The merger and acquisition game is on again in the US, with Minnesota’s The St Paul Companies reaching agreement to buy the much larger Travelers Property/Casualty Corporation for about $22.1 billion.

The merger will create the second-largest commercial insurer in the US market, with a total of $148 billion in assets and $35.9 billion in capital. The premium income of the new St Paul Travelers will be $27.6 billion.

It is expected that the deal will be completed before mid-2004. The St Paul President and CEO, Jay Fishman, will be the CEO of the new group. Until two years ago he worked at Travelers.

Reports say Mr Fishman, 51, has displayed good timing. His old boss, Travelers President and CEO Robert Lipp, 65, will become Executive Chairman. But he will retire on January 1, 2006, and Mr Fishman is expected to then become chairman.

What’s to be known as St Paul Travelers Companies will be based in St Paul, Minnesota. (Travelers is based in Hartford, Connecticut.)

Mr Fishman said he expects the transaction “to enhance growth opportunities and enable the combined company to benefit from improved efficiencies and economies of scale”.

It’s a remarkable recovery by The St Paul, which withdrew from many foreign markets and consolidated operations in 2001 following hefty 9/11-influenced losses. Its profit for the first nine months of 2003 was $296 million. Travelers achieved a $589.6 million profit in the same period.