NEW YORK, Aug. 18, 2004 (PRIMEZONE) -- The New York law firm of Wechsler Harwood today announced that it filed a securities class action complaint against The St. Paul Travelers Companies, Inc. (NYSE:STA) ("St. Paul Travelers") (formerly known as The St. Paul Companies, Inc. or "St. Paul") and certain of its current and former officers and directors, on behalf of former shareholders of Travelers Property Casualty Corp.'s ("Travelers") Class A and Class B common stock who acquired St. Paul's common stock pursuant to a St. Paul registration statement filed with the SEC in connection with St. Paul's stock-for stock merger with Travelers on April 1, 2004 (the "Merger").
The action is pending in the U.S. District Court for the District of Minnesota. The complaint is available from the U.S. District Court and on Wechsler Harwood's website, www.whesq.com.
The Merger was billed as a "merger-of equals" between Travelers' and St. Paul. The complaint alleges that the registration statement issued in connection with the Merger was materially false or misleading because it failed to disclose that (a) there were substantial differences between the accounting and actuarial methods of St. Paul and Travelers, necessitating St. Paul Travelers to increase its claims reserves by $1.171 billion to conform St. Paul's less conservative accounting and actuarial methods to that of Travelers; (b) St. Paul's then-existing exposure to certain adverse financial condition of a construction contractor, a reduction in reinsurance recoverables, and other similar conditions, required St. Paul Travelers to increase its claims reserves by an additional $466 million; and (c) the aggregate $1.637 billion of required increase in claims reserves due to these existing but undisclosed facts relating to St. Paul would require St. Paul Travelers to record a significant charge to its income statement, adversely impacting earnings.
On July 23, 2004, St. Paul Travelers revealed that certain conditions relating to St. Paul required the Company to increase its claims reserves by $1.6 billion. On August 5, 2004, St. Paul Travelers further announced that the required $1.6 billion increase in claims reserves would result in an operating loss of $310 million or $0.47 per basic and diluted share for the quarter.
St. Paul common stock per-share closing price was $40.77 on April 1, 2004, the date on which each share of Travelers' Class A and Class B common stock was exchanged for 0.4334 share of St. Paul common stock pursuant to the materially false or misleading registration statement. When the true extent of required reserve increase and its adverse impact to St. Paul Travelers was fully disclosed to the investing public on August 5, 2004, the per share price of St. Paul common stock had declined by $6.02 or 14.77% to close at $34.75 on August 5, 2004 -- causing massive losses to former Travelers shareholders.
Any member of the Class (defined as any holder of shares of Travelers' Class A or Class B common stock who acquired shares of St. Paul's common stock in connection with St. Paul's stock-for stock merger with Travelers) who desires to be appointed lead plaintiff in the class action must file a motion with the Court no later than October 15, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.