The St. Paul Companies Reports Third-Quarter Results

The St. Paul Companies announced a 2001 third-quarter after-tax operating loss from continuing operations of $545 million, or $2.62 per share. In the year earlier period, the company reported after-tax operating earnings from continuing operations of $157.5 million, or $0.67 per diluted share.

The loss includes $606 million in after-tax operating losses, or $2.90 per share, attributable to the Sept. 11 terrorist attack in the United States, and $46 million in after-tax operating losses, or $0.22 per share from other catastrophes, including $33 million, or $0.16 per share, from a $2 billion industry catastrophe in Toulouse, France.

Excluding charges for the Sept. 11 attack and the other catastrophe losses, after-tax operating earnings for the quarter were $107 million, or $0.48 per share. In the third quarter of 2000, the company reported after-tax operating earnings from continuing operations excluding catastrophes of $168.8 million, or $0.72 per diluted share.

The pretax losses attributable to the Sept. 11 attack reflect an increase from the previously estimated pretax losses of $700 million to $866 million. While the company’s estimate of gross pretax losses related to the Sept. 11 attack remains unchanged at approximately $2.2 billion, the increase in net impact stemmed primarily from the company’s intention not to cede the losses from the Sept. 11 event to its 2001 corporate aggregate stop-loss reinsurance program.

The after-tax operating loss attributable to the event includes a write-off of $43 million in foreign tax credits.

“Since joining The St. Paul only a few short weeks ago, I am more convinced of the quality of the people here, the business platforms they have created and the foundation in place to build a company that can achieve higher and more consistent levels of performance,” said Jay Fishman, chairman and chief executive officer of The St. Paul Companies.

“That said, our third-quarter results, excluding the Sept. 11 and Toulouse catastrophes, continue to reflect unacceptable performance in previously identified problem segments: Health Care and International.”

Under its new leadership, the company is undertaking a strategic and financial review of these businesses and anticipates establishing a more robust earnings platform for 2002.

“With our strong financial profile, and the plans we are putting in place for the future, we believe we are well-positioned to meet our goal of achieving demonstrably higher levels of performance and earnings consistency in 2002,” Fishman said.

The company reported a net loss of $658.7 million for the quarter, or $3.16 per diluted share, compared with income of $231.1 million, or $0.98 per diluted share, for the third quarter last year. The net loss included net realized investment losses of $50.7 million and losses from discontinued operations of $63.5 million.

Net written premiums, at $2.03 billion, were up 36 percent compared with last year’s third quarter.

Book value per share for the third quarter decreased to $28.75 from $32.12 one year ago. In addition to the impact of the net losses, $1.02 of the decline is due to share repurchases, while $0.79 of the decline is driven by changes in unrealized gains in investments. Adjusting its holdings of money manager John Nuveen to market, The St. Paul’s book value per share is $32.43.

During the quarter, the company repurchased 4.64 million shares at an average price of $43.00, and year-to-date, repurchased 13 million shares at an average price of $45.36. Since the program started in 1998, The St. Paul has repurchased more than 45.8 million shares for $1.6 billion. The company has outstanding board authorization to repurchase an additional $89.7 million in shares.

For additional information about The St. Paul’s quarterly results, including detailed loss and expense ratios, go to the Investor Relations section of The St. Paul’s website: www.stpaul.com.

The St. Paul Companies Inc. is headquartered in Saint Paul, Minn., and provides commercial property-liability insurance and nonlife reinsurance worldwide.

Topics Profit Loss