The purchase expands the carrier's distribution network to 500 new agents, complementing the more than 6,500 independent agents offering Travelers' personal lines products. It also increases Travelers' presence in commercial lines.

Travelers said the purchase price was attractive and opens the possibility of acquiring up to approximately $1.5 billion in new net written premiums.

The carrier said it expects the purchase to add net income of approximately $50-$60 million in 2005.

"This transaction is consistent with our strategy of supplementing internal growth through selected acquisitions that complement our core businesses," said Robert I. Lipp, chairman and chief executive officer for Travelers, in a statement. "Royal & SunAlliance's accounts are a great fit with ours, and we believe that their customers, agents and brokers will consider this an excellent opportunity to align themselves with Travelers."

Doug Elliot, chief operating officer for Travelers, told National Underwriter that the carrier is not purchasing any of Royal & SunAlliance's assets, but is looking to hire some of the employees who would otherwise be losing their jobs because of the transaction. He said certain people offer expertise in the accounts Travelers will be looking for.

"I think it's a tough day today at Royal & SunAlliance in some parts of the country," he said.

He said approximately one-third of the business was in personal lines, while the rest was commercial. Travelers will be working quickly over the coming months to secure the accounts and is already reaching out to agents and brokers.

"Speed is critical here," he said.

Mr. Elliot said Travelers did not purchase Royal & SunAlliance's book outright because the process would have taken too long and it would have missed out on the renewal business.

"This was the negotiated path we took," he said.

In a statement, Royal & SunAlliance said the deal "is part of a strategic shift by Royal & SunAlliance worldwide to refocus operations on those markets and businesses where it has a leading position, primarily the United Kingdom, Scandinavia and Canada."

The sale does not include U.S. business in nonstandard personal auto, Grocers Insurance Group, DPIC Insurance, Risk Management global property, Asia Branch and SJA Agency. Royal & SunAlliance said that a range of options are being considered regarding these businesses, including renewal rights transactions and disposals.

Royal & Sun Alliance Insurance Group plc, the parent of Royal & SunAlliance USA, today reported a six-month operating result of $579 million, up from $496 million for the corresponding period in 2002. Globally, the company reported net written premiums of $6.0 billon and a combined operating ratio of 99.3, compared with $7.0 billion and 104.6 for half-year 2002.

For Royal & SunAlliance USA, the half-year combined ratio was 107.4, compared to 111.2 percent for the same period in 2002.

Moody's Investor Services in London said it has placed various ratings of Royal & Sun Alliance Insurance Group on review for possible downgrade and that it has lowered the Royal & SunAlliance USA ratings.

The insurance financial strength ratings of Royal & SunAlliance USA were downgraded by one notch (RSA USA intercompany pool members to Ba1 from Baa3, non-pooled companies to Ba2 from Ba1) and were placed on review for further possible downgrade, Moody's said.