St. Paul Travelers Cos. plans to cut 3,000 jobs so it can deliver the savings executives promised investors when The St. Paul Cos. merged with the Travelers Property Casualty Corp.
Layoffs had been expected since The St. Paul and Hartford, Conn.-based Travelers agreed to the $17.9 billion merger, which closed in April.
Chief executive Jay Fishman told securities analysts Friday the company expects to save more than $350 million by reducing its 30,200-member work force by 10 percent.
"We certainly feel very good about that," Fishman said.
Company officials offered no specifics about where layoffs would occur. About 2,700 people work at the headquarters in downtown St. Paul, but the combined company's largest business — commercial and property insurance — is run in Connecticut.
Fishman also told analysts Friday that St. Paul Travelers plans to take a $1.63 billion charge to increase its reserves for future claims. That's much more than many Wall Street analysts had expected.
The insurer said it increased its reserves after adopting Travelers' more conservative approach to calculating reserves. The company said the charge could result in a second-quarter loss of up to $300 million; it has delayed the release of its second-quarter results, previously scheduled for the coming week, to ask securities regulators how it should account for the charge.
Several analysts said they were surprised the charge was so large and questioned why the company did not disclose it earlier.
"The magnitude of this charge is shocking, and it's hard to imagine them missing (the charge) when they were doing their due diligence," said Michael Paisan, an insurance analyst with Legg Mason Wood Walker of Baltimore.
Paisan said Travelers shareholders might have turned down the deal had they known that a charge of this magnitude was around the corner.
St. Paul Travelers' shares have lost nearly 13 percent of their value since the merger was completed. Its stock closed Friday at $35.66, down 2.4 percent from $36.55.
