St. Paul Cos. Revised

Standard & Poor’s removed St. Paul Cos. Inc. and its subsidiaries from CreditWatch and lowered its counterparty credit rating on the St Paul Cos. to “BBB+” from “A-“, due to the company’s challenges executing certain strategic actions and its lower-than-expected capital adequacy for St. Paul’s combined operating insurance companies. The removal from CreditWatch, however, reflects the strength of the group’s core business.

The outlook on the St. Paul Cos. remains negative. S&P expects that the company will concentrate its resources on its profitable core commercial book of business. St. Paul enjoys strong brand recognition in the domestic primary commercial market. By year-end 2002, S&P expects that the company’s capital adequacy will return to very strong levels because of increased retention of earnings and other capital-raising initiatives. Capital adequacy should exceed 150 percent, with continued strong financial flexibility.