THE ST. PAUL TRAVELERS COMPANIES, INC.

385 Washington Street, St. Paul, MN 55102

Telephone (651) 310-7911

March 17, 2006

Dear Fellow Shareholders:

Please join us for our Annual Meeting of Shareholders on Wednesday, May 3, 2006, at 10:30 a.m. (Central Daylight Time) at the Company’s office at 385 Washington Street, Saint Paul, Minnesota.

The enclosed Notice of Annual Meeting of Shareholders and Proxy Statement describe the business to be conducted at the meeting. We also will report on matters of current interest to our shareholders.

Your vote is important. Whether you own a few shares or many, it is important that your shares be represented. You may vote your shares by internet, by telephone, by completing, signing and promptly returning the proxy card in the envelope provided or by attending the Annual Meeting and voting in person.

We look forward to seeing you at the Annual Meeting.

PROXY VOTING METHODS

If at the close of business on March 8, 2006, you are a shareholder of record or hold shares through a St. Paul Travelers benefit or compensation plan or a broker or bank, you may vote your shares by proxy through the internet, by telephone, by mail, or in person at the Annual Meeting. Please help us save administrative and postage costs by voting through the internet or by telephone. Each proxy voting method is available 24 hours a day. If you are a shareholder of record or hold shares through a broker or bank and are voting by proxy, your vote must be received by 11:59 p.m. (Eastern Daylight Time) on May 2, 2006 to be counted, and you may revoke your proxies at the times and in the manners described on page 4 of the Proxy Statement.

Votes of shares held through a St. Paul Travelers benefit or compensation plan, however, must be received by 11:59 p.m. (Eastern Daylight Time) on April 28, 2006. Those votes cannot be changed or revoked after that time, and those shares cannot be voted in person at the Annual Meeting.

To vote by proxy:

BY INTERNET

·       Go to the web site at www.proxyvote.com, 24 hours a day, seven days a week.

·       Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

BY TELEPHONE

·       From a touch-tone telephone, call the toll-free number printed on your proxy card or electronic notification, 24 hours a day, seven days a week.

·       Have your proxy card in hand when you call and then follow the simple recorded instructions.

BY MAIL

·       Mark your selections on the proxy card.

·       Date and sign your name exactly as it appears on your proxy card.

·       Mail the proxy card in the enclosed postage-paid envelope.

·       Mailed proxy cards must be received no later than May 2, 2006 to be counted before the Annual Meeting. Proxy cards voting shares held through a St. Paul Travelers benefit or compensation plan, however, must be received no later than April 28, 2006 to be counted before the Annual Meeting.

YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.

THE ST. PAUL TRAVELERS COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

This Notice of Annual Meeting, Proxy Statement and accompanying proxy card
are being distributed on or about March 17, 2006.

TABLE OF CONTENTS

TABLE OF CONTENTS (Continued)

THE ST. PAUL TRAVELERS COMPANIES, INC.

385 Washington Street
Saint Paul, Minnesota 55102
Telephone: 651-310-7911

PROXY STATEMENT
Annual Meeting of Shareholders
May 3, 2006
10:30 a.m. (Central Daylight Time)

We are providing these proxy materials in connection with the solicitation by the Board of Directors of The St. Paul Travelers Companies, Inc. (“Company”) of proxies to be voted at the Company’s Annual Meeting of Shareholders to be held on May 3, 2006 (“Annual Meeting”), and at any adjournment of the Annual Meeting. Directors, officers and other Company employees also may solicit proxies by telephone or otherwise. Brokers and other nominees will be requested to solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses.

GENERAL INFORMATION

What am I voting on?

There are four proposals scheduled to be voted on at the meeting:

·       Election of 11 directors;

·       Ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2006;

·       Shareholder proposal relating to the vote required to elect directors, if presented at the Annual Meeting; and

·       Shareholder proposal relating to political contributions, if presented at the Annual Meeting.

Who is entitled to vote?

Shareholders as of the close of business on March 8, 2006 (the “Record Date”) may vote at the Annual Meeting. As of that date, there were 695,987,515 shares of common stock and 449,971 shares of Series B convertible preferred stock outstanding. The holders of common stock and Series B convertible preferred stock vote as one class on all matters at the Annual Meeting. Each share of Series B convertible preferred stock is entitled to eight votes. You have one vote for each share of common stock you held as of the close of business on the Record Date, including shares:

·       Held directly in your name as “shareholder of record” (also referred to as “registered shareholder”);

·       Held for you in an account with a broker, bank or other nominee (shares held in “street name”). Street name holders generally cannot vote their shares directly and instead must instruct the brokerage firm, bank or nominee how to vote their shares;

·       Credited to your account in the Company’s 401(k) Savings Plan; and

·       Held for you by the Company as restricted shares (whether vested or non-vested) under any of the Company’s stock incentive plans.

What constitutes a quorum?

A majority of the aggregate voting power of the shares of common stock and Series B convertible preferred stock entitled to vote, present or represented by proxy, constitutes a quorum for the Annual Meeting. Abstentions are counted as present and entitled to vote for purposes of determining a quorum. Shares represented by “broker non-votes” (see below) also are counted as present and entitled to vote for purposes of determining a quorum. On the Record Date, 695,987,515 shares of the Company’s common stock and 449,971 shares of the Company’s Series B convertible preferred stock were outstanding. Each share of common stock is entitled to one vote, and each share of Series B convertible preferred stock is entitled to eight votes. Therefore, a total of 699,587,283 votes are eligible to be cast at the Annual Meeting. Cumulative voting in the election of directors is not permitted.

How many votes are required to approve each proposal?

Directors are elected by a plurality vote. Each of the other proposals requires the affirmative vote of the greater of (i) a majority of the votes represented in person or by proxy at the Annual Meeting and entitled to vote and (ii) a majority of the voting power of the minimum number of shares entitled to vote that would constitute a quorum at the Annual Meeting.

How are votes counted?

You may vote either “FOR” or “WITHHOLD” for each of the nominees for the Board of Directors. You may vote “FOR,” “AGAINST” or “ABSTAIN” on each of the other proposals. Votes withheld for the election of directors will have no impact on the election of directors. If you abstain from voting on any of the other proposals, it has the same effect on the vote as a vote against the proposal. A broker non-vote with respect to any of the other proposals is not deemed to be present in person or by proxy for the purpose of determining whether a proposal has been approved and, therefore, will have no effect in determining whether the proposal has been approved. If you just sign and submit your proxy card without voting instructions, your shares will be voted “FOR” each director nominee and “FOR” or “AGAINST” the other proposals as recommended by the Board. Voting instructions are being provided separately to current and former employees who hold shares through any of the Company’s benefit or compensation plans.

Who will count the vote?

Representatives of ADP Investor Communication Services will tabulate the votes, and representatives of IVS Associates will act as inspectors of election.

What is a broker non-vote?

If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote (a “broker non-vote”). Shares held by brokers who do not have discretionary authority to vote on a particular matter and who have not received voting instructions from their customers are not counted or deemed to be present or represented for the purpose of determining whether shareholders have approved that matter, but they are counted as present for the purpose of determining a quorum at the Annual Meeting.

How does the Board recommend that I vote?

The Company’s Board recommends that you vote your shares:

·       “FOR” each of the nominees to the Board;

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·       “FOR” the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2006;

·       “AGAINST” the shareholder proposal relating to the vote required to elect directors; and

·       “AGAINST” the shareholder proposal relating to political contributions.

How do I vote my shares without attending the Annual Meeting?

If you are a shareholder of record or hold shares through one of the Company’s benefit or compensation plans, you may vote by granting a proxy. For shares held in street name, you may vote by submitting voting instructions to your broker or nominee. In all circumstances, you may vote:

·       By Internet or Telephone—If you have internet or telephone access, you may submit your proxy by following the voting instructions on the proxy card. If you vote by internet or telephone, you do not need to return your proxy card.

·       By Mail—You may vote by mail by signing and dating your proxy card and mailing it in the envelope provided. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity.

Internet and telephone voting facilities will close at 11:59 p.m. (Eastern Daylight Time) on May 2, 2006 for the voting of shares held by shareholders of record or in street name and at 11:59 p.m. (Eastern Daylight Time) on April 28, 2006, for the voting of shares held by current and former employees through a Company benefit or compensation plan.

Mailed proxy cards with respect to shares held of record or in street name must be received no later than May 2, 2006.

Mailed proxy cards with respect to shares held by current and former employees through a Company benefit or compensation plan must be received no later than April 28, 2006.

How do I vote my shares in person at the Annual Meeting?

First, you must satisfy the requirements for admission to the Annual Meeting (see below). Then, if you are a shareholder of record and prefer to vote your shares at the Annual Meeting, you must bring the enclosed proxy card or proof of identification. You may vote shares held in street name at the Annual Meeting only if you obtain a signed proxy from the record holder (broker or other nominee) giving you the right to vote the shares.

Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by internet, telephone or proxy card so that your vote will be counted even if you later were to decide not to attend the Annual Meeting.

Shares held by current and former employees through a Company benefit or compensation plan cannot be voted in person at the Annual Meeting.

What does it mean if I receive more than one proxy card?

It generally means you hold shares registered in more than one account. To ensure that all your shares are voted, please sign and return each proxy card or, if you vote by internet or telephone, vote once for each proxy card you receive.

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May I change my vote or revoke my proxy?

Yes. Whether you have voted by mail, internet or telephone, if you are a shareholder of record or hold shares in street name, you may change your vote and revoke your proxy by:

·       Sending a written statement to that effect to the Company’s Corporate Secretary or to any other corporate officer of the Company, provided such statement is received not later than May 2, 2006;

·       Voting again by internet or telephone at a later time before closing of those voting facilities at 11:59 p.m. (Eastern Daylight Time) on May 2, 2006;

·       Submitting a properly signed proxy card with a later date that is received no later than May 2, 2006; or

·       Attending the Annual Meeting, revoking your proxy and voting in person.

If you are a current or former employee and hold shares through a St. Paul Travelers benefit or compensation plan, you may change your vote and revoke your proxy by any of the first three methods listed above if you do so no later than 11:59 p.m. (Eastern Daylight Time) on April 28, 2006. You cannot, however, revoke or change your proxy after that date, and you cannot vote those shares in person at the Annual Meeting.

Do I need a ticket to be admitted to the Annual Meeting?

You will need an admission ticket or proof of ownership to enter the Annual Meeting. An admission ticket is attached to your proxy card if you hold shares directly in your name as a shareholder of record. If you plan to attend the Annual Meeting, please vote your proxy but keep the admission ticket and bring it with you to the Annual Meeting.

If your shares are held beneficially in the name of a bank, broker or other holder of record and you plan to attend the Annual Meeting, you must present proof of your ownership of The St. Paul Travelers Companies, Inc. stock, such as a bank or brokerage account statement, to be admitted to the Annual Meeting. If you would rather have an admission ticket, you can obtain one in advance by mailing a written request, along with proof of your ownership of St. Paul Travelers stock, to:

St. Paul Travelers
Shareholders Relations Department
One Tower Square
Hartford, CT  06183

Do I need to present identification to be admitted to the Annual Meeting?

In all events, shareholders also must present a form of personal identification in order to be admitted to the Annual Meeting.

No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting.

Could other matters be decided at the Annual Meeting?

At the date this Proxy Statement went to press, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement.

If other matters are properly presented at the Annual Meeting for consideration, the persons named in your proxy card, if you are a shareholder of record, will have the discretion to vote on those matters for you.

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Who will pay for the cost of this proxy solicitation?

We will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by directors, officers or employees (for no additional compensation) in person or by telephone, electronic transmission and facsimile transmission. We have hired Morrow & Co. to distribute and solicit proxies. We will pay Morrow & Co. a fee of $14,000, plus reasonable expenses, for these services.

ITEM 1—ELECTION OF DIRECTORS

There are currently 12 members of the Board of Directors (the “Board”). On February 7, 2006, the Board, upon recommendation of its Governance Committee, unanimously nominated the 11 directors listed below for re-election to the Board at the Annual Meeting. Clarence Otis, who currently serves as a director, previously had informed the Governance Committee that he would not be available to stand for re-election. The Company thanks Mr. Otis for his counsel and contributions to both the Company and to Travelers Property Casualty Corp. (“Travelers”) before the merger of Travelers with a subsidiary of The St. Paul Companies, Inc. (“St. Paul”) on April 1, 2004 (the “Merger”).

The directors elected at the Annual Meeting will hold office until the 2007 annual meeting of shareholders and until their successors are duly elected and qualified. Unless otherwise instructed, the persons named in the accompanying proxy form (the “proxyholders”) intend to vote the proxies held by them for the election of the 11 nominees named below. The proxies cannot be voted for more than 11 candidates for director. If any of the 11 nominees ceases to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.

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NOMINEES FOR ELECTION AS DIRECTORS

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NOMINEES FOR ELECTION AS DIRECTORS

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NOMINEES FOR ELECTION AS DIRECTORS

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NOMINEES FOR ELECTION AS DIRECTORS

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NOMINEES FOR ELECTION AS DIRECTORS

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NOMINEES FOR ELECTION AS DIRECTORS

*                    Prior to becoming directors of the Company on April 1, 2004, the following individuals were directors of Travelers from the dates indicated until the Merger:  Mr. Disharoon, since May 2002; Mr. Lipp, since December 2001; Ms. McGarvie, since July 2003; and Ms. Thomsen, since September 2002.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.

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COMMITTEES OF THE BOARD AND MEETINGS

There are six standing committees of the Board: the Audit Committee, the Executive Committee, the Investment and Capital Markets Committee, the Compensation Committee, the Governance Committee and the Risk Committee. The Board has adopted a written charter for each of the Committees, copies of which are posted on the Company’s website at www.stpaultravelers.com. The following table summarizes the current membership of the Board and of each of its Committees, as well as the number of times the Board and each Committee met during 2005.

Each director attended 75% or more of the total number of meetings of the Board and of the Committees on which the director served, except Ms. Dolan, who attended 73% of such Board and Committee meetings. In April 2005, Ms. Dolan began serving a thirteen month unpaid commitment as a member of the Securities and Exchange Commission’s (“SEC”) Advisory Committee on Smaller Public Companies and chair of its Subcommittee on Internal Controls. Some of the 2005 meetings of that committee and subcommittee conflicted with the Company’s Board and Committee meetings, causing her 2005 attendance at Company Board and Committee meetings to fall below 75%. Although Ms. Dolan did not and does not have any authority over the scheduling of the meetings of either of that SEC committee or subcommittee, she does not expect any further scheduling conflicts over the remainder of her service to the SEC, which will end in May 2006.

Audit Committee

The Board has determined that all members of the committee are “independent,” as defined by the Company’s Governance Guidelines, the New York Stock Exchange (“NYSE”) listing standards applicable to audit committees and the Board in general and Section 301 of the Sarbanes-Oxley Act of 2002, and that the members of the Committee meet the independence and financial literacy and expertise requirements of the NYSE. The Board also has determined that Mr. Dasburg’s qualities, his experience with KPMG Peat Marwick from 1973 to 1980 and his service as a KPMG Tax Partner from 1978 to 1980, his experience as Chief Financial Officer of Marriott Corporation, as Chief Executive Officer of Northwest Airlines, Burger King Corporation and ASTAR Air Cargo, Inc., and his service on the audit committees of other public companies, all qualify him as an audit committee financial expert, and he has been so designated.

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The duties and responsibilities of the Audit Committee are contained in its charter, which is included as Annex A to this Proxy Statement, and include the following:

·       Serve as an independent and objective body to assist the Board in its oversight of the Company’s financial reporting principles and policies and internal controls and procedures;

·       Review and evaluate the qualifications, performance and independence of the Company’s independent registered public accounting firm;

·       Review and pre-approve the audit and non-audit services and proposed fees of the independent registered public accounting firm;

·       Review reports and other communications between management and the independent registered public accounting firm with respect to that firm’s  evaluation of the design or operation of internal controls;

·       Select the Company’s independent registered public accounting firm; and

·       Review and evaluate the work of the Company’s internal audit unit.

Executive Committee

The Board has granted to the Executive Committee, subject to certain limitations, the broad responsibility of having and exercising the authority of the Board in the oversight of the business of the Company in the interval between meetings of the Board.

The Executive Committee meets only as necessary.

Investment and Capital Markets Committee

The Investment and Capital Markets Committee assists the Board in exercising its oversight of management’s investment of the Company’s investment portfolio and certain financial affairs of the Company, including its financial structure with respect to Company debt and equity financing; dividend policy and actions, stock splits, repurchases of stock or other securities, capital needs and financing agreements, and financial strategies regarding risk.

The Committee also reviews and recommends appropriate Board action with respect to, among other matters, the issuance of securities, the establishment of bank lines of credit, certain purchases and dispositions of real property and acquisitions and divestitures of assets.

Compensation Committee

The Compensation Committee, which the Board has determined consists entirely of “independent” directors as defined by the Company’s Governance Guidelines and NYSE listing standards, assists the Board in carrying out its responsibilities with respect to (a) Chairman and Chief Executive Officer (“CEO”) compensation and performance, (b) compensation for the executive management group, (c) executive compensation programs, (d) employee benefit programs and (e) personnel policies. The duties and responsibilities of the Compensation Committee include reviewing and approving:

·       The general compensation philosophy of the Company;

·       All employment and severance contracts of executive officers of the Company;

·       Stock ownership guidelines for the Chairman and CEO and the executive management team, and monitoring compliance therewith; and

·       The compensation, performance goals and objectives of the CEO and of the CEO’s direct reports.

Pursuant to its charter, the Compensation Committee has delegated its authority to an Executive Compensation Subcommittee with respect to compensation actions for the CEO, the Named Executives whose compensation is reported in this Proxy Statement, the Company’s executive officers who are subject to Section 16 of the Securities Exchange Act of 1934, and the members of the Management Committee, which includes all executives who report directly to the CEO.

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Governance Committee

The Governance Committee provides counsel to the Board with respect to its organization, membership and function, committee structure, director compensation, executive succession and corporate governance. The Board has determined that each member of the Governance Committee is “independent” as defined by the Company’s Governance Guidelines and NYSE listing standards. The functions of the Governance Committee include:

·       Identifying qualified persons for election and re-election as directors or for appointment to any committee of the Board; and

·       Reviewing the criteria for Board membership and the Board’s composition, and making appropriate recommendations for changes.

The Governance Committee weighs the independence, skills, characteristics and experience of potential candidates for election to the Board and recommends nominees for director to the full Board. In considering candidates for the Board, the Governance Committee assesses the overall composition of the Board, considering its age, skills, backgrounds, diversity, contacts in the insurance industry or other industries relevant to the Company’s business and ability and willingness to commit adequate time to Board and Committee matters. As the application of these factors involves the exercise of judgment, the Governance Committee does not have a set of minimum qualifications that a nominee must meet for a position on the Board.

In identifying prospective director candidates, the Governance Committee seeks referrals from other members of the Board, management, shareholders and other sources. The Governance Committee also may, but need not, retain a professional search firm in order to assist it in these efforts. The Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. When considering director candidates, the Governance Committee seeks individuals with backgrounds and qualities that, when combined with those of the Company’s incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness.

The Governance Committee will consider director candidates submitted by shareholders, and shareholders who would like to propose a director candidate for consideration may do so by submitting the proposed candidate’s full name and address, resumé and biographical information to the attention of the Corporate Secretary, The St. Paul Travelers Companies, Inc., 385 Washington Street, Saint Paul, Minnesota 55102. All proposals for nomination received by the Corporate Secretary will be presented to the Governance Committee for its consideration.

Risk Committee

The Risk Committee provides counsel to the Board with respect to exercising its oversight of the operational activities of the Company and the timely identification, mitigation and management of those risks that could have a material impact on the Company. The functions of the Risk Committee are to review and advise the Board regarding the Company’s strategies, processes and controls pertaining to the underwriting of insurance, settlement of claims, management of catastrophe exposure, retention of insured risk and appropriate levels of reinsurance, credit risk exposure, business continuity and crisis management.

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NON-EMPLOYEE DIRECTOR COMPENSATION

The Governance Committee of the Board recommends to the full Board for approval the amount and composition of Board compensation for non-employee directors (the “Director Compensation Program”). Directors who are Company employees are not compensated for their service on the Board. The Governance Committee reviews the importance and appropriateness of each of the components of the Director Compensation Program at least once every two years. The objectives of the Governance Committee are to compensate directors in a manner that closely aligns the interests of directors with those of our shareholders, to attract and retain highly qualified directors and to structure and set total compensation in such a manner and at such levels that will not call into question any director’s objectivity.

It is the Board’s practice to provide a mix of cash and equity-based compensation to non-employee directors.

The 2005 compensation of non-employee directors is displayed in the chart below and explained in the following paragraphs:

*                    On May 3, 2005, non-employee directors were granted options to purchase 4,237 shares of the Company’s common stock at an option exercise price of $35.98 per share. Those options had a modified Black-Scholes value of $40,000.

**             Mr. Lipp started receiving compensation as a non-employee director upon his retirement as Chairman of the Company on September 12, 2005.

Retainer and Fees.   The Director Compensation Program  provides non-employee directors with compensation comprised of a $50,000 annual retainer for services as a director. The chair of the Audit Committee is paid an additional $25,000 annually, the chair of the Compensation Committee is paid an additional $20,000 annually and the chair and co-chairs of the Risk, Governance and Investment and Capital Markets Committees are each paid an additional $15,000 annually. In addition, each non-employee director is entitled to reimbursement of up to $5,000 each year (plus travel and related business expenses) for participation in director education programs. Expenditures for director education that from time to time exceed such amount may be approved at the discretion of the Chairman.

Deferred Stock Awards.   Immediately after and as of the date of each of the Company’s annual meetings of shareholders, each non-employee director is awarded $50,000 of deferred common stock units, which vest one year after the date of award. The value of each unit on the date of grant is equal to the closing price of one share of common stock on the business day immediately preceding the date of the award. These awards are made under the Company’s 2004 Stock Incentive Plan. Dividend equivalents (in an amount equal to the common stock dividends)

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attributable to the deferred common stock units are deemed “reinvested” in additional deferred common stock units. The accumulated deferred common stock units in a director’s account are distributed in the form of shares of the Company’s common stock, at the director’s election, either in a lump sum or in annual installments beginning at least six months following termination of service as a director.

Stock Options.   Immediately after and as of the date of each of the Company’s annual meetings of shareholders, nonqualified stock option grants with a $40,000 Black-Scholes (or similar) value on the date of grant are made to each non-employee director under the Company’s 2004 Stock Incentive Plan. Such options have an exercise price equal to the closing price of a share of common stock on the business day immediately preceding the date of grant and become exercisable one year after the date of grant. These options terminate 10 years after the date of grant, or at any earlier time set by the Compensation Committee at the time of option grant. Special provisions apply in the case of the death of an optionee. In addition, prior to, upon or after a Change of Control of the Company, as defined in the Company’s 2004 Stock Incentive Plan, the Compensation Committee may in its discretion take certain actions with respect to options, including making certain adjustments to the options.

Director Deferral Plan.   Directors may elect to have all or any portion of their annual retainer and any committee chair or co-chair fees paid in cash or in common stock or deferred through the Company’s Deferred Compensation Plan for Non-Employee Directors. Deferrals are notionally “invested” in deferred Company common stock units. Any director who elects to have any of his or her fees paid in common stock or credited to his or her Deferred Compensation Plan account as deferred stock units will be deemed to have purchased shares on the date the fees would otherwise have been paid in cash, based on the fair market value of the Company’s common stock on such date. The value of deferred stock units rises or falls as the price of Company common stock fluctuates in the market. In addition, dividend equivalents (in an amount equal to the dividends payable on shares of Company common stock) on those units are “reinvested” in additional deferred stock units. Distributions are made in the form of shares of Company common stock on pre-designated dates, usually following termination of service as a director. Shares of common stock issued in payment of current or deferred fees are awarded under the Company’s 2004 Stock Incentive Plan, which previously has been approved by shareholders.

Legacy Directors’ Charitable Award Program.   Prior to the Merger, directors of St. Paul participated in a Directors’ Charitable Award Program, pursuant to which each director could designate up to four tax-exempt charitable, educational, or other organizations to receive contributions from St. Paul over a period of ten years following the death of the director, in an aggregate amount of up to $1 million per director. All St. Paul directors on April 1, 2004 became fully vested in this program, upon the consummation of the Merger. This program has been discontinued; however, it continues to be actively administered with respect to the vested interests of former St. Paul directors, including Ms. Dolan and Messrs. Dasburg, Duberstein, Fishman, Graev, Hodgson and Nelson. All donations ultimately paid by the Company under this program should be deductible against Federal and other income taxes payable by the Company.

Mr. Lipp’s 2005 Compensation.   Mr. Lipp served as the Company’s Executive Chairman from April 1, 2004 through his retirement on September 12, 2005, and he continues to serve the Company as a director. From January 1, 2005 until his retirement, Mr. Lipp was paid $696,795 in salary. In addition, as part of his compensation, Mr. Lipp was awarded 8,791 shares of restricted stock and 100,506 stock options in January 2005. In February 2006, the Executive Compensation Subcommittee awarded him a $1,000,000 cash bonus for his service as Executive Chairman during 2005. Since September 12, 2005, Mr. Lipp has been compensated as a non-employee director.

GOVERNANCE OF YOUR COMPANY

The Governance Guidelines, Code of Business Conduct and Ethics, Committee charters and

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other corporate governance information are available on the Corporate Governance page of the Investors section on the Company’s website at www.stpaultravelers.com and in print to any shareholder who requests them by contacting the Corporate Secretary at The St. Paul Travelers Companies, Inc., 385 Washington Street, St. Paul, MN  55102.

Governance Guidelines

The Company’s commitment to good corporate governance is reflected in its Governance Guidelines, which describe the Board’s views on a wide range of governance topics. These Governance Guidelines, which are included as Annex B to this Proxy Statement, are reviewed regularly by the Governance Committee and, to the extent deemed appropriate in light of emerging practices, revised accordingly, upon recommendation to and approval by the full Board.

Certain of the significant corporate governance practices that have been implemented by the Board are described below.

Code of Business Conduct and Ethics

The Company maintains a Code of Business Conduct and Ethics (the “Code of Conduct”), which is applicable to all directors, officers and employees of the Company, including its Chief Executive Officer, Chief Financial Officer, Controller and other senior financial officers. This Code of Conduct sets forth the Company’s policies and expectations on a number of topics, including conflicts of interest, compliance with laws, use of Company assets and business ethics.

The Company has maintained an Ethics hotline since May 2003 for employees to report integrity concerns or seek guidance regarding a policy or procedure. The Ethics hotline is serviced by an independent company and is available  7 days a week, 24 hours a day. The hotline has a toll free number for U.S.- based employees, as well as a toll-free international number for employees based outside the U.S. Employees who contact the Ethics hotline may choose to remain anonymous. No employees shall be subject to retaliation or discipline as a result of any good faith report made by them. The Company has a formal no retaliation policy. Once a complaint is alleged, the report is forwarded to the Company’s Chief Compliance Officer who is responsible for oversight of the hotline. The Chief Compliance Officer will investigate the matter, and the issue will not be closed until it has been addressed to his satisfaction. Any matter reported to the Chief Compliance Officer that involves accounting, internal control or audit matters, or any fraud involving persons with a significant role in the Company’s internal controls, is reported promptly to the Audit Committee.

The Company’s Chief Compliance Officer oversees adherence to the Code of Conduct in addition to overseeing the Company’s compliance functions throughout the businesses.

The Chief Compliance Officer assists in the broad communication of the Code of Conduct, oversees employee education regarding its requirements, including online compliance training, and ensures certification by all employees as to their familiarity and compliance with the Code of Conduct.

The Governance Committee regularly reviews the Code of Conduct and proposes any amendments that it deems appropriate to the full Board for consideration.

In 2005, the Company also designated an individual as both the Company’s Business Conduct Officer and Chair of the Business Practices Committee. Concurrent with the announcement, the Company established a Producer Protocol Question and Answer Forum, as well as a helpline to answer questions from employees relating to our interactions with agents and brokers.

Stock Ownership Targets

The Board has established Company common stock ownership targets for each non-employee director in amounts valued at four times the director’s annual retainer (currently $50,000 per year). Each new director is expected to meet or exceed this $200,000 target within four years of his or her initial election to the Board. All of the Company’s directors have achieved stock

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ownership levels in excess of the applicable multiple required.

Director Age Limit

The Governance Guidelines provide that each director who will have reached the age of 72 on or before the date of the next annual shareholders’ meeting shall not stand for re-election at the subsequent annual meeting of the shareholders without an express waiver by the Board.

This year, the Board waived this age limit with respect to Mr. Disharoon so as to continue to benefit from his advice, counsel, and experience for one additional year.

Director Independence and Independence Determinations

Under the Governance Guidelines and NYSE rules, the Board must have a majority of directors who meet the applicable NYSE criteria for independence. The Board must determine, based on all of the relevant facts and circumstances, whether each director satisfies the criteria for independence, which require that (i) a director not have a direct or indirect material relationship with the Company, and (ii) the director otherwise meets the bright-line test for independence set forth by the NYSE rules.

The Board has established director independence categorical standards to assist it in making independence determinations. These standards are set forth on page B-4 under “Director Independence” in the Company’s Governance Guidelines, which are included as Annex B to this Proxy Statement.

In the event a director has any relationship with the Company that is not addressed by the independence guidelines, the independent members of the Board determine whether such relationship is material.

The Board annually reviews all commercial and charitable relationships of directors.

Based upon its independence guidelines, the Board has determined that all of the Company’s non-employee director nominees for election at the Annual Meeting, other than Mr. Lipp, are independent.

During 2005, Mr. Graev was Of Counsel at King & Spalding LLP, a law firm which provided legal services to the Company during 2005 and continues to provide services to the Company in 2006. The Board considered the fact that Mr. Graev did not provide services to the Company since he became a director of St. Paul. Furthermore, as Of Counsel, Mr. Graev did not share in the profits of King & Spalding LLP, and no portion of his compensation was dependent in any manner on his relationship with the Company. In view of these facts, the Board determined that these relationships have not impaired Mr. Graev’s independence. Mr. Graev resigned from his Of Counsel position with King & Spalding LLP, effective January 31, 2006.

Mr. Lipp, who was an executive officer of the Company until September 1, 2005, and Mr. Fishman, who is an executive officer of the Company, do not satisfy the independence guidelines. Therefore, if all of the director nominees are reelected to the Board, approximately 82% of the directors on the Board will be independent. The Board previously determined that all current directors, other than Messrs. Fishman and Lipp, are independent, and accordingly, approximately 83% of the directors on the Board, as currently composed, are independent.

Executive Sessions

Executive sessions, which are meetings of the non-employee members of the Board (including those who may not be independent), are regularly scheduled throughout the year. The co-chairpersons of the Governance Committee, currently Mr. Disharoon and Dr. Nelson, chair all executive sessions of the Board and serve as the focal point for discussions among non-employee directors. In addition, at least once a year, the independent directors meet in a private session that excludes management and any non-employee directors who are not independent. The Audit, Compensation and Governance Committees meet regularly in executive session.

Board and Committee Evaluations

Every year, the Board and each of its Committees evaluates their respective performance and effectiveness. Each director

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completes a questionnaire developed by the Governance Committee to solicit feedback on specific aspects of performance. The responses are collected and compiled by the Corporate Secretary in advance of the self-evaluation meetings and reported by the Governance Committee to the full Board. Each Committee’s self-assessments are based on the terms of its charter. As an outcome of the evaluation process, the Board and Committees develop recommendations to enhance their effectiveness over the next year.

Shareholder Communications

As described on the Company’s website at www.stpaultravelers.com, shareholders and other interested parties who wish to communicate with a member or members of the Board, including either co-chair of the Governance Committee, the non-employee directors as a group or the Audit Committee, may do so by addressing their correspondence as follows: if intended for the full Board, to the Chairman of the Board; if intended for one or more non-employee directors, to either co-chair of the Governance Committee; and if intended for the Audit Committee, to the chairman of the Audit Committee. All such correspondence should be sent to the following address: Corporate Secretary, The St. Paul Travelers Companies, Inc., 385 Washington Street, St. Paul, Minnesota 55102. The office of the Corporate Secretary will forward all such correspondence to the appropriate person or persons.

Annual Meeting of Shareholders

The Company encourages and expects all of the directors to attend each annual meeting of shareholders. To that end, and to the extent reasonably practicable, the Company regularly schedules a meeting of the Board on the same day as the annual meeting of shareholders. All but one of the Company directors were present at the 2005 annual meeting of the Company’s shareholders.

Compensation Committee Interlocks and Insider Participation

None of the members of the Board who served on the Compensation Committee during 2005 was ever an officer or employee of the Company or of any of its subsidiaries. As noted above under “Director Independence and Independence Determinations”, Mr. Graev, a member of the Compensation Committee (but not of the Executive Compensation Subcommittee), was Of Counsel at King & Spalding LLP during 2005 and January 2006.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Aircraft Lease

LCG Enterprises LLC, a limited liability company of which Mr. Lipp is the sole member (“LCG”), owns and, until November 1, 2005, leased to The Travelers Indemnity Company (“Indemnity”), a subsidiary of the Company, a Falcon 50 aircraft on a month-to-month basis for business purposes. Pursuant to the lease, which had been in place since May 2002, Indemnity was responsible for the operation and maintenance of the aircraft and paid to LCG $989 per hour of actual flight time. Indemnity did not incur an hourly charge when the aircraft was not used or when Mr. Lipp used the aircraft for personal reasons. Mr. Lipp could use the aircraft and other Company-owned aircraft for personal travel, and he agreed to reimburse the Company for his personal use of any of the aircraft at the maximum non-charter rate permitted by the Federal Aviation Administration rules. From January 1, 2005 through November 1, 2005, the Company paid $15,033 to LCG for use of the aircraft, and Mr. Lipp reimbursed the Company $386,752 for his personal use of Company aircraft. The lease was terminated and this LCG aircraft discontinued use of the Company’s hangar on November 1, 2005.

Legal Services

As noted above, King & Spalding LLP provided legal services to the Company in 2005 and continues to provide services to the Company in 2006. Mr. Graev, a director of the Company, was Of Counsel at this law firm during 2005 and until January 31, 2006, when he resigned from that position.

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Investment Banking Services

Mr. Lipp, a director of the Company, is an executive officer and director of JPMorgan Chase & Co., the parent company of the investment banking firm J.P. Morgan Securities Inc. (“JPMSI”). JPMSI performed investment banking services for the Company during 2005, and JPMSI may perform such services for the Company during 2006. Subsidiaries of JPMorgan Chase & Co. also participate in the Company’s $1 billion credit facility, provide cash management and custody services to the Company, serve as trustee with respect to various securities issued by the Company or its affiliates and act as trustee for certain of the Company’s employee benefit plans.

CERTAIN LITIGATION MATTERS

Two derivative actions have been brought in the United States District Court for the District of Minnesota against all of the Company’s current directors and certain of the Company’s former Directors, naming the Company as a nominal defendant:  Rowe v. Fishman, et al. (Oct. 22, 2004) and Clark v. Fishman, et al. (Nov. 18, 2004). The derivative actions have been consolidated for pretrial proceedings as Rowe, et al. v. Fishman, et al. (“Rowe”) and a consolidated derivative complaint has been filed. The consolidated derivative complaint asserts state law claims, including breach of fiduciary duty, in connection with the Company’s alleged failure to make disclosure regarding the value of its loss reserves, the Company’s practice of paying brokers commissions on a contingent basis, the Company’s alleged involvement in a conspiracy to rig bids and the Company’s allegedly improper use of finite reinsurance products. On June 10, 2005, the Company and the other defendants in Rowe moved to dismiss the complaint. Oral argument on the motion to dismiss was presented on September 19, 2005. The Company is obligated to the extent provided under Minnesota law to indemnify its officers and directors in respect of these lawsuits and other lawsuits arising out of alleged similar facts and circumstances. The Company retained special counsel, who determined that the directors were entitled to advances of their costs of defense under the Minnesota Business Corporation Act. Accordingly, the Company has advanced officers and directors attorneys’ fees and other expenses they may have incurred in defending Rowe v. Fishman, et al. and Clark v. Fishman, et al. To date, the Company has advanced approximately $367,000.

ITEM 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected KPMG to serve as our independent registered public accounting firm for 2006.

Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of KPMG to our shareholders for ratification because we value our shareholders’ views on the Company’s independent registered public accounting firm. If our shareholders fail to ratify the selection, it will be considered as notice to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.

Representatives of KPMG will be present at the Annual Meeting to answer questions. They also will have the opportunity to make a statement if they desire to do so.

The shares represented by your proxy will be voted for the ratification of the selection of KPMG unless you specify otherwise. KPMG has served as the independent registered public accounting firm of the Company (including St. Paul and its subsidiaries prior to the Merger) since 1968 and of Travelers and its predecessors from December 1993 until the Merger.

Your Board of Directors unanimously recommends that you vote FOR the ratification of KPMG as our independent registered public accounting firm for 2006.

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Audit and Non-Audit Fees

In connection with the audit of the 2005 financial statements, the Company entered into an engagement agreement with KPMG which set forth the terms by which KPMG will perform audit services for the Company. That agreement provides for alternative dispute resolution procedures and an exclusion of punitive damages.

The following table presents fees for professional services rendered by KPMG for (i) the audit of the Company’s financial statements for the period April 1, 2004 through December 31, 2004 and for 2005 and fees billed for other services rendered by KPMG for those periods; and (ii) the audit of St. Paul’s and Travelers’ financial statements for the period January 1, 2004 through March 31, 2004, and fees billed for other services rendered by KPMG during that period. During 2004, the Company, on behalf of Nuveen Investments, Inc. (“Nuveen”), paid $457,000 of audit fees, $44,500 of audit-related fees, and $92,750 of tax fees to KPMG for services provided to Nuveen. Those amounts are included in the table below. During 2005, the Company sold its 79% ownership of Nuveen, and the Company made no payments to KPMG on Nuveen’s behalf in 2005.

(1)                The Company began incurring costs and paying fees following the Merger on April 1, 2004. Prior to that date, for the period January 1, 2004 through March 31, 2004, St. Paul and Travelers incurred costs and paid fees individually. Therefore, all information presented in the table for St. Paul and Travelers for 2004 relates only to the period January 1, 2004 through March 31, 2004, and all information regarding the Company for 2004 relates to the period April 1, 2004 through December 31, 2004.

(2)                For the Company, and for each of St. Paul and Travelers individually prior to the Merger, fees paid were for audits of financial statements, reviews of quarterly financial statements and related reports and reviews of registration statements and certain periodic reports filed with the Securities and Exchange Commission (“SEC”).

(3)                In 2004 and 2005, services for the Company primarily consisted of audits of employee benefit plans, statutory reserve reporting services and reports on internal controls not required by applicable regulations. In 2004, services for St. Paul primarily consisted of fees for Sarbanes-Oxley Act documentation assistance, consultation related to financial accounting and reporting standards, review of regulatory filings, consultation regarding proposed transactions and audit work on benefit plans and funds and other attestation and certification services. Professional services received by Travelers in 2004 were related primarily to the audits of employee benefit plans

(4)                In 2004 and 2005, tax fees paid by the Company related primarily to domestic and international tax planning and tax return preparation and assistance services, and tax services related to Company expatriates.

The Audit Committee of the Board considered whether providing the non-audit services shown in this table was compatible with maintaining KPMG’s independence, and concluded that it was.

Consistent with SEC policies regarding auditor independence and the Audit Committee’s charter, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. In exercising this responsibility, the Audit Committee preapproves all audit and permitted non-audit services provided by the independent registered public accounting firm. Each year, the Audit Committee approves an annual budget for

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such permitted services and requires the independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year. The Audit Committee has authorized the Company’s chief auditor to approve KPMG’s commencement of work on permitted services within that budget, although the chair of the Audit Committee must approve any permitted service within the budget if the expected cost for that service exceeds $100,000. During the year, circumstances may arise that make it necessary to engage the independent registered public accounting firm for additional services that would exceed the initial budget. The Audit Committee has delegated the authority to the Committee chair to review such circumstances and to grant approval when appropriate. All such approvals are then reported by the Audit Committee chair to the full Audit Committee at its next meeting.

Report of the Audit Committee

The role of the Audit Committee is to assist the Board in its oversight of the Company’s financial reporting process. The Board has determined that Mr. Dasburg is an “audit committee financial expert,” as defined in SEC rules. The Board based its determination on Mr. Dasburg’s professional experience, as previously described, and his service on the audit committees of other companies.

The Audit Committee operates pursuant to a charter which is reviewed annually by the Committee. Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under the discussion of “Audit Committee.”  Under the Audit Committee charter, management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting principles and the Company’s internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America.

In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial statements of the Company with management and with the independent registered public accounting firm. The Committee also discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, Communication with Audit Committees. In addition, the Audit Committee received the written disclosures from the independent registered public accounting firm required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees and discussed with the independent registered public accounting firm their independence.

Based upon the review and discussions described in the preceding paragraph, the Company’s Audit Committee recommended to the Board that the audited financial statements of the Company be included in the Annual Report on Form 10-K for the year ended December 31, 2005 filed with the SEC.

Submitted by the Audit Committee of the Company’s Board of Directors:

John H. Dasburg (Chair), Janet M. Dolan, Thomas R. Hodgson, Clarence Otis, Jr. and Laurie J. Thomsen.

SHAREHOLDER PROPOSALS

We expect the following proposals (Items 3 and 4 on the proxy card) to be presented by shareholders at the Annual Meeting. We are printing the proposals in the order in which we received them. The first proposal was submitted by The United Brotherhood of Carpenters and Joiners of America, 101 Constitution Avenue, NW, Washington D.C. 20001, which states that it is the beneficial owner of approximately 10,900 shares of the Company’s common stock. The second proposal was submitted by Calvert Asset Management Company, Inc., 4550 Montgomery Avenue, Bethesda, Maryland 20814, which states that it is the beneficial owner of approximately 11,851 shares of the Company’s common stock. The Board of Directors has recommended a vote against each of these proposals for the reasons set forth following each proposal.

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ITEM 3

SHAREHOLDER PROPOSAL RELATING TO THE VOTE REQUIRED TO ELECT DIRECTORS

Resolved:   That the shareholders of The St. Paul Travelers Companies, Inc. (“Company”) hereby request that the Board of Directors initiate the appropriate process to amend the Company’s articles of incorporation to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders.

Supporting Statement:   Our Company is incorporated in Minnesota. Among other issues, Minnesota corporate law addresses the issue of the level of voting support necessary for a specific action, such as the election of corporate directors. Minnesota law provides that unless a company’s articles of incorporation provide otherwise, a plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director. (Minnesota Statutes 2005, 302A.215, Voting for directors; cumulative voting, Subdivision 1. Required vote)

Our Company presently uses the plurality vote standard to elect directors. This proposal requests that the Board initiate a change in the Company’s director election vote standard to provide that nominees for the board of directors must receive a majority of the vote cast in order to be elected or re-elected to the Board.

We believe that a majority vote standard in director elections would give shareholders a meaningful role in the director election process. Under the Company’s current standard, a nominee in a director election can be elected with as little as a single affirmative vote, even if a substantial majority of the votes cast are “withheld” from that nominee. The majority vote standard would require that a director receive a majority of the vote cast in order to be elected to the Board.

The majority vote proposal received high levels of support last year, winning majority support at Advanced Micro Devices, Freeport McMoRan, Marathon Oil, Marsh and McClennan, Office Depot, Raytheon, and others. Leading proxy advisory firms recommended voting in favor of the proposal.

Some companies have adopted board governance policies requiring director nominees that fail to receive majority support from shareholders to tender their resignations to the board. We believe that these policies are inadequate for they are based on continued use of the plurality standard and would allow director nominees to be elected despite only minimal shareholder support. We contend that changing the legal standard to a majority vote is a superior solution that merits shareholder support.

Our proposal is not intended to limit the judgment of the Board in crafting the requested governance change. For instance, the Board should address the status of incumbent director nominees who fail to receive a majority vote under a majority vote standard and whether a plurality vote standard may be appropriate in director elections when the number of director nominees exceeds the available board seats.

We urge your support for this important director election reform.

Your Company’s Response:

The Board believes that active shareholder participation in the election of directors is important to the Company and to effective corporate governance, but that this proposal is both unnecessary and premature.

The proposal’s contention that a director nominee can be elected by plurality vote with as little as a single affirmative vote is completely hypothetical. If this proposal had been in effect at any time within the past ten years, it would have had no impact on our Company’s (or any of our predecessor Companies’) board membership. Director candidates are recommended to the Board for nomination by the Governance Committee based on criteria set forth in our Governance Guidelines. The Governance Committee, which is comprised solely of independent directors, follows the identical evaluation process and criteria, whether the director candidate is suggested by shareholders or identified through other means.

St. Paul Travelers’ Board is committed to good governance practices and has implemented a number of measures to strengthen the Company’s governance processes, including, for example:

·       St. Paul Travelers does not have multi-year, staggered terms for its Board members. Rather, each director is elected for a

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one-year term, enabling shareholders to vote annually on each Board member.

·       St. Paul Travelers has a strong, independent Board which was elected by plurality vote. Approximately 83% of the directors on the Board are independent, as determined pursuant to New York Stock Exchange guidelines.

·       St. Paul Travelers’ governance policies and procedures often exceed the requirements of the New York Stock Exchange, the Sarbanes-Oxley Act and the Securities and Exchange Commission.

·       The Board has established a target for ownership of the Company’s common stock for each non-employee director at a value of four times the director’s annual retainer (currently $50,000). Each new director is asked to meet or exceed that target within four years of his or her initial election to the Board, to further align the interests of the Board and the shareholders.

Your Board also believes that while the proposed approach is conceptually simple, it in fact does not address what would happen if one or more candidates who are directors failed to receive a majority of the votes cast. Nor does it address whether a plurality standard is appropriate in contested elections for directors. The proposal only suggests that the Board should address these issues. Under Minnesota law and under the Company’s bylaws, a director who receives the affirmative vote of less than a majority of the votes cast remains in office until a successor is elected and qualified. In the event such a director were to resign, the Board could appoint a director to fill the vacancy or the position could remain vacant. The Board believes these various alternatives inadvertently could result in a less democratic process than in the election of directors by plurality vote, and would likely be highly disruptive and administratively burdensome.

At present, various governmental organizations, scholars, lawyers, corporations and stockholders are debating and analyzing whether a change to majority voting in the election of directors is a workable goal, and if so, how best to give it effect. St. Paul Travelers will continue to monitor closely developments with regard to this issue and take appropriate action on a timely basis to maintain its commitment to good corporate governance. Given the constructs and timing of this particular proposal, however, and applicable Minnesota law, our Board does not believe this proposal necessarily achieves the intended goal of ensuring that directors are elected by a majority vote.

For the above reasons, the Board of Directors recommends that you vote against this proposal.

ITEM 4

SHAREHOLDER PROPOSAL RELATING TO POLITICAL CONTRIBUTIONS

Resolved, that the shareholders of The St. Paul Travelers Companies, Inc. (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:

1.                Policies and procedures for political contributions (both direct and indirect) made with corporate funds.

2.                Monetary and non-monetary contributions to political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code including the following:

a.                  An accounting of the Company’s funds contributed to any of the persons or organizations described above.

b.                 Identification of the person or persons in the Company who participated in making the decisions to contribute.

c.                  The internal guidelines or policies, if any, governing the Company’s political contributions.

This report shall be presented to the board of directors’ audit committee or other relevant oversight committee, and posted on the company’s website to reduce costs to shareholders.

Stockholder Supporting Statements

As long-term shareholders of The St. Paul Travelers Companies, Inc., we support policies that apply transparency and accountability to corporate political giving. In our view, such disclosure is consistent with public policy in regard to public company disclosure.

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Company executives exercise wide discretion over the use of corporate resources for political purposes. In 2003-04, the last fully reported election cycle, The St. Paul Travelers Companies, Inc. contributed at least $1,815. (The Center for Public Integrity: http://www.publicintegrity.org/527/db.aspx?act=main)

Relying only on the limited data available from the Federal Election Commission and the Internal Revenue Service, the Center for Public Integrity, a leading campaign finance watchdog organization, provides an incomplete picture of the Company’s political donations. Complete disclosure by the Company is necessary for the Company’s Board and its shareholders to be able to fully evaluate the political use of corporate assets.

Although the Bi-Partisan Campaign Reform Act of 2002 prohibits corporate contributions to political parties at the federal level, it allows companies to contribute to independent political committees, also known as 527s.

Absent a system of accountability, corporate executives will be free to use the Company’s assets for political objectives that are not shared by and may be inimical to the interests of the Company and its shareholders. There is currently no single source of information that provides the information sought by this resolution. That is why we urge your support for this critical governance reform.

Your Company’s Response:

The Company complies with all applicable laws and regulations pertaining to political contributions, at the federal, state and local levels, including those requiring specific disclosures of such contributions made. These disclosures provide ample public information about the scope of St. Paul Travelers’ political involvement. Assembling different and specific reports at the request of each nongovernmental organization that may seek them would be a costly diversion of management’s attention from the business of the Company.

Political contributions to federal candidates, political party committees, and political action committees are made by the Company’s political action committee (PAC), which is not funded by corporate funds, but by the personal funds given voluntarily by our employees. Contrary to the assertion of the proposal’s proponent, decisions concerning use of those funds are made by the PAC Contributions Committee, whose objective is to advance the best interests of the Company and its shareholders. Such contributions by the PAC are reported in filings with the Federal Election Commission and are publicly available. As federal contributions are a matter of public record, the concerns of the proposal’s proponent regarding its ability to evaluate the political use of corporate assets are unfounded.

To the extent corporate contributions to candidates or political parties are permitted by certain states, these states also require that such contributions be disclosed either by the recipient or by the donor. As this information is publicly available, data on contributions by the Company could be obtained without the Company’s preparing an additional report. All political contributions made by the Company and by the Company’s PACs are reported to, and reviewed by, the Governance Committee of the Board at least semi-annually.

We believe that the Company’s current policies and practices with regard to political contributions, together with applicable federal and state reporting requirements, appropriately balance the Company’s interests in political participation and the public interest in disclosure. Adopting a policy as set forth in the proposal would create an unnecessary expense and could put St. Paul Travelers at a competitive disadvantage by revealing its legislative strategies and priorities.

For the above reasons, the Board of Directors recommends that you vote AGAINST this proposal.

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EXECUTIVE COMPENSATION

Report Of The Compensation Committee
And The Executive Compensation Subcommittee
On Executive Compensation

Program Objectives

The Company’s compensation program is designed to align with market practice and to reward performance.

The guiding objectives of the Company’s executive compensation program are to:

1.                Provide industry-competitive compensation opportunities intended to attract, motivate and retain high-performing management talent.

2.                Link the delivery of realized compensation to the achievement of the Company’s most critical short and long-term financial and strategic objectives.

3.                Foster commonality of interest between management and shareholders by delivering a substantial portion of the total compensation opportunity through equity-based incentives and ensuring that executives accumulate meaningful ownership stakes over their tenure.

4.                Maximize, to the extent practicable, the financial efficiency of the overall compensation program from tax, accounting and cash flow perspectives.

5.                Reflect established and evolving corporate governance standards.

The compensation of the Company’s top executives is reviewed and approved by the Executive Compensation Subcommittee (the “Subcommittee”) of the Board’s Compensation Committee (“the Committee”), which is comprised entirely of directors determined by the Board to be independent under NYSE requirements, who are “non-employee directors” within the meaning of Rule 16b-3(b)(3) of the Securities Exchange Act of 1934, as amended, and who qualify as “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Subcommittee has retained an independent compensation consulting firm (the “Compensation Consultant”) to assist and advise it with that compensation review. In addition to other relevant data and information further described below, the Subcommittee uses survey information on comparative executive compensation levels in the property-casualty insurance and financial service industries. In addition, the Subcommittee considers recommendations from the Chairman and Chief Executive Officer regarding total compensation for each of the members of the Management Committee, which includes all executives who report directly to him.

Program Elements

There are four elements to the Company’s executive compensation program:

·       Base salary

·       Bonus

·       Long-term incentives

·       Other benefits

It is the intent of the Committee that base salary for senior executives in the aggregate, including those listed in the Summary Compensation Table, be targeted at the 50th percentile of a select group of substantial financial services companies that are similar in size and nature of business to St. Paul Travelers. Individual base salary levels, however, range between the 25th and 75th percentiles based upon the potential impact of the executive’s role on the Company, the experience the executive brings to the position and the performance and potential of the executive in his or her role.

The Company’s Senior Executive Performance Plan identifies a maximum pool for bonus, CAP Shares (defined below) and restricted stock that could be available to the Subcommittee for possible award to the Company’s Chief Executive Officer and the four other most highly compensated executive officers. If a pool is available, the Subcommittee, in its sole discretion, reviews both the Company’s and the individual’s performance and determines what, if any, awards will be made under the Senior Executive Performance Plan. Generally, if the Company’s return on equity (which is determined by dividing the After-Tax Operating Earnings for the performance period, as adjusted in accordance with the definition of that term in the Senior Executive Performance Plan, by beginning total common shareholders’ equity) for a

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performance period is greater than 8%, the pool available to the Subcommittee will be equal to 1.5% of After-Tax Operating Earnings. In assessing the Company’s and the individual’s performance to determine what, if any, amounts to award, the Subcommittee weighs the recent financial performance of the Company or relevant business segment, as applicable, depending on the executive, as well as other short-term and long-term objectives.

In addition to financial performance, the Subcommittee also considers the degree to which certain objectives have been achieved and other qualitative factors, such as the strategic positioning of the Company or the applicable business segment; the progress made on strategic initiatives; the identification and achievement of cost efficiencies or the maintenance of a unit’s cost effectiveness; the demonstration of leadership and innovation and business unit growth plans. With regard to CEO performance, the Subcommittee also considers his development of management expertise, organizational bench strength and succession plans.

The number of stock options and shares of restricted stock set for grant each year also takes into account an analytical review of the economic cost and resulting level of potential shareholder dilution as determined by the Subcommittee with the assistance of the Compensation Consultant.

2005 Performance Awards

For 2005 performance, the Subcommittee considered operating earnings and return on equity as the most appropriate indicators of financial performance, taking into account the unprecedented nature of certain 2005 natural disasters.

For 2005 performance awards, the Subcommittee also considered the Company’s successful systems conversions, its field reorganization and its continued focus on integration-driven cost reductions as important objectives.

The available pool for awards under the Senior Executive Performance Plan for 2005 was $60.1 million, of which the Subcommittee awarded to the executives named in the Summary Compensation Table $13.8 million in value, comprised of approximately $8.8 million in cash bonuses, $1,699,960 (grant date value) in shares of restricted stock and $3,256,547 (grant date value) in shares of restricted stock under the Capital Accumulation Program (“CAP”) described below (the “CAP Shares”).

Long-Term Incentive Compensation

Stock Options and Restricted Stock Awards

In determining the number of stock options and restricted shares to award based on 2005 performance, the Subcommittee, in significant measure, considered award targets previously established on the basis of an individual’s base salary, role and responsibilities, adjusted for 2005 individual performance considering the factors described above.

Stock options are granted at the closing price on the business day immediately preceding the date of grant and generally carry a ten-year maximum term.

Restricted stock awards generally vest in full after three years. The Subcommittee may, on occasion, make special equity grants of options and shares of restricted stock to recruit and/or retain certain key executives.

CAP Shares

The Company maintains a Capital Accumulation Program (“CAP”) under which 25% of any annual bonus awarded to an employee whose base salary exceeds $125,000 is delivered in the form of restricted shares that vest in full after two years (“CAP Shares”).

CAP Shares are awarded to employees at a 10% discount from the fair market value of the Company’s common stock on the date of grant (the “CAP Discount”).

In February 2006, a total of 72,707 CAP Shares with a grant date value of approximately $3,256,547 were awarded to the Named Executives with respect to bonuses earned for 2005 performance. The aggregate value of the CAP Discount granted to the Named Executives in connection with the February 2006 award of CAP Shares represented 7,264 of the total CAP Shares awarded, with a grant date value of approximately $325,355.

Following the February 2006 CAP awards, the Company discontinued the program with respect to any future awards.

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Performance Shares

Periodically, the Company reviews its compensation practices to ensure that the right compensation mix is provided to attract, motivate and retain top talent in the organization, while seeking to align individual compensation with individual, business unit and Company performance and with the interests of our shareholders. As a result of a recent review, the Board has approved a modification to the Company’s long-term incentive program.

Beginning with performance year 2006, for certain leadership positions, performance shares were  added to the mix of equity compensation. Performance shares represent target shares that provide the recipient with the right to earn shares of the Company’s common stock based upon the Company’s attainment of certain performance goals. The performance goals for awards made in 2006 are based on the Company’s adjusted return on equity over the three-year performance period of 2006-2008. If the Company’s performance falls short of target performance, none or only a portion of the shares and accumulated dividend equivalents will vest after the three-year performance period from date of grant. If Company performance exceeds target performance, then more than 100 percent (up to a maximum of 160 percent) of the shares and accumulated dividend equivalents will vest after the three-year period from date of grant.

Beginning with awards granted on February 6, 2006, options, restricted stock and performance share awards generally will vest in full three years after the date of grant.

Deferred Compensation Plan

The St. Paul Travelers Deferred Compensation Plan is a non-qualified plan that allows an employee with an annual salary of $150,000 or more to defer receipt of a portion of his or her salary and/or annual performance plan bonuses until a date or dates elected by the employee. The amounts deferred are invested in Company common stock or in accounts that mirror the gains and/or losses of various investment funds selected by the employee. The Deferred Compensation Plan offers participants a range of publicly available investment funds from which to choose and does not provide any above-market rates of return to any employee.

The Deferred Compensation Plan is not funded by the Company, and participants have an unsecured contractual commitment by the Company to pay amounts owed under the Plan.

Other Benefits

The Company also provides certain other benefits described below to its executive officers that are not tied to any performance criteria and are intended to be part of a competitive compensation program.

Financial Counseling

The executive financial counseling program provides executives at the senior vice president level and above, at no charge, with up to $17,000 of professional financial planning services per year.

Executive Severance

The Company’s executive severance policy applies to vice presidents and above whose employment is terminated due to a reduction in force. Executive Vice Presidents and above are eligible to receive a severance benefit equal to their total monthly cash compensation for 18 to 24 months, depending on their years of service with the Company provided, however, if the executive vice president has entered into a non-solicitation and non-disclosure agreement with the Company, he or she is entitled to minimum severance equal to no less than 21 months total monthly cash compensation which would be based on the greater of his or her (i) two most recent cash payments under the Company’s annual incentive plan and (ii) 125% of his or her final annual base salary. “Total monthly cash compensation” means 1/12th of the employee’s annual base salary in effect at the time of the termination of his or her employment plus 1/12th of the average of his or her two most recent cash payments under the Company’s annual incentive plan.

Tax Gross-Up

The Company periodically reimburses executives the tax cost of any imputed non-cash taxable executive benefits that are provided for business reasons, such as, for example, financial counseling, certain commuting expenses and spousal business travel. Details as to the amounts involved for the Named

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Executives are provided in the “Other Annual Compensation” column of the Summary Compensation Table on page 32.

Transportation

Pursuant to the Company’s security policies, the Company’s Chief Executive Officer is provided with a car and driver for all business and personal travel in the Hartford, New York City and St. Paul areas. In addition, the Chief Executive Officer is required to use the Company aircraft for all business and personal air travel provided, however, that Mr. Fishman must compensate the Company for international personal travel on Company aircraft at the maximum amount legally payable for such flights under applicable Federal Aviation Regulations, which is not to exceed the then applicable first class rate. Mr. Fishman is responsible for all taxes due on income imputed to him in connection with his personal use of Company means of transportation, other than taxes on travel expenses that are deemed commuting costs, as to which he is reimbursed by the Company.

Additional information with regard to transportation benefits is included in the “Company Security Policies and Valuation of Company Aircraft and Car and Driver Usage” section of this Proxy Statement.

Security

Security installation, repair, maintenance and monitoring of the Chief Executive Officer’s home security and protection equipment also is provided by the Company.

Pension and Other Benefits

The Company also provides other benefits such as pension, medical, dental and life insurance to each Named Executive, on the same terms as provided to all other U.S.-based Company employees. In addition to the qualified pension plan, the Company also has a nonqualified retirement plan which provides benefit accruals for all U.S.-based Company employees, including the Named Executives, with respect to compensation in excess of a set amount under the Internal Revenue Code, which in 2005 was $210,000. Additional information is included in the “Pension Benefits” section of this Proxy Statement.

Chief Executive Officer Employment Agreement

The Company entered into a five-year agreement with Mr. Fishman, which is described in further detail on pages 39 and 40.

Deductibility of Compensation

Section 162(m) of the Internal Revenue Code prohibits the Company from deducting compensation in excess of $1 million paid to its CEO or to any of the other Named Executives, unless certain requirements are met. The Committee has determined that it will make reasonable efforts, consistent with sound executive compensation principles and the needs of the Company, to seek to ensure that such payments are deductible by the Company. The Committee recognizes however, that unanticipated future events, such as a change of control of the Company or a change of executive personnel, could result in a disallowance of a compensation deduction under Section 162(m). Moreover, the Committee may from time to time award compensation that is non-deductible under Section 162(m), when in the exercise of the Committee’s business judgment such award would be in the best interests of the Company.

Compensation of the Chief Executive Officer

The methods for determining Mr. Fishman’s salary and bonus opportunities under the Company’s Senior Executive Performance Plan are previously described in this report.

Pursuant to his employment agreement, Mr. Fishman’s annualized base salary is $1 million, and it has remained at that level since he joined the Company in October     2001. A summary of Mr. Fishman’s employment agreement is provided in the “Employment Contracts” section of this Proxy Statement.

In February 2006, the Subcommittee awarded Mr. Fishman an annual bonus under the Senior Executive Performance Plan consisting of $3,750,000 in cash and 31,006 CAP Shares with an aggregate grant date value of $1,388,759, which includes 3,098 CAP Shares with a value of $138,759 awarded pursuant to the CAP Discount.

In addition, under the terms of his employment agreement, Mr. Fishman earned long-term incentives in the form of 25,815 shares of restricted stock, 255,678 options and, for the performance

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period 2006-2008, 36,280 performance shares, all of which were awarded in February 2006. With respect to the 2006 option grant, Mr. Fishman waived the more favorable vesting provided for in his employment agreement, so as to ensure that the vesting of his options is consistent with that of other executives in the Company (i.e., 100% after three years from the date of grant).

Compensation of the Other Named Executive Officers

The methods and considerations the Subcommittee relied on to determine the salaries, bonus opportunities, stock option grants, restricted stock awards and performance shares for Messrs. MacLean, Benet, Heyman, and Lacher are described in the “Program Elements” section of this report and are similar to those used for Mr. Fishman.

The Subcommittee also reviewed summary reports prepared by management, with the assistance of the Compensation Consultant, with respect to each Named Executive. These reports reflect the total value of each Named Executive’s annual compensation, including salary, bonus, and long-term incentive compensation, as well as comparative executive compensation data with respect to similar positions at peer companies.

Mr. MacLean’s annualized base salary was increased from $525,000 to $650,000 effective April 1, 2005 and from $650,000 to $700,000 on May 3, 2005. In February 2006, under the Senior Executive Performance Plan, he was granted a bonus award of $1,875,000 in cash, 11,721 shares of restricted stock with a grant date value of $524,984 and 15,503 CAP Shares with a grant date value of $694,379, representing an aggregate grant date value of $1,219,363, which includes 1,549 CAP Shares with a value of $69,380 awarded pursuant to the CAP Discount. In addition, he was granted 16,410 performance shares with respect to the performance period 2006-2008, and 116,091 stock options.

Mr. Benet’s annualized base salary remained constant at $575,000 during 2005. In February 2006, under the Senior Executive Performance Plan, he was granted a bonus award of $1,125,000 in cash, 9,628 shares of restricted stock with a grant date value of $431,238 and 9,301 CAP Shares with a grant date value of $416,592, representing an aggregate grant date value of $847,830, which includes 929 CAP Shares with a value of $41,610 awarded pursuant to the CAP Discount. In addition, he was granted 13,480 performance shares with respect to the performance period 2006-2008, and 95,361 stock options.

Mr. Heyman’s annualized salary remained constant at $575,000 during 2005. In February 2006, under the Senior Executive Performance Plan, he was granted a bonus award of $1,125,000 in cash, 9,628 shares of restricted stock with a grant date value of $431,238 and 9,301 CAP Shares with a grant date value of $416,592, representing an aggregate grant date value of $847,830, which includes 929 CAP Shares with a value of $41,610 awarded pursuant to the CAP Discount. In addition, he was granted 13,480 performance shares with respect to the performance period 2006-2008, and 95,361 stock options.

Mr. Lacher’s annualized base salary was increased from $300,000 to $400,000 effective January 1, 2005, and from $400,000 to $500,000 on August 1, 2005. In February 2006, under the Senior Executive Performance Plan, he was granted a bonus award of $918,750 in cash, 6,977 shares of restricted stock with a grant date value of $312,500 and 7,596 CAP Shares with a grant date value of $340,225, representing an aggregate grant date value of $652,725, which includes 759 CAP Shares with a value of $33,996 awarded pursuant to the CAP Discount. In addition, he was granted 9,768 performance shares with respect to the performance period 2006-2008, and 69,102 stock options.

Executive Stock Ownership Policy

The Company also maintains an executive stock ownership policy pursuant to which executives are expected to accumulate and retain certain levels of Company equity ownership, depending on their respective levels of responsibility, so as to further align the interests of management and our shareholders. Under this policy, the Chairman and CEO has a target ownership level established as the lesser of 150,000 shares or the equivalent value of 500% of base salary. Vice Chairmen and Executive Vice Presidents have target ownership levels established as the lesser of 15,000 shares or the equivalent value of 150% of base salary and Senior Vice Presidents have target ownership levels established as the lesser of 5,000 shares or the equivalent value of 100% of base salary. Executives

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who have not achieved these levels of stock ownership are prohibited from selling shares upon exercising stock options or upon the vesting of their restricted stock.

The Committee periodically reviews stock ownership levels of all persons subject to this policy. In determining an executive’s share ownership level, the following equity components are valued as follows:  shares held directly by the executive, 100%; shares held indirectly through the Company’s 401(k) Plan or Deferred Compensation Plan, 100%; 50% of restricted shares; and a number of shares with a market value equal to 50% of any unrealized appreciation in stock options, whether vested or unvested. The extent, if any, to which performance shares will be counted in determining an executive’s share ownership level has not yet been determined.

Each of the Named Executives has achieved stock ownership levels in excess of the applicable multiple set forth above.

Submitted by the Compensation Committee of the Company’s Board of Directors:

Leslie B. Disharoon (Chairman), Kenneth M. Duberstein, Lawrence G. Graev, Blythe J. McGarvie and Glen D. Nelson

and by

The Executive Compensation Subcommittee of the Compensation Committee: Leslie B. Disharoon (Chairman), Kenneth M. Duberstein and Blythe J. McGarvie.

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SUMMARY COMPENSATION TABLE

The following table sets forth the cash and non-cash compensation for each of the last three fiscal years earned by the CEO and the four most highly compensated officers other than the CEO (collectively, the “Named Executives”).

(1)                 The bonus amounts shown were earned in the year indicated and paid under the Senior Executive Performance Plan in the following year.

(2)                 Included in “Other Annual Compensation” is the aggregate incremental cost to the Company of providing various perquisites and the value of CAP Discount Shares awarded to the Named Executives.

                           For Mr. Fishman for 2005, 2004 and 2003, respectively, the following amounts are included: (a) $383,546, $360,543, and $437,167 for personal use of Company aircraft; (b) $138,835, $144,291, and $136,260 for use of a Company car and driver; (c) $0, $0, and $7,129 for lodging expenses; (d) $19,950, $28,222, and $47,710 representing tax reimbursements for the payment of taxes on the associated imputed income relating to commuting expenses; (e) $15,568, $15,361 and $15,219 for amounts that the Company paid for financial counseling services and related financial planner travel expenses provided by the Company and $11,828, $7,464 and $7,735 for the reimbursement of taxes on the associated imputed income on the foregoing items; (f) $5,544, $4,930 and $8,283 for personal security expenses pursuant to the Executive Security Program paid on Mr. Fishman’s behalf for locations other than his corporate offices; and (g) $138,759, $37,451 and $74,011 of grant date value of CAP Shares earned in the year indicated but awarded in the following year pursuant to the CAP Discount. For 2004, the Company paid $43,508 on Mr. Fishman’s behalf for certain legal fees relating to his employment agreement, including the reimbursement for taxes thereon.

                           The Company requires that Mr. Fishman use Company aircraft for business and personal travel. For information about the Company’s security policies and executive use of Company owned aircraft, see “Company Security Policies and Valuation of Company Aircraft and Car and Driver Usage”.

                           For 2005, Mr. MacLean received $579 for reimbursement for paying taxes on the associated imputed income for personal travel expenses on company-sponsored business trips. For 2005, 2004 and 2003, respectively, Mr. MacLean received $69,380, $22,219 and $54,150 of grant date value of CAP Shares earned in the year indicated but awarded in the following year pursuant to the CAP Discount.

                           For Mr. Benet for 2005, 2004 and 2003, respectively, the following amounts are included: (a) $13,573, $25,895 and $25,512 of company-paid housing expenses for an apartment in Hartford, Connecticut; (b) $12,068, $11,437 and $12,074 for financial counseling services provided by the Company; (c) $17,760, $25,138 and $22,075 for reimbursement of taxes on the associated imputed income on the foregoing items and other personal travel expenses on Company-sponsored business trips; and (d) $41,610, $24,992 and $83,340 of grant date value of CAP Shares earned in the year indicated but awarded in the following year pursuant to the CAP Discount. For 2004, “Other Annual Compensation” also includes $3,362 for personal travel expenses.

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                           For Mr. Heyman for 2005, 2004 and 2003, respectively, the following amounts are included: (a) $39,879, $40,301 and $35,672, principally for transportation expenses (air and ground transportation) for Mr. Heyman’s commuting expenses from his principal residence in New York, New York to St. Paul, Minnesota; (b) $24,000, $24,000 and $24,000 for lodging expenses in St. Paul, Minnesota; (c) $62,050, $69,588 and $59,848 for reimbursement of taxes on the income imputed on the foregoing items; and (d) $41,610, $22,219 and $20,797 of grant date value of CAP Shares earned in the year indicated but awarded in the following year pursuant to the CAP Discount.

                           For 2005, Mr. Lacher received $6,644 for financial counseling services and related financial planner travel expenses provided by the Company and $4,730 for the reimbursement of taxes on the associated imputed income on the foregoing item and other personal travel expenses on Company-sponsored business trips. For 2005, 2004 and 2003, respectively, Mr. Lacher received $33,996, $20,814 and $50,004 of grant date value of CAP Shares earned in the year indicated but awarded in the following year pursuant to the CAP Discount.

(3)                 From the date of award of all shares of restricted stock described below and those described in the previous footnote, the recipient can vote the restricted shares and will receive cash dividends at the same times and amounts per share as all other holders of common stock.

                           For 2005, the amounts displayed include the values on the respective dates of award of the following restricted stock awards:

(i)               Pursuant to the terms of Mr. Fishman’s Employment Agreement, in January 2005, $1,562,500 (42,264 shares) of restricted stock;

(ii)            January 2005 long-term incentive awards granted to: Mr. Fishman – $0, Mr. MacLean – $131,244 (3,550 shares), Mr. Benet – $143,739 (3,888 shares), Mr. Heyman – $143,739 (3,888 shares) and Mr. Lacher – $100,004 (2,705 shares);

(iii)         January 2005 special one time retention awards to: Mr. Fishman – $0, Mr. MacLean – $987,506 (26,711 shares), Mr. Benet – $712,486 (19,272 shares), Mr. Heyman – $462,495 (12,510 shares) and Mr. Lacher – $799,994 (21,639 shares);

(iv)          February 2006 awards under the Senior Executive Performance Plan earned in 2005 but awarded in 2006 to: Mr. Fishman – $0, Mr. MacLean – $524,984 (11,721 shares), Mr. Benet – $431,238 (9,628 shares), Mr. Heyman – $431,238 (9,628 shares) and Mr. Lacher – $312,500 (6,977 shares); and

(v)             February 2006 CAP Shares earned in 2005 but awarded in 2006 under the Senior Executive Performance Plan to: Mr. Fishman – $1,249,999 (27,908 shares), Mr. MacLean – $625,000 (13,954 shares), Mr. Benet – $374,982 (8,372 shares), Mr. Heyman – $374,982 (8,372 shares) and Mr. Lacher – $306,229 (6,837 shares).

                           For 2004, the amounts displayed include the values on the respective dates of award of the following restricted stock awards:

(i)               April 2004 long-term incentive awards granted to: Mr. Fishman – $0, Mr. MacLean – $249,981 (5,875 shares), Mr. Benet – $249,981 (5,875 shares), Mr. Heyman – $0 and Mr. Lacher – $87,483 (2,056 shares); and

(ii)            January 2005 CAP Shares earned in 2004 but awarded in 2005 under the Senior Executive Performance Plan to: Mr. Fishman – $337,499 (9,129 shares), Mr. MacLean – $200,008 (5,410 shares), Mr. Benet – $224,999 (6,086 shares), Mr. Heyman – $200,008 (5,410 shares) and Mr. Lacher – $187,512 (5,072 shares).

                           For 2003, the amounts displayed include the values on the respective dates of award of the following restricted stock awards:

(i)               February 2004 CAP Shares earned in 2003 but awarded in 2004 to: Mr. Fishman – $666,655 (15,547 shares) and Mr. Heyman – $187,514 (4,373 shares); and

(ii)            January 2004 legacy Travelers CAP Shares earned in 2003 but awarded in 2004 to: Mr. MacLean – $162,504 (3,929 shares), Mr. Benet – $249,980 (6,044 shares) and Mr. Lacher – $149,971 (3,626 shares).

                           The table below sets forth, as of December 31, 2005, (i) total holdings of restricted stock for the Named Executives; (ii) the number of shares vesting in fewer than three years from the date of grant; and (iii) the market value of these shares as of December 31, 2005 (based on the closing price of our common shares on December 30, 2005, which was $44.67).