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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest
event reported): January 26, 1998
THE ST. PAUL COMPANIES, INC.
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(Exact name of Registrant as specified in its charter)
Minnesota 0-3021 41-0518860
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(State of (Commission File (I.R.S. Employer
Incorporation) Number) Identification No.)
385 Washington St., St. Paul, MN 55102
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(Address of principal (Zip Code)
executive offices)
(612) 310-7911
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(Registrant's telephone number,
including area code)
N/A
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(Former name or former address, if changed since last
report)
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Item 5. Other Events.
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Filed herewith are statements derived from a press
release dated January 26, 1998, of the registrant relating
to its results for the year ended December 31, 1997, which
will be superseded by the registrant's Annual Report on Form
10-K for such period.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
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An Exhibit Index is set forth as the next page in this
report.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
THE ST. PAUL COMPANIES, INC.
By /s/ Bruce A. Backberg
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Bruce A. Backberg
Senior Vice President,
Chief Legal Counsel
and Corporate Secretary
Date: January 27, 1998
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EXHIBIT INDEX
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How
Exhibit Filed
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(99) Statements derived from a press release of
The St. Paul Companies, Inc. dated January 26, 1998
relating to its results for the year ended
December 31, 1997. . . . . . . . . . . . . . . . .. . . (1)
(1) Filed electronically.
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Exhibit 99
Jan. 26, 1998 - THE ST. PAUL COMPANIES REPORTS
RECORD EARNINGS FOR 1997
Operating Earnings Increase 28%
ST. PAUL, Minn. - The St. Paul Companies (NYSE:SPC) today
reported record operating earnings from continuing
operations of $531.1 million, or $5.77 per share (diluted),
for 1997, compared with $414.8 million, or $4.56 per share
(diluted), for 1996.
"Our underwriting operations performed well in a
fiercely competitive market, aided by a $100 million decline
in catastrophe losses from last year's near-record level,"
said Douglas W. Leatherdale, chairman and chief executive
officer.
"Our specialized commercial segment - our largest
underwriting unit, consisting of Major Markets and Custom
Markets, delivered especially good results in 1997, although
premiums were flat with 1996, reflecting tough competition
in that marketplace.
"Our reinsurance operation posted another year of solid
results, also in a very competitive market, In 1997, St.
Paul Re opened branch offices in Chicago and Sydney,
Australia.
"One of our major success stories for 1997 was the
turnaround in our Personal Insurance operation, with
particularly good results in the fourth quarter.
"Our investment portfolio generated a record $886
million in pretax investment income and over $400 million in
pretax realized gains."
Net income for 1997 was a record $705.5 million, or
$7.66 per share, compared with net income of $450.1 million,
or $4.94 per share, for 1996. 1997 net income included
after-tax realized investment gains of $242.1 million, or
$2.62 per share, compared with $143.1 million, or $1.55 per
share, in 1996.
The St. Paul Companies' 77% share of The John Nuveen
Company's 1997 pretax earnings was $92.6 million.
"Our shareholders' equity grew to $4.6 billion - a new
high. Book value at year-end stood at $55.06 per share, up
from $47.93 a year ago," Leatherdale said. "Company assets
were $21.5 billion at year-end, up from $20.7 billion a year
ago.
"Of particular note at this time is our announcement
one week ago that the boards of The St. Paul Companies and
USF&G Corporation approved a merger agreement," Leatherdale
said.
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The merger is expected to form the nation's eighth-
largest property-casualty insurer (based on combined 1996
net written premium volume for the two companies). The
combined company will have a very large market presence in
key areas of the specialty insurance business, as well as
leading positions in surety, reinsurance and certain niches
of commercial insurance. The company will operate under the
St. Paul name, and headquarters will be in St. Paul, Minn.
The transaction is subject to various regulatory approvals
and votes by The St. Paul Companies, Inc. and USF&G
Corporation shareholders, and is expected to close in mid-
1998.
The transaction will provide USF&G shareholders with
St. Paul common stock. The merger will be a tax-free
exchange accounted for on a pooling-of-interests basis. The
total value of the transaction is approximately $3.5
billion, which includes $2.8 billion of equity, plus the
assumption of approximately $400 million in debt and $300
million of capital securities. The St. Paul Companies, Inc.
expects to incur restructuring charges of between $300
million and $500 million in 1998 in connection with the
merger.
Fourth-quarter results
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For the fourth quarter of 1997, operating earnings from
continuing operations were $147.5 million, or $1.59 per
share, compared with operating earnings of $107.2 million,
or $1.18 per share, for the fourth quarter of 1996.
Net income for the fourth quarter of 1997 was $187.0
million, or $2.02 per share, compared with net income of
$62.3 million, or $0.69 per share, for the fourth quarter of
1996. Net income for the fourth quarter of 1997 included
after-tax realized investment gains of $39.5 million, or
$0.43 per share, compared with $56.2 million, or $0.61 per
share, in 1996.
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THE ST. PAUL COMPANIES
CONSOLIDATED 1997 RESULTS
1997 1996
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Revenues $6,219,273,000 $5,734,156,000
Pretax Operating Earnings
Underwriting $615,445,000 $477,535,000
Investment Banking-
Asset Management 92,617,000 91,697,000
Parent and Other (97,439,000) (88,621,000)
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Total pretax operating earnings $610,623,000 $480,611,000
Income Tax Expense $79,538,000 $65,856,000
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Operating Earnings $531,085,000 $414,755,000
Per Common Share (Diluted) $5.77 $4.56
Per Common Share (Basic) $6.20 $4.85
Realized Investment Gains,
Net of Taxes $242,138,000 $143,103,000
Per Common Share (Diluted) $2.62 $1.55
Per Common Share (Basic) $2.90 $1.72
Discontinued Operations,
Net of Taxes $(67,750,000) $(107,759,000)
Per Common Share (Diluted) $(0.73) $(1.17)
Per Common Share (Basic) $(0.82) $(1.29)
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Net Income $705,473,000 $450,099,000
Per Common Share (Diluted) $7.66 $4.94
Per Common Share (Basic) $8.28 $5.28
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Common Shareholders' Equity $4,609,985,000 $3,987,757,000
Per Common Share $55.06 $47.93
THE ST. PAUL COMPANIES
CONSOLIDATED FOURTH-QUARTER RESULTS
1997 1996
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Revenues $1,544,311,000 $1,563,633,000
Pretax Operating Earnings
Underwriting $165,754,000 $148,593,000
Investment Banking-
Asset Management 25,334,000 25,179,000
Parent and Other (25,804,000) (26,566,000)
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Total pretax operating earnings $165,284,000 $147,206,000
Income Tax Expense $17,775,000 $40,037,000
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Operating Earnings from
Continuing Operations $147,509,000 $107,169,000
Per Common Share (Diluted) $1.59 $1.18
Per Common Share (Basic) $1.71 $1.26
Realized Investment Gains,
Net of Taxes $39,487,000 $56,160,000
Per Common Share (Diluted) $0.43 $0.61
Per Common Share (Basic) $0.48 $0.67
Discontinued Operations,
Net of Taxes - ($101,038,000)
Per Common Share (Diluted) - ($1.10)
Per Common Share (Basic) - ($1.21)
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Net Income $186,996,000 $62,291,000
Per Common Share (Diluted) $2.02 $0.69
Per Common Share (Basic) $2.19 $0.72
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THE ST. PAUL COMPANIES
TWELVE-MONTHS UNDERWRITING OPERATIONS
HIGHLIGHTS
Twelve months ended Dec. 31 1997 1996
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Written premiums $4,479,903,000 $4,396,122,000
Net investment income $880,802,000 $794,901,000
Combined ratio 105.1 105.5
THE ST. PAUL COMPANIES
FOURTH-QUARTER UNDERWRITING OPERATIONS
HIGHLIGHTS
Three months ended Dec. 31 1997 1996
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Written premiums $1,081,561,000 $1,136,615,000
Net investment income $225,612,000 $210,265,000
Combined ratio 105.2 105.2
The St. Paul Companies, headquartered in St. Paul, Minn., is
a group of companies providing property-liability insurance
products and services throughout the world.
