<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, 1998
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 . . . . . . . . . . . 7-16
Item 27a-Schedule of Assets Held for Investment Purposes 17
Item 27b-Schedule of Loans or Fixed Income Obligations 18
Item 27d-Schedule of Reportable Transactions . . . . 19
<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, 1998 and 1997,
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, 1998 and 1997, 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, loans or
fixed income obligations 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 18, 1999
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
1998 1997
------------ ------------
Assets:
Investments:
Common stock of The St.Paul
Companies, Inc. $ 68,022,546* $ 77,304,516*
Fidelity U.S. Bond Index Fund 88,915,578* 76,124,483*
Fidelity Puritan Fund 57,382,686* -
Fidelity U.S. Equity Index Pool 102,075,127* 85,299,219*
Fidelity Blue Chip Growth Fund 109,561,232* -
Fidelity Diversified International
Fund 12,265,902 10,260,486
Fidelity Retirement Money Market
Portfolio 17,173,757 -
Fidelity Equity-Income Fund 4,813,091 -
Franklin Small Cap Growth Fund I 4,951,288 -
Neuberger & Berman Genesis Fund 3,784,222 -
Participant loans 19,477,531 21,241,171*
Short-term investments 833,735 6,477,158
------------ ------------
Total investments 489,256,695 276,707,033
Receivables:
Open investment transactions - 161,780,334
Accrued dividends 487,492 442,967
------------ ------------
Total assets 489,744,187 438,930,334
------------ ------------
Liabilities:
Cash overdraft - 6,443,772
Forfeitures and other 237,247 136,239
------------ ------------
Total liabilities 237,247 6,580,011
------------ ------------
Net assets available for plan benefits $489,506,940 $432,350,323
============ ============
*Investment represents 5 percent or more of the Plan's net assets
available for plan benefits.
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, 1998
<TABLE>
<CAPTION>
Company Stock Income Balanced Diversified Aggressive
Fund Fund Fund Fund Fund
<S> ------------- -------- -------- ----------- ----------
Contributions:
Participating companies <C> <C> <C> <C> <C>
(salary conversion) $3,700,168 $2,942,318 $2,847,635 4,728,295 $6,359,696
Investment income:
Interest - - - - -
Dividends 1,955,690 5,703,496 6,060,376 - 4,456,379
Net appreciation
(depreciation) in fair
value of investments (12,297,730) 1,849,209 2,209,242 23,711,648 23,669,569
---------- ---------- ---------- ---------- ----------
Total investment
income (loss) (10,342,040) 7,552,705 8,269,618 23,711,648 28,125,948
Transfers from other plans 561,731 160,078 274,660 660,745 1,186,950
---------- ---------- ---------- ---------- ----------
Total additions (loss) (6,080,141) 10,655,101 11,391,913 29,100,688 35,672,594
---------- ---------- ---------- ---------- ----------
Retirement and termination
distribution benefits
and withdrawals:
Paid to participants
in cash 2,824,203 8,268,630 4,495,407 6,349,854 6,571,293
Common stock distributed,
at market value 1,098,336 - - - -
Forfeitures and other - - - - -
---------- ---------- ---------- ---------- ----------
Total deductions 3,922,539 8,268,630 4,495,407 6,349,854 6,571,293
---------- ---------- ---------- ---------- ----------
Net increase (decrease) prior
to interfund transfers (10,002,680) 2,386,471 6,896,506 22,750,834 29,101,301
Interfund transfers 720,710 (3,087,931) (2,592,041) (5,974,926) (2,015,736)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) (9,281,970) (701,460) 4,304,465 16,775,908 27,085,565
Net assets available for plan
benefits:
Beginning of year 77,304,516 89,617,038 53,078,221 85,299,219 82,475,667
---------- ---------- ---------- ----------- -----------
End of year $68,022,546 $88,915,578 $57,382,686 $102,075,127 $109,561,232
========== ========== ========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Equity
International Stable Income Growth Growth
Fund Fund Fund Fund I Fund II
<S> ------------- ---------- ---------- ---------- ----------
Contributions:
Participating companies <C> <C> <C> <C> <C>
(salary conversion) $1,314,560 $ 777,184 $ 887,192 $ 989,417 $1,113,587
Investment income:
Interest - 749,081 - - -
Dividends 463,727 - 191,275 68,880 118,603
Net appreciation
(depreciation) in fair
value of investments 985,179 - (120,958) (436,198) (424,019)
---------- ---------- ---------- ---------- ----------
Total investment income 1,448,906 749,081 70,317 (367,318) (305,416)
Transfers from other plans 265,224 927,431 398,645 299,459 298,284
---------- ---------- ---------- ---------- ----------
Total additions 3,028,690 2,453,696 1,356,154 921,558 1,106,455
---------- ---------- ---------- ---------- ----------
Retirement and termination
distribution benefits
and withdrawals:
Paid to participants
in cash 774,038 2,661,614 126,497 45,884 174,710
Common stock distributed,
at market value - - - - -
Forfeitures and other - - - - -
---------- ---------- ---------- ---------- ----------
Total deductions 774,038 2,661,614 126,497 45,884 174,710
---------- ---------- ---------- ---------- ----------
Net increase (decrease) prior
to interfund transfers 2,254,652 (207,918) 1,229,657 875,674 931,745
Interfund transfers (249,236) 4,647,784 3,583,434 4,075,614 2,852,477
---------- ---------- ---------- ---------- ----------
Net increase (decrease) 2,005,416 4,439,866 4,813,091 4,951,288 3,784,222
Net assets available for plan
benefits:
Beginning of year 10,260,486 12,733,891 - - -
---------- ---------- ---------- ---------- ----------
End of year $12,265,902 $17,173,757 $4,813,091 $4,951,288 $3,784,222
========== ========== ========== ========== ==========
</TABLE>
<PAGE>
Participant Other
Loans Unallocated Total
----------- ----------- ---------
Contributions:
Participating companies
(salary conversion) $ - $ - $25,660,052
Investment income:
Interest 1,734,670 55,259 2,539,010
Dividends - - 19,018,426
Net appreciation
(depreciation) in fair
value of investments - - 39,145,942
---------- --------- ----------
Total investment income 1,734,670 55,259 60,703,378
Transfers from other plans - - 5,033,207
---------- --------- ----------
Total additions 1,734,670 55,259 91,396,637
========== ========= ==========
Retirement and termination
distribution benefits
and withdrawals:
Paid to participants
in cash 759,302 - 33,051,432
Common stock distributed,
at market value - - 1,098,336
Forfeitures and other - 90,252 90,252
---------- --------- ----------
Total deductions 759,302 90,252 34,240,020
---------- --------- ----------
Net increase (decrease) prior
to interfund transfers 975,368 (34,993) 57,156,617
Interfund transfers (2,739,008) 778,859 -
---------- --------- ----------
Net increase (decrease) (1,763,640) 743,866 57,156,617
Net assets available for plan
benefits:
Beginning of year 21,241,171 340,114 432,350,323
---------- --------- -----------
End of year $19,477,531 $1,083,980 $489,506,940
========== ========= ===========
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 (decrease) 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 conversion) $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 (decrease) 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
Notes to Financial Statements
December 31, 1998 and 1997
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. The Company has 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, were eligible to participate on the Jan. 1 or July 1
following their employment date and effective Jan. 1, 1998 are
eligible to participate immediately upon employment.
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
December 31, 1998 and 1997
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 to an annual maximum of $10,000.
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.
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 ten 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
December 31, 1998 and 1997
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, a
mutual fund that invests in investment-grade debt securities
which became the underlying investment for the Income Fund.
Prior to 1994, the Income Fund invested in interest income
contracts issued by banks or insurance companies. 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 on Jan. 2, 1998 in the Fidelity
Puritan Fund, a mutual fund that invests in common stocks and
bonds which became the underlying investment for the Balanced
Fund.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
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 (S&P 500).
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, a
commingled pool managed by Fidelity Management Trust Company
that invests in the common stocks of the S&P 500, which became
the underlying investment for the Diversified Fund.
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 on Jan. 2, 1998 in the Fidelity Blue Chip
Growth Fund, a mutual fund that invests in common stocks of
established companies, which became the underlying investment
for the Aggressive Fund.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
Note 1 Description of the Plan (continued)
Investment Funds (continued)
----------------------------
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, a mutual fund that
invests in international equity securities, which became the
underlying investment for the International Fund.
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 on Jan. 2, 1998 in
the Fidelity Retirement Money Market Portfolio, a money market
mutual fund that invests in money market securities, which
became the underlying investment for the Stable Fund.
Equity-Income Fund
------------------
The Equity-Income Fund, first available in 1998, is to be
invested in an investment fund which invests in income
securities.
Effective Jan. 1, 1998, the Benefit Plans Investment Committee
selected the Fidelity Equity-Income Fund, a mutual fund that
invests in income-producing equity securities as the underlying
investment for the Equity-Income Fund.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
Note 1 Description of the Plan (continued)
Investment Funds (continued)
----------------------------
Growth Fund I
-------------
The Growth Fund I, first available in 1998, is to be invested
in an investment fund which invests in common stock of small-
cap companies.
Effective Jan. 1, 1998, the Benefit Plans Investment Committee
selected the Franklin Small Cap Growth Fund I, a mutual fund
managed by Franklin Advisers, Inc., that invests in stocks of
companies with market values less than $1 billion, as the
underlying investment for the Growth Fund I.
Growth Fund II
--------------
The Growth Fund II, first available in 1998, is to be invested
in an investment fund which invests in common stocks of smaller-
cap companies.
Effective Jan. 1, 1998, the Benefit Plans Investment Committee
selected the Neuberger & Berman Genesis Fund, a mutual fund
managed by Neuberger & Berman Management, Inc. that invests in
stocks of companies with market values less than $750 million,
as the underlying investment for the Growth Fund II.
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.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
Note 1 Description of the Plan (continued)
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.
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. Effective Jan.
1, 1998, participants pay a $75.00 set-up fee for each loan.
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.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
Note 1 Description of the Plan (continued)
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.
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.
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 are 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.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
Note 2 Significant Accounting Policies (continued)
Certain amounts in the 1997 financial statements have been
reclassified to conform to the 1998 presentation.
Note 3 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 4 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. Stock Ownership Plan (SOP). These
diversification transfers are cash amounts which SOP
participants elect to have invested in the Plan rather than
receive as diversification distributions. Effective
Jan. 1, 1998 the SOP diversification occured within the SOP
and does not affect the Plan.
The following is a summary of these transfers to the Plan in
1998 and 1997:
1998 1997
---------- ----------
Rollover transfers $5,033,207 $6,150,759
SOP diversification transfers - 483,709
---------- -----------
Total transfers from other
plans $5,033,207 $6,634,468
========== ===========
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 1998 and 1997
Note 5 Party-in-Interest Transactions
Transactions resulting in Plan assets being transferred to or
used by a related party are prohibited under the Employee Retirement
Income Security Act of 1974 (ERISA) unless a specific exemption
applied. Fidelity Management Trust Company (Fidelity) and State Street
Bank and Trust Company (State Street), are each a party-in-
interest as defined by ERISA 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.
Note 6 Subsequent Event
On April 24, 1998, the Company completed a merger with the
USF&G Corporation and, effective as of the close of business
Dec. 31, 1998, the USF&G Corporation Capital Accumulation Plan,
with net assets of approximately $230,000,000, was merged into
the Plan.
<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, 1998
Description of Current
Identity of Issue Investment Cost Value**
- -------------------------- ------------------- ---------- -----------
*The St. Paul Companies, Inc. 1,953,969 no par
common shares $ 37,061,957 68,022,546
*Fidelity U.S. Bond Index 8,068,564 mutual
Fund fund shares 87,231,942 88,915,578
*Fidelity Puritan Fund 2,859,127 mutual
fund shares 55,463,244 57,382,686
*Fidelity U.S. Equity 2,929,826 pool
Index Pool units 80,417,021 102,075,127
*Fidelity Blue Chip Growth 2,174,265 mutual
Fund fund shares 87,681,283 109,561,232
*Fidelity Diversified 692,207 mutual
International Fund fund shares 11,500,257 12,265,902
*Fidelity Retirement Money 17,173,757 mutual
Market Portfolio fund shares 17,173,757 17,173,757
*Fidelity Equity-Income 86,644 mutual
Fund fund shares 4,855,585 4,813,091
Franklin Small Cap Growth 219,375 mutual
Fund I fund shares 5,142,659 4,951,288
Neuberger & Berman 262,065 mutual
Genesis Fund fund shares 4,124,292 3,784,222
Participant loans 6.50% to 9.50%,
maximum 5 years 19,477,531 19,477,531
Short-term investments:
*St. Paul Short-Term Pool 5.21%, due on demand 36,241 36,241
*Fidelity Institutional
Cash Portfolio 5.20%, due on demand 797,494 797,494
---------- -----------
833,735 833,735
---------- -----------
Total investments $410,968,263 $489,256,695
=========== ===========
*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 27b-Schedule of Loans or Fixed Income Obligations
Year Ended December 31, 1998
Identity of Amount received during Unpaid
obligor/ Original reporting year balance Amount overdue**
Description of amount at end Prin- Int-
loan of loan Principal Interest of year cipal erest
- ------------------ ------- --------- -------- ------ -------- --------
Brethauer,
William R.
Oviedo, Florida
Loan, 6.5%
interest,
due 1/26/98 $17,100 $ - $ - $2,859 $ 308 $ 1
Christiansen,
Toni S.
Portland, Oregon
Loan, 9.0%
interest,
due 4/30/98 700 12 2 688 216 35
Colburn, Harley B.
St. Paul, Minnesota
Loan, 6.75%
interest,
due 4/30/98 10,200 767 66 2,410 1,594 72
Loan, 8.75%
interest,
due 4/30/98 12,300 781 272 8,546 1,556 432
Coleman, Judy A.
Charlotte, NC
Loan, 6.5%
interest,
due 11/16/98 5,500 - - 1,340 1,107 33
Loan, 9.0%
interest,
due 1/14/00 6,300 - - 3,550 1,358 209
Davis, Carla D.
Indianapolis, IN
Loan, 6.5%
interest,
due 11/16/98 13,700 - - 5,276 2,758 83
Driesch, Robert D.
Bloomington, MN
Loan, 9.25%
interest,
due 6/29/00 20,000 - - 12,940 4,306 890
Grantz, Caren
St. Paul, Minnesota
Loan, 9.0%
interest,
due 4/30/98 3,000 168 90 2,795 336 152
Schworer,
Thomas A.
New Brighton, MN
Loan, 8.75%
interest,
due 3/10/00 1,900 - - 1,229 484 80
**The company monitors participant loans which are in default on a monthly
basis. Participants who have not separated from service and have not made
a loan payment for more than one calendar quarter are deemed to have
received a distribution and are issued an IRS form 1099 for the amount of
the unpaid loan balance. For participants who have separated from service
and have an unpaid loan, they must repay their loan in full within 60 days
or their loan is defaulted and are issued an IRS form 1099 for the amount
of the unpaid loan balance.
See accompanying independent auditors' report.
<PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Schedule 3
Item 27d-Schedule of Reportable Transactions**
Year Ended December 31, 1998
Total Total
Identity of Party Total Total Dollar Dollar
Involved/ Number Number Value Value
Description of of of of of
Asset Purchases Sales Purchases Sales Net Gain
- ------------------ --------- ------- ---------- ---------- ---------
*Fidelity Puritan
Fund/ Mutual Fund
Shares: 220 205 $66,053,977 $10,880,475 $289,830
*Fidelity Blue Chip
Growth Fund/
Mutual Fund Shares: 229 206 103,845,770 17,954,078 1,789,685
*Fidelity
Retirement
Money Market
Portfolio/
Mutual Fund Shares: 213 206 29,807,888 12,551,407 -
*Fidelity U.S.
Bond Index Fund/
Mutual Fund Shares: 226 204 17,943,833 20,416,645 165,573
*Fidelity U.S. Equity
Index Pool/
Mutual Fund Shares: 226 206 11,996,970 18,989,163 2,053,539
*Party-in-interest
**No expense incurred with transactions
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.
THE ST. PAUL COMPANIES, INC.
SAVINGS PLUS PLAN
(The Plan)
June 28, 1999 By /s/ John P. Clifford, Jr.
-------------------------
John P. Clifford Jr.
Vice President, Performance
and Reward Systems
Member of the Administrative
Committee for The St. Paul
Companies, Inc. Savings Plus
Plan
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
------ -----------
23 Consent of Independent Auditors
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Plan Administrative Committee and Plan Participants
The St. Paul Companies, Inc. Savings Plus Plan:
We consent to incorporation by reference in the registration statement
(No. 33-15392) on Form S-8 of The St. Paul Companies, Inc. of our report
dated June 18, 1999, relating to the statement of net assets available for
benefits of The St. Paul Companies, Inc. Savings Plus Plan as of
December 31, 1998 and 1997, and the related statements of changes in net
assets available for plan benefits with fund information for the years
then ended and related supplemental schedules for the year ended
December 31, 1998 which report appears elsewhere in this December 31, 1998
annual report on Form 11-K of The St. Paul Companies, Inc. Savings Plus
Plan.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
June 28, 1999
