The St. Paul Will Delist London Shares; Best Affirms Int’l. Unit ‘A’ (Excellent) Rating

December 27, 2002

The St. Paul Companies announced the delisting of its common stock on the London Stock Exchange, where it has been traded as a secondary listing since the early 1990’s, effective Jan. 23, 2003.

Earlier in the week A.M. Best announced that it had affirmed the financial strength rating of A (Excellent) of St Paul International Insurance Company Limited, London, with a “stable” outlook.

“The decision to delist on the London Stock Exchange was made based upon the company’s reduced international presence and because the secondary listing was not necessary to provide liquidity in the stock. The St. Paul will continue to list its common stock for trading on the New York Stock Exchange,” said the company’s bulletin.

Best indicated that the “rating reflects the company’s status as a core subsidiary of its ultimate parent, The St Paul Companies Inc., its very good risk-adjusted capitalisation and excellent business profile.” It noted that “offsetting factors include weak, although improving, underwriting performance and potential exposure to the run-off operations relating to discontinued business.”

The report said that Best considers St. Paul International as a core entity for the St. Paul following the significant restructuring of its global operations in late 2001, and noted that it “continues to receive financial support.” Over the last three years it’s received additional capital of around $149 million, and a guaranteed loan of $33.6 million.

Best forecast success for the company’s current business plan, which will concentrate the use of its capital facilities on the United Kingdom and Ireland, “exiting medical malpractice and construction lines, and the consequent expected return to operating profitability.”

It also expects St. Paul International to improve its underwriting results, which culminated in a combined ratio of 136.5% in 2001. “Underwriting losses have attributed to the accumulation of significant retained loss reserves over this period,” said Best, around $141 million at year-end 2001. It “expects the recent restructuring and renewed focus on core business to lead to a marked improvement in performance in 2002 (combined ratio of below 107%).”

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