Minnesota-based The St. Paul Companies announced fourth-quarter 2002 net income of $244.2 million, or $1.02 per share, compared to a fourth-quarter 2001 net loss of $736 million, or $3.57 per share. Fourth-quarter 2002 operating earnings (net income excluding after-tax realized gains and after-tax losses from discontinued operations) were $194.4 million, or $0.81 per share, compared to an operating loss of $646.7 million, or $3.14 per share, for the comparable period of 2001.
The fourth quarter 2002 net income included $56.1 million of net after-tax realized gains, comprised of a gain of $131.6 million related to the divestiture of certain of the company’s international operations, an after-tax loss of $54 million on the transfer of the company’s reinsurance operations to a newly formed Bermuda-based reinsurer, Platinum Underwriters Holdings, Ltd. (“Platinum”), and net realized investment losses of $21.5 million. Fourth-quarter 2001 results reflected $612 million in after-tax losses, or $2.96 per share, from reserve strengthening, restructuring charges and goodwill write-downs announced in December 2001.
“Our results demonstrate the progress we’re making in repositioning the company to a more competitive enterprise focused on superior execution,” Jay Fishman, chairman and CEO, commented. “The improvements in our operations are attributable to achieving the strategic and operational objectives we set forth in December 2001. We exited or reoriented certain businesses, clarified our strategic focus, significantly reduced expenses, brought a new level of urgency and energy to our business, and delivered stronger results.”
The strategic steps completed in the fourth quarter included:
*The company completed the transfer of its going-forward reinsurance operations to Platinum. The transaction resulted in a pretax gain of $29.2 million and, as the result of a charge-off of the associated deferred tax asset, an after-tax loss of $54 million.
*The company substantially completed the refocusing of its International operations. During the fourth quarter, the company sold St. Paul Holdings (the immediate parent of The St. Paul’s Spanish operations) as well as its operations in Argentina and Mexico (other than surety). Tax benefits from the sales represented virtually all of the $131.6 million after-tax realized gain.
*The company substantially exceeded its goal of reducing corporate and insurance expenses by $125 million in 2002.
*The company successfully launched its St. Paul Mainstreet(SM) Small Commercial insurance platform, with its full rollout beginning in January 2003.
In addition, in Dec. 2002, the company acquired from Royal & SunAlliance the right to seek to renew approximately $125 million in U.S. professional liability and directors and officers liability premiums. The underwriting profile of this book of business is similar to The St. Paul’s profile in that it targets small to mid-sized commercial and nonprofit customers. Furthermore, it expands the company’s geographic reach within these product lines.
Topics Profit Loss
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