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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 29, 1999
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)
(651) 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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The following information was derived from press
releases of The St. Paul Companies, Inc. dated February 2,
1999 and January 29, 1999:
February 2, 1999
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The St. Paul's board of directors increased the regular
quarterly dividend from $0.25 per share to $0.26 per share
payable April 16, 1999 to shareholders of record at the
close of business March 31, 1999. The new annual dividend
rate of $1.04 per share represents a 4 percent increase over
the previous rate of $1.00 per share. The St. Paul has paid
cash dividends without interruption for 127 years and has
increased the dividend in each of the last 13 years.
January 29, 1999
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The St. Paul Companies reported 1998 fourth-quarter
core* operating earnings of $133.5 million, or $0.53 per
share (diluted). These results compare to core operating
earnings of $206.9 million, or $0.82 per share (diluted) for
the same period in 1997. The decline in the 1998 quarter is
attributable to continuing difficult conditions in the
property-liability insurance marketplace.
Fourth quarter net income was $104.0 million, or $0.41
per share, compared with net income of $255.8 million, or
$1.01 per share, for the same period of 1997. Fourth-
quarter 1998 net income included $22.3 million, or $0.09 per
share, in after-tax restructuring charges for severance and
lease buy-out costs related to a fourth-quarter
reorganization of the company's commercial insurance
operations. 1998 fourth-quarter net income also included
after-tax realized investment losses of $7.2 million, or
$0.03 per share, compared with fourth-quarter after-tax
realized gains of $48.9 million, or $0.19 per share.
"Our performance in the final quarter of 1998, although
worse than last year's comparable results, reflects strong
improvement over the second and third quarters of 1998 in a
persistently difficult market," said Douglas W. Leatherdale,
chairman and chief executive officer of The St. Paul. "The
improvement is due in part to our successful integration of
USF&G operations."
*Core operating earnings exclude the 1998 second-quarter
merger-related charges and fourth-quarter restructuring
charges.
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1998 results
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Core operating earnings for 1998 were $397.2 million,
or $1.61 per share (diluted), compared with 1997 core
operating earnings of $742.9 million, or $2.95 per share
(diluted). 1998 results were affected by $418.7 million in
pretax catastrophe losses, and difficult market conditions.
Net income for 1998 was $65.2 million or $0.22 per share,
compared with 1997 net income of $929.3 million, or $3.69
per share. 1998 net income includes a second-quarter after-
tax merger-related charge of $457.5 million, or $1.92 per
share, as well as the fourth-quarter restructuring charges.
1998 net income also includes after-tax realized gains of
$147.8 million, or $0.62 per share, compared with gains of
$254.2 million, or $1.01 per share, for 1997. Net income in
1997 included an after-tax loss of $67.8 million, or $0.27
per share, from discontinued operations.
All results reflect the combined St. Paul and USF&G
operations, and figures for prior periods have been
restated.
"Even though written premiums were down 3 percent from
1997, and we incurred commercial underwriting losses in a
market characterized by a continued decline in prices,
several of our businesses turned in excellent results.
These include our Surety, Technology, and Financial and
Professional Services businesses within our specialty
segment; our Nonstandard Auto operation; and our reinsurance
segment," Leatherdale said.
"In addition, our operations outside the property-
liability insurance industry continue to produce strong
results. F&G Life's pretax earnings were up 19 percent over
last year, and our portion of The John Nuveen Company's
earnings was up 12 percent."
Consolidated financial position of The St. Paul Companies
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Consolidated assets of The St. Paul Companies as of
Dec. 31, 1998 were $38.3 billion, compared with $37.4
billion on Dec. 31, 1997. Common shareholders' equity was
$6.6 billion at year-end, or $28.22, about even with Dec.
31, 1997.
During the fourth quarter of 1998, The St. Paul
repurchased 3.8 million of its common shares for a total
cost of $135 million.
The St. Paul Companies is a group of companies
providing insurance and reinsurance products and services
worldwide.
Certain statements made by the company in this release
may constitute forward-looking statements. Actual results
may differ materially from those projected in the forward-
looking statements. These forward looking statements
involve risks and uncertainties including, but not limited
to, the following: the frequency and severity of
catastrophic events; a change in the demand for, pricing of,
or supply of reinsurance or insurance; increased competitive
pressure; losses due to foreign currency exchange rate
fluctuations; changes in the rate of inflation; effects of
the merger with USF&G Corporation; and general economic
conditions.
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THE ST. PAUL COMPANIES
CONSOLIDATED YEAR-END RESULTS
Year ended Dec. 31 1998 1997
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Core Revenues $9,137,409,000 $9,623,179,000
Pretax Core Operating Earnings
Property-Liability Insurance $392,443,000 $978,253,000
Life Insurance $75,908,000 $63,886,000
Asset Management $103,960,000 $92,617,000
Parent and Other ($196,072,000) ($222,096,000)
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Total Pretax Core Operating Earnings $376,239,000 $912,660,000
Income Tax Expense (Benefit) ($20,962,000) $169,801,000
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Core Operating Earnings
from Continuing Operations $397,201,000 $742,859,000
Per Common Share (Basic) $1.63 $3.16
Per Common Share (Diluted) $1.61 $2.95
Restructuring Charges, Net of Taxes (22,295,000) -
Per Common Share (Basic) ($0.09) -
Per Common Share (Diluted) ($0.09) -
Merger-Related Charges, Net of Taxes ($457,517,000) -
Per Common Share (Basic) ($1.95) -
Per Common Share (Diluted) ($1.92) -
Core Realized Investment Gains,
Net of Taxes* $147,768,000 $254,183,000
Per Common Share (Basic) $0.63 $1.11
Per Common Share (Diluted) $0.62 $1.01
Discontinued Operations,
Net of Taxes - ($67,750,000)
Per Common Share (Basic) - ($0.30)
Per Common Share (Diluted) - ($0.27)
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Net Income $65,157,000 $929,292,000
Per Common Share (Basic) $0.22 $3.97
Per Common Share (Diluted) $0.22 $3.69
Common Shareholders Equity $6,596,620,000 $6,591,443,000
Per Common Share $28.22 $28.27
*Core realized investment gains exclude the 1998 second-
quarter merger-related writedown in the carrying value of
certain investments.
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THE ST. PAUL COMPANIES
CONSOLIDATED FOURTH-QUARTER RESULTS
Three months ended Dec. 31 1998 1997
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Core Revenues $2,193,271,000 $2,403,536,000
Pretax Core Operating Earnings
Property-Liability Insurance $114,144,000 $267,859,000
Life Insurance $18,929,000 $18,130,000
Asset Management $29,378,000 $25,334,000
Parent and Other ($38,827,000) ($58,426,000)
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Total Pretax Core Operating Earnings $123,624,000 $252,897,000
Income Tax Expense (Benefit) ($9,873,000) $46,009,000
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Core Operating Earnings
from Continuing Operations $133,497,000 $206,888,000
Per Common Share (Basic) $0.55 $0.87
Per Common Share (Diluted) $0.53 $0.82
Realized Investment Gains
(Losses), Net of Taxes ($7,244,000) $48,872,000
Per Common Share (Basic) ($0.03) $0.22
Per Common Share (Diluted) ($0.03) $0.19
Restructuring Charges, Net of Taxes (22,295,000) -
Per Common Share (Basic) ($0.09) -
Per Common Share (Diluted) ($0.09) -
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Net Income $103,958,000 $255,760,000
Per Common Share (Basic) $0.43 $1.09
Per Common Share (Diluted) $0.41 $1.01
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ST. PAUL YEAR-END PROPERTY-LIABILITY
UNDERWRITING OPERATIONS HIGHLIGHTS
Year ended Dec. 31 1998 1997
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Written premiums $6,693,168,000 $6,931,928,000
Net investment income (pretax) 1,306,828,000 $1,323,967,000
Core statutory combined ratio 112.5 103.8
ST. PAUL FOURTH-QUARTER PROPERTY-LIABILITY
UNDERWRITING OPERATIONS HIGHLIGHTS
Three months ended Dec. 31 1998 1997
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Written premiums $1,566,409,000 $1,605,565,000
Net investment income $321,841,000 $338,273,000
Core statutory combined ratio 110.7 103.8
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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
and Chief Legal Counsel
Date: February 3, 1999
