<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 11-K
X Annual Report Pursuant to Section 15(d) of the
--- Securities Exchange Act of 1934 (Fee Required)
or
Transition Report Pursuant to Section 15(d) of
--- the Securities Exchange Act of 1934(no fee required)
for the transition period from to .
--------- ----------
For the fiscal year ended December 31, 1997
Commission file number 0-3021
------------------------------
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL MINNESOTA 55102
(Full title of the Plan and address of the Plan)
------------------------------
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL, MINNESOTA 55102
(Name and address of principal executive
offices of the issuer of the securities)
-------------------------------
<PAGE>
REQUIRED INFORMATION
--------------------
The St. Paul Companies, Inc. Savings Plus Plan (the "Plan") is subject
to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and for purposes of satisfying the
requirements of Form 11-K has included for filing herewith the Plan
financial statements and schedules prepared in accordance with the
financial reporting requirements of ERISA.
Financial Statements and Schedules Page
- ---------------------------------- ----
Independent Auditors' Report . . . . . . . . . . . 3
Statements of Net Assets Available
for Plan Benefits . . . . . . . . . . . . . . . . 4
Statements of Changes in Net Assets
Available for Plan Benefits With Fund Information 5-6
Notes to Financial Statements . . . . . . . . . . . 7-21
Item 27a-Schedule of Assets Held for Investment Purposes 22
Item 27d-Schedule of Reportable Transactions . . . . 23
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Plan Administrative Committee and Plan Participants
The St. Paul Companies, Inc. Savings Plus Plan:
We have audited the accompanying statements of net assets available
for plan benefits of The St. Paul Companies, Inc. Savings Plus Plan
(the Plan) as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for plan benefits with
fund information for the years then ended. These financial statements
are the responsibility of the Plan administrator. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of The St. Paul Companies, Inc. Savings Plus Plan as of December
31, 1997 and 1996, and the changes in the net assets available for
plan benefits for the years then ended in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules of assets held for investment purposes and reportable
transactions are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The fund information in the
statement of changes in net assets available for plan benefits is
presented for purposes of additional analysis rather than to present
the changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected to
the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/ KPMG PEAT MARWICK LLP
---------------------
KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
June 12, 1998
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and 1996
1997 1996
------------ ------------
Assets:
Investments:
Common stock of The St.Paul
Companies, Inc. $ 77,304,516 $ 58,068,532
Fidelity U.S. Bond Index Fund 76,124,483 -
Fidelity U.S. Equity Index Pool 85,299,219 -
Fidelity Diversified International
Fund 10,260,486 -
Interest Income contracts - 25,430,965
Fidelity Intermediate Bond Fund - 77,342,203
Vanguard Wellesley Income Fund - 44,220,420
Vanguard Institutional Index Fund - 59,021,057
Twentieth Century Ultra Fund - 66,938,124
Fidelity International Growth Fund - 7,749,917
Vanguard Money Market Reserves Fund - 10,368,734
Participant loans 21,241,171 21,195,009
Short-term investments 6,477,158 1,976,568
------------ ------------
Total investments 276,707,033 372,311,529
Receivables:
Open investment transactions 161,780,334 -
Accrued dividends 442,967 435,252
Company contributions - 986,800
------------ ------------
Total assets 438,930,334 373,733,581
------------ ------------
Liabilities:
Cash overdraft 6,443,772 1,508,896
Forfeitures and other 136,239 11,770
------------ ------------
Total liabilities 6,580,011 1,520,666
------------ ------------
Net assets available for plan benefits $432,350,323 $372,212,915
============ ============
See accompanying notes to financial statements.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Statements of Changes in Net Assets Available for Plan Benefits With
Fund Information
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Company Stock Income Balanced Diversified Aggressive
Fund Fund Fund Fund Fund
<S> ------------- -------- -------- ----------- ----------
Contributions:
Participating companies <C> <C> <C> <C> <C>
(salary conversion) $3,446,092 $3,731,233 $3,220,369 $5,160,674 $6,873,660
Investment income:
Interest - 1,083,695 - - -
Dividends 1,807,480 5,066,967 5,938,398 1,939,735 16,927,772
Net appreciation
(depreciation) in fair
value of investments 23,125,595 793,607 2,971,959 18,842,153 (1,148,067)
---------- ---------- ---------- ---------- ----------
Total investment income 24,933,075 6,944,269 8,910,357 20,781,888 15,779,705
Transfers from other plans 848,573 440,443 860,977 1,981,618 1,435,805
---------- ---------- ---------- ---------- ----------
Total additions 29,227,740 11,115,945 12,991,703 27,924,180 24,089,170
---------- ---------- ---------- ---------- ----------
Retirement and termination
distribution benefits and
withdrawals:
Paid to participants
in cash 7,389,952 13,931,963 5,659,897 7,115,187 8,409,268
Common stock distributed,
at market value 254,196 - - - -
Forfeitures and other - - - - -
---------- ---------- ---------- ---------- ----------
Total deductions 7,644,148 13,931,963 5,659,897 7,115,187 8,409,268
---------- ---------- ---------- ---------- ----------
Net increase prior to
interfund transfers 21,583,592 (2,816,018) 7,331,806 20,808,993 15,679,902
Interfund transfers (2,347,608) (10,340,112) 1,525,995 5,469,169 (142,359)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) 19,235,984 (13,156,130) 8,857,801 26,278,162 15,537,543
Net assets available
for plan benefits:
Beginning of year 58,068,532 102,773,168 44,220,420 59,021,057 66,938,124
---------- ---------- ---------- ---------- ----------
End of year $77,304,516 $89,617,038 $53,078,221 $85,299,219 $82,475,667
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Stable Participant Other
Fund Fund Loans Unallocated Total
<S> ------------- ---------- ----------- ----------- ------
Contributions:
Participating companies <C> <C> <C> <C> <C>
(salary converson) $1,218,142 $872,878 - 26 $24,523,074
Investment income:
Interest - 746,369 1,719,233 191,040 3,740,337
Dividends 612,588 - - - 32,292,940
Net appreciation
(depreciation) in fair
value of investments (6,545) - - - 44,578,702
---------- ---------- ---------- ----------- ----------
Total investment income 606,043 746,369 1,719,233 191,040 80,611,979
Transfers from other plans 519,976 547,076 - - 6,634,468
---------- ---------- ---------- ----------- ----------
Total additions 2,344,161 2,166,323 1,719,233 191,066 111,769,521
---------- ---------- ---------- ----------- -----------
Retirement and termination
distribution benefits and
withdrawals:
Paid to participants
in cash 1,083,893 4,607,790 2,949,291 - 51,147,241
Common stock distributed,
at market value - - - - 254,196
Forfeitures and other - - - 230,676 230,676
---------- ---------- ---------- ---------- ----------
Total deductions 1,083,893 4,607,790 2,949,291 230,676 51,632,113
---------- ---------- ---------- ---------- ----------
Net increase prior to
interfund transfers 1,260,268 (2,441,467) (1,230,058) (39,610) 60,137,408
Interfund transfers 1,250,301 4,806,624 1,276,220 (1,498,230) -
---------- ---------- ---------- ---------- ----------
Net increase (decrease) 2,510,569 2,365,157 46,162 (1,537,840) 60,137,408
Net assets available
for plan benefits:
Beginning of year 7,749,917 10,368,734 21,195,009 1,877,954 372,212,915
---------- ---------- ---------- ---------- -----------
End of year $10,260,486 $12,733,891 $21,241,171 $ 340,114 $432,350,323
========== ========== ========== ========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Statements of Changes in Net Assets Available for Plan Benefits With
Fund Information
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Company Stock Income Balanced Diversified Aggressive
Fund Fund Fund Fund Fund
------------- --------- -------- ----------- ----------
<S>
Contributions:
Participating companies <C> <C> <C> <C> <C>
(salary conversion) $3,682,138 $4,365,274 $3,352,522 $3,970,045 $6,549,957
Company supplemental match - - - - -
---------- ---------- ---------- ---------- ----------
Total contributions 3,682,138 4,365,274 3,352,522 3,970,045 6,549,957
---------- ---------- ---------- ---------- ----------
Investment income:
Interest - 2,481,408 - - -
Dividends 1,745,190 4,180,174 3,509,228 2,090,951 3,763,205
Net appreciation
(depreciation) in fair
value of investments 3,164,745 (1,844,029) 229,013 8,215,019 4,046,528
---------- ---------- ---------- ---------- ----------
Total investment income 4,909,935 4,817,553 3,738,241 10,305,970 7,809,733
Transfers from other plans 1,227,476 1,012,771 1,787,004 2,280,651 2,781,391
---------- ---------- ---------- ---------- ----------
Total additions 9,819,549 10,195,598 8,877,767 16,556,666 17,141,081
---------- ---------- ---------- ---------- ----------
Retirement and termination
distribution benefits
and withdrawals:
Paid to participants
in cash 2,838,812 8,341,575 1,978,185 2,714,935 3,299,578
Common stock distributed,
at market value 54,514 - - - -
Forfeitures and other - - - - -
---------- ---------- ---------- ---------- ----------
Total deductions 2,893,326 8,341,575 1,978,185 2,714,935 3,299,578
---------- ---------- ---------- ---------- ----------
Net increase prior to
interfund transfers 6,926,223 1,854,023 6,899,582 13,841,731 13,841,503
Interfund transfers (1,597,645) (7,861,315) (227,313) 3,471,832 (356,986)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) 5,328,578 (6,007,292) 6,672,269 17,313,563 13,484,517
Net assets available
for plan benefits:
Beginning of year 52,739,954 108,780,460 37,548,151 41,707,494 53,453,607
---------- ----------- ---------- ---------- ----------
End of year $58,068,532 $102,773,168 $44,220,420 $59,021,057 $66,938,124
========== =========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Stable Participant Other
Fund Fund Loans Unallocated Total
------------- ---------- ----------- ------------ ------
Contributions:
Participating companies <C> <C> <C> <C> <C>
(salary conversion) $902,875 $524,525 $ - $ - $23,347,336
Company supplemental match - - - 986,643 986,643
---------- ---------- ---------- ---------- ----------
Total contributions 902,875 524,525 - 986,643 24,333,979
---------- ---------- ---------- ---------- ----------
Investment income:
Interest - 330,782 1,628,547 156,336 4,597,073
Dividends 244,188 - - - 15,532,936
Net appreciation
(depreciation) in fair
value of investments 496,031 - - - 14,307,307
---------- ---------- ---------- ---------- ----------
Total investment income 740,219 330,782 1,628,547 156,336 34,437,316
Transfers from other plans 650,067 770,528 - - 10,509,888
---------- ---------- ---------- ---------- ----------
Total additions 2,293,161 1,625,835 1,628,547 1,142,979 69,281,183
---------- ---------- ---------- ---------- ----------
Retirement and termination
distribution benefits
and withdrawals:
Paid to participants
in cash 273,163 1,521,885 1,021,577 - 21,989,710
Common stock distributed,
at market value - - - - 54,514
Forfeitures and other - - - 124,502 124,502
---------- ---------- ---------- ---------- ----------
Total deductions 273,163 1,521,885 1,021,577 124,502 22,168,726
---------- ---------- ---------- ---------- ----------
Net increase prior to
interfund transfers 2,019,998 103,950 606,970 1,018,477 47,112,457
Interfund transfers 1,544,662 5,723,928 1,280,920 (1,978,083) -
---------- ---------- ---------- ---------- ----------
Net increase (decrease) 3,564,660 5,827,878 1,887,890 (959,606) 47,112,457
Net assets available
for plan benefits:
Beginning of year 4,185,257 4,540,856 19,307,119 2,837,560 325,100,458
---------- ---------- ---------- ---------- -----------
End of year $7,749,917 $10,368,734 $21,195,009 $1,877,954 $372,212,915
========== ========== ========== ========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements
Note 1 Description of the Plan
General Provisions
------------------
The St. Paul Companies, Inc. Savings Plus Plan (the Plan) is a
defined contribution plan which provides retirement and other
benefits to eligible employees of participating companies. The
St. Paul Companies, Inc. (the Company) and its subsidiaries,
St. Paul Fire and Marine Insurance Company and St. Paul
Reinsurance Management Corporation currently participate in the
Plan. Minet Re North America, Inc., The Swett & Crawford
Group, Inc., Minet Settlement Services, Inc. and Minet, Inc.
each withdrew from the Plan effective May 16, 1997 pursuant to
the sale of Minet Holdings, Inc. and its subsidiaries by the
Company. Until mid-1996, the Company as Plan Administrator,
exercised all fiduciary responsibility with respect to the
administration of the Plan and managed and controlled the Plan
assets. In mid-1996, the Company appointed the Administrative
Committee as the Plan administrator and the Benefit Plans
Investment Committee to which the Company has delegated
authority over the management and control of the assets of the
Plan (including the designation of investment funds). State
Street Bank and Trust Company was the trustee for the trust
maintained in connection with the Plan until Jan. 1, 1998 when
Fidelity Management Trust Company was appointed trustee.
The following brief description of the Plan is provided for
general information purposes. Participants should refer to the
Plan document and the employee benefits program manual for more
complete information.
Participation, Vesting and Forfeitures
--------------------------------------
All employees of participating companies, as defined by the
Plan, are eligible to participate on the Jan. 1 or July 1
following their employment date. Participants are 100% vested
in their contributions and related earnings. Participants
become vested in Company contributions at the rate of 20% after
two years of service, increasing 20% per year of additional
service and are 100% vested after six years of service.
Nonvested Company contributions are forfeited by terminating
participants. Forfeitures can be used to restore accounts, pay
Plan administrative expenses or offset Company contributions or
salary conversion contributions. Upon termination of the Plan
or change in control of the Company, participant account
balances would vest in full.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 1 Description of the Plan (continued)
Contributions
-------------
Participants elect to have their employer make salary
conversion (pretax) contributions to the Plan on their behalf
under Section 401(k) of the Internal Revenue Code. Salary
conversion contributions are currently limited to 10% of
employees' annual base salary.
Participating companies made matching contributions of 50 cents
for every dollar of participant salary conversion contributions
up to 6% of their base salary until June 30, 1990. Beginning
July 1, 1990 the matching contributions to the Plan were
replaced with contributions to The St. Paul Companies, Inc.
Savings Plus Preferred Stock Ownership Plan of 60 cents for
every dollar of participant salary conversion contributions up
to 6% of salary.
Employees who did not participate in the Company's stock
ownership plan were eligible for a Company supplemental match
contribution of $1.00 for every dollar of salary conversion
contributions up to 6% of salary. The supplemental match
contribution was made to the Plan annually after Dec. 31, for
those participants employed on that date. Beginning Jan. 1,
1997 all eligible employees participated in the Company's stock
ownership plan, and supplemental match contributions were
discontinued.
Investment Funds
----------------
The Plan currently calls for the maintenance of seven separate
investment funds as described below:
Company Stock Fund
------------------
The Company Stock Fund is to be invested in shares of common
stock of The St.Paul Companies, Inc., up to a maximum of 10% of
the Company's outstanding common stock.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 1 Description of the Plan (continued)
Investment Funds (continued)
----------------------------
Income Fund
-----------
The Income Fund is to be invested in an investment fund which
invests in fixed income securities to earn a high level of
current income while minimizing risk of principal.
In 1994, the Plan administrator directed that new monies
invested in the Income Fund and proceeds from maturing
contracts of this fund be invested in the Fidelity Intermediate
Bond Fund, a mutual fund which invests in investment-grade
fixed income obligations of three- to ten-year maturities,
managed by Fidelity Management and Research, Inc. On Dec. 31,
1997 the investment in the Fidelity Intermediate Bond Fund was
sold and reinvested in the Fidelity U.S. Bond Index Fund.
Prior to 1994, the Income Fund invested in interest income
contracts issued by banks or insurance companies. The Plan
administrator selected interest income contracts offered by
various companies for the Income Fund as listed in Note 5. On
Dec. 31, 1997 the final interest income contract matured and
proceeds were invested in the Fidelity U.S. Bond Index Fund on
Jan. 2, 1998.
Balanced Fund
-------------
The Balanced Fund is to be invested in an investment fund which
invests in common stock, corporate and government fixed income
securities and cash equivalents.
Until Dec. 31, 1997, the Benefit Plans Investment Committee had
selected the Vanguard Wellesley Income Fund, a mutual fund which is
a member of The Vanguard Group of Investment Companies, as the
underlying investment for the Balanced Fund. On Dec. 31, 1997
the investment in Vanguard Wellesley Income Fund was sold and
reinvested in the Fidelity Puritan Fund on Jan. 2, 1998.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 1 Description of the Plan (continued)
Investment Funds (continued)
----------------------------
Diversified Fund
----------------
The Diversified Fund is to be invested in an investment fund
which invests primarily in common stocks and attempts to match
the investment performance of the Standard & Poor's 500
Composite Stock Index.
Effective June 30, 1996, the Benefit Plans Investment Committee
selected the Vanguard Institutional Index Fund, a common stock
mutual fund of the Vanguard Group of Investment Companies, as
the underlying investment for the Diversified Fund.
On Dec. 31, 1997 the investment in the Vanguard Institutional
Index Fund was sold and reinvested in the Fidelity U.S. Equity
Index Pool.
The Plan administrator had selected the Mellon Stock Fund, a
stock trust managed by Mellon Capital Management Corporation, a
subsidiary of Mellon Bank, as the underlying investment for the
Diversified Fund prior to June 30, 1996.
Aggressive Fund
---------------
The Aggressive Fund is to be invested in an investment fund
which invests in common stocks of companies that commonly are
considered emerging or high growth corporations.
Until Dec. 31, 1997, the Benefit Plans Investment Committee had
selected the Twentieth Century Ultra Fund, a common stock mutual
fund of Twentieth Century Investors, Inc. as the underlying investment
for the Aggressive Fund. On Dec. 31, 1997 the investment in
Twentieth Century Ultra Fund was sold and reinvested in the
Fidelity Blue Chip Growth Fund on Jan. 2, 1998.
International Fund
------------------
The International Fund is to be invested in an investment fund
which invests in common stocks and fixed income securities of
foreign companies.
Until Dec. 31, 1997, the Benefit Plans Investment Committee had
selected the Fidelity International Growth Fund, an international
mutual fund managed by Fidelity Management and Research, Inc. as the
underlying investment for the International Fund. On Dec. 31,
1997 the investment in Fidelity International Growth Fund was
sold and reinvested in the Fidelity Diversified International
Fund.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 1 Description of the Plan (continued)
Investment Funds (continued)
----------------------------
Stable Fund
-----------
The Stable Fund is to be invested in an investment fund which
invests in money market instruments with one year or less
maturities.
Until Dec. 31, 1997, the Benefit Plans Investment Committee had
selected the Vanguard Money Market Reserves Fund, a money market
mutual fund which is a member of The Vanguard Group of Investment
Companies, as the underlying investment for the Stable Fund.
On Dec. 31, 1997 the investment in Vanguard Money Market
Reserves Fund was sold and reinvested in the Fidelity
Retirement Money Market Portfolio on Jan. 2, 1998.
Allocation
----------
Participants may elect to have their participating Company
salary conversion and Company supplemental match contributions
invested in these funds in 1% multiples as they choose and may
also transfer their balances daily within these funds.
Investment Income
-----------------
Investment income is allocated daily to participant accounts on
the basis of each participant's respective share of the assets
of each applicable fund.
Distributions
-------------
Distribution of benefits from the Plan is made upon retirement,
permanent total disability, death or employment termination.
Distributions from the Company Stock Fund may be made either in
shares of common stock of The St. Paul Companies, Inc., cash or
any combination thereof at the discretion of the participant.
Distributions are based on a participant's share of the market
value of the assets in the applicable funds when the
distribution occurs.
Participants are permitted withdrawals from their share of
Company match and salary conversion contributions for financial
hardship reasons, as defined by the Plan.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 1 Description of the Plan (continued)
Participant Loans
-----------------
Participants may request to receive as a loan from the Plan up
to 50% of their vested account balance subject to a minimum of
$500 and a maximum of $50,000. Loans are made at current prime
interest rate plus 1/2% and must be repaid by payroll
deduction over a maximum period of five years.
Tax Status
----------
The Internal Revenue Service has issued a determination letter
stating that the Plan qualifies under Section 401(a) of the
Internal Revenue Code and that the trust created thereunder is
exempt from federal income taxes under Section 501(a) of the
Internal Revenue Code. Since the receipt of the determination
letter, certain Plan amendments have been made. It is the
opinion of the Company that the Plan continues to qualify under
Section 401(a) of the Internal Revenue Code.
Company match contributions invested in the Plan and salary
conversion contributions invested in the Plan for participants
by their employers are not taxed to the participant until
received as a distribution from the Plan. Any appreciation of
shares of common stock of The St. Paul Companies, Inc.
distributed to a participant is not taxed until the participant
disposes of such shares. Under certain circumstances a
distribution may be subject to excise taxes of 10% in addition
to normal income tax.
Plan loans to participants are generally not considered taxable
income.
Taxes on rollover transfers are deferred until the rollover
amounts are received as a distribution from the Plan.
Plan Termination
----------------
Although the Company expects to continue the Plan
indefinitely, it has reserved the right to terminate the Plan
at any time. Upon such termination, the Plan administrator
would direct the Plan trustee to distribute participant account
balances. Upon termination of the Plan or change in control of
the Company, participant account balances would vest in full.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 2 Significant Accounting Policies
The accompanying Plan financial statements are presented on
the accrual basis of accounting.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of additions and deductions during the
reported period. Actual results could differ from those
estimates.
The investment in common stock of The St. Paul Companies, Inc.
and in shares or units of investment funds are carried at
market value, based on published market quotations. Realized
gains or losses on sales of these investments and the change in
unrealized appreciation or depreciation in market value of
these investments are presented in total in the statements of
changes in net assets available for plan benefits with fund
information. The average cost method is used to determine cost
of shares sold or distributed. Purchases and sales of
investments are recorded on a trade date basis.
The investment in interest income contracts is carried at the
contract value of contributions made plus interest at the
contract rate less withdrawals for benefits paid.
Participant loans are carried at unpaid principal amounts plus
accrued interest.
Money market fund and short-term investments are carried at
cost plus accrued interest, which approximates market value.
A portion of the administration expenses of the Plan is paid by the
Company and is not reflected in the accompanying financial
statements. Plan administrative expenses paid by the Plan are
paid out of forfeitures and interest from the controlled
disbursement account maintained by State Street Bank and Trust
Company and are shown as forfeitures and other in the
accompanying statements of changes in net assets available for
plan benefits with fund information. Plan forfeitures are used
to restore accounts, pay administrative expenses, offset
company matching contributions or salary conversion
contributions.
Certain amounts in the 1996 financial statements have been
reclassified to conform to the 1997 presentation.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 3 Investment in Common Stock of The St. Paul Companies, Inc.
Information regarding the Plan's investment in common stock of
The St. Paul Companies, Inc. follows:
December 31,
----------------------------
1997 1996
----------- -----------
Number of shares owned 1,884,040 1,981,016
Percent of total shares
outstanding 1% 1%
Market value per share $ 41.03 $ 29.31
Average cost per share 16.53 14.06
Total cost of shares
owned $31,139,709 $27,862,612
Unrealized appreciation 46,164,807 30,205,920
----------- -----------
Total market value
of shares owned $77,304,516 $58,068,532
=========== ===========
Dividend income for
the year $ 1,807,480 $ 1,745,190
=========== ===========
The number of shares owned, market value per share and average
cost per share for both periods reflect the May 1998 2-for-1
stock split.
Note 4 Investment in Fidelity U.S. Bond Index Fund and Fidelity
Intermediate Bond Fund
Information regarding the Plan's investment in shares of the
Fidelity U.S. Bond Index Fund follows:
December 31,
--------------------------
1997 1996
----------- -----------
Number of shares owned 7,055,096 -
Market value per share $ 10.79 -
Average cost per share 10.79 -
Total cost of shares
owned $76,124,483 -
Unrealized appreciation - -
----------- -----------
Total market value of
shares owned $76,124,483 -
=========== ===========
Dividend income for the
year $ - -
=========== ===========
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, Continued
Note 4 Investment in Fidelity U.S. Bond Index Fund and Fidelity
Intermediate Bond Fund (continued)
Information regarding the Plan's investment in shares of the
Fidelity Intermediate Bond Fund follows:
December 31,
--------------------------
1997 1996
----------- ---------
Number of shares owned - 7,672,838
Market value per share - $ 10.08
Average cost per share - 10.12
Total cost of shares
owned - $77,638,705
Unrealized (depreciation) - (296,502)
----------- -----------
Total market value of
shares owned - $77,342,203
=========== ===========
Dividend income for the
year $ 5,066,967 $ 4,180,174
=========== ===========
On Dec. 31, 1997 the investment in the Fidelity Intermediate
Bond Fund was sold and reinvested in the Fidelity U.S. Bond
Index Fund.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, Continued
Note 5 Investment in Interest Income Contracts
Information regarding the carrying value of the Plan's
investment in interest income contracts follows. The average
annual yield on the interest income contracts was 5.71% in 1997
and 6.02% in 1996:
December 31,
-------------------------
Company Contract Terms 1997 1996
---------------- ------------------ ----------- -----------
John Hancock -Deposit of first
Life Insurance half 1993 cash flow
and 50% of first
half 1993 contract
payments
-5.74% annual
interest rate
-Repayment on
June 30, 1997 - $12,668,427
Provident Life -Deposit second
and Accident half 1993 cash
Insurance flow and contract
payments
-5.72% annual
interest rate
-Repayment on
Dec. 31, 1997 - 12,762,538
----------- -----------
Total carrying value - $25,430,965
=========== ===========
Interest income for the year $ 1,083,695 $ 2,481,408
=========== ===========
The estimated fair value of the interest income contracts was
based on current interest rates available on fixed income
securities in the market that had terms similar to the Plan's
interest income contracts. Information regarding the
estimated fair value of each interest income contract follows:
Contract Company December 31, 1996
----------------------- -----------------
John Hancock Life
Insurance $12,680,335
Provident Life and
Accident Insurance 12,754,242
-----------
Total estimated fair
value $25,434,577
===========
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 6 Investment in Vanguard Wellesley Income Fund
Information regarding the Plan's investment in shares of the
Vanguard Wellesley Income Fund follows:
December 31,
---------------------------
1997 1996
----------- -----------
Number of shares owned - 2,156,042
Market value per share - $ 20.51
Average cost per share - 18.43
Total cost of shares
owned - $39,730,675
Unrealized appreciation - 4,489,745
----------- -----------
Total market value of
shares owned - $44,220,420
=========== ===========
Dividend income for
the year $ 5,938,398 $ 3,509,228
=========== ===========
On Dec. 31, 1997 the investment in the Vanguard Wellesley
Income Fund was sold and reinvested in the Fidelity Puritan
Fund on Jan. 2, 1998.
Note 7 Investment in Fidelity U.S. Equity Index Pool and Vanguard
Institutional Index Fund
Information regarding the Plan's investment in units of the
Fidelity U.S. Equity Index Pool follows:
December 31,
--------------------------
1997 1996
----------- -----------
Number of units owned 3,152,225 -
Market value per unit $ 27.06 -
Average cost per unit 27.06 -
Total cost of units owned $85,299,219 -
Unrealized appreciation -
----------- -----------
Total Market value of units
owned $85,299,219 -
=========== ===========
Dividend income for the year $ - -
=========== ===========
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 7 Investment in Fidelity U.S. Equity Index Pool and Vanguard
Institutional Index Fund (continued)
Information regarding the Plan's investment in shares of the
Vanguard Institutional Index Fund follows:
December 31,
--------------------------
1997 1996
----------- -----------
Number of shares owned - 857,117
Market value per share - $ 68.86
Average cost per share - 63.21
Total cost of shares owned - $54,175,093
Unrealized appreciation - 4,845,964
----------- -----------
Total Market value of shares
owned - $59,021,057
=========== ===========
Dividend income for the year $ 1,939,735 $ 1,510,086
=========== ===========
The Mellon Stock Fund had 1996 dividend income of $580,865.
Effective June 30, 1996, the investment in the Mellon Stock
Fund was sold and reinvested in the Vanguard Institutional
Index Fund.
On Dec. 31, 1997 the investment in the Vanguard Institutional
Index Fund was sold and reinvested in the Fidelity U.S. Equity
Index Pool.
Note 8 Investment in Twentieth Century Ultra Fund
Information regarding the Plan's investment in shares of the
Twentieth Century Ultra Fund follows:
December 31,
---------------------------
1997 1996
----------- -----------
Number of shares owned - 2,382,988
Market value per share - $ 28.09
Average cost per share - 21.78
Total cost of shares owned - $51,900,311
Unrealized appreciation - 15,037,813
----------- -----------
Total market value of shares
owned - $66,938,124
=========== ===========
Dividend income for the year $16,927,772 $ 3,763,205
=========== ===========
On Dec. 31, 1997 the investment in the Twentieth Century Ultra
Fund was sold and reinvested in the Fidelity Blue Chip Growth
Fund on Jan. 2, 1998.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 9 Investment in Fidelity Diversified International Fund and
Fidelity International Growth Fund
Information regarding the Plan's investment in shares of the
Fidelity Diversified International Fund follows:
December 31,
---------------------------
1997 1996
---------- ----------
Number of shares owned 636,112 -
Market value per share $ 16.13 -
Average cost per share 16.13 -
Total cost of shares owned $10,260,486 -
Unrealized appreciation - -
---------- ----------
Total market value of shares
owned $10,260,486 -
========== ==========
Dividend income for the year $ - -
========== ==========
Information regarding the Plan's investment in shares of the
Fidelity International Growth Fund follows:
December 31,
---------------------------
1997 1996
---------- ----------
Number of shares owned - 396,415
Market value per share - $ 19.55
Average cost per share - 18.10
Total cost of shares owned - $7,174,779
Unrealized appreciation - 575,138
---------- ----------
Total market value of shares
owned - $7,749,917
========== ==========
Dividend income for the year $ 612,588 $ 244,188
========== ==========
On Dec. 31, 1997 the investment in Fidelity International
Growth Fund was sold and reinvested in the Fidelity Diversified
International Fund.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 10 Open investment transactions
Information regarding the Plan's open investment transactions
for investments sold on Dec. 31, 1997 and reinvested in
Fidelity Funds on Jan. 2, 1998 follows:
Market Value
Plan investment funds December 31, 1997
------------------------------- -----------------
Income Fund $ 13,492,555
Balanced Fund 53,078,221
Aggressive Fund 82,475,667
Stable Fund 12,733,891
------------
Total open investment
transactions $161,780,334
============
Note 11 Net appreciation (depreciation) in fair value of investments
The Plan's net appreciation (depreciation) in fair value of
investments owned, purchased or sold during the years
indicated are summarized by investment as follows:
Investment 1997 1996
----------------------------- ------------ -------------
Common stock of The St. Paul
Companies, Inc. $ 23,125,595 $ 3,164,745
Fidelity Intermediate Bond Fund 793,607 (1,844,029)
Vanguard Wellesley Income Fund 2,971,959 229,013
Vanguard Institutional Index Fund 18,842,153 4,927,342
Mellon Stock Fund - 3,287,677
Twentieth Century Ultra Fund (1,148,067) 4,046,528
Fidelity International Growth
Fund (6,545) 496,031
------------ ------------
Total $44,578,702 $14,307,307
============ ============
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
Note 12 Transfers from Other Plans
The Plan allows for rollover transfers to be made to the Plan
by employees of participating companies. These rollover
transfers are lump-sum distributions from other tax-qualified
plans of previous employers which participants elect to have
invested in the Plan within sixty days of receipt.
The Plan also allows for annual diversification transfers to
be made to the Plan by certain participants of The St. Paul
Companies, Inc. Employee Stock Ownership Plan (ESOP). These
diversification transfers are cash amounts which ESOP
participants elect to have invested in the Plan rather than
receive as diversification distributions.
The following is a summary of these transfers to the Plan in
1997 and 1996:
1997 1996
---------- ----------
Rollover transfers $6,150,759 $10,119,577
ESOP diversification transfers 483,709 390,311
---------- -----------
Total transfers from other
plans $6,634,468 $10,509,888
========== ===========
Note 13 Party-in-Interest Transactions
Transactions resulting in Plan assets being transferred to or
used by a related party are prohibited under the Pension
Reform Act (the Act) unless a specific exemption applied.
Fidelity Management Trust Company (Fidelity) and State Street
Bank and Trust Company (State Street), are a party-in-interest as
defined by the Act as a result of being trustee of the Plan.
Fidelity and State Street are investing Plan assets in their
short-term investment fund. The Plan also engages in
transactions involving the acquisition or disposition of common
stock and the short-term pool of The St. Paul Companies, Inc., a
party-in-interest with respect to the Plan. These
transactions are covered by an exemption from the "prohibited
transactions" provisions of ERISA and the Internal Revenue
Code.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Schedule 1
Item 27a-Schedule of Assets Held for Investment Purposes
Investments at End of Plan Year
December 31, 1997
Description of Current
Identity of Issue Investment Cost Value**
- -------------------------- ------------------- ---------- -----------
*The St. Paul Companies, Common stock, no
Inc. par value, 1,884,040
shares $31,139,709 $77,304,516
Fidelity U.S. Bond Index 7,055,096 mutual
Fund fund shares 76,124,483 76,124,483
Fidelity U.S. Equity
Index Pool 3,152,225 pool units 85,299,219 85,299,219
Fidelity Diversified 636,112 mutual fund
International Fund shares 10,260,486 10,260,486
Participant loans 6.50% to 9.50%,
maximum 5 years 21,241,171 21,241,171
Short-term investments:
*St. Paul Short-Term 5.70%, due on 34,293 34,293
Pool demand
*State Street Bank &
Trust Fund 5.86%, due on 6,414,218 6,414,218
demand
Fidelity Institutional
Cash
Portfolio 5.67%, due on 28,647 28,647
demand
---------- -----------
6,477,158 6,477,158
---------- -----------
Total investments $230,542,226 $276,707,033
=========== ===========
*Party-in-interest
**For ERISA reporting purposes current value is equal to
market value, except for participant loans, which are
equal to unpaid principal plus accrued interest.
See accompanying independent auditors' report.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Schedule 2
Item 27d-Schedule of Reportable Transactions*
Year Ended December 31, 1997
Current
Identity of Party Value of
Involved/ the Asset
Description of Purchase Selling Cost of on Trans- Net Gain
Asset Price Price the Asset** action date or (Loss)
- ------------------ --------- --------- --------- ---------- --------
Fidelity U.S. Bond
Index Fund/Mutual
Fund Shares:
Purchases $76,124,483 $ - $76,124,483 $76,124,483 $ -
Fidelity
Intermediate
Bond Fund/
Mutual
Fund Shares:
Purchases 25,048,275 25,048,275 25,048,275 -
Withdrawals 103,257,367 102,006,017 103,257,367 1,251,350
Fidelity U.S.
Equity
Index Pool/
Pool Units:
Purchases 85,299,219 85,299,219 85,299,219 -
Vanguard Wellesley
Income Fund/
Mutual
Fund Shares:
Withdrawals 60,844,440 57,872,409 60,844,440 2,972,031
Vanguard
Institutional
Index Fund/
Mutual
Fund Shares:
Withdrawals 94,108,061 75,265,908 94,108,061 18,842,153
Twentieth Century
Ultra Fund/
Mutual
Fund Shares:
Purchases 29,288,382 29,288,382 29,288,382 -
Withdrawals 95,073,346 96,221,413 95,073,346 (1,148,067)
*No expense incurred with transactions
**For ERISA reporting purposes cost is equal to the market value as of the
beginning of the year, plus current year purchases. For assets purchased
and sold during the year the cost is equal to the purchase price.
See accompanying independent auditors' report.
<PAGE>
SIGNATURE
----------
The Plan. Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees (or other persons who administer the
employee benefit plan) have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
June 29, 1998 THE ST. PAUL COMPANIES, INC.
SAVINGS PLUS PLAN
(The Plan)
By /s/John P. Clifford Jr.
------------------------
John P. Clifford Jr.
Human Resources Benefits and
Compensation Officer,
Member of the Administrative
Committee for The St. Paul
Companies, Inc. Savings Plus
Plan
