Lawsuits To Cost St. Paul Travelers $ 67 Million
By Diane Levick
The Hartford Courant (Connecticut)
Dec. 08, 2005
The St. Paul Travelers Cos. is expected to pay $ 67.5 million for a previously announced settlement of shareholder litigation stemming from the firm's April 2004 merger, court documents show.
The company said in a federal filing Nov. 22 that it had agreed to settle the 15 lawsuits, proposed as class actions, but would not disclose the amount of the settlement.
The average distribution to stockholders would be a little more than 13 cents a share before court-approved expenses are deducted, according to the notice of the settlement.
Shareholders' amounts will be based on the number of claimants, the shares each purchased and other factors.
Plaintiff attorneys' fees and expenses will come out of the $ 67.5 million. Attorneys plan to ask the U.S. District Court in Minneapolis to approve fees of as much as 15 percent of the settlement, which would be $ 10.1 million, excluding interest.
The attorneys will also seek as much as $ 350,000 in reimbursement for out-of-pocket expenses.
The amended, consolidated case alleged that The St. Paul Cos.' officers and directors knew and failed to disclose that the company had inadequate reserves to cover claims, and that the merger with Hartford-based Travelers Property Casualty Corp. was a bailout. Even after the merger, the truth did not come out until July 2004, when St. Paul Travelers said it would take a $ 1.6 billion charge to boost reserves, the suit said. The stock plunged then, and again in August with a further disclosure.
The settlement is subject to a Dec. 27 fairness hearing and final court approval.
It would cover people who bought St. Paul common shares between Nov. 17, 2003, and April 1, 2004 -- the date of the merger -- exchanged Travelers' shares for St. Paul Travelers shares as a result of the merger, or bought shares of the merged company between April 2, 2004, and Aug. 4, 2004.