-----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, GbYHsMxMaCrqC+hVnkD4opg2zwDX/6lwhcRQiMqrtLbp+BUIU9sL1nAEBmA1qzkB czn+NqJuUl+JDKEU2MDYkw== 0000086312-99-000014.txt : 19990630 0000086312-99-000014.hdr.sgml : 19990630 ACCESSION NUMBER: 0000086312-99-000014 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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: 11-K SEC ACT: SEC FILE NUMBER: 001-10898 FILM NUMBER: 99654475 BUSINESS ADDRESS: STREET 1: 385 WASHINGTON ST CITY: SAINT PAUL STATE: MN ZIP: 55102 BUSINESS PHONE: 6123107911 FORMER COMPANY: FORMER CONFORMED NAME: ST PAUL COMPANIES INC /MN/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SAINT PAUL COMPANIES INC DATE OF NAME CHANGE: 19900730 11-K 1 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) ------------------------------- 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 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 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. 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
Company Stock Income Balanced Diversified Aggressive Fund Fund Fund Fund Fund ------------- -------- -------- ----------- ---------- Contributions: Participating companies (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 ========== ========== ========== =========== ===========
Equity International Stable Income Growth Growth Fund Fund Fund Fund I Fund II ------------- ---------- ---------- ---------- ---------- Contributions: Participating companies (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 ========== ========== ========== ========== ==========
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. 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
Company Stock Income Balanced Diversified Aggressive Fund Fund Fund Fund Fund ------------- --------- ----------- ----------- ------------ Contributions: Participating companies (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 ========== ========== ========== ========== ==========
International Stable Participant Other Fund Fund Loans Unallocated Total ------------ ---------- ----------- ----------- --------- Contributions: Participating companies (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.
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. 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. 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. 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. 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. 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. 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. 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. 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 ========== =========== 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. 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. 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. 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. 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 EXHIBIT INDEX ------------- Exhibit Number Description ------ ----------- 23 Consent of Independent Auditors EX-23 2 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 -----END PRIVACY-ENHANCED MESSAGE-----