-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E3FEKjRU+8+ylqAc0lHngRiqHD4jfWMrRme9gULu6ka89DHl37Jeeg9ovRdrTwUO ytpZj/WaGyT6npm4DbywAA== 0000086312-98-000024.txt : 19980806 0000086312-98-000024.hdr.sgml : 19980806 ACCESSION NUMBER: 0000086312-98-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980803 ITEM INFORMATION: FILED AS OF DATE: 19980805 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST PAUL COMPANIES INC /MN/ CENTRAL INDEX KEY: 0000086312 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 410518860 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10898 FILM NUMBER: 98677641 BUSINESS ADDRESS: STREET 1: 385 WASHINGTON ST CITY: SAINT PAUL STATE: MN ZIP: 55102 BUSINESS PHONE: 6123107911 FORMER COMPANY: FORMER CONFORMED NAME: SAINT PAUL COMPANIES INC DATE OF NAME CHANGE: 19900730 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 --------------------------- Date of Report (Date of earliest event reported): August 3, 1998 THE ST. PAUL COMPANIES, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Minnesota 0-3021 41-0518860 - ------------------- -------------------- --------------------- (State of (Commission File (I.R.S. Employer Incorporation) Number) Identification No.) 385 Washington St., St. Paul, MN 55102 - -------------------------------- ----------- (Address of principal (Zip Code) executive offices) (651) 310-7911 ---------------------------------- (Registrant's telephone number, including area code) N/A - ------------------------------------------------------------ (Former name or former address, if changed since last report) Item 5. Other Events. ------------- The following information was derived from a press release of The St. Paul Companies, Inc. dated August 3, 1998: THE ST. PAUL COMPANIES REPORTS SECOND-QUARTER RESULTS The St. Paul Companies (NYSE:SPC) reported second- quarter 1998 core operating earnings of $53.2 million, or $0.21 per share (diluted). Second quarter 1997 core operating earnings were $176.9 million, or $0.71 per share (diluted). Beginning this quarter, all results reflect the combined St. Paul and USF&G operations, and figures for prior periods have been restated. "Core operating earnings" exclude the $457.5 million, or $1.95 per share, one-time after-tax charge taken in the second quarter as a result of The St. Paul's merger with USF&G. Douglas W. Leatherdale, chairman and chief executive officer, said, "Our second-quarter and six-month performance was affected by a high level of catastrophe losses and intensely competitive conditions in the property-liability insurance market. "Second-quarter storm activity blanketed the entire country, but much of the worst was focused in Minnesota, where we have a heavy concentration of business, and in Tennessee, which is one of USF&G's largest markets. While these storms may not have made headlines nationally - for us, the cumulative effect was the worst catastrophe quarter since Hurricane Andrew struck in 1992. Pretax catastrophe losses were $157 million, reducing our core after-tax operating earnings by about $0.51 per share. 1997 second- quarter pretax catastrophe losses were $70 million, which reduced core after-tax operating earnings by approximately $0.19 per share. "The other key factor in our second quarter operating results was the deterioration in the U.S. commercial marketplace. The good news is that, in our medical liability operation, we successfully implemented price increases during the second quarter. It is also important to note that many of the actions we are taking to reduce expenses and improve underwriting performance following the merger have yet to have an impact on our results. "Despite the high level of catastrophes and difficult market conditions in certain segments, many of our businesses performed well during the quarter: - Specialized commercial, excluding medical malpractice, held its own in a difficult market, with standout performance from the newly combined St. Paul-USF&G surety operation, now the largest surety operation in the nation. - Excluding the impact of catastrophe losses, our personal insurance business performed well, continuing its recovery. - Our reinsurance operation posted strong year-over- year results. - Second-quarter core after-tax operating earnings of our life insurance operation, acquired in the merger, grew 25 percent over the same period of 1997. - The international segment of our business had a good quarter, with significant improvement in underwriting results and strong premium growth. - Our 78 percent ownership in The John Nuveen Company also contributed to our performance in the quarter. Nuveen reported a 14 percent increase in second-quarter net income and earnings per share. "In spite of the second-quarter charge we are taking to earnings, our book value per share, at $27.45 at quarter's end, is 8 percent higher than our $25.34 of book value per share as of June 30, 1997. The book value of this corporation has grown over $600 million in the past year. This gives you some indication of the underlying strength of The St. Paul," he said. The St. Paul Companies reported a second-quarter net loss of $297.3 million, or $1.28 per share, compared with net income of $288.9 million, or $1.15 per share, for the second quarter of 1997. Also included in the net loss were after-tax realized gains of $107.0 million, or $0.46 per share, compared with $112.0 million, or $0.44 per share, for the second quarter of 1997. The $656 million pretax one-time charge was composed of the following: - $250 million increase in loss reserves to reflect the application of The St. Paul's reserving policies to USF&G's reserves; - $176 million in severance and other employee-related costs; - $108 million in write-downs in the carrying value of certain USF&G assets; - $70 million in facilities exit costs; - $52 million in other costs, including transaction fees. Six-month Results - ----------------- Six-month 1998 core operating earnings were $216.0 million, or $0.89 per share (diluted), compared with first- half 1997 core operating earnings of $351.6 million, or $1.40 per share (diluted). Reflecting predominantly the second-quarter after-tax charge of $457.5 million, or $1.95 per share, The St. Paul reported a six-month net loss of $102.6 million, or $0.46 per share, compared with net income of $458.4 million, or $1.82 per share, for the first half of 1997. Also included in the net loss were six-month after-tax realized gains of $138.9 million, or $0.60 per share, compared with $174.5 million, or $0.69 per share, for the first half of 1997. Net income in the first half of 1997 included a loss of $67.8 million, or a loss of $0.27 per share, from discontinued operations. Consolidated Financial Position of The St. Paul Companies - --------------------------------------------------------- Consolidated assets of The St. Paul Companies as of June 30, 1998 were $37.4 billion, compared with $35.5 billion on June 30, 1997. Common shareholders' equity was $6.5 billion at the end of the second quarter, compared with $5.8 billion on June 30, 1997. THE ST. PAUL COMPANIES CONSOLIDATED SECOND-QUARTER RESULTS Three months ended June 30 1998 1997 - -------------------------- ------ ------ Revenues $2,408,689,000 $2,493,102,000 Pretax Core Operating Earnings Property-Liability Insurance $54,633,000 $238,150,000 Life Insurance $19,001,000 $15,047,000 Asset Management- Investment Banking $25,093,000 $21,430,000 Parent and Other ($53,776,000) ($55,091,000) -------------- -------------- Total Pretax Core Operating Earnings $44,951,000 $219,536,000 Income Tax Expense (Benefit) ($8,260,000) $42,636,000 -------------- -------------- Core Operating Earnings from Continuing Operations $53,211,000 $176,900,000 Per Common Share (Basic) $0.21 $0.76 Per Common Share (Diluted) $0.21 $0.71 One-time Charge, Net of Taxes ($457,517,000) - Per Common Share (Basic) ($1.95) - Per Common Share (Diluted) ($1.95) - Core Realized Investment Gains, Net of Taxes $107,025,000 $112,042,000 Per Common Share (Basic) $0.46 $0.49 Per Common Share (Diluted) $0.46 $0.44 -------------- -------------- Net Income (Loss) ($297,281,000) $288,942,000 Per Common Share (Basic) ($1.28) $1.25 Per Common Share (Diluted) ($1.28) $1.15 THE ST. PAUL COMPANIES CONSOLIDATED FIRST-HALF RESULTS Six months ended June 30 1998 1997 - ------------------------ ------ ------ Revenues $4,732,881,000 $4,895,353,000 Pretax Core Operating Earnings Property-Liability Insurance $263,620,000 $465,052,000 Life Insurance $37,225,000 $28,796,000 Asset Management- Investment Banking $48,710,000 $44,134,000 Parent and Other ($104,118,000) ($105,292,000) -------------- -------------- Total Pretax Core Operating Earnings $245,437,000 $432,690,000 Income Tax Expense $29,452,000 $81,096,000 -------------- -------------- Core Operating Earnings from Continuing Operations $215,985,000 $351,594,000 Per Common Share (Basic) $0.89 $1.50 Per Common Share (Diluted) $0.89 $1.40 One-time Charge, Net of Taxes ($457,517,000) - Per Common Share (Basic) ($1.95) - Per Common Share (Diluted) ($1.95) - Core Realized Investment Gains, Net of Taxes $138,929,000 $174,516,000 Per Common Share (Basic) $0.60 $0.76 Per Common Share (Diluted) $0.60 $0.69 Discontinued Operations, Net of Taxes - ($67,750,000) Per Common Share (Basic) - ($0.30) Per Common Share (Diluted) - ($0.27) -------------- -------------- Net Income (Loss) ($102,603,000) $458,360,000 Per Common Share (Basic) ($0.46) $1.96 Per Common Share (Diluted) ($0.46) $1.82 Common Shareholders Equity $6,473,719,000 $5,827,054,000 Per Common Share $27.45 $25.34 THE ST. PAUL COMPANIES SECOND-QUARTER PROPERTY-LIABILITY UNDERWRITING OPERATIONS HIGHLIGHTS Three months ended June 30 1998 1997 - -------------------------- ------ ------ Written premiums $1,745,262,000 $1,827,104,000 Net investment income $331,130,000 $326,827,000 Core statutory combined ratio 116.0 103.0 THE ST. PAUL COMPANIES FIRST-HALF PROPERTY-LIABILITY UNDERWRITING OPERATIONS HIGHLIGHTS Six months ended June 30 1998 1997 - ------------------------ ------ ------ Written premiums $3,399,841,000 $3,499,908,000 Net investment income $662,893,000 $657,334,000 Core statutory combined ratio 111.4 104.6 The St. Paul Companies, headquartered in Saint Paul, Minn., is a group of companies providing insurance products and services worldwide. 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 --------------------- Bruce A. Backberg Senior Vice President and Chief Legal Counsel Date: August 5, 1998 -----END PRIVACY-ENHANCED MESSAGE-----