereby in connection with the Acquisition. As part of the financing of the
Acquisition and pursuant to separate stock purchase agreements, the Company sold
an aggregate of 33,000,515 shares of Class A Common Stock (representing
approximately 9% of its outstanding common stock at that time) to Aetna, J.P.
Morgan Capital, Trident and Fund American (collectively, the "Private
Investors") for an aggregate of $525 million. On June 23, 1997, the Company
repurchased in the aggregate 6,600,102 shares of Class A Common Stock held by
the Private Investors for a total purchase price of approximately $240.8
million, representing a discount to the then current market price. The
repurchases represented 20% of the holdings of each of the Private Investors. On
November 19, 1997, the Private Investors sold in the aggregate 14,200,207 shares
of Class A Common Stock for total proceeds to the Private Investors of
approximately $486.5 million in an underwritten public offering conducted
pursuant to the provisions of the Shareholders Agreement described in the
following paragraph (the "November 1997 Offering").
Pursuant to the Shareholders Agreement, dated as of April 2, 1996, and
amended as of June 20, 1997 and November 5, 1997, by and among the Company,
TIGI, Aetna, J.P. Morgan Capital, Trident and Fund American (the "Shareholders
Agreement"), the Private Investors have certain rights with respect to the
ownership of Class A Common Stock and the management of the Company. The Private
Investors are collectively entitled to a total of four demand registrations with
respect to their shares of Class A Common Stock and an unlimited number of
"piggy back" registrations. Private Investors owning more than 50% of the shares
of Class A Common Stock then owned in the aggregate by the Private Investors may
demand by written notice that the Company register no less than a number of
shares the sale of which is reasonably expected to yield gross proceeds of at
least $60 million. The Company has agreed to indemnify the Private Investors for
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Private Investors may be required to make in respect
thereof, in connection with sales by the Private Investors of shares of Class A
Common Stock pursuant to a registration statement prepared by the Company.
Pursuant to the Shareholders Agreement, the Company has agreed to pay all
expenses of the Private Investors in connection with each such registration,
except underwriting discounts and commissions applicable to the shares of Class
A Common Stock sold by the Private Investors. The offering hereby is as a result
of a demand delivered by Aetna, J.P. Morgan Capital and Sixty Wall Street on May
22, 1998 in accordance with the terms of the Shareholders Agreement. After the
offerings contemplated hereby, the Private Investors will be entitled to two
remaining demand registrations, although Aetna, J.P. Morgan
14
<PAGE>
Capital and Sixty Wall Street will no longer be entitled to any demand
registrations if they sell all of their shares which may be offered hereby.
The nature of any position, office or other material relationship which the
Selling Stockholders have had within the past three years with the Company or
any of its predecessors or affiliates is set forth below.
Roberto G. Mendoza, a Vice Chairman and a director of J.P. Morgan & Co.
Incorporated, has been a director of the Company since 1996. J.P. Morgan & Co.
Incorporated is the parent of J.P. Morgan Capital and Sixty Wall Street. Mr.
Mendoza was initially appointed to the Board of Directors of the Company by
Trident pursuant to its rights under the Shareholders Agreement, and served on
the Board as Trident's nominee until April 1998. Trident's right to nominate a
member of the Board of Directors expired upon consummation of the November 1997
Offering. Mr. Mendoza has since been renominated to the Board, and he continues
to serve as a director. Mr. Mendoza's current term expires in 1999.
In connection with the Acquisition, Aetna agreed for a period of five years
not to compete with any of the businesses of Travelers Casualty and Surety
Company (formerly The Aetna Casualty and Surety Company) and The Standard Fire
Insurance Company (collectively, "Aetna P&C") as conducted in certain countries,
with certain limited exceptions. Aetna entered into a license agreement with
Aetna P&C that permits those companies and their subsidiaries to use the "Aetna"
name in connection with their operations through December 31, 1998. Aetna also
agreed not to license the Aetna name to anyone else for use in a property and
casualty insurance business until after December 31, 2001.
Aetna Inc. and its subsidiaries continue to provide certain
telecommunications services to the Company and arrangements for the lease of
real property, among other things. During 1997, the Company paid to Aetna Inc.
approximately $4 million in respect of these and other administrative services
provided. From time to time, the Company has engaged and may in the future
engage in transactions with the Selling Stockholders and their affiliates in the
ordinary course of business.
The Selling Stockholders and their affiliates have made and may make
investments in or provide financial advisory and other services to insurance
enterprises and ventures or other entities that may compete with the Company. As
a result, there may currently exist, or may develop in the future, perceived or
actual conflicts of interest between the Selling Stockholders or their
affiliates, on the one hand, and the Company, on the other hand.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell shares of Class A Common Stock registered
hereunder from time to time in one or more transactions on or after the date
hereof. The aggregate proceeds to the Selling Stockholders from sales of shares
of Class A Common Stock offered hereby will be the purchase price of such shares
less any commissions, discounts or other compensation of any Broker-Dealer (as
defined below).
Sales of shares of Class A Common Stock by the Selling Stockholders may be
made from time to time, as market conditions permit, by any of the following
means, or any combination thereof, using such broker-dealer or broker-dealers as
may enter into arrangements with the Selling Stockholders from time to time
(each such broker-dealer being herein referred to as a "Broker-Dealer"): (i)
ordinary brokerage transactions on the NYSE and transactions in which a
Broker-Dealer solicits purchasers; (ii) block trades in accordance with the
rules of the NYSE in which a Broker-Dealer may attempt to sell the shares as
agent but may position and resell all or a portion of the block as principal to
facilitate the transactions; (iii) "off-board" secondary distributions, exchange
distributions or special offerings in accordance with the rules of the NYSE in
which a Broker-Dealer may act as principal or agent; (iv) sales to a
Broker-Dealer in which such Broker-Dealer purchases the shares as principal and
resells such shares for its own account pursuant to a Prospectus Supplement; (v)
sales "at the market" or to or through a market maker or into an existing
trading market, on an exchange or otherwise for such shares; and (vi) sales in
other ways not involving
15
<PAGE>
market makers or established trading markets, including direct sales to
institutions or individual purchasers.
The shares of Class A Common Stock are expected to be sold at prices
prevailing at the time of sale, and it is anticipated that the offering prices
will not exceed the last reported sale price for the Class A Common Stock on the
NYSE immediately prior to the determination thereof. Each Broker-Dealer will
receive such brokerage commissions or other compensation as may be negotiated
with the Selling Stockholders immediately prior to the sale. Such commissions or
other compensation are not expected to exceed those customary in the types of
transactions involved. Each Broker-Dealer may also receive compensation from
purchasers of the shares of Class A Common Stock which is not expected to exceed
that which is customary in the types of transactions involved.
In connection with the sale of the shares of Class A Common Stock offered
hereby, each Broker-Dealer may be deemed to be an underwriter within the meaning
of the Securities Act, in which event the brokerage commissions or discounts
received by it may be deemed to be underwriting compensation. To the extent
required by the Securities Act, additional information relating to the specific
shares of Class A Common Stock offered, the price at which such shares are
offered and the particular selling arrangements, if any, made with any
Broker-Dealer in connection therewith (including any applicable commissions or
discounts) will be set forth in an accompanying Prospectus Supplement or, if
appropriate, a post-effective amendment to the Registration Statement of which
this Prospectus is a part. The Company or the Selling Stockholders, under
arrangements which they may enter into with any Broker-Dealer, may agree to
indemnify such Broker-Dealer against certain liabilities under the Securities
Act or to contribute to payments that such Broker-Dealer may be required to make
in respect thereof.
In connection with the sale of the shares of Class A Common Stock offered
hereby and in compliance with applicable law, any Broker-Dealer may over-allot
and may effect transactions which stabilize, maintain or otherwise affect the
market price of the Class A Common Stock at levels above those which might
otherwise prevail in the open market. Such transactions may include placing bids
for the Class A Common Stock or effecting purchases of the Class A Common Stock
for the purpose of pegging, fixing or maintaining the price of the Class A
Common Stock or for the purpose of reducing a syndicate short position created
in connection with the offering. A syndicate short position may be covered by
exercise of any over-allotment option granted to any Broker-Dealer in lieu of or
in addition to open market purchases. In addition, the particular selling
arrangements made with any Broker-Dealer may include a provision whereby, if
such Broker-Dealer purchases Class A Common Stock in the open market for the
account of an underwriting syndicate and the securities purchased can be traced
to a particular member of such syndicate or member of the selling group, the
underwriting syndicate may require the syndicate or selling group member in
question to purchase the Class A Common Stock in question at the cost price to
the syndicate or may recover from (or decline to pay to) the syndicate or
selling group member in question the selling concession applicable to the
securities in question. Such Broker-Dealer would not be required to engage in
any of these activities and any such activities, if commenced, could be
discontinued at any time.
LEGAL MATTERS
The validity of the Class A Common Stock offered hereby will be passed upon
for the Company by James M. Michener, Esq., General Counsel of the Company and
for any Broker-Dealers by Dewey Ballantine LLP, 1301 Avenue of the Americas, New
York, New York. Mr. Michener, Senior Vice President, General Counsel and
Secretary of the Company, beneficially owns, or has rights to acquire under the
Company's employee benefit plans, an aggregate of less than 1% of the Common
Stock. Dewey Ballantine LLP has from time to time acted as counsel for Travelers
Group and certain of its subsidiaries and may do so in the future. A member of
Dewey Ballantine LLP participating in this matter beneficially owns an aggregate
of less than 1% of the common stock of Travelers Group.
16
<PAGE>
EXPERTS
The consolidated financial statements and financial statement schedules of
Travelers Property Casualty Corp. and its subsidiaries as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December 31,
1997, included or incorporated by reference in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, have been incorporated by
reference herein, in reliance upon the reports (also incorporated by reference
herein) of KPMG Peat Marwick LLP, independent certified public accountants, and
upon the authority of said firm as experts in accounting and auditing.
The combined financial statements of Travelers Casualty and Surety Company
(formerly The Aetna Casualty and Surety Company) and The Standard Fire Insurance
Company and their subsidiaries as of December 31, 1995 and 1994, and for each of
the years in the three-year period ended December 31, 1995, incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, have been incorporated by reference herein, in reliance upon
the reports (also incorporated by reference herein) of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth estimated expenses to be incurred in
connection with the distribution of the securities being registered hereby, all
of which shall be borne by the Company:
<TABLE>
<S> <C>
Commission Registration Fees...................................... $ 111,262
NASD Registration Fee............................................. 0
Printing and Engraving Expenses................................... 25,000
Legal Fees and Expenses........................................... 35,000
Accounting Fees and Expenses...................................... 50,000
Blue Sky Fees and Expenses........................................ 5,000
Miscellaneous..................................................... 3,738
---------
Total....................................................... $ 230,000
---------
---------
</TABLE>
Except for the Commission and NASD registration fees, all of the foregoing
are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the Delaware General Corporation Law
("DGCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided for by
II-1
<PAGE>
Section 145 shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of such person's heirs, executors and
administrators; and empowers the corporation to purchase and maintain insurance
on behalf of a director or officer of the corporation against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145. Section 3 of Article V
of the Company's Restated By-Laws provides that the Company shall indemnify its
directors and officers to the fullest extent permitted by the DGCL.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Company, which provides for coverage against loss from claims made against
directors and officers in their capacity as such, including liabilities under
the Securities Act of 1933, as amended.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit. Article TWELFTH of the
Company's Restated Certificate of Incorporation limits the liability of
directors to the fullest extent permitted by Section 102(b)(7).
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.01 Form of Underwriting Agreement.
5.01 Opinion of James M. Michener, Esq., General Counsel of the Company, with respect to the legality of the
securities being registered.*
23.01 Consent of James M. Michener, Esq. (included in Exhibit 5.01).
23.02 Consent of KPMG Peat Marwick LLP.
23.03 Consent of KPMG Peat Marwick LLP.
24.01 Powers of Attorney of certain directors of the Company.*
24.02 Power of Attorney of Roberto G. Mendoza.
</TABLE>
- ------------------------
* Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
(d) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Travelers Property Casualty Corp. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment to this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, this eighteenth day of June, 1998.
<TABLE>
<S> <C> <C>
TRAVELERS PROPERTY CASUALTY CORP.
By: /s/ ROBERT I. LIPP
-----------------------------------------
Robert I. Lipp
Chairman of the Board, President and
Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on this eighteenth day of June, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ------------------------------------------------------
<C> <S>
/s/ ROBERT I. LIPP
------------------------------------------- Chairman of the Board, President and Chief Executive
Robert I. Lipp Officer (Principal Executive Officer) and Director
/s/ WILLIAM P. HANNON
------------------------------------------- Chief Financial Officer (Principal Financial Officer)
William P. Hannon
/s/ THOMAS P. SHUGRUE
------------------------------------------- Vice President and Chief Accounting Officer (Principal
Thomas P. Shugrue Accounting Officer)
*
------------------------------------------- Director
Kenneth J. Bialkin
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ------------------------------------------------------
<C> <S>
*
------------------------------------------- Director
James Dimon
*
------------------------------------------- Director
Dudley C. Mecum
*
------------------------------------------- Director
Roberto G. Mendoza
*
------------------------------------------- Director
Frank J. Tasco
*
------------------------------------------- Director
Sanford I. Weill
*
------------------------------------------- Director
Arthur Zankel
</TABLE>
*By: /s/ WILLIAM P. HANNON
-------------------------
William P. Hannon
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
<C> <S> <C>
1.01 Form of Underwriting Agreement.
5.01 Opinion of James M. Michener, Esq., General Counsel of the Company, with respect to the legality
of the securities being registered.*
23.01 Consent of James M. Michener, Esq. (included in Exhibit 5.01).
23.02 Consent of KPMG Peat Marwick LLP.
23.03 Consent of KPMG Peat Marwick LLP.
24.01 Powers of Attorney of certain directors of the Company.*
24.02 Power of Attorney of Roberto G. Mendoza.
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
Exhibit 1.01
8,918,395 SHARES
TRAVELERS PROPERTY CASUALTY CORP.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
June , 1998
To the Representative or Representatives
named in the Terms Agreement referred to
in Section 3 hereto
Ladies and Gentlemen:
Certain holders (the "Selling Stockholders") of Class A Common
Stock, $0.01 par value per share (the "Class A Common Stock"), of Travelers
Property Casualty Corp., a Delaware corporation (the "Company") propose to sell
from time to time up to an aggregate of 8,918,395 shares of Class A Common Stock
(the "Registered Securities"). Particular offerings of the Registered Securities
will be sold pursuant to Terms Agreements referred to in Section 3 hereto, for
resale in accordance with terms of the offering determined at the time of sale.
The Registered Securities involved in any such offering are hereinafter referred
to as the "Offered Securities." The firm or firms which agree to purchase the
Offered Securities are hereinafter referred to as the "Underwriters" of such
securities, and the representative or representatives of the Underwriters, if
any, specified in a Terms Agreement referred to in Section 3 hereto are
hereinafter referred to as the "Representatives," provided, however, that if the
Terms Agreement does not specify any representative of the Underwriters, the
term "Representatives," as used in this Agreement (other than in the second
sentence of Section 3), shall mean the Underwriters.
The Class A Common Stock, including the Registered Securities,
and the Company's Class B Common Stock, $0.01 par value per share, are
hereinafter referred to collectively as the "Common Stock." The Company is a
majority-owned subsidiary of The Travelers Insurance Group Inc. ("TIGI"), which
in turn is an indirect wholly owned subsidiary of Travelers Group Inc.
("Travelers Group").
The Company and the Selling Stockholders wish to confirm as
follows their agreements with the Underwriters in connection with the purchase
of the Registered Securities by the Underwriters.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters and each of the
Selling Stockholders as of the date of the applicable Terms Agreement that:
(a) A registration statement (No. 333-56249) relating to the
Registered Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended
<PAGE>
(the "Act"), and has become effective. Such registration statement (including
all financial schedules and exhibits), as amended at the time of the Terms
Agreement referred to in Section 3 hereto (a "Terms Agreement"), is hereinafter
referred to as the "Registration Statement," and the prospectus included in such
Registration Statement, as supplemented as contemplated by Section 3 hereto to
reflect the terms of offering of the Offered Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under
the Act, including all material incorporated by reference therein, is
hereinafter referred to as the "Prospectus". If it is contemplated, at the time
this Agreement is executed, that a post-effective amendment to the Registration
Statement will be filed and must be declared effective before the offering of
the Offered Securities may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said
post-effective amendment No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act.
(b) The Prospectus complies in all material respects with the
provisions of the Act. The Commission has not issued any order preventing or
suspending the use of the Prospectus.
(c) The Company meets the requirements for the use of Form S-3
under the Act. The Registration Statement in the form in which it became
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, and the Prospectus and any supplement thereto
when filed with the Commission under Rule 424(b) under the Act, complied or will
comply in all material respects with the provisions of the Act and did not or
will not at any such times contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and on the date of the applicable Terms
Agreement, the Registration Statement and Prospectus will conform in all
material respects to the requirements of the Act and the rules and regulations
thereunder, and neither the Registration Statement nor the Prospectus will
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information relating to the
Underwriters furnished to the Company in writing through the Representatives by
or on behalf of the Underwriters expressly for use therein.
(d) All the outstanding shares of capital stock of the Company
(including the Offered Securities) have been duly authorized and validly issued,
are fully paid and nonassessable and are free of any preemptive or similar
rights, except as set forth in Section 5 of the Shareholders Agreement, dated as
of April 2, 1996, as amended on June 20, 1997 and November 5, 1997, among TIGI
and the other shareholders party thereto (the "Shareholders Agreement") and
Section 5.1 of the Intercompany Agreement, dated as of April 2, 1996, between
Travelers Group and the Company (the "Intercompany Agreement"); and the capital
stock of the Company conforms in all material respects to the description
thereof included or incorporated by reference in the Registration Statement and
the Prospectus.
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of
2
<PAGE>
its business requires such registration or qualification, except where the
failure or failures (individually or in the aggregate) so to register or qualify
does not have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole.
(f) There are no legal or governmental proceedings (including,
without limitation, actions or proceedings by any insurance regulatory agency or
body) pending or, to the knowledge of the Company, threatened, against the
Company or any of the Company's "significant subsidiaries," as determined in
accordance with Regulation S-X under the Act (such "significant subsidiaries"
being hereinafter referred to collectively as the "Subsidiaries" and
individually as a "Subsidiary"), or to which the Company or any of the
Subsidiaries is a party, or to which any of their respective properties is
subject, that are required to be described in the Registration Statement or the
Prospectus that are not described as required by the Act.
(g) The Company is not (i) in violation of its certificate of
incorporation or bylaws, or (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company, or
(iii) in violation of any decree of any court or governmental agency or body
having jurisdiction over the Company, or (iv) in default in the performance or
any obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any agreement, indenture, lease or
other instrument to which the Company is a party or by which it or any of its
properties may be bound, except, in the case of clauses (ii), (iii) and (iv),
where any such violation or default would not, net of reinsurance, reserves and
taxes, have a material adverse effect (individually or in the aggregate) on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and its subsidiaries taken as a whole.
(h) Neither the execution, delivery or performance of the
applicable Terms Agreement by the Company, nor the consummation by the Company
of the transactions contemplated thereby (i) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body (including any insurance regulatory body), administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Registered Securities under the Act and compliance
with the securities or Blue Sky laws of various jurisdictions, all of which have
been or will be effected in accordance with this Agreement), except where the
failure to obtain such consent, approval, authorization or other order or make
such registration or filing would not have (individually or in the aggregate) a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole, or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation or bylaws, or other organizational documents, of
the Company or any of the Subsidiaries, or (iii) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or (iv) violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree of any government,
government instrumentality (including, without limitation, any insurance
regulatory agency or body) or court, domestic or foreign, applicable to the
Company or any of the Subsidiaries or any of their respective properties, or (v)
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be
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bound or to which any of the property or assets of any of them is subject,
except, in the case of clauses (iii), (iv) and (v) of this paragraph (h), any
such conflict, breach or default, violation or any such lien or encumbrance that
would not (individually or in the aggregate) have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and its subsidiaries taken as a whole.
(i) The accountants, KPMG Peat Marwick LLP, who have certified
or shall certify the financial statements included in the Registration Statement
and the Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Act.
(j) The consolidated financial statements, together with related
schedules and notes, included and/or incorporated by reference in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), comply as to form in all material respects with the requirements of
the Act. Such statements present fairly the consolidated financial position of
the Company and its subsidiaries and the combined financial position of
Travelers Casualty and Surety Company (formerly The Aetna Casualty and Surety
Company) and The Standard Fire Insurance Company and their subsidiaries, in each
case at the respective dates indicated, and the results of their operations and
their cash flows for the respective periods indicated in accordance with
generally accepted accounting principles consistently applied throughout such
periods. The other financial and statistical information relating to the
Company and its subsidiaries and Travelers Casualty and Surety Company and The
Standard Fire Insurance Company and their subsidiaries and data included and/or
incorporated by reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), historical and pro forma, that are
identified as being prepared in accordance with generally accepted accounting
principles, are, in all material respects, accurately presented and prepared on
a basis consistent with such financial statements and the books and records of
the Company and its subsidiaries or Travelers Casualty and Surety Company and
The Standard Fire Insurance Company and their subsidiaries, as the case may be.
No pro forma financial statements prepared in accordance with Article 11 of
Regulation S-X under the Act are required to be included or incorporated by
reference in the Registration Statement or Prospectus.
(k) The statutory financial statements of the Company's
insurance subsidiaries from which certain ratios and other statistical data
included and/or incorporated by reference in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) have been derived, have
been prepared for each relevant period in conformity with accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the insurance departments of the states of domicile of such subsidiaries, in
effect at such time of preparation, except as otherwise stated therein.
(l) The execution and delivery of, and the performance by the
Company of its obligations under the applicable Terms Agreement has been duly
and validly authorized by the Company, and the applicable Terms Agreement has
been duly executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that (i) enforcement thereof may
be limited by (x) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (y) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (ii) the rights to indemnity
and contribution thereunder may be limited by United States federal or state
securities laws.
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<PAGE>
(m) Except as disclosed in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), (i)
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business (including any material addition, or any development
involving a prospective material addition, to the Company's consolidated reserve
for insurance claims and claims expense, other than as contemplated by the
Registration Statement or the Prospectus), that is material to the Company and
its subsidiaries taken as a whole, (ii) there has not been any change in the
capital stock of the Company nor any material increase in the short-term debt or
long-term debt of the Company or any of its subsidiaries, and (iii) there has
not been any material adverse change, or any development involving or which may
reasonably be expected to involve, a prospective material adverse change, in the
condition (financial or other), business, net worth or results of operation of
the Company and its subsidiaries taken as a whole.
(n) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Offered Securities, will not distribute any offering materials in connection
with the offering and sale of the Offered Securities other than the Registration
Statement, the Prospectus or other materials, if any, permitted by the Act.
(o) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and with
statutory accounting principles, and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(p) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company because of the filling of the registration statement or the consummation
of the transactions contemplated by this Agreement, other than any such rights
that have been complied with or waived in writing.
(q) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(r) The documents incorporated by reference in the Registration
Statement and the Prospectus (the "Incorporated Documents") heretofore filed
were filed in a timely manner and, when they were filed (or, if any amendment
with respect to any such document was filed, when such amendment was filed),
conformed with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(s) The Offered Securities have been approved for listing on the
New York Stock Exchange, Inc.
5
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder, severally and not jointly, represents and warrants to
the Underwriters and to the Company as of the date of the applicable Terms
Agreement that:
(a) Such Selling Stockholder has, and on the Closing Date (as
defined herein) will have, valid and unencumbered title to the Offered
Securities to be delivered by such Selling Stockholder on the Closing Date and
has full right, power and authority to enter into this Agreement and to sell,
assign, transfer and deliver the Offered Securities to be delivered by such
Selling Stockholder on the Closing Date pursuant to the applicable Terms
Agreement; and upon the delivery of any payment for the Offered Securities on
the Closing Date, and assuming the Underwriters take delivery of such Shares in
good faith and without notice of any adverse claim within the meaning of the
Uniform Commercial Code as in effect in the State of New York (the "UCC"), the
Underwriters will acquire valid and unencumbered title to such Offered
Securities to be delivered by such Selling Stockholder on the Closing Date.
(b) Such Selling Stockholder has reviewed the information
relating to such Selling Stockholder contained in the Registration Statement and
the Prospectus and the information relating to such Selling Stockholder in the
Registration Statement and the Prospectus does not contain any untrue statement
of a material fact relating to such Selling Stockholder or omit to state any
fact required to be stated therein or necessary to make the statements therein
relating to such Selling Stockholder not misleading in any material respect.
(c) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to be obtained or
made by such Selling Stockholder for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the Offered
Securities to be sold by such Selling Stockholder under the applicable Terms
Agreement, except such as have been obtained and made under the Act and such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Offered Securities.
(d) Neither the execution, delivery and performance of the
applicable Terms Agreement by such Selling Stockholder nor the consummation of
the transactions therein contemplated by such Selling Stockholder will result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, (A) any statute, rule, regulation or order of any governmental
agency or body or any court having jurisdiction over such Selling Stockholder or
any of its properties, (B) any agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or to which
any of the properties of such Selling Stockholder is subject or (C) the
certificate or articles of incorporation or by-laws or other organizational
documents of such Selling Stockholder.
(e) The applicable Terms Agreement has been duly authorized,
executed and delivered by such Selling Stockholder and is the valid and binding
agreement of such Selling Stockholder enforceable against such Selling
Stockholder in accordance with its terms, except as rights to indemnity and
contribution thereunder may be limited by federal or state securities laws or
principles of public policy and except as enforcement thereof may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and the rights
of creditors of insurance companies generally and by general equitable
principles.
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<PAGE>
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. The
obligation of the Underwriters to purchase the Offered Securities will be
evidenced by an agreement or exchange of other written communications (including
the provisions of this Agreement incorporated by reference therein in accordance
with the next succeeding sentence, a "Terms Agreement") at the time the Selling
Stockholders determine to sell the Offered Securities. The applicable Terms
Agreement will incorporate by reference the provisions of this Agreement, except
as otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the number of shares to be
purchased by each Underwriter, the number of shares to be sold by each Selling
Stockholder and the purchase price to be paid by the Underwriters. The
applicable Terms Agreement will also specify the time and date of delivery and
payment (such time and date, or such other time not later than seven full
business days thereafter as the Underwriter first named in such Terms Agreement
(the "Lead Underwriter") and the Selling Stockholders agree as the time for
payment and delivery, being herein and in the applicable Terms Agreement
referred to as the "Closing Date"), the place of delivery and payment and any
details of the terms of offering that should be reflected in the prospectus
supplement relating to the offering of the Offered Securities. For purposes of
Rule 15c6-1 under the Exchange Act, the Closing Date (if later than the
otherwise applicable settlement date) shall be the date for payment of funds and
delivery of securities for all the Offered Securities sold pursuant to the
applicable Terms Agreement. The obligations of the Underwriters to purchase,
and of the Selling Stockholders to sell, the Offered Securities will be several
and not joint.
The certificates for the Offered Securities delivered to the
Underwriters on the Closing Date will be in definitive form, in such
denominations and registered in such names as the Lead Underwriter requests.
4. TERMS OF THE PUBLIC OFFERING. It is understood that the
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with
the Underwriters as follows:
(a) The Company will advise the Lead Underwriter promptly and,
if requested by the Lead Underwriter, will confirm such advice in writing: (i)
of any request by the Commission for amendment of or a supplement to the
Registration Statement or the Prospectus or for additional information; (ii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Offered
Securities for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
paragraph (d) below, of any change in the condition (financial or other),
business, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole, or of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Act or the regulations thereunder to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply with the
Act or any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible time.
7
<PAGE>
(b) The Company will furnish to the Underwriters, without
charge, copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits thereto and Incorporated Documents, in such quantities as the
Underwriters may reasonably request.
(c) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which the Lead Underwriter shall not previously have been advised or to which
the Lead Underwriter shall reasonably object after being so advised or (ii) so
long as, in the opinion of counsel for the Underwriters, a prospectus is
required to be delivered in connection with sales by the Underwriters or any
dealer, file any information, documents or reports pursuant to the Exchange Act,
without delivering a copy of such information, documents or reports to the
Underwriters prior to or concurrently with such filing.
(d) As soon after the execution and delivery of the applicable
Terms Agreement as possible and thereafter from time to time for such period as
in the opinion of counsel for the Underwriters a Prospectus is required by the
Act to be delivered in connection with sales by the Underwriters or any dealer,
the Company will expeditiously deliver to the Underwriters and each dealer,
without charge, as many copies of the Prospectus (and of any amendment or
supplement thereto) as the Underwriters may reasonably request. The Company
consents to the use of the Prospectus (and of any amendment or supplement
thereto) in accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Offered Securities are offered
by the Underwriters and by all dealers to whom Offered Securities may be sold,
both in connection with the offering and sale of the Offered Securities and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by the Underwriters or any dealer. If during
such period of time any event shall occur that in the judgment of the Company or
in the opinion of counsel for the Underwriters is required to be set forth in
the Prospectus (as then amended or supplemented) or should be set forth therein
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus, or to file under the Exchange Act any document which upon
filing becomes an Incorporated Document, to comply with the Act, the Exchange
Act or any other law, the Company will forthwith prepare and, subject to the
provisions of paragraph (c) above, file with the Commission an appropriate
supplement or amendment thereto or Incorporated Document and will expeditiously
furnish to the Underwriters and dealers a reasonable number of copies thereof.
(e) The Company will cooperate with the Underwriters and with
counsel for the Underwriters in connection with the registration or
qualification of the Offered Securities for offering and sale by the
Underwriters and by dealers under the securities or Blue Sky laws of such
jurisdictions as the Lead Underwriter may designate and will file such consents
to service of process or other documents necessary or appropriate in order to
effect such registration or qualification; provided that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale of the
Offered Securities, in any jurisdiction where it is not now so subject.
(f) As soon as practicable after the date of the applicable
Terms Agreement, the Company will make generally available to its
securityholders an earnings statement, which need not be audited, covering a
period of at least 12 months beginning after the later of (i) the
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<PAGE>
effective date of the registration statement relating to the Registered
Securities and (ii) the effective date of the most recent post-effective
amendment to the Registration Statement to become effective prior to the date of
such Terms Agreement, which will satisfy the provisions of Section 11(a) of the
Act.
(g) During the period of two years after the date of the
applicable Terms Agreement, the Company will furnish to the Underwriters, upon
the Underwriters' request, a copy of each report of the Company mailed to
stockholders filed by the Company with the Commission under the Exchange Act.
(h) If Rule 430A of the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act and will advise the
Underwriters of the time and manner of such filing.
(i) Except as stated in this Agreement and in the Prospectus,
the Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Offered Securities.
(j) The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto) and the Prospectus or any related preliminary
prospectus and each amendment or supplement to any of them; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, the Prospectus, the Incorporated Documents (as defined below) and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with offerings and sales of the Offered Securities; (iii) the
preparation, printing, authentication, issuance and delivery of certificates for
the Offered Securities, including any stamp taxes in connection with the
original issuance and sale of the Offered Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, Blue Sky Memoranda and all other
agreements or documents printed (or reproduced) and delivered in connection with
offerings of the Offered Securities; (v) the registration or qualification of
the Offered Securities for offer and sale under the securities or blue sky laws
of the several states as provided in Section 5(e) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of Blue Sky
Memoranda and such registration and qualification); (vi) the filing fees and the
reasonable fees and expenses of counsel for the Underwriters in connection with
any filings required to be made with the National Association of Securities
Dealers, Inc.; (vii) the transportation and other expenses incurred by or on
behalf of Company management in connection with presentations to prospective
purchasers of the Offered Securities; and (viii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company and the Selling Stockholders.
6. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each of the Selling
Stockholders agrees, severally and not jointly, with the Underwriters as
follows:
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<PAGE>
(a) Such Selling Stockholder will cooperate to the extent
necessary to cause any post-effective amendment to the Registration Statement to
become effective at the earliest possible time.
(b) Such Selling Stockholder will pay all federal and other
taxes, if any, on the transfer or sale of any Offered Securities that are sold
by such Selling Stockholder to the Underwriters.
(c) Such Selling Stockholder will do or perform all things
required to be done or performed by it prior to the Closing Date to satisfy all
conditions precedent to the delivery of the Offered Securities by such Selling
Stockholder pursuant to the applicable Terms Agreement.
(d) Except as stated in the applicable Terms Agreement or in the
Prospectus, such Selling Stockholder will not take, directly or indirectly, any
action designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Offered Securities.
(e) Such Selling Stockholder will advise the Underwriters
promptly, and if requested by the Underwriters, will confirm such advice in
writing, within the period of time referred to in Section 5(d) hereof, of any
change in information relating to such Selling Stockholder that suggests that
any statement relating to such Selling Stockholder made in the Registration
Statement or the Prospectus (as then amended or supplemented, if amended or
supplemented) is or may be untrue in any material respect or that the
Registration Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material fact or a fact
necessary to be stated therein in order to make the statements therein relating
to such Selling Stockholder not misleading in any material respect.
(f) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982, as amended, with respect to the transactions contemplated by the
applicable Terms Agreement, such Selling Stockholder agrees to deliver to the
Underwriters prior to or on the Closing Date a properly completed and executed
United States Treasury Department Form W-9 if required by Treasury Department
regulations (or any other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase and pay for the Offered Securities
on any Closing Date will be subject to the accuracy in all material respects of
the representations and warranties on the part of the Company and the Selling
Stockholders in the applicable Terms Agreement and to the performance by the
Company and the Selling Stockholders of its obligations under the applicable
Terms Agreement in all material respects and to the following additional
conditions precedent:
(a) The Prospectus shall have been filed with the Commission in
accordance with the Commission's rules and regulations. Prior to the Closing
Date, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company, threatened by the Commission.
(b) Subsequent to the execution and delivery of the applicable
Terms Agreement, there shall not have occurred (i) any change, or any
development or event involving
10
<PAGE>
a prospective change, in the financial condition, business or results of
operations of the Company or its subsidiaries which, in the judgment of the Lead
Underwriter, would materially and adversely affect the market for the Offered
Securities; (ii) any suspension or material limitation of trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market; (iii) any general banking moratorium declared by U.S.
federal or New York authorities; or (iv) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of the Lead Underwriter, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.
(c) The Underwriters shall have received on the Closing Date, an
opinion of James M. Michener, Esq., General Counsel of the Company, dated the
Closing Date and addressed to the Underwriters, and otherwise in form and
substance satisfactory to the Underwriters, covering the matters referred to in
Exhibit A hereto. All capitalized terms not defined in Exhibit A shall have the
meaning ascribed to them herein.
(d) The Underwriters shall have received on the Closing Date,
opinions of William J. Casazza, Esq., Vice President and Deputy General Counsel
to Aetna Services Inc., and Travis Epes, Esq., Managing Director and Assistant
Legal Counsel, J.P. Morgan & Co. Incorporated, counsel to J.P. Morgan Capital
Corporation and Sixty Wall Street Fund, L.P., respectively, each dated the
Closing Date and addressed to the Underwriters, and otherwise in form and
substance satisfactory to the Underwriters, covering the matters referred to in
Exhibits B-1 and B-2 hereto, respectively. All capitalized terms not defined in
Exhibits B-1 and B-2 shall have the meaning ascribed to them herein.
(e) The Underwriters shall have received on the Closing Date an
opinion of Dewey Ballantine LLP, counsel for the Underwriters, dated the Closing
Date and addressed to the Underwriters, with respect to the Registration
Statement, the Prospectus and such other related matters as the Underwriters may
reasonably require.
(f) The Underwriters shall have received letters dated the date
of the applicable Terms Agreement and the Closing Date from KPMG Peat Marwick
LLP, independent certified public accountants, substantially in the forms
heretofore approved by the Underwriters.
(g) The Underwriters shall have received a certificate, dated
the Closing Date, of any two of the Chairman, President and Chief Executive
Officer; Vice Chairman; Chief Financial Officer; General Counsel and Secretary
of the Company; or such other officers as are acceptable to the Underwriters, in
which such officers, to the best of their knowledge, shall state that: the
representations and warranties of the Company in the applicable Terms Agreement
are true and correct in all material respects; the Company has performed or
complied with all agreements on its part required to be performed or complied
with pursuant to the applicable Terms Agreement at or prior to such Closing
Date; no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission; and, subsequent to the date of the most recent
financial statements included or incorporated by reference in the Prospectus,
there has been no material adverse change, in the financial condition, business
or results of operations of the
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<PAGE>
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus.
(h) The Company and the Selling Stockholders shall have
furnished the Underwriters and their counsel with such conformed copies of such
certificates and documents as the Underwriters shall reasonably request. The
Lead Underwriter may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters under the
applicable Terms Agreement.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each of
the Representatives and each other Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Underwriters for any legal or other expenses reasonably incurred by such
Underwriters in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, except insofar as
such losses, claims, damages, liabilities, actions or expenses arise out of or
are based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon and
in conformity with information relating to such Underwriter furnished in writing
to the Company by or on behalf of such Underwriter through the Representatives
expressly for use in connection therewith, it being understood and agreed that
the only such information furnished by the Representatives consists of the
information described as such in the applicable Terms Agreement; PROVIDED,
HOWEVER, that the indemnification contained in this paragraph (a) with respect
to any preliminary prospectus or preliminary prospectus supplement shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) to the extent that any such loss, claim, damage,
liability or expense arises from the sale of the Offered Securities by such
Underwriter to any person if it shall be established that a copy of the
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such preliminary prospectus or preliminary prospectus supplement
was corrected in the Prospectus and such correction would have cured the defect
giving rise to such loss, claim, damage, liability or expense; PROVIDED that the
Company delivered the Prospectus to the Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
(b) Each Selling Stockholder, severally and not jointly, agrees
to indemnify and hold harmless each of the Representatives and each other
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities or expenses (or actions
in respect thereof) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement, the
Prospectus, or any
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<PAGE>
amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Underwriters for any legal or other expenses reasonably incurred
by such Underwriters in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred; in each
case to the extent, but only to the extent, that such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon information relating to such Stockholder furnished in writing by or
on behalf of such Selling Stockholder expressly for use in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, it being understood
and agreed that the only such information furnished by the Representatives
consists of the information described as such in the applicable Terms Agreement;
PROVIDED, HOWEVER, that the indemnification contained in this paragraph (b) with
respect to any preliminary prospectus or preliminary prospectus supplement shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Offered Securities by such
Underwriter to any person if it shall be established that a copy of the
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such preliminary prospectus or preliminary prospectus supplement
was corrected in the Prospectus and such correction would have cured the defect
giving rise to such loss, claim, damage, liability or expense; PROVIDED that the
Company delivered the Prospectus to the Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing indemnity shall
be in addition to any liability which the Selling Stockholders may otherwise
have.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company and each Selling Stockholder and any
person who controls the Company or any Selling Stockholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any losses,
claims, damages or liabilities to which the Company or any Selling Stockholder
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriters specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company or the Selling Stockholders in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by the Representatives consists
of the information described as such in the applicable Terms Agreement. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is
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<PAGE>
to be made against the indemnifying party under subsection (a), (b) or (c)
above, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under
subsection (a), (b) or (c) above. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, including the employment of counsel.
Such indemnified party shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party has agreed in writing to pay
such fees and expenses, (ii) the indemnifying party has failed to assume the
defense and employ counsel or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include both such indemnified
party and the indemnifying party and such indemnified party shall have been
advised by its counsel that the representation of such indemnified party and the
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the indemnifying party shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such
indemnified party). It is understood, however, that the indemnifying party
shall, in connectio with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for such indemnified
parties not having actual or potential differing interest with the Underwriters
or among themselves, which firm shall be designated in writing, in the care of
the Underwriters, by the Lead Underwriter and (ii) the reasonable fees and
expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Selling Stockholders not having actual or
potential differing interest among themselves, which firm shall be designated in
writing by the Selling Stockholders selling a majority of the Offered
Securities, and that all such fees and expenses shall be reimbursed as they are
incurred. The indemnifying party shall not be liable for any settlement of any
such action, suit or proceeding effected without its written consent, but if
settled with such written consent, or if there be a final judgment for the
plaintiff in any such action, suit or proceeding, the indemnifying party agrees
to indemnify and hold harmless any indemnified party, to the extent provided in
paragraphs (a), (b) or (c) of this Section 8, from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a), (b) or (c)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Offered Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and
14
<PAGE>
the Selling Stockholders on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Selling Stockholders bear
to the total underwriting discounts and commissions received by the
Underwriters. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection () shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The obligations of the Company and the Selling Stockholders
under this Section shall be in addition to any liability which the Company and
the Selling Stockholders may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls each Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company or
any Selling Stockholder within the meaning of the Act or the Exchange Act.
(g) Notwithstanding any other provision of this Section 8, the
total liability of any Selling Stockholder for indemnification and contribution
under this Section 8 shall not exceed an amount equal to the number of shares of
Offered Securities sold by such Selling Stockholder under the applicable Terms
Agreement multiplied by the purchase price per share set forth in the applicable
Terms Agreement.
9. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters
default in their obligations to purchase Offered Securities under the applicable
Terms Agreement and the aggregate number of shares of Offered Securities that
such defaulting Underwriter or Underwriters agreed but failed to purchase does
not exceed 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on the Closing Date, the Lead Underwriter
may make arrangements satisfactory to the Company for the purchase of such
Offered Securities by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments under the applicable Terms Agreement, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
the Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are
15
<PAGE>
obligated to purchase on the Closing Date and arrangements satisfactory to the
Lead Underwriter and the Company for the purchase of such Offered Securities by
other persons are not made within 36 hours after such default, the applicable
Terms Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
10. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers, of the Selling Stockholders and of
the Underwriters set forth in or made pursuant to the applicable Terms Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of the Underwriters,
the Company, any Selling Stockholder or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If for any reason the purchase of the
Offered Securities by the Underwriters is not consummated pursuant to the
applicable Terms Agreement (otherwise than pursuant to clause (ii), (iii) or
(iv) of Section 7(b) or Section 9 hereto), the Company shall remain responsible
for the expenses to be paid or reimbursed by it pursuant to Section 5(j) hereto
and the respective obligations of the Company, the Selling Stockholders and the
Underwriters pursuant to Section 8 hereto shall remain in effect, and if any
Offered Securities have been purchased hereunder the representations and
warranties in Sections 1 and 2 and all obligations under Sections 5 and 6 hereto
shall also remain in effect. If the purchase of the Offered Securities by the
Underwriters is not consummated for any reason other than solely because of the
occurrence of any event specified in clause (ii), (iii) or (iv) of Section 7(b),
the Company will reimburse the Underwriters for all out-of- pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities.
11. NOTICES. All communications hereunder will be in writing and
will be mailed, delivered or telegraphed and confirmed to them (i) if to the
Company, at the office of the Company at One Tower Square, Hartford, Connecticut
06183, Attention: Mr. Jay S. Fishman, Vice Chairman, with copies to: James M.
Michener, Esq., General Counsel, and Stephanie B. Mudick Esq., Deputy General
Counsel of Travelers Group; (ii) if to the Selling Stockholders, at the offices
of (a) Aetna Services, Inc., Law & Regulation Affairs RC4A, 151 Farmington
Avenue, Hartford, Connecticut 06156-3124, Attention: Mr. William J. Casazza,
with a copy to: Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, Attention: Richard J. Sandler, Esq.; (b) J.P. Morgan Capital Corporation,
60 Wall Street, New York, New York 10260, Attention: J. Edmund Colloton, Esq.,
with a copy to: Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, Attention: Richard J. Sandler, Esq.; and (c) Sixty Wall Street Fund,
L.P., 60 Wall Street, New York, New York 10260, Attention: J. Edmund Colloton,
Esq., with a copy to: Davis Polk & Wardwell, 450 Lexington Avenue,, New York,
New York 10017, Attention: Richard J. Sandler, Esq.; or (iii) if to the
Underwriters, to the Lead Underwriter as set forth in the applicable Terms
Agreement, with a copy to Dewey Ballantine LLP, 1301 Avenue of the Americas, New
York, New York 10019, Attention: Frederick W. Kanner, Esq.
12. SUCCESSORS. Each Terms Agreement (including the provisions
of this Agreement) is and has been made solely for the benefit of the several
Underwriters, the Company, the Company's directors and officers, the Selling
Stockholders and the controlling persons referred to in Section 8 hereof and
their respective successors and assigns, to the extent
16
<PAGE>
provided herein, and no other person shall acquire or have any right under or by
virtue of this Agreement or any Terms Agreement. Neither the term "successor"
nor the term "successors and assigns" as used in this Agreement shall include a
purchaser from any Underwriter of any of the Offered Securities in his status as
such purchaser.
13. COUNTERPARTS. This Agreement and any Terms Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
Agreement.
14. APPLICABLE LAW. Each Terms Agreement (including the
provisions of this Agreement) shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to principles of
conflicts of laws.
17
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the Underwriters.
Very truly yours,
TRAVELERS PROPERTY CASUALTY CORP.
By:
-------------------------------------
Name:
Title:
AETNA SERVICES, INC.
By:
-------------------------------------
Name:
Title:
J.P. MORGAN CAPITAL CORPORATION
By:
-------------------------------------
Name:
Title:
SIXTY WALL STREET FUND, L.P.
By:
-------------------------------------
Name:
Title:
18
<PAGE>
Confirmed as of the date first
above mentioned.
By J.P. MORGAN SECURITIES INC.
By:
----------------------------
Managing Director
19
<PAGE>
EXHIBIT A
---------
(OPINION OF JAMES M. MICHENER)
1. The Company is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure or failures (individually or in the
aggregate) so to register or qualify does or do not have a material adverse
effect on the condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries taken as a whole.
2. Each of the Subsidiaries is a corporation duly incorporated and
validly existing in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, lease, and
operate its properties and to conduct its business as described in the
Prospectus; and all the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable, and are owned by the Company directly or indirectly, free and
clear of any lien, adverse claim, security interest or other encumbrance.
3. Each of the Subsidiaries has full corporate power and authority,
and the Company and each of the Subsidiaries has all necessary governmental
authorizations, approvals, orders, licenses, certificates, franchises and
permits of and from all governmental regulatory officials and bodies (including,
without limitation, insurance licenses from the insurance regulatory agencies of
the various states where it conducts business) (except where the failure so to
have any such authorizations, approvals, orders, licenses, certificates,
franchises or permits, individually or in the aggregate, would not have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole), to own their respective properties and to
conduct their respective businesses as now being conducted, as described in the
Prospectus.
4. Neither the Company nor any of the Subsidiaries is in violation
of its respective certificate or articles of incorporation or by-laws, or other
organizational documents, or to the best knowledge of such counsel, is in
default in the performance of any obligation, agreement or condition contained
in any bond, debenture, note or other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or to which any of them or any of their respective
properties may be bound other than any such violation or default that would not,
net of reinsurance, reserves and taxes, have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and its subsidiaries taken as a whole.
5. Neither the execution, delivery or performance of the Terms
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated thereby (A) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation or by-laws of the Company or any of the
Subsidiaries, (B) conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, (i) any agreement, indenture, lease
or other instrument to which the Company is a party or by which it or any of its
properties may be bound or (ii) any material agreement, indenture, lease or
other instrument to which any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, in each case that is an
exhibit to the Registration Statement or any Incorporated Document or that is
known to such counsel, (C) will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
the Subsidiaries, or (D) violate or will violate any statute, law,
<PAGE>
regulation, filing, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree of any
government, governmental instrumentality (including, without limitation, any
insurance regulatory agency or body), or court, domestic or foreign, known to
such counsel, applicable to the Company or any of the Subsidiaries or any of
their respective properties, except, in the case of clauses (B), (C) and (D) of
this paragraph (5), any such conflict, breach or default or any such lien or
encumbrance that would not (individually or in the aggregate) have a material
adverse effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company and its subsidiaries taken as a
whole.
6. No consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency, or official (except such as has been
obtained under the Act or such as may be required under state securities or Blue
Sky laws governing the purchase and distribution of the Offered Securities) is
required on the part of the Company for the execution, delivery or performance
of the Terms Agreement, except, in each case, where the failure to obtain such
consent, approval, authorization or other order to make such registration or
filing would not have (individually or in the aggregate) a material adverse
effect on the condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries taken as a whole.
7. Each of the Subsidiaries is duly organized and licensed as an
insurance company in the state of its incorporation and is duly licensed or
authorized as an insurer or reinsurer in each other jurisdiction where it is
required to be so licensed or authorized to conduct its business as described in
the Prospectus, except where the failure (individually or in the aggregate) to
be so licensed or authorized in any such jurisdiction does not have a material
adverse effect on the condition (financial or other), business, properties, net
worth or results of operations of the Company and its subsidiaries taken as a
whole.
8. Except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of, and there is no
commitment, plan or arrangement to issue any shares of capital stock of the
Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company.
9. Except as described in the Prospectus, there is no holder of any
security of the Company or any other person who has the right, contractual or
otherwise, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, the Offered Securities or the right to have any
Common Stock or other securities of the Company included in the Registration
Statement or the right, as a result of the filing of the Registration Statement,
to require registration under the Act of any shares of Common Stock or other
securities of the Company.
10. The Company has corporate power and authority to enter into the
Terms Agreement, and the Terms Agreement has been duly authorized, executed and
delivered by the Company and is a valid, legal and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement of rights to indemnity and contribution thereunder may be limited by
federal or state securities laws or principles of public policy and subject to
the qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles.
A-2
<PAGE>
11. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, and are fully paid and
nonassessable; and the Class A Common Stock conforms in all material respects as
to legal matters to the description thereof incorporated by reference in the
Prospectus.
12. The Incorporated Documents (except for the financial statements
and the notes thereto and the schedules and other financial and statistical
information included therein, as to which no opinion need be expressed), at the
time they were filed with the Commission (or, if any amendment with respect to
any such document was filed, when such document was filed), complied as to form
in all material respects with the requirements of the Exchange Act.
13. The Registration Statement was declared effective under the Act,
and, to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or have been communicated
by the Commission to the Company as being contemplated by it under the Act. The
Registration Statement, as of its effective date, and the Prospectus, as of its
date and as of the Closing Date, comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations thereunder
(except as to the financial statements or other data of a financial or
statistical nature, as to which no opinion need be expressed); such counsel has
no reason to believe that the Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of its date or as of the
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (except as to the financial statements or
other data of a financial or statistical nature, as to which no opinion need be
expressed). The descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings and contracts and other documents
are accurate and fairly present the information required to be shown; and such
counsel does not know of any legal or governmental proceedings required to be
described in the Registration Statement or Prospectus which are not described as
required or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement or any Incorporated Document which are not
described and filed as required; except that such counsel need not express any
opinion as to the financial statements or other data of a financial or
statistical nature contained in the Registration Statement or the Prospectus.
While such counsel need not independently verify nor assume any responsibility
for the accuracy, completeness or fairness of the statements, except as
expressly referred to in the immediately preceding sentence, contained in the
Registration Statement or the Prospectus, the foregoing opinion in the second
and third sentences in this paragraph 13 shall be based upon such counsel's
review and discussion with members of the Travelers Group Inc. legal staff who
participated in the preparation of the Registration Statement and the Prospectus
(including any Incorporated Documents) and any amendments and supplements
thereto (including any such Incorporated Documents), review and discussion of
the contents thereof and the knowledge such counsel has gained in such counsel's
capacity as Senior Vice President, General Counsel and Secretary to the Company,
but without any independent check or verification on such counsel's part.
A-3
<PAGE>
EXHIBIT B-1
-----------
(OPINION OF WILLIAM J. CASAZZA)
(i) No consent, approval, authorization or order of, or filing with, any
court or governmental agency or body of the United States or the State of
New York or the State of Connecticut is required on behalf of Aetna
Services, Inc. ("Aetna") for the sale of the Offered Securities in
accordance with the Terms Agreement, except for such consents, approvals,
authorizations, orders or filings as have been made or obtained under the
Securities Act of 1933, as amended, and such consents, approvals,
authorizations, orders or filings as may be required under state
securities or Blue Sky laws or insurance securities laws of any such
jurisdiction in connection with the purchase and sale and distribution of
the Offered Securities by the Underwriters, and except those which, if
not made or obtained, would not have a material adverse effect on the
sale of the Offered Securities;
(ii) Aetna has the corporate power and authority to sell, assign, transfer and
deliver the Offered Securities to the Underwriters on the Closing Date as
provided in the Terms Agreement; and, upon delivery of such Offered
Securities and payment therefor as contemplated by the Terms Agreement
and assuming the several Underwriters purchased such Offered Securities
in good faith and without notice of an adverse claim within the meaning
of Section 8-102 of the Uniform Commercial Code of the State of New York,
under such Uniform Commercial Code the several Underwriters will acquire
the Offered Securities free of any adverse claim (as defined in such
Section 8-102);
(iii) To my knowledge: the sale of the Offered Securities and the performance
by Aetna of its obligations under the Terms Agreement will not conflict
with or result in a breach or violation by Aetna of any of the terms or
provisions of, or constitute a default by Aetna under, any indenture,
mortgage, deed of trust, loan agreement or other similar agreement or
instrument to which Aetna is party or by which Aetna is bound or to which
any of the property or assets of Aetna is subject, except, in all such
cases, for such conflicts, breaches, violations or defaults as would not
have a material adverse effect on the sale of the Offered Securities; the
sale of the Offered Securities and the performance by Aetna of its
obligations under the Terms Agreement will not result in any violation of
the provisions of the Amended and Restated Certificate of Incorporation
or By-Laws of Aetna; and the sale of the Offered Securities and the
performance by Aetna of its obligations under the Terms Agreement will
not result in any violation of any statute of the United States or the
State of New York or the State of Connecticut or any order, rule or
regulation of any court or governmental agency or body of the United
States or the State of New York or the State of Connecticut having
jurisdiction over Aetna or any of its properties, except such violations
as would not have a material adverse effect on the sale of the Offered
Securities; provided that, with respect to this paragraph (iii) I do not
express any opinion as to any violation of any fraudulent transfer laws
or other antifraud laws or as to any violation of any federal or state
securities laws or Blue Sky or insurance securities laws; and provided
further that, insofar as performance by Aetna of its obligations under
the Terms Agreement is concerned, I do not express any opinion as to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance companies generally;
and
(iv) The Terms Agreement has been duly authorized, executed and delivered by
Aetna.
<PAGE>
EXHIBIT B-2
-----------
(OPINION OF TRAVIS EPES)
(i) No consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required by on behalf of J.P
Morgan Capital Corporation ("Morgan Capital") or Sixty Wall Street Fund,
L.P. ("60WSF") for the sale of the Offered Securities by Morgan Capital
or 60WSF pursuant to the Terms Agreement, except (A) such consents,
approvals, authorizations, orders or filings as have been obtained or
made under the Act, (B) such consents, approvals, authorizations, orders
or filings as may be required under state securities laws and (C) such
consents, approvals, authorizations, orders or filings which if not
obtained would not have a material adverse effect on the sale of the
Offered Securities by Morgan Capital or 60WSF.
(ii) Each of Morgan Capital and 60WSF has the requisite corporate or
partnership power and authority to sell, assign, transfer and deliver the
Offered Securities on the Closing Date as provided in the Terms
Agreement; and, upon delivery of such Offered Securities and payment
therefor as contemplated by the Terms Agreement and assuming the several
Underwriters purchased such Offered Securities in good faith and without
notice of an adverse claim within the meaning of the UCC as in effect in
the State of New York (the "UCC"), the several Underwriters will acquire
the Offered Securities free and clear of any adverse claim within the
meaning of the UCC.
(iii) To my knowledge, neither the execution, delivery and performance of the
Terms Agreement by Morgan Capital or 60WSF or the sale of the Offered
Securities by Morgan Capital or 60WSF will result in (A) a breach or
violation of any of the terms and provisions of, the charter, by-laws or
other organizational documents of either Morgan Capital or 60WSF; (B) the
violation of any statute, any rule, regulation or order of any New York
State or federal governmental agency or body or any New York State or
federal court having jurisdiction over Morgan Capital or 60WSF or any of
their properties; or (C) conflict with, or result in a breach or default
under, any material agreement, indenture, mortgage or other instrument to
which Morgan Capital or 60WSF is a party or by which Morgan Capital or
60WSF is bound, except in the case of clause (A), (B) or (C) above for
any breach, violation, conflict or default that would not have a material
adverse effect on the sale of the Offered Securities by Morgan Capital or
60WSF.
(iv) The Terms Agreement has been duly authorized, executed and delivered by
each of Morgan Capital and 60WSF.
<PAGE>
TRAVELERS PROPERTY CASUALTY CORP.
(A DELAWARE CORPORATION)
CLASS A COMMON STOCK
TERMS AGREEMENT
---------------
June __, 1998
Aetna Services, Inc.
Law & Regulation Affairs RC4A
151 Farmington Avenue
Hartford, CT 06156-3124
J.P. Morgan Capital Corporation
60 Wall Street
New York, NY 10260
Sixty Wall Street Fund, L.P.
60 Wall Street
New York, NY 10260
Travelers Property Casualty Corp.
One Tower Square
Hartford, Connecticut 06103
Dear Sirs:
Reference is made to that certain Underwriting Agreement, dated June
__, 1998 (the "Underwriting Agreement"), among certain stockholders (the
"Selling Stockholders") named therein of Travelers Property Casualty Corp., a
Delaware corporation (the "Company"), J.P. Morgan Securities Inc. ("J.P.
Morgan") and the Company. A copy of the Underwriting Agreement is attached
hereto as Annex A. The provisions of the Underwriting Agreement are incorporated
by reference herein and shall be deemed to be part of this Terms Agreement as if
such provisions had been set forth in full herein.
We understand that, as contemplated by the Underwriting Agreement, the
Selling Stockholders propose to sell, and the Underwriters referred to below,
for whom J.P. Morgan will act as representative (the "Representative"), propose
to purchase, an aggregate of 8,918,395 shares of Class A Common Stock (the
"Common Stock"), $.01
<PAGE>
par value per share, of the Company (the "Registered Securities"). The number
of shares to be sold by each of the Selling Stockholders is set forth on
Schedule I hereto, and the number of shares to be purchased by each of the
Underwriters is set forth on Schedule II hereto.
The statements set forth in the prospectus supplement dated June __,
1998 (the "Prospectus Supplement") under the caption "Underwriting" constitute
the only information furnished by or on behalf of the Underwriters through the
Representative as such information is referred to in Section 8 of the
Underwriting Agreement. The statements set forth in the Prospectus under the
caption "Selling Stockholders" and in the Prospectus Supplement under the
caption "Selling Stockholders" constitute the only information furnished by or
on behalf of the Selling Stockholders as such information is referred to in
Section 8 of the Underwriting Agreement
Subject to the terms and conditions set forth or incorporated by
reference herein, the Underwriters hereby agree, severally and not jointly, to
purchase all of the Registered Securities on the terms set forth below:
Purchase price per share: $
Date, time and location
of delivery of shares: At or about 9:00 a.m
New York City Time
June __, 1998
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Closing date and location: June __, 1998
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
2
<PAGE>
If the terms set forth above are acceptable to you, please indicate
your acceptance of this offer by signing a copy of this Terms Agreement in the
space set forth below and returning the signed copy to us no later than [7:00]
p.m. (New York City time) on June __, 1998.
Very truly yours,
J.P. MORGAN SECURITIES INC.
By:
-------------------------------------
Name:
Title
Accepted:
AETNA SERVICES, INC.
By:
-------------------------------------
Name:
Title
J.P. MORGAN CAPITAL CORPORATION
By:
-------------------------------------
Name:
Title
SIXTY WALL STREET FUND, L.P.
By:
-------------------------------------
Name:
Title
TRAVELERS PROPERTY CASUALTY
CORP.
By:
-------------------------------------
Name:
Title
3
<PAGE>
SCHEDULE I
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Name Number of Shares to be Sold
---- ---------------------------
<S> <C>
Aetna Services, Inc. . . . . . . . . . . . 4,270,697
J.P. Morgan Capital Corporation. . . . . . 4,598,410
Sixty Wall Street Fund, L.P. . . . . . . . 50,997
---------
Total. . . . . . . . . . . . . 8,918,395
=========
</TABLE>
4
<PAGE>
SCHEDULE II
UNDERWRITERS
<TABLE>
<CAPTION>
Name Number of Shares
---- ----------------
<S> <C>
J.P. Morgan Securities Inc. . . . . . . . .
Total. . . . . . . . . . . . . . 8,918,395
=========
</TABLE>
5
<PAGE>
ANNEX A
UNDERWRITING AGREEMENT
----------------------
<PAGE>
Exhibit 23.02
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Travelers Property Casualty Corp.:
We consent to the incorporation by reference in Amendment No. 1 to
the registration statement on Form S-3 of our report on the consolidated
financial statements of the Travelers Property Casualty Corp.
(the "Company") dated January 26, 1998, except for note 1, Accounting
Policies - Earnings per Share, as to which the date is February 3, 1998,
and our report on the related financial statement schedules dated
January 26, 1998, which are incorporated by reference or included in
the 1997 Annual Report on Form 10-K of the Company and which is incorporated
herein by reference.
/s/ KPMG Peat Marwick
Hartford, Connecticut
June 18, 1998
<PAGE>
Exhibit 23.03
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Aetna Services, Inc. (formerly "Aetna Life and Casualty Company"):
We consent to the incorporation by reference in Amendment No. 1 to
the registration statement on Form S-3 of Travelers Property Casualty
Corp. (the "Company") of our report on the combined financial statements
of The Aetna Casualty and Surety Company and The Standard Fire Insurance
Company and their subsidiaries dated February 28, 1996, which are
incorporated by reference in the 1997 Annual Report on Form 10-K of the
Company, and which is incorporated herein by reference. Our report refers
to a change 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/ KPMG Peat Marwick
Hartford, Connecticut
June 18, 1998
<PAGE>
Exhibit 24.02
POWER OF ATTORNEY
Registration Statement on Form S-3
Travelers Property Casualty Corp.
Know All Men By These Presents, that the undersigned, a director of
Travelers Property Casualty Corp., a Delaware corporation (the "Company"),
does hereby constitute and appoint Jay S. Fishman, William P. Hannon and
James M. Michener, and each of them severally, to be my true and lawful
attorneys-in-fact and agents, each acting alone with full power of
substitution and re-substitution, to do or cause to be done any and all acts
and things and to execute any and all instruments and documents which said
attorneys-in-fact and agents, or any of them, may deem advisable or necessary
to enable the Company to comply with the Securities Act of 1933, as amended
(the "Securities Act"), and any rules, regulations and requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
registration under the Securities Act of up to 10,080,319 shares of the
Company's Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), to be offered by the Company for the account of certain stockholders
of the Company, including specifically, but without limiting the generality
of the foregoing, power and authority to sign, in the name and on behalf of
the undersigned as a director of the Company, a Registration Statement on
Form S-3 or another appropriate form in respect of the registration of such
Class A Common Stock and any and all amendments thereto, including
post-effective amendments, and any instruments, contracts, documents or other
writings of which the originals or copies thereof are to be filed as a part
of, or in connection with, any such Registration Statement or amendments, and
to file or cause to be filed the same with the Securities and Exchange
Commission, and to effect any and all applications and other instruments in
the name and on behalf of the undersigned which said attorneys-in-fact and
agents, or any of them, deem advisable in order to qualify or register the
Class A Common Stock under the securities laws of any of the several States;
and the undersigned does hereby ratify all that said attorneys-in-fact or
agents, or any of them, shall do or cause to be done by virtue thereof.
In Witness Whereof, the undersigned has signed these presents this 8th
day of June, 1998.
/s/ Roberto G. Mendoza
--------------------------
(Signature)
