ST PAUL COMPANIES INC /MN/ - 10-K Annual Report

Back to GetFilings.com

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------ -----------

Commission file number 0-3021

THE ST. PAUL COMPANIES, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)

Minnesota 41-0518860
------------------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

385 Washington Street, Saint Paul, MN 55102
------------------------------------- --------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number,
Including area code 651-310-7911
------------

Securities registered pursuant to Section 12(b) of the Act:

Common Stock (without par value) New York Stock Exchange
- ------------------------------- London Stock Exchange
------------------------------
(Title of class) (Name of each exchange on which
registered)

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. ( )

The aggregate market value of the outstanding Common Stock held by
nonaffiliates of the Registrant on March 13, 2000, was
$4,785,479,797. The number of shares of the Registrant's Common
Stock, without par value, outstanding at March 13, 2000, was
214,895,253.

An Exhibit Index is set forth at page 38 of this report.

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------

Portions of the Registrant's 1999 Annual Report to Shareholders are
incorporated by reference into Parts I, II and IV of this report.
Portions of the Registrant's Proxy Statement relating to the Annual
Meeting of Shareholders to be held May 2, 2000 are incorporated by
reference into Parts III and IV of this report.

PART I
------
Item 1. Business.
- ------ --------

General Description

The St. Paul Companies, Inc. (The St. Paul) is incorporated as a
general business corporation under the laws of the State of
Minnesota. The St. Paul and its subsidiaries constitute one of the
oldest insurance organizations in the United States, dating back to
1853. The St. Paul is a management company principally engaged,
through its subsidiaries, in providing commercial property-
liability and life insurance, and reinsurance products and services
worldwide. The St. Paul also has a presence in the asset
management industry through its 79% majority ownership of The John
Nuveen Company (Nuveen). As a management company, The St. Paul
oversees the operations of its subsidiaries and provides them with
capital, management and administrative services. At March 1, 2000,
The St. Paul and its subsidiaries employed approximately 12,000
persons. Based on total revenues, The St. Paul ranked No. 171 on
the 1998 Fortune 500 list of the largest companies in the United
States.

1999 Developments
- -----------------

Summary of Results. The following table summarizes The St. Paul's
consolidated results for the last three years:

Year ended December 31
1999 1998 1997
(In millions, except per ------ ------ ------
share data)

Pretax income (loss):
Property-liability insurance $ 971 $ 298 $1,488
Life insurance 66 21 78
Asset management 123 104 93
Parent company and
other operations (143) (303) (226)
------ ------ ------
Pretax income from
continuing operations 1,017 120 1,433
Income tax expense (benefit) 238 (79) 371
------ ------ ------
Income from continuing
operations before
cumulative effect of
accounting change 779 199 1,062
Cumulative effect of accounting
change, net of taxes (30) - -
------ ------ ------
Income from continuing
operations 749 199 1,062
Discontinued operations,
net of taxes 85 (110) (133)
------ ------ ------
Net income $ 834 $ 89 $ 929
====== ====== ======
Per common share (diluted) $ 3.41 $ 0.32 $ 3.69
====== ====== ======

The improvement in pretax income from continuing operations in 1999
over 1998 was driven by The St Paul's property-liability insurance
operations, reflecting efficiencies realized from the 1998 merger
with USF&G Corporation (USF&G), the favorable impact of two
aggregate excess-of-loss reinsurance treaties, and improvements in
certain commercial insurance underwriting results. Pretax income
in 1999 was reduced by a charge of $60 million related to a cost
reduction program, whereas 1998 pretax income reflected the impact
of a provision to strengthen loss reserves, and merger-related and
other expenses.

Strategic Transactions. The St. Paul took four major actions in
1999 consistent with its strategy of focusing its resources on
specialty commercial and professional property-liability insurance
lines. First, The St. Paul completed the sale of its standard
personal insurance underwriting operations to Metropolitan Property
and Casualty Insurance Company (Metropolitan). Second, The St.
Paul reached a definitive agreement to sell its nonstandard auto
insurance operations to Prudential Insurance Company of America
(Prudential), in a transaction expected to be completed in the
second quarter of 2000. The results of the operations sold and to
be sold are included in discontinued operations for all periods in
the preceding table. Note 14 to the consolidated financial
statements on pages 66 and 67 of The St. Paul's 1999 Annual Report
to Shareholders, which includes additional information regarding
the sale of these operations, including the components of the
respective gain and estimated loss on disposal, is incorporated
herein by reference.

Third, The St. Paul reached definitive agreement to purchase MMI
Companies, Inc., a provider of insurance products and consulting
services to the healthcare industry, in a transaction expected to
be finalized in the second quarter of 2000. Fourth, The St. Paul
agreed to purchase Pacific Select Insurance Company, which will
increase its earthquake risk underwriting capabilities in
California, in a transaction completed in the first quarter of
2000. Note 2 to the consolidated financial statements on pages 52
and 53 of The St. Paul's 1999 Annual Report to Shareholders
includes additional information about these acquisitions and is
incorporated herein by reference.

Cost Reduction Program. In the third quarter of 1999, The St. Paul
announced a cost reduction program designed to enhance the
company's efficiency in the highly-competitive property-liability
insurance marketplace. The St. Paul recorded a pretax charge to
earnings of $60 million in 1999 related to this program, consisting
of $33 million of occupancy-related expenses, $25 million of
employee-related expenses related to the anticipated elimination of
approximately 700 positions, and $2 million of equipment charges.
Through Dec. 31, 1999, the employment of approximately 480
individuals had been terminated under this plan.

Realignment of Primary Insurance Operations. In the fourth quarter
of 1999, The St. Paul realigned its primary property-liability
insurance operations in order to further streamline the company's
organization and ease agent and broker access to its products and
services. The St. Paul created a Global Specialty Practices
organization, encompassing The St. Paul's Specialty Commercial and
Surety business segments, which has worldwide responsibility for
product development, strategic planning, pricing and risk selection
for The St. Paul's specialty commercial insurance operations.

USF&G Merger Update
- -------------------

In April 1998, The St. Paul merged with USF&G Corporation (USF&G),
a Baltimore, Maryland-based holding company for property-liability
and life insurance and reinsurance operations. The St. Paul issued
66.5 million of its common shares in exchange for all of the
outstanding common stock of USF&G in a business combination
accounted for as a pooling of interests. The combined entity
retained The St. Paul name, with headquarters in St. Paul,
Minnesota.

In 1999, The St. Paul substantially completed the integration of
USF&G into its operations, achieving significant efficiencies
through the elimination of duplicate functions throughout the
combined organization, including the consolidation of corporate
headquarters' functions and the elimination of approximately 2,200
employee positions. By the end of 1999, The St. Paul had realized
pretax annual expense savings of approximately $260 million (as
measured against the combined 1997 pre-merger expenses of The St.
Paul and USF&G) as a result of the merger and the subsequent
restructuring of its commercial insurance underwriting operations
in late 1998.

The St. Paul recorded a pretax merger-related charge to earnings of
$292 million in 1998, primarily for severance and facilities exit
costs. Note 15 to the consolidated financial statements, on pages
67 through 69 of The St. Paul's 1999 Annual Report to Shareholders,
which includes additional information regarding the charge,
including the components thereof and cash disbursements through
Dec. 31, 1999, is incorporated herein by reference.

The St. Paul also recorded a $215 million pretax provision to
increase USF&G's loss and loss adjustment expense reserves
subsequent to the merger. Note 8 to the consolidated financial
statements included in The St. Paul's 1999 Annual Report to
Shareholders, which includes additional information about the $215
million provision, is incorporated herein by reference.

Business Segments
- -----------------

The St. Paul's property-liability insurance operations, composed of
five distinct underwriting business segments and an investment
operations segment, accounted for 89%, 91% and 92% of consolidated
revenues from continuing operations in 1999, 1998 and 1997,
respectively. The St. Paul's life insurance segment, Fidelity and
Guaranty Life Insurance Company and subsidiaries (F&G Life),
accounted for 6% of revenues in 1999 and 5% of revenues in 1998 and
1997, with Nuveen accounting for virtually all of the remaining
revenues in each year. Financial information about The St. Paul's
business segments is set forth in Note 18 to the consolidated
financial statements on pages 71 through 73 of The St. Paul's 1999
Annual Report to Shareholders, and is incorporated herein by
reference.

The following table summarizes the sources of The St. Paul's
consolidated revenues from continuing operations for each of the
last three years. Following the table is a narrative description
of each of The St. Paul's business segments.

Percentage of
Consolidated Revenues

1999 1998 1997
------ ------ ------
Property-liability insurance:
Primary insurance operations
U.S. Underwriting:
Commercial Lines Group 25.7% 29.5% 31.5%
Specialty Commercial 19.4 18.8 17.4
Surety 5.0 4.4 3.5
------ ------ ------
Total U.S. Underwriting 50.1 52.7 52.4
International 5.2 4.3 3.4
------ ------ ------
Total primary underwriting 55.3 57.0 55.8
Reinsurance 12.1 13.5 14.7
------ ------ ------
Total Underwriting 67.4 70.5 70.5
Investment operations:
Net investment income 16.6 16.8 15.9
Realized investment gains 3.6 2.4 4.9
------ ------ ------
Total investment operations 20.2 19.2 20.8
Other 1.0 0.8 0.5
------ ------ ------
Total property-
liability insurance 88.6 90.5 91.8
Life insurance 6.3 5.1 4.9
Asset management 4.7 4.0 3.2
Parent company, other
operations and eliminations 0.4 0.4 0.1
------ ------ ------
Total 100.0% 100.0% 100.0%
====== ====== ======

Narrative Description of Business

Property-Liability Insurance
- ----------------------------

The St. Paul's property-liability insurance underwriting operations
consist of three U.S.-based primary underwriting segments
collectively referred to as U.S. Underwriting, an international
underwriting segment (International) and a reinsurance segment (St.
Paul Re). The St. Paul's U.S. Underwriting operations underwrite
property and liability insurance and provide insurance-related
products and services to commercial and professional customers
throughout the United States. International underwrites most of
The St. Paul's primary property and liability insurance coverages
outside the United States. International also includes The St.
Paul's operations at Lloyd's (formerly Lloyd's of London), and
insurance written for non-U.S. risks of U.S.-based corporate
policyholders and non-U.S.- based policyholders' exposures in the
United States. St. Paul Re underwrites reinsurance for leading
property-liability insurance companies worldwide. The St. Paul's
property-liability operations also include an investment segment
responsible for overseeing the property-liability investment
portfolio.

The primary sources of property-liability revenues are premiums
earned from insurance policies and reinsurance contracts, income
earned from the investment portfolio and gains from sales of
investments. According to the most recent industry statistics
published in "Best's Review" with respect to property-liability
insurers doing business in the United States, The St. Paul's
property-liability underwriting operations ranked 11th on the basis
of 1998 written premiums.

Principal Departments and Products. The "Property-Liability
Underwriting Results by Segment" table included in "Management's
Discussion and Analysis" on page 24 of The St. Paul's 1999 Annual
Report to Shareholders, which summarizes written premiums,
underwriting results and statutory combined ratios for each of its
underwriting segments for the last three years, is incorporated
herein by reference. The following discussion summarizes the
business structure of The St. Paul's property-liability insurance
underwriting operations as it existed on Dec. 31, 1999.

U.S. Underwriting
- -----------------

U.S. Underwriting operates through the following business segments:

Commercial Lines Group. The Commercial Lines Group, in general,
underwrites general liability and casualty, property, workers'
compensation, commercial auto, inland marine, umbrella and excess
liability, and package coverages. This segment includes the
following business centers: Middle Market Commercial provides "all
lines" property and casualty insurance and risk management services
for midsize and large commercial enterprises. Tailored coverages
and products are marketed to specific customer groups such as golf
courses, museums, colleges and schools, multipurpose recreational
facilities, manufacturers, wholesalers, processors, service-related
industries (retailers, insurance companies, and hospitality and
entertainment firms) and motor carriers. Insurance coverages are
also offered for nationwide, multiple-policyholder programs
generated through a single agency source. Small Commercial
provides coverages to small businesses, including retailers,
wholesalers, professional offices, manufacturers and contractors,
and offers unique coverages for group accounts, such as franchise
operations, associations and multi-location accounts. Coverages
marketed specifically to small commercial customers include the
Business Insurance Policy (BIP). Construction provides insurance
and related services to a broad range of general contractors,
highway contractors and specialty contractors. The Cat Risk
business center underwrites property coverage for major U.S.
corporations, including policyholders with specialty needs and high
property values, with an emphasis on earthquake and hurricane
catastrophe exposures. This business center also provides personal
property coverages for earthquake exposures in California through
GeoVera Insurance Company.

The St. Paul's participation in insurance pools and associations,
which provide specialized underwriting skills and risk management
services for the classes of business that they write, is also
included in Commercial Lines Group results. These pools and
associations serve to increase the underwriting capacity of
participating companies for insurance policies where the
concentration of risk is so high or the amount so large that a
single company could not prudently accept the entire risk. The St.
Paul's participation in these pools and associations is limited.

Specialty Commercial. The Specialty Commercial segment serves
specific commercial customer groups, generally providing coverage
for damage to the customer's property (fire, inland marine and
auto), liability for bodily injury or damage to the property of
others (general liability, auto liability, umbrella and excess),
workers' compensation insurance, and various professional liability
coverages. Product and services are offered through the following
business centers:

Health Services (formerly Medical Services) underwrites
professional liability, property and general liability insurance
throughout the health care delivery system. Products include
coverages for health care professionals (physicians and surgeons,
dental professionals and nurses); individual health care facilities
(including hospitals, long-term care facilities and other
facilities such as laboratories); and entire systems, such as
hospital networks and managed care systems. Specialized claim and
loss control services are vital components of Health Services'
insurance products and services. The St. Paul's Health Services
business center is the largest medical liability insurer in the
United States, with premium volume accounting for approximately 6%
of the U.S. market based on 1998 premium data published in "Best's
Review." The St. Paul's acquisition of MMI Companies, Inc.,
expected to be completed in 2000, will create, when combined with
its existing operations, a globally integrated provider of
insurance and risk management services for the healthcare industry,
with pro forma combined annual revenues of approximately $1
billion.

Financial and Professional Services provides directors' and
officers' liability and commercial fidelity coverages to public,
private and nonprofit corporations, including financial services
organizations. The St. Paul is endorsed by two major banking
associations in the United States as the recommended insurance
carrier for their members. This business center also provides
professional liability coverages for lawyers, and offers errors and
omissions coverage to other professionals, including insurance
agents, real estate agents and appraisers. Public Sector Services
markets insurance products and services, including professional
liability coverages, to all local governments, Indian nations and
special government districts and authorities, such as water
districts, transit authorities and fire protection districts.

Technology offers a comprehensive portfolio of specialty products
and services to companies involved in medical technology and
biotechnology, electronics, information technology,
telecommunications and industrial electronics manufacturing.
Excess and Surplus Lines underwrites umbrella and excess liability
coverages, as well as property and liability insurance for high-
risk classes of business and unique, sometimes one-of-a-kind risks
that standard insurance markets generally avoid. Oil and Gas
provides standard and specialty insurance coverages for customers
involved in the exploration and production of oil and gas,
including operators, drillers and oil servicing contractors. St.
Paul Athena is a specialty underwriting facility dedicated to
business generated through Swett & Crawford, a wholesale insurance
brokerage subsidiary of Aon Corporation. Global Marine provides a
variety of property-liability insurance related to ocean and inland
waterways traffic, including cargo and hull property protection.
Specialty Lines provides unsupported umbrellas, policies and self-
insured retention products in the specialty admitted market.

Surety. The Surety segment underwrites surety bonds, which are
agreements under which one party, the surety, guarantees to another
party, the owner or obligee, that a third party, the contractor or
principal, will perform in accordance with contractual obligations.
The Contract Surety business center specializes in providing bid,
performance and payment bonds, domestically and internationally, to
a broad spectrum of clients specializing in general contracting,
highway and bridge construction, asphalt paving, underground and
pipeline construction, manufacturing, civil and heavy engineering,
and mechanical and electrical construction. Bid bonds provide
financial assurance that a bid has been submitted in good faith and
that the contractor intends to enter into the contract at the price
bid and provide the required performance and payment bonds.
Performance bonds protect the obligee from financial loss should
the contractor fail to perform the contract in accordance with the
terms and conditions of the contract documents. Payment bonds
guarantee that the contractor will pay certain subcontractor, labor
and material bills associated with a project. The Commercial
Surety and Fidelity business center offers license and permit
bonds, court bonds, public official bonds and other miscellaneous
bonds.

According to data published by the Surety Association of America,
The St. Paul's domestic Surety operations were the largest in the
United States based on 1998 written premiums, accounting for
approximately 11% of the domestic market. The St. Paul's Surety
segment also includes Afianzadora Insurgentes, the leading surety
operation in Mexico. According to data published by AFIANZA, the
Mexican Surety Commission, Afianzadora Insurgentes accounted for
approximately 40% of the Mexican surety bond market based on
written premium volume for the first nine months of 1999.

International
- -------------

The St. Paul's International business segment is responsible for
most of The St. Paul's primary insurance written outside the United
States. International has a presence through insurance companies
licensed in Canada, Australia, and 12 countries in Europe, Africa
and Latin America. It also includes business generated from The
St. Paul's participation in Lloyd's as a provider of capital to
selected underwriting syndicates and as the owner of a managing
agency. International also includes insurance written for non-U.S.
operations of multinational corporations based in the United States
and insurance written to cover exposures in the United States for
non-U.S. companies. This segment predominantly markets specialty
commercial insurance in the international arena, with a particular
emphasis on liability coverages. The International segment offers
a broad range of products and services tailored to meet the unique
needs of both its multinational customers as well as its customers
in each of the domestic markets which it serves.

St. Paul Re
- -----------

St. Paul Re underwrites traditional treaty and facultative
reinsurance for property, liability, ocean marine, surety, health
and certain specialty classes of coverages, and also underwrites
"non-traditional" reinsurance, which combines traditional
underwriting risk with financial risk protection. St. Paul Re
underwrites reinsurance for leading property, liability and other
non-life insurance companies worldwide, with clients in North
America, Latin America, the Caribbean, Europe, Australia and the
Asia-Pacific region. Reinsurance is an agreement by which an
insurance company will pay a premium to transfer, or "cede," a
portion of the risk it has underwritten to a reinsurer. A large
portion of reinsurance is effected automatically under general
reinsurance contracts known as treaties. In some instances,
reinsurance is effected by negotiation on individual risks, which
is referred to as facultative reinsurance.

Through Discover Re, The St. Paul's Reinsurance segment underwrites
primary insurance, reinsurance and provides related services to
self-insured companies and insurance pools, in addition to ceding
to and reinsuring captive insurers, all within the alternative risk
transfer market. Through alternative risk transfer, a company self-
insures, or insures through a captive insurer, the portion of its
own losses which are predictable and purchases insurance for the
less predictable, high-severity losses that could have a major
financial impact on the company.

According to the most recent data published by the Reinsurance
Association of America, St. Paul Re's written premium volume
through the first nine months of 1999 ranked it as the sixth-
largest reinsurer in the United States. According to data
published in "Business Insurance," St. Paul Re was ranked as the
15th-largest property-liability reinsurer in the world, based on
1998 written premiums.

Principal Markets and Methods of Distribution
- ---------------------------------------------

The St. Paul's U.S. Underwriting operations are licensed to
transact business in all 50 states, the District of Columbia,
Puerto Rico, Guam and the Virgin Islands. At least five percent of
U.S. Underwriting's 1999 property-liability written premiums were
produced in each of Illinois, California, Florida and New York.

U.S. Underwriting's business is produced primarily through
approximately 6,900 independent insurance agencies and insurance
brokers. The needs of agents, brokers and policyholders are
addressed through approximately 130 offices located throughout
the United States.

St. Paul Re produces reinsurance business from its New York
headquarters, as well as from offices in London, Atlanta, Brussels,
Chicago, Hong Kong, Miami, Morristown NJ, Munich, San Francisco,
Singapore, Sydney and Tokyo. It underwrites business through
brokers and, for certain types of reinsurance and in certain
markets, on a direct basis. Discover Re underwrites alternative
risk transfer business from its Farmington, CT headquarters, from
regional U.S. offices in Atlanta, Pittsburgh, Dallas, Minneapolis
and San Francisco, and from a correspondent office in London.

The St. Paul's International operations are headquartered in London
and underwrite insurance through domestic operations in 13 markets
outside the United States (Argentina, Australia, Botswana, Canada,
France, Germany, Ireland, Lesotho, Mexico, South Africa, Spain, The
Netherlands and the United Kingdom). These operations distribute
their products principally through independent brokers. Through
its owned operations and partner companies, International's global
network conducts business in more than 70 countries worldwide.
Through its presence at Lloyd's, International also has access to
business markets in virtually every country of the world for its
specialty products including aviation, kidnap and ransom, malicious
product tampering, creditor/payment protection and personal
accident. The Lloyd's managing agency, operating under the name
St. Paul Syndicate Management Ltd., underwrites business for eight
syndicates, collectively representing approximately 4% of Lloyd's
total capacity.

Reserves for Losses and Loss Adjustment Expenses
- ------------------------------------------------

General Information. When claims are made by or against
policyholders, any amounts that The St. Paul's underwriting
operations pay or expect to pay to the claimant are referred to as
losses. The costs of investigating, resolving and processing these
claims are referred to as loss adjustment expenses (LAE). The St.
Paul establishes reserves that reflect the estimated unpaid total
cost of these two items. The reserves for unpaid losses and LAE at
Dec. 31, 1999 cover claims that were incurred not only in 1999 but
also in prior years. They include estimates of the total cost of
claims that have already been reported but not yet settled ("case"
reserves), and those that have been incurred but not yet reported
("IBNR" reserves). Loss reserves are reduced for estimates of
salvage and subrogation.

Loss reserves for certain workers' compensation business and
certain assumed reinsurance contracts are discounted to present
value. Additional information about these discounted liabilities
is set forth in Note 1 to the consolidated financial statements on
pages 49 through 52 of The St. Paul's 1999 Annual Report to
Shareholders, and is incorporated herein by reference. During
1999, $5.0 million of discount was amortized and $2.7 million of
additional discount was accrued.

Management continually reviews loss reserves, using a variety of
statistical and actuarial techniques to analyze current claim
costs, frequency and severity data, and prevailing economic, social
and legal factors. Management believes that the reserves currently
established for losses and LAE are adequate to cover their eventual
costs. However, final claim payments may differ from these
reserves, particularly when these payments may not take place for
several years. Reserves established in prior years are adjusted as
loss experience develops and new information becomes available.
Adjustments to previously estimated reserves are reflected in
results in the year in which they are made.

Ten-year Development. The table on page 10 presents a development
of net loss and LAE reserve liabilities and payments for the years
1989 through 1999. The top line on the table shows the estimated
liability for unpaid losses and LAE, net of reinsurance
recoverables, recorded at the balance sheet date for each of the
years indicated.

The table excludes the reserves and activity of Economy Fire and
Casualty Company and its subsidiaries (Economy), which were
included in the sale of The St. Paul's standard personal insurance
operations to Metropolitan. The table does, however, include
reserves and activity for the non-Economy standard personal
insurance business that was sold to Metropolitan, since The St.
Paul remains liable for claims on non-Economy standard personal
insurance policies that result from losses occurring prior to Sept.
30, 1999 (the closing date of the sale). Also included in the
table are the reserves and activity for The St. Paul's nonstandard
auto business, which The St. Paul has agreed to sell to Prudential
in a transaction expected to be completed in the second quarter of
2000. Notes 8 and 14 to the consolidated financial statements on
pages 56 and 57, and pages 66 and 67, respectively, of The St.
Paul's 1999 Annual Report to Shareholders, which include additional
information regarding the sale of these operations and the related
reserves, are incorporated herein by reference.

In 1997, The St. Paul changed the method by which it assigns loss
activity to a particular year for assumed reinsurance written by
its U.K.-based reinsurance operation. Prior to 1997, that loss
activity was assigned to the year in which the underlying
reinsurance contract was written. In 1997, The St. Paul's analysis
indicated that an excess amount of loss activity was being assigned
to prior years because of this practice. As a result, The St. Paul
implemented an improved procedure in 1997 that more accurately
assigns loss activity for this business to the year in which it
occurred. This change had the impact of increasing favorable
development on previously established reserves by approximately
$110 million in 1997. There was no net impact on total incurred
losses, however, because there was a corresponding increase in the
provision for current year loss activity in 1997. Development data
for individual years prior to 1997 in this table were not restated
to reflect this new procedure because reliable data to do so was
not available.

The upper portion of the table, which shows the re-estimated
amounts relating to the previously recorded liabilities, is based
upon experience as of the end of each succeeding year. These
estimates are either increased or decreased as further information
becomes known about individual claims and as changes in the trend
of claim frequency and severity become apparent.

The "Cumulative redundancy (deficiency)" line on the table for any
given year represents the aggregate change in the estimates for all
years subsequent to the year the reserves were initially
established. For example, the 1991 reserve of $12,848 million
developed to $12,479 million, or a $369 million redundancy, by the
end of 1993. By the end of 1999, the 1991 reserve had developed a
redundancy of $1,041 million. The changes in the estimate of 1991
loss reserves were reflected in operations during the past eight
years.

In 1993, The St. Paul adopted the provisions of SFAS No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts." This statement required, among other
things, that reinsurance recoverables on unpaid losses and LAE be
shown as an asset, instead of the prior practice of netting this
amount against insurance reserves for balance sheet reporting
purposes.

The middle portion of the table, which includes data for only those
periods impacted since the adoption of SFAS No. 113 (the years 1992
through 1999), represents a reconciliation between the net reserve
liability as shown on the top line of the table and the gross
reserve liability as shown on The St. Paul's balance sheet. This
portion of the table also presents the gross re-estimated reserve
liability as of the end of the latest re-estimation period (Dec. 31,
1999) and the related re-estimated reinsurance recoverable.
The St. Paul did not restate data for years prior to 1992 in this
table for presentation on a gross basis due to the impracticality
of determining such gross data on a reliable basis for its foreign
underwriting operations.

The lower portion of the table presents the cumulative amounts paid
with respect to the previously recorded liability as of the end of
each succeeding year. For example, as of Dec. 31, 1999, $9,066
million of the currently estimated $11,807 million of losses and
LAE that have been incurred for the years up to and including 1991
have been paid. Thus, as of Dec. 31, 1999, it is estimated that
$2,741 million of incurred losses and LAE have yet to be paid for
the years up to and including 1991.

Caution should be exercised in evaluating the information shown on
this table. It should be noted that each amount includes the
effects of all changes in amounts for prior periods. For example,
the portion of the development shown for year-end 1995 reserves
that relates to 1989 losses is included in the cumulative
redundancy (deficiency) for the years 1989 through 1995.

In addition, the table presents calendar year data. It does not
present accident or policy year development data, which some
readers may be more accustomed to analyzing. The social, economic
and legal conditions and other trends which have had an impact on
the changes in the estimated liability in the past are not
necessarily indicative of the future. Accordingly, readers are
cautioned against extrapolating any conclusions about future
results from the information presented in this table.

Note 8 to the consolidated financial statements, on pages 56 and 57
of The St. Paul's 1999 Annual Report to Shareholders, includes a
reconciliation of beginning and ending loss reserve liabilities for
each of the last three years and is incorporated herein by
reference. Additional information about The St. Paul's reserves is
contained in the "Loss and Loss Adjustment Expense Reserves" and
"Environmental and Asbestos Claims" sections of "Management's
Discussion and Analysis" on pages 33 and 34 of The St. Paul's 1999
Annual Report to Shareholders, which are incorporated herein by
reference.

Analysis of Loss and Loss Adjustment Expense (LAE) Development
(In millions)

Year ended December 31 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- ---------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----

Net liability for
unpaid losses and LAE $11,343 11,881 12,848 13,211 12,990 13,020 13,489 14,718 14,802 14,926 14,161
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Liability re-estimated
as of:
One year later 11,305 12,228 12,684 12,911 12,621 12,688 13,019 13,958 14,566 14,616
Two years later 11,517 12,130 12,479 12,589 12,247 12,250 12,314 13,733 14,360
Three years later 11,480 12,058 12,280 12,384 11,949 11,792 12,165 13,632
Four years later 11,518 11,930 12,222 12,144 11,587 11,644 12,071
Five years later 11,503 11,918 12,065 11,915 11,474 11,490
Six years later 11,544 11,850 11,944 11,818 11,343
Seven years later 11,538 11,869 11,899 11,729
Eight years later 11,646 11,844 11,807
Nine years later 11,642 11,821
Ten years later 11,669

Cumulative redundancy
(deficiency) $(326) 60 1,041 1,482 1,647 1,530 1,418 1,086 442 310
====== ====== ====== ====== ====== ====== ====== ====== ====== ======

Net liability for
unpaid losses and LAE 13,211 12,990 13,020 13,489 14,718 14,802 14,926 14,161
Reinsurance recoverable on
unpaid losses 3,903 2,581 2,533 2,824 2,864 3,051 3,260 3,773
------ ------ ------ ------ ------ ------ ------ ------
Gross liability 17,114 15,571 15,553 16,313 17,582 17,853 18,186 17,934
====== ====== ====== ====== ====== ====== ====== ======
Gross re-estimated liability:
One year later 16,467 15,177 15,642 15,869 17,054 17,757 17,833
Two years later 16,143 15,201 15,280 15,130 16,816 17,429
Three years later 15,998 14,988 14,689 15,009 16,511
Four years later 15,825 14,520 14,698 14,618
Five years later 15,536 14,550 14,260
Six years later 15,565 14,174
Seven years later 15,372
Gross cumulative
redundancy 1,742 1,397 1,293 1,695 1,071 424 353
====== ====== ====== ====== ====== ====== ======

Cumulative amount of net
liability paid through:
One year later $ 3,041 3,105 3,027 3,017 2,735 2,654 2,906 3,353 3,538 3,700
Two years later 5,004 5,107 5,027 4,970 4,523 4,510 4,848 5,682 5,955
Three years later 6,390 6,433 6,380 6,263 5,797 5,838 6,333 7,284
Four years later 7,271 7,371 7,276 7,173 6,712 6,874 7,265
Five years later 7,931 8,006 7,917 7,838 7,443 7,557
Six years later 8,388 8,470 8,424 8,329 7,960
Seven years later 8,745 8,875 8,812 8,650
Eight years later 9,077 9,196 9,066
Nine years later 9,337 9,405
Ten years later 9,514

Cumulative amount of
gross liability paid
through:
One year later 4,072 3,328 3,255 3,422 3,719 3,962 4,184
Two years later 6,585 5,506 5,509 5,407 6,335 6,635
Three years later 8,178 7,072 6,864 7,098 8,156
Four years later 9,304 8,008 8,057 8,164
Five years later 10,009 8,851 8,852
Six years later 10,597 9,480
Seven years later 11,143

Ceded Reinsurance. Through ceded reinsurance, other insurers and
reinsurers agree to share certain risks that The St. Paul's
subsidiaries have underwritten. The purpose of reinsurance is to
limit a ceding insurer's maximum net loss arising from large risks
or catastrophes. Reinsurance also serves to increase the direct
writing capacity of the ceding insurer. Amounts recoverable on
ceded losses are recorded as an asset.

With respect to ceded reinsurance, The St. Paul strives to protect
its assets from large individual risk and occurrence losses, and
provide its respective underwriting operations with the capacity
necessary to write large limits on accounts.

The collectibility of reinsurance is subject to the solvency of
reinsurers. The St. Paul's Reinsurance Security Committee, which
has established financial standards to determine qualified,
financially secure reinsurers, guides the placement of ceded
reinsurance. Uncollectible reinsurance recoverables have not had a
material adverse impact on The St. Paul's results of operations,
liquidity or financial position.

In 1999, The St. Paul ceded losses and loss adjustment expenses
totaling $534 million under two separate aggregate excess-of-loss
reinsurance treaties. Written and earned premiums totaling $273
million were also ceded under these treaties, resulting in a $261
million benefit included in The St. Paul's 1999 pretax income.
Note 16 to the consolidated financial statements on page 70 of The
St. Paul's 1999 Annual Report to Shareholders, which provides a
schedule of ceded reinsurance and additional information about the
two 1999 reinsurance treaties, is incorporated herein by reference.

Property - Liability Investment Operations
- ------------------------------------------

Objectives. The St. Paul's board of directors approves the overall
aggregate investment plan for the companies within The St. Paul
group. Each subsidiary adopts its own specific investment policy
tailored to comply with domestic laws and regulations and the
overall corporate investment plan. The primary objectives of those
plans are as follows:

1) to maintain a widely diversified fixed maturities portfolio
structured to maximize investment income while minimizing credit
risk through investments in high-quality instruments; and

2) to provide for long-term growth in the market value of the
investment portfolio and enhance shareholder value through
investments in certain other investment classes, such as equity
securities, venture capital and real estate.

The St. Paul's property-liability investment operations have had
limited involvement with derivative financial instruments,
primarily for purposes of hedging against fluctuations in foreign
currency exchange rates and interest rates. The St. Paul's
investment operations have not participated in the derivatives
market for trading or speculative purposes.

Fixed Maturities. Fixed maturities constituted 75% (at cost) of
The St. Paul's property-liability insurance operations' investment
portfolio at Dec. 31, 1999. The portfolio is primarily composed of
high-quality, intermediate-term taxable U.S. government agency and
corporate bonds and tax-exempt U.S. municipal bonds. The following
table presents information about the fixed maturities portfolio for
the last three years (dollars in millions).

Weighted Weighted
Amortized Estimated Pretax Net Average Average
Cost at Fair Value Investment Pre-tax After-tax
Year Year-end at Year-end Income Yield Yield
- ---- ------ ----------- -------- ------- -------
1999 $15,515 $15,479 $1,171 6.8% 5.1%
1998 16,198 17,177 1,204 6.8% 5.1%
1997 16,548 17,376 1,236 7.1% 5.2%

The St. Paul determines the mix of its investments in taxable and
tax-exempt securities based on its current and projected tax
position and the relationship between taxable and tax-exempt
investment yields. Taxable, intermediate-term, investment-grade
securities accounted for the majority of new bond purchases in
1999. The fixed maturities

portfolio is carried on The St. Paul's balance sheet at estimated
fair value, with unrealized appreciation and depreciation (net of
taxes) recorded in common shareholders' equity. At Dec. 31, 1999,
pretax unrealized depreciation totaled $36 million, compared with
appreciation of $979 million at the end of 1998. The decline in
unrealized appreciation was primarily the result of an increase in
market interest rates during 1999.

The fixed maturities portfolio is managed conservatively to provide
reasonable returns while limiting exposure to risks. Approximately
95% of the fixed maturities portfolio is rated at investment grade
levels (BBB or better). The remaining 5% of the portfolio is split
between nonrated and non-investment grade (high-yield) securities.
The St. Paul believes the nonrated securities would be considered
investment-grade in quality if rated.

Equities. Equity securities comprised 5% of the property-liability
operations' investments (at cost) at Dec. 31, 1999, and consist of
a diversified portfolio of common stocks, which are held with the
primary objective of achieving capital appreciation. Sales of
equities generated $118 million of pretax realized investment gains
in 1999, and dividend income totaled $16 million. The portfolio's
carrying value at year-end included $516 million of pretax
unrealized appreciation. The St Paul's domestic equity portfolio
produced a total return of 32.6% in 1999.

Real Estate and Mortgage Loans. The St. Paul's property-liability
operations' real estate holdings consist of a diversified portfolio
of commercial office and warehouse properties that The St. Paul
owns directly or has partial interest in through joint ventures.
The properties are geographically distributed throughout the United
States and had an occupancy rate of 94% at Dec. 31, 1999. The St.
Paul also has a portfolio of real estate mortgage investments
acquired in the merger with USF&G. The real estate and mortgage
loan portfolio produced $87 million of pretax investment income in
1999 and generated $18 million of pretax realized gains.

Venture Capital. Securities of small- to medium-sized companies
spanning a variety of industries comprise The St. Paul's venture
capital holdings, which accounted for 2% of property-liability
investments (at cost) at Dec. 31, 1999. These investments are in
the form of limited partnership interests or direct equity
investments. Venture capital investments generated pretax realized
investment gains of $158 million in 1999. The carrying value of
venture capital investments at Dec. 31, 1999 included $468 million
of pretax unrealized appreciation.

Securities Lending Collateral. This investment class, which
comprised 6% of property-liability investments at Dec. 31,
1999, consists of collateral held on certain fixed-maturity
securities loaned to other institutions through a lending agent for
short periods of time. The collateral is maintained at 102%,
marked to market daily, of the fair value of the loaned securities.
The St. Paul retains full ownership of the loaned securities and is
indemnified by the lending agent in the event a borrower becomes
insolvent or fails to return the securities.

Short-Term and Other Investments. The St. Paul's portfolio also
includes short-term securities and other miscellaneous investments,
which in the aggregate comprised 6% of property-liability
investments at Dec. 31, 1999.

Notes 1, 4, 5 and 7 to the consolidated financial statements, which
are included in The St. Paul's 1999 Annual Report to Shareholders,
provide additional information about The St. Paul's investment
portfolio and are incorporated herein by reference. The
"Investment Operations" and "Exposures to Market Risk" sections of
"Management's Discussion and Analysis" in said Annual Report are
also incorporated herein by reference.

Life Insurance
- --------------

F&G Life markets many forms of annuity and life insurance products,
including single premium and flexible premium deferred annuities
(such as equity-indexed annuities), tax sheltered annuities, single
premium immediate annuities, structured settlement annuities and
universal life, whole life and term life insurance.

Most of F&G Life's annuities and life insurance products are sold
primarily through independent agents and insurance brokers.
Structured settlement annuities are sold predominantly to property-
liability companies (primarily The St. Paul's U.S. Underwriting
operations) in settlement of certain of their insurance claims.

Note 8 to the consolidated financial statements, on pages 56 and 57
of The St. Paul's 1999 Annual Report to Shareholders, provides a
table of F&G Life's future policy benefit reserves by type of
product and is incorporated herein by reference.

Life Insurance Investment Operations. F&G Life's investment
portfolio totaled $4.3 billion at Dec. 31, 1999, consisting of
investment grade government and corporate securities (64% of the
total); asset-backed and mortgage-backed securities (18%); high-
yield investments (7%); and real estate mortgage loans and other
investments (11%). F&G Life uses derivative instruments in the form
of over-the-counter indexed call options for the purpose of hedging
interest credited on its equity-indexed annuity products. The cost
of derivatives amounted to 1% of invested assets at Dec. 31, 1999.
Note 7 on page 56 of The St. Paul's 1999 Annual Report to
Shareholders, which includes additional information about F&G
Life's involvement with derivative financial instruments, is
incorporated herein by reference.

Asset Management
- ----------------

The John Nuveen Company (Nuveen) is The St. Paul's asset management
subsidiary. The St. Paul and its largest property-liability
insurance subsidiary, St. Paul Fire and Marine Insurance Company
(Fire and Marine) hold a combined 79% interest in Nuveen.

Nuveen's principal businesses are asset management and related
research, as well as the development, marketing and distribution of
investment products and services. Nuveen distributes its
investment products, including mutual funds, exchange-traded funds
(closed-end funds), defined portfolio products (unit trusts), and
individually managed accounts through registered representatives
associated with unaffiliated firms, including broker-dealers,
commercial banks, affiliates of insurance providers, financial
planners, accountants, consultants, and investment advisers. In
1999, Nuveen sold its investment banking business to U.S. Bancorp
Piper Jaffray, enabling Nuveen to focus on its asset management
business.

Nuveen's primary business activities generate two principal sources
of revenue: (1) ongoing advisory fees earned on assets under
management, including mutual funds, exchange-traded funds, and
individually managed accounts; and (2) transaction-based revenue
earned upon the distribution of mutual fund, exchange-traded fund
and defined portfolio products.

Nuveen's operations are organized around six subsidiaries: John
Nuveen & Co. Incorporated (Nuveen & Co.), a registered broker and
dealer in securities under the Securities Exchange Act of 1934 and
five investment advisory subsidiaries registered under the
Investment Advisers Act of 1940. The five investment advisory
subsidiaries are Nuveen Advisory Corp. (NAC), Nuveen Institutional
Advisory Corp. (NIAC), Nuveen Asset Management Inc. (NAM),
Rittenhouse Financial Services, Inc. (Rittenhouse) and Nuveen
Senior Loan Asset Management, Inc. (NSLAM). Nuveen & Co. provides
investment product distribution and related services for Nuveen's
managed funds and defined portfolios. NAC, NIAC and NSLAM provide
investment management services for and administer the business
affairs of the Nuveen managed funds. Rittenhouse and NAM provide
investment management services to individually managed accounts,
and Rittenhouse also acts as sub-adviser and portfolio manager for
a mutual fund managed by NIAC.

At Dec. 31, 1999, Nuveen's assets under management totaled $59.8
billion, consisting of $26.8 billion of exchange-traded funds,
$20.9 billion of managed accounts, and $12.1 billion of mutual
funds. Municipal securities accounted for 66% of the underlying
managed assets.

In 1999, Nuveen repurchased 914,100 of its outstanding common
shares for a total cost of $36 million. In 1998, Nuveen
repurchased 732,700 of its outstanding common shares for a total
cost of $27 million. The repurchases in both years were solely
from minority shareholders, which served to increase The St. Paul's
ownership percentage from 77% at Dec. 31, 1997 to 79% at Dec. 31,
1999.

Competition and Regulation
- --------------------------

Property-Liability Insurance. The St. Paul's domestic and
international underwriting subsidiaries compete with a large number
of other insurers and reinsurers. In addition, many large
commercial customers self-insure their risks or utilize large
deductibles on purchased insurance. The St. Paul's subsidiaries
compete principally by attempting to offer a combination of
superior products, underwriting expertise and services at a
competitive, yet profitable, price. The combination of products,
services, pricing and other methods of competition varies by line
of insurance and by coverage within each line of insurance.

The St. Paul and its underwriting subsidiaries are subject to
regulation by certain states as an insurance holding company
system. Such regulation generally provides that transactions
between companies within the holding company system must be fair
and equitable. Transfers of assets among such affiliated
companies, certain dividend payments from underwriting subsidiaries
and certain material transactions between companies within the
system may be subject to prior notice to, or prior approval by,
state regulatory authorities. During 1999, The St. Paul received
$294 million of cash dividends from its U.S. Underwriting
operations. In 2000, up to $484 million in cash dividends can be
paid by the U.S. Underwriting operations to The St. Paul without
regulatory approval. In addition, any change of control (generally
presumed by the holding company laws to occur with the acquisition
of 10% or more of an insurance holding company's voting securities)
of The St. Paul and its underwriting subsidiaries is subject to
prior approval.

The underwriting subsidiaries are subject to licensing and
supervision by government regulatory agencies in the jurisdictions
in which they do business. The nature and extent of such
regulation vary but generally have their source in statutes which
delegate regulatory, supervisory and administrative powers to
insurance regulators, which in the U.S. are state authorities.
Such regulation, supervision and administration of the underwriting
subsidiaries may relate, among other things, to the standards of
solvency which must be met and maintained; the licensing of
insurers and their agents; the nature of and limitations on
investments; restrictions on the size of risk which may be insured
under a single policy; deposits of securities for the benefit of
policyholders; regulation of policy forms and premium rates;
periodic examination of the affairs of insurance companies; annual
and other reports required to be filed on the financial condition
of insurers or for other purposes; requirements regarding reserves
for unearned premiums, losses and other matters; the nature of and
limitations on dividends to policyholders and shareholders; the
nature and extent of required participation in insurance guaranty
funds; and the involuntary assumption of hard-to-place or high-risk
insurance business, primarily in workers' compensation insurance
lines.

Loss ratio trends in property-liability insurance underwriting
experience may be improved by, among other things, changing the
kinds of coverages provided by policies, providing loss prevention
and risk management services, increasing premium rates or by a
combination of these. The ability of The St. Paul's insurance
underwriting subsidiaries to meet emerging adverse underwriting
trends may be delayed, from time to time, by the effects of laws
which require prior approval by insurance regulatory authorities of
changes in policy forms and premium rates. The St. Paul's U.S.
Underwriting operations do business in all 50 states and the
District of Columbia, Puerto Rico, Guam and the U.S. Virgin
Islands. Many of these jurisdictions require prior approval of
most or all premium rates.

The St. Paul's insurance underwriting business in the United
Kingdom is regulated by the Financial Services Authority (FSA).
The FSA's principal objectives are to ensure that insurance
companies are responsibly managed, that they have adequate funds to
meet liabilities to policyholders and that they maintain required
levels of solvency. In Canada, the conduct of insurance business
is regulated under provisions of the Insurance Companies Act of
1992, which requires insurance companies to maintain certain levels
of capital depending on the type and amount of insurance policies
in force. The Lloyd's operation is currently regulated by the
Council of Lloyd's, a self-regulatory organization, but will in due
course be regulated by the FSA. The St. Paul is also subject to
regulations in the other countries and jurisdictions in which it
underwrites insurance business.

Life Insurance. The St. Paul's life insurance subsidiaries operate
in a competitive environment, with approximately 1,400 companies
nationwide in the industry including stock and mutual companies.
F&G Life ranked 168th based on 1998 statutory net premiums written,
142nd based on 1998 statutory assets, and 170th based on 1998
statutory capital and surplus. In the life insurance industry,
interest crediting rates, underwriting philosophy, policy features,
financial

stability and service quality are important competitive factors.
F&G Life's products compete not only with those offered by other
life insurance companies, but also with other income accumulation-
oriented products offered by other financial services companies.
The life insurance industry has experienced considerable
competitive pressure in recent periods as a result of fluctuating
interest rates.

F&G Life is subject to licensing and supervision by government
regulatory agencies in the jurisdictions in which it does business.
The nature and extent of regulation vary but generally have their
source in statutes which delegate regulatory, supervisory and
administrative powers to state insurance commissioners. Such
regulation and supervision of F&G Life may relate, among other
things, to the standards of solvency which must be met and
maintained; the licensing of insurers and agents; the nature of and
limitations on investments; deposits of securities for the benefit
of policyholders; regulation of policy forms; periodic examination
of the affairs of the company; annual and other reports required to
be filed; requirements regarding reserves for policyholder
benefits; fixing maximum interest rates on life insurance policy
loans and minimum rates for accumulation of surrender values; the
nature of and limitations on dividends to policyholders and
shareholders; and the nature and extent of required participation
in insurance guaranty funds.

Asset Management. Nuveen is subject to substantial competition in
all aspects of its business. Investment products are sold to the
public by broker-dealers, banks, insurance companies and others.
Nuveen competes with these other providers of products primarily on
the basis of the range of products offered, the investment
performance of such products, quality of service, fees charged, the
level and type of broker compensation, the manner in which such
products are marketed and distributed, and the services provided to
investors.

Nuveen is a publicly-traded company registered under the Securities
Exchange Act of 1934 and listed on the New York Stock Exchange.
One of its subsidiaries, Nuveen & Co., is a broker and dealer
registered under the Securities Exchange Act of 1934, and is
subject to regulation by the Securities and Exchange Commission,
the National Association of Securities Dealers, Inc. and other
federal and state agencies and self-regulatory organizations. It
is also subject to net capital requirements that restrict its
ability to pay dividends. Nuveen's other five subsidiaries are
investment advisers registered under the Investment Advisers Act of
1940. As such, they are subject to regulation by the Securities
and Exchange Commission.

Year 2000 Readiness Disclosure
- ------------------------------

The St. Paul experienced no major disruptions in its information
technology systems at the turn of the century. The "Year 2000
Readiness Disclosure" section of "Management's Discussion and
Analysis" on page 41 of The St. Paul's 1999 Annual Report to
Shareholders is incorporated herein by reference.

Forward-Looking Statement Disclosure
- ------------------------------------

This report contains certain forward-looking statements within the
meaning of the Private Litigation Reform Act of 1995. Forward-
looking statements are statements other than historical information
or statements of current condition. Words such as expects,
anticipates, intends, plans, believes, seeks or estimates, or
variations of such words, and similar expressions are also intended
to identify forward-looking statements. Examples of these forward-
looking statements include statements concerning: market and other
conditions and their effect on future premiums, revenues, earnings,
cash flow and investment income; expense savings resulting from the
USF&G merger and the restructuring actions announced in 1998 and
1999; expected closing dates for acquisitions and dispositions; and
Year 2000 issues and The St. Paul's efforts to address them.

In light of the risks and uncertainties inherent in future
projections, many of which are beyond The St. Paul's control,
actual results could differ materially from those in forward-
looking statements. These statements should not be regarded as a
representation that anticipated events will occur or that expected
objectives will be achieved. Risks and uncertainties include, but
are not limited to, the following: general economic conditions
including changes in interest rates and the performance of
financial markets; changes in domestic and foreign laws,
regulations and taxes; changes in the demand for, pricing of, or
supply of reinsurance or insurance; catastrophic events of
unanticipated frequency or severity; loss of significant customers;
judicial decisions and rulings; the pace and effectiveness of the
transfer of the standard personal insurance business to
Metropolitan; the pace and effectiveness of the transfer of the
nonstandard auto

operations to Prudential; the pace and effectiveness of our
acquisition of MMI Companies, Inc.; and various other matters,
including the effects of the merger with USF&G. Actual results and
experience relating to Year 2000 issues could differ materially
from anticipated results or other expectations as a result of a
variety of risks and uncertainties, including unanticipated
judicial interpretations of the scope of the insurance or
reinsurance coverage provided by The St. Paul's policies. The St.
Paul undertakes no obligation to release publicly the results of
any future revisions it may make to forward-looking statements to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.

Item 2. Properties.
- ------ ----------

Fire and Marine owns The St. Paul's corporate headquarters
buildings, located at 385 Washington Street and 130 West Sixth
Street, St. Paul, MN. These buildings are adjacent to one another
and consist of approximately 1.1 million square feet of gross floor
space. Fire and Marine also owns property in Woodbury, MN where
its Administrative Services Building and off-site computer
processing operations are located. The St. Paul also owns the
former USF&G headquarters campus known as Mount Washington Center,
located in Baltimore, MD. The campus currently houses offices for
certain executives of The St. Paul, as well as offices for certain
underwriting, legal and claim personnel. A training and
development center also resides on the Mount Washington campus.
The St. Paul has leased a substantial portion of one of the
buildings on the campus to an outside party.

St. Paul International Insurance Company Ltd. owns a building in
London, England, which houses a portion of its operations. The St.
Paul retained ownership of another building in London subsequent to
the sale of Minet to Aon in 1997, which is leased to an outside
party.

Fire and Marine and its subsidiary, St. Paul Properties, Inc., own
a portfolio of income-producing properties in various locations
across the United States that they have purchased for investment.

The St. Paul's operating subsidiaries rent or lease office space in
most cities in which they operate.

Management considers the currently owned and leased office
facilities of The St. Paul and its subsidiaries adequate for the
current and anticipated future level of operations.

Item 3. Legal Proceedings.
- ------ -----------------

The information set forth in the "Legal Matters" section of Note 13
to the consolidated financial statements, and the "Environmental
and Asbestos Claims" section of "Management's Discussion and
Analysis," which are included in The St. Paul's 1999 Annual Report
to Shareholders on pages 65 and 34, respectively, are incorporated
herein by reference.

In 1990, at the direction of the UK Department of Trade and
Industry (DTI), five insurance underwriting subsidiaries of London
United Investments PLC (LUI) suspended underwriting new insurance
business. At the same time, four of those subsidiaries, being
insolvent, suspended payment of claims and have since been placed
in provisional liquidation. The fifth subsidiary, Walbrook
Insurance Company, continued paying claims until May of 1992 but
has now also been placed in provisional insolvent liquidation.
Weavers Underwriting Agency (Weavers), an LUI subsidiary, managed
these insurers. Minet, a former insurance brokerage subsidiary of
The St. Paul, had brokered business to and from Weavers for many
years. From 1973 through 1980, The St. Paul's UK-based
underwriting operations, now called St. Paul International
Insurance Company Ltd. (SPI), had accepted business from Weavers.
A portion of that business was ceded by SPI to reinsurers. Certain
of those reinsurers have challenged the validity of certain
reinsurance contracts relating to the Weavers pool, of which SPI
was a member, in an attempt to avoid liability under those
contracts. SPI and other members of the Weavers pool are seeking
enforcement of the reinsurance contracts. Minet may also become
the subject of legal proceedings arising from its role as one of
the major brokers for Weavers. When The St. Paul sold Minet in May
1997, it agreed to indemnify the purchaser for most of Minet's
preclosing liabilities, including liabilities relating to the
Weavers matter. Any proceedings relating to the Weavers matter will
be vigorously contested by The St. Paul and it recognizes that the
final outcome of these proceedings, if adverse to The St. Paul, may
materially impact the results of operations in the period in which
that outcome occurs, but believes it will not have a materially
adverse effect on its liquidity or overall financial position.

Item 4. Submission of Matters to a Vote of Security Holders.
- ------ ---------------------------------------------------

No matter was submitted to a vote of security holders during the
quarter ended Dec. 31, 1999.

Executive Officers Of The Registrant
- ------------------------------------

All of the following persons are regarded as executive officers of
The St. Paul Companies, Inc. because of their responsibilities and
duties as elected officers of The St. Paul, Fire and Marine, St.
Paul International Underwriting or St. Paul Re. There are no
family relationships between any of The St. Paul's executive
officers and directors, and there are no arrangements or
understandings between any of these officers and any other person
pursuant to which the officer was selected as an officer. The
officers listed in the chart below, except Thomas A. Bradley, James
E. Gustafson, Robert J. Lamendola, Stephen W. Lilienthal, Paul J.
Liska, John A. MacColl and David R. Nachbar, have held positions
with The St. Paul or one or more of its subsidiaries for more than
five years, and have been employees of The St. Paul or a subsidiary
for more than five years.

Messrs. Thomas A. Bradley, Stephen W. Lilienthal, John A. MacColl
and Robert J. Lamendola held positions and were employees of USF&G
Corporation or one of its subsidiaries for five or more years prior
to its merger with The St. Paul in April of 1998. James E.
Gustafson joined the company on Jan. 30, 1999. He had been an
employee of General Re Corporation since 1969 where he held various
executive positions until being named President and Chief Operating
Officer of General Re Corporation in 1995. Paul J. Liska joined
The St. Paul in January of 1997. For three years prior to that
date, Mr. Liska held various management positions with Specialty
Foods Corporation, including the position of president and chief
executive officer from January 1996 to January 1997.

David R. Nachbar joined The St. Paul in August 1998. For two years
prior to that date, Mr. Nachbar was employed as vice president,
human resources and chief of staff-Asia for Citibank. From 1995 to
1996 he was the area human resources director for Frito-Lay, a
PepsiCo unit. From 1989 through 1995, Mr. Nachbar was employed in
various capacities in the human resources area by the Pizza Hut
division of PepsiCo.

Positions Presently Term of Office and
Name Age Held Period of Service
- ------------- --- ------------------- ------------------

Douglas W. 63 Chairman and Chief Serving at the
Leatherdale Executive Officer pleasure of the
(The St. Paul Board from 5-90
Companies, Inc.)

James E. Gustafson 53 President and Chief Serving at the
Operating Officer pleasure of the
(The St. Paul Board from 1-99
Companies, Inc.)

Paul J. Liska 44 Executive Vice Serving at the
President and Chief pleasure of the
Financial Officer Board from 1-97
(The St. Paul
Companies, Inc.)

James F. Duffy 56 Chairman, President Serving at the
and Chief Executive pleasure of the
Officer (St. Paul Board from 9-93
Re)

John A. MacColl 51 Executive Vice Serving at the
President and pleasure of the
General Counsel Board from 5-99
(The St. Paul
Companies, Inc.)

Positions Presently Term of Office and
Name Age Held Period of Service
- -------------- --- ------------------- ------------------

Mark L. Pabst 53 President and Chief Serving at the
Operating Officer pleasure of the
(St. Paul Board from 2-95
International)

Michael J. Conroy 58 Executive Vice Serving at the
President and Chief pleasure of the
Administrative Board from 8-95
Officer (Fire and
Marine )

Stephen W. 50 Executive Vice Serving at the
Lilienthal President (Fire and pleasure of the
Marine) Board from 4-98

Robert J. 55 President - Surety Serving at the
Lamendola and pleasure of the
Senior Vice Board from 10-99
President - Global
Specialty Practices
(Fire and Marine)

T. Michael Miller 41 Senior Vice Serving at the
President - Global pleasure of the
Specialty Practices Board from 10-99
(Fire and Marine)

Kent D. Urness 50 Senior Vice Serving at the
President - Global pleasure of the
Specialty Practices Board from 10-99
(Fire and Marine)

Bruce A. Backberg 51 Senior Vice Serving at the
President - Legal pleasure of the
Services Board from 11-97
(The St. Paul
Companies, Inc.)

Janet R. Nelson 50 Special Assistant Serving at the
to the President pleasure of the
(Fire and Marine) Board from 10-99

Thomas A. Bradley 42 Senior Vice Serving at the
President - Finance pleasure of the
(The St. Paul Board from 5-98
Companies, Inc.)

Karen L. Himle 44 Senior Vice Serving at the
President - pleasure of the
Corporate Affairs Board from 11-97
(The St. Paul
Companies, Inc.)

David R. Nachbar 37 Senior Vice Serving at the
President - Human pleasure of the
Resources Board from 8-98
(The St. Paul
Companies, Inc.)

Laura C. Gagnon 38 Vice President - Serving at the
Finance and pleasure of the
Investor Relations Board from 7-99
(The St. Paul
Companies, Inc.)

Sandra Ulsaker 40 Assistant Vice Serving at the
Wiese President and pleasure of the
Corporate Secretary Board from 5-99
(The St. Paul
Companies, Inc.)

Part II
-------

Item 5. Market for the Registrant's Common Equity and
- ------ Related Stockholder Matters.
----------------------------

The St. Paul's common stock is traded on the New York Stock
Exchange, where it is assigned the symbol SPC. The stock is also
listed on the London Stock Exchange under the symbol SPA. The
number of holders of record, including individual owners, of The
St. Paul's common stock was 22,603 as of March 1, 2000.

The "Stock Trading" and "Stock Price and Dividend Rate" portions of
the "Shareholder Information" section on page 80 of The St. Paul's
1999 Annual Report to Shareholders are incorporated herein by
reference.

Item 6. Selected Financial Data.
- ------ -----------------------

The "Six-Year Summary of Selected Financial Data" on page 43 of The
St. Paul's 1999 Annual Report to Shareholders is incorporated
herein by reference.

Item 7. Management's Discussion and Analysis of Financial
- ------ Condition and Results of Operations.
-----------------------------------

The "Management's Discussion and Analysis" on pages 18 through 42
of The St. Paul's 1999 Annual Report to Shareholders is
incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
- -------- ----------------------------------------------------------

The "Exposures to Market Risk" section of "Management's Discussion
and Analysis" on pages 40 and 41 of The St. Paul's 1999 Annual
Report to Shareholders is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.
- ------ -------------------------------------------

The "Independent Auditors' Report," "Management's Responsibility
for Financial Statements," Consolidated Balance Sheets,
Consolidated Statements of Income, Comprehensive Income,
Shareholders' Equity and Cash Flows, and Notes to Consolidated
Financial Statements on pages 44 through 74 of The St. Paul's 1999
Annual Report to Shareholders are incorporated herein by reference.

Item 9. Changes in and Disagreements With Accountants on
- ------ Accounting and Financial Disclosure.
-----------------------------------

None.

Part III
--------

Item 10. Directors and Executive Officers of the Registrant.
- ------- --------------------------------------------------

The "Election of Directors - Nominees for Directors" section, which
provides information regarding The St. Paul's directors, on pages 4
to 6 of The St. Paul's Proxy Statement relating to the Annual
Meeting of Shareholders to be held May 2, 2000, is incorporated
herein by reference. Michael R. Bonsignore, 58, is currently a
director of The St. Paul, but is not standing for re-election at
the 2000 Annual Meeting of Shareholders.

The "Section 16(a) Beneficial Ownership Reporting Compliance"
section on pages 40 and 41 of The St. Paul's Proxy Statement
relating to the Annual Meeting of Shareholders to be held May 2,
2000, is incorporated herein by reference.

Item 11. Executive Compensation.
- ------- ----------------------

The "Executive Compensation" section on pages 21 to 36 and the
"Election of Directors - Board of Directors Compensation" section
on pages 7 to 9 of the Proxy Statement relating to the Annual
Meeting of Shareholders to be held May 2, 2000, are incorporated
herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------- --------------------------------------------------------------

The "Security Ownership of Certain Beneficial Owners and
Management" section on pages 38 to 40 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held May 2,
2000, is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions.
- ------- ----------------------------------------------

The "Indebtedness of Management" section on page 37 of the Proxy
Statement relating to the Annual Meeting of Shareholders to be held
May 2, 2000, is incorporated herein by reference.

Part IV
-------

Item 14. Exhibits, Financial Statements, Financial Statement
- ------- Schedules and Reports on Form 8-K.
---------------------------------

(a) Filed documents. The following documents are filed as part of
this report:

1. Financial Statements.
Incorporated by reference into Part II of this report:
The St. Paul Companies, Inc. and Subsidiaries:
Consolidated Statements of Income - Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Comprehensive Income -
Years Ended December 31, 1999, 1998 and 1997
Consolidated Balance Sheets - December 31, 1999
and 1998
Consolidated Statements of Shareholders'
Equity - Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years Ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
Independent Auditors' Report

The foregoing documents are incorporated by reference
to The St. Paul's 1999 Annual Report to
Shareholders.

2. Financial Statement Schedules.
The St. Paul Companies, Inc. and Subsidiaries:

Independent Auditors' Report on Financial
Statement Schedules
I. Summary of Investments - Other than Investments
in Related Parties
II. Condensed Financial Information of Registrant
III. Supplementary Insurance Information
IV. Reinsurance
V. Valuation and Qualifying Accounts
VII. Predecessor Auditors' Reports on Consolidated
Financial Statements and Financial Statement
Schedules

All other schedules are omitted because they are not
applicable, not required, or the information is
included elsewhere in the Consolidated Financial
Statements or Notes thereto.

3. Exhibits. An Exhibit Index is set forth at page 38
of this report.

(3) (a) The current articles of incorporation of The
St. Paul are incorporated by reference to
Form 10-K for the year ended December 31, 1998.

(b) The current bylaws of The St.
Paul are incorporated herein by reference to Form
10-Q for the quarter ended March 31, 1994.

(4) (a) A specimen certificate of
The St. Paul's common stock is incorporated by
reference to Form 10-K for the year ended December
31, 1998.

There are no long-term debt instruments
in which the total amount of securities authorized
exceeds 10% of the total assets of The St. Paul
and its subsidiaries on a consolidated basis. The
St. Paul agrees to furnish a copy of any of its
long-term debt instruments to the Securities and
Exchange Commission upon request.

(10) (a) Amended and Restated
Letter Agreement between The St. Paul and Mr.
Stephen W. Lilienthal dated as of August 5, 1999 related
to terms of his employment is filed herewith.

(b) Amendment to The St. Paul's
Directors Charitable Award Program is filed
herewith.

(c) The Employment Agreement between
The St. Paul and Mr. James E. Gustafson dated as
of January 6, 1999 is incorporated by reference to
Form 10-K for the year ended December 31, 1998.

(d) The Restricted Stock Award Plan, as
amended, is incorporated by reference to Form
10-K for the year ended December 31, 1998.

(e) The 1988 Stock Option Plan as in
effect for options granted prior to June 1994, as
amended, is incorporated by reference to Form 10-K
for the year ended December 31, 1998.

(f) The Non-Employee Director Stock
Retainer Plan is incorporated by reference to Form
10-K for the year ended December 31, 1998.

(g) The Amended and Restated Special
Severance Policy is incorporated by reference to
Form 10-K for the year ended December 31, 1998.

(h) The Annual Incentive Plan is
incorporated by reference to the Proxy Statement
relating to the 1999 Annual Meeting of
Shareholders that was held on May 4, 1999.

(i) The Amended and Restated 1994 Stock
Incentive Plan, as amended, is incorporated by
reference to the Proxy Statement relating to the
2000 Annual Meeting of Shareholders to be held on
May 2, 2000.

(j) The Deferred Management Incentive
Awards Plan is incorporated by reference to Form
10-K for the year ended December 31, 1997.

(k) The Directors' Deferred
Compensation Plan is incorporated by reference to
Form 10-K for the year ended December 31, 1997.

(l) The Relocation Loan Payback
Agreement with Mr. James F. Duffy is incorporated
by reference to Form 10-K for the year ended
December 31, 1997.

(m) The Benefit Equalization Plan -
1995 Revision is incorporated by reference to Form
10-K for the year ended December 31, 1997.

(n) First Amendment to Benefit
Equalization Plan - 1995 Revision is incorporated
by reference to Form 10-K for the year ended
December 31, 1997.

(o) Executive Post-Retirement Life
Insurance Plan - Summary Plan Description is
incorporated by reference to Form 10-K for the
year ended December 31, 1997.

(p) Executive Long-Term Disability Plan
- Summary Plan Description is incorporated by
reference to Form 10-K for the year ended December
31, 1997.

(q) The St. Paul Re Long-Term Incentive
Plan is incorporated by reference to the Form S-8
Registration Statement filed March 17, 1998
(Commission File No. 333-48121).

(r) Letter Agreement between The St.
Paul and Mr. Paul J. Liska dated May 8, 1997
relating to the terms of his employment is
incorporated by reference to Form 10-Q for the
quarter ended March 31, 1997.

(s) Letter Agreement, agreed to January 20,
1997 between The St. Paul and Mr. Paul J.
Liska relating to severance benefits is
incorporated by reference to Form 10-Q for the
quarter ended March 31, 1997.

(t) The Special Leveraged Stock
Purchase Plan is incorporated by reference to Form
10-Q for the quarter ended March 31, 1997.

(u) The Directors' Charitable Award
Program is incorporated by reference to the Form
10-K for the year ended December 31, 1994.

(v) The summary description of the
Outside Directors' Retirement Plan is incorporated
by reference to the Proxy Statement relating to
the Annual Meeting of Shareholders to be held May 2,
2000.

(w) The summary description of the Key
Executive Special Incentive Arrangement is
incorporated by reference to Form 10-Q for the
quarter ended September 30, 1999.

(11) A statement regarding the computation of
per share earnings is filed herewith.

(12) A statement regarding the computation of
the ratio of earnings to fixed charges and the
ratio of earnings to combined fixed charges and
preferred stock dividends is filed herewith.

(13) The St. Paul's 1999 Annual Report to
Shareholders is furnished to the Commission in
paper format pursuant to Rule 14a-3(c). The
following portions of such annual report,
representing those portions expressly incorporated
by reference in this report on Form 10-K, are
filed as an exhibit to this report:

Location of
Portions of Annual Report Information
for the Year Ended Incorporated
December 31, 1999 by Reference
------------------------- ------------

Consolidated Financial Statements Item 8
Notes to Consolidated
Financial Statements Item 1,8
Independent Auditors' Report Item 8
Management's Discussion and
Analysis Item 1,3,7
Six-Year Summary of Selected
Financial Data Item 6
Shareholder Information Item 5

(21) List of subsidiaries of The St. Paul Companies, Inc.
is filed herewith.

(23) Consents of independent auditors to incorporation
by reference of certain reports into Registration
Statements on Form S-8 (SEC File No. 33-15392, No. 33-23446
No. 33-23948, No. 33-24220, No. 33-24575, No. 33-26923,
No. 33-49273, No. 33-56987, No. 333-01065, No. 333-22329, No. 333-
25203, No. 333-28915, No. 333-48121, No. 333-50935, No. 333-50937
No. 333-50941, No. 333-50943 and No. 333-67983) and Form S-3 (SEC
File No. 333-06465 and No. 333-67139) are filed herewith.

(24) Power of attorney is filed herewith.

(27) Financial data schedule is filed herewith.

(b) Reports on Form 8-K.

A Form 8-K Current Report dated January 27, 2000
was filed relating to the announcement of The St.
Paul's financial results for the quarter and year ended
December 31, 1999.

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, The St. Paul Companies, Inc. has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

THE ST. PAUL COMPANIES, INC.
---------------------------
(Registrant)

Date: March 29, 2000 By /s/ Sandra Ulsaker Wiese
-------------- ------------------------
Sandra Ulsaker Wiese
Assistant Vice President and
Corporate Secretary

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of The St. Paul Companies, Inc. and in the capacities and on
the dates indicated.

Date: March 29, 2000 By /s/ Douglas W. Leatherdale
-------------- --------------------------
Douglas W. Leatherdale,
Director, Chairman of the
Board and Chief Executive
Officer

Date: March 29, 2000 By /s/ James E. Gustafson
-------------- ----------------------
James E. Gustafson,
Director, President and
Chief Operating Officer

Date: March 29, 2000 By /s/ Paul J. Liska
-------------- -----------------
Paul J. Liska, Executive
Vice President and
Chief Financial Officer

Date: March 29, 2000 By /s/ Thomas A. Bradley
-------------- ---------------------
Thomas A. Bradley, Senior
Vice President -
Finance and Chief Accounting
Officer

Date: March 29, 2000 By /s/ H. Furlong Baldwin
-------------- ----------------------
H. Furlong Baldwin*, Director

Date: March 29, 2000 By /s/ Michael R. Bonsignore
-------------- -------------------------
Michael R. Bonsignore*, Director

Date: March 29, 2000 By /s/ John H. Dasburg
-------------- -------------------
John H. Dasburg*, Director

Date: March 29, 2000 By /s/ W. John Driscoll
-------------- --------------------
W. John Driscoll*, Director

Date: March 29, 2000 By /s/ Kenneth M. Duberstein
-------------- -------------------------
Kenneth M. Duberstein*, Director

Date: March 29, 2000 By /s/ Pierson M. Grieve
-------------- ---------------------
Pierson M. Grieve*, Director

Date: March 29, 2000 By /s/ Thomas R. Hodgson
-------------- ---------------------
Thomas R. Hodgson*, Director

Date: March 29, 2000 By /s/ David G. John
-------------- -----------------
David G. John*, Director

Date: March 29, 2000 By /s/ William H. Kling
-------------- --------------------
William H. Kling*, Director

Date: March 29, 2000 By /s/ Bruce K. MacLaury
-------------- ---------------------
Bruce K. MacLaury*, Director

Date: March 29, 2000 By /s/ Glen D. Nelson, M.D.
-------------- -----------------------
Glen D. Nelson, M.D.*, Director

Date: March 29, 2000 By /s/ Anita M. Pampusch
-------------- ---------------------
Anita M. Pampusch*, Director

Date: March 29, 2000 By /s/ Gordon M. Sprenger
-------------- ----------------------
Gordon M. Sprenger*, Director

Date: March 29, 2000 *By /s/ Sandra Ulsaker Wiese
-------------- ------------------------
Sandra Ulsaker Wiese,
Attorney-in-fact

INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES

The Board of Directors and Shareholders
The St. Paul Companies, Inc.:

Under date of February 16, 2000, we reported on the consolidated
balance sheets of The St. Paul Companies, Inc. and subsidiaries
as of December 31, 1999 and 1998, and the related consolidated
statements of income, shareholders' equity, comprehensive income
and cash flows for each of the years in the three-year period
ended December 31, 1999, as contained in the 1999 annual report
to shareholders. These consolidated financial statements and our
report thereon are incorporated by reference in the annual report
on Form 10-K for the year 1999. In connection with our audits of
the aforementioned consolidated financial statements we also have
audited the related financial statement schedules I through V, as
listed in the index in Item 14(a)2. of said Form 10-K. These
financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our
audits.

The consolidated financial statements and financial statement
schedules for the year ended December 31, 1997 have been restated
to reflect the pooling of interests with USF&G Corporation. We
did not audit the consolidated financial statements or financial
statement schedules of USF&G Corporation for the year ended
December 31, 1997, which statements reflect total revenues
constituting 34 percent for the year ended December 31, 1997 of
the related consolidated total. Those statements and financial
statement schedules were audited by other auditors whose reports
have been furnished to us, and our opinion, insofar as it relates
to the amounts included for USF&G Corporation, for the year ended
December 31, 1997, is based solely on the reports of the other
auditors.

In our opinion, based on our audits and the reports of the other
auditors, such financial statement schedules I through V, when
considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material
respects, the information set forth therein.

Minneapolis, Minnesota /s/ KPMG LLP
February 16, 2000 ------------
KPMG LLP

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE I - SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 1999
(In millions)

1999
-----------------------------------
Amount at
which shown
in the
Cost* Value* balance sheet
Type of investment: ------- ------- -------------

Fixed maturities:
- ----------------
United States Government and
government agencies and
authorities $ 2,174 $ 2,187 $ 2,187
States, municipalities and
political subdivisions 5,336 5,419 5,419
Foreign governments 912 934 934
Corporate securities 7,999 7,737 7,737
Asset-backed securities 669 650 650
Mortgage-backed securities 2,452 2,402 2,402
------- ------- -------
Total fixed maturities 19,542 19,329 19,329
------- ------- -------

Equity securities:
- -----------------
Common stocks:
Public utilities 8 8 8
Banks, trusts and insurance
companies 154 185 185
Industrial, miscellaneous and
all other 916 1,425 1,425
------- ------- -------
Total equity securities 1,078 1,618 1,618
------- ------- -------
Venture capital 399 866 866
------- ------- -------
Real estate and mortgage loans 1,511** 1,504
Securities lending collateral 1,216 1,216
Other investments 301 301
Short-term investments 1,373 1,373
------- -------
Total investments $ 25,420 $ 26,207
======= =======

* See Notes 1, 4, 5 and 7 to the consolidated financial statements
included in The St. Paul's 1999 Annual Report to Shareholders.

** The cost of real estate represents the cost of properties before
valuation provisions. (See Schedule V on page 35).

THE ST. PAUL COMPANIES, INC. (Parent Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEET INFORMATION
December 31, 1999 and 1998
(In millions)

Assets 1999 1998
- ------ ------- -------

Investment in subsidiaries $ 8,116 $ 7,207
Investments:
Fixed maturities 109 125
Equity securities 78 70
Short-term investments 33 12
Cash 4 9
Deferred income taxes 301 359
Refundable income taxes 152 42
Other assets 233 384
------- -------
Total assets $ 9,026 $ 8,208
======= =======

Liabilities:
- -----------
Debt $2,060 $1,406
Dividends payable to shareholders 58 58
Other liabilities 436 108
------- -------
Total liabilities 2,554 1,572
------- -------

Shareholders' Equity:
Preferred:
Convertible preferred stock 129 134
Guaranteed obligation - PSOP (105) (119)
------- -------
Total preferred shareholders' equity 24 15
------- -------

Common:
Common stock, authorized 480 shares;
issued 225 shares (234 in 1998) 2,079 2,128
Retained earnings 3,827 3,480
Accumulated other comprehensive income:
Unrealized appreciation of investments 568 1,027
Unrealized loss on foreign
currency translation (26) (14)
------- -------
Total accumulated other
comprehensive income 542 1,013
------- -------
Total common shareholders' equity 6,448 6,621
------- -------
Total shareholders' equity 6,472 6,636
------- -------
Total liabilities and
shareholders' equity $ 9,026 $ 8,208
======= =======

See accompanying notes to condensed financial information.

THE ST. PAUL COMPANIES, INC. (Parent Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENT OF INCOME INFORMATION
Years Ended December 31, 1999, 1998 and 1997
(In millions)

1999 1998 1997
------- ------- -------
Revenues:
Net investment income $ 17 $ 18 $ 18
Realized investment gains 10 6 7
------- ------- -------
Total revenues 27 24 25
------- ------- -------
Expenses:
Interest expense 145 67 67
Administrative and other expenses 51 66 52
------- ------- -------
Total expenses 196 133 119
------- ------- -------
Loss before income tax benefit (169) (109) (94)
Income tax benefit (59) (80) (113)
------- ------- -------
Income (loss) from continuing
operations - parent company only (110) (29) 19

Equity in net income of subsidiaries 889 228 1,043
------- ------- -------
Income from continuing operations
before cumulative effect
of accounting change 779 199 1,062
Cumulative effect of
accounting change (30) - -
------- ------- -------
Income from continuing operations 749 199 1,062
Gain (loss) from
discontinued operations 85 (110) (133)
------- ------- -------
Consolidated net income $ 834 $ 89 $ 929
======= ======= =======

See accompanying notes to condensed financial information.

THE ST. PAUL COMPANIES, INC. (Parent Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENT OF CASH FLOWS INFORMATION
Years Ended December 31, 1999, 1998 and 1997
(In millions)

1999 1998 1997
------- ------- -------
Operating Activities:
Net income (loss) - parent only $ (110) $ (29) $ 19
Cash dividends from subsidiaries 320 223 216
Tax payments from subsidiaries 69 71 166
Net federal income tax refund (payments) (71) 54 (61)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Deferred tax expense
(benefit) - operations 38 (78) (60)
Pretax realized investment gains (10) (6) (7)
Other (38) (4) (19)
------- ------- -------
Cash provided by
operating activities 198 231 254
------- ------- -------
Investing Activities:
Purchases of investments (155) (47) (56)
Proceeds from sales and maturities
of investments 153 81 76
Capital contributions and loans
to subsidiaries (4) (178) (107)
Proceeds from
repayment of intercompany loans 294 - -
Discontinued operations (10) (20) (54)
Other 6 10 (3)
------- ------- -------
Cash provided (used) by
investing activities 284 (154) (144)
------- ------- -------
Financing Activities:
Dividends paid to shareholders (246) (210) (166)
Proceeds from issuance of debt 204 239 118
Repayment of debt and capital securities (121) (25) (100)
Repurchase of common shares (356) (135) (27)
Proceeds from Nuveen stock repurchase - - 41
Stock options exercised and other 32 63 24
------- ------- -------
Cash used in financing activities (487) (68) (110)
------- ------- -------
Change in cash (5) 9 -
Cash at beginning of year 9 - -
------- ------- -------
Cash at end of year $ 4 $ 9 $ -
======= ======= =======

See accompanying notes to condensed financial information.

THE ST. PAUL COMPANIES, INC. (Parent Only)

SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO CONDENSED FINANCIAL INFORMATION

1. The accompanying condensed financial information should be
read in conjunction with the consolidated financial
statements and notes included in The St. Paul's 1999 Annual
Report to Shareholders. The Annual Report includes The St.
Paul's Consolidated Statements of Shareholders' Equity and
Comprehensive Income.

Some data in the accompanying condensed financial
information for the years 1998 and 1997 were reclassified to
conform with the 1999 presentation.

2. Debt of the parent company consists of the following (in
millions):
December 31,
-------------------
1999 1998
------ ------
External:
--------
Medium-term notes $ 617 $ 637
Commercial paper 400 257
8-3/8% senior notes 150 -
Zero coupon convertible notes 94 111
7-1/8% senior notes 80 -
Variable rate borrowings 64 -
------ ------
Total external debt 1,405 1,005
------ ------
Intercompany (1):
------------
Convertible subordinated debentures 262 262
Subordinated debentures 230 -
Guaranteed PSOP debt 105 119
Notes payable to subsidiaries 58 20
------ ------
Total intercompany debt 655 401
------ ------
Total debt $2,060 $1,406
====== ======

(1) Eliminated in consolidation.

See Note 10 to the consolidated financial statements
included in the 1999 Annual Report to Shareholders for
further information on debt outstanding at Dec. 31, 1999.

The amount of debt, other than commercial paper and debt
eliminated in consolidation, that becomes due during each of
the next five years (including the debt discussed in Note 3
below) is as follows: $0 in 2000; 2001, $195 million; 2002,
$49 million; 2003, $67 million; and 2004, $55 million.

3. The St. Paul Companies, Inc. merged with USF&G Corporation
on April 24, 1998 in a business combination accounted for as
a pooling of interests. (See Note 2, "Acquisitions," to the
consolidated financial statements included in The St. Paul's
1999 Annual Report to Shareholders). Effective Jan. 1,
1999, the former holding company for USF&G Corporation was
merged into St. Paul Fire and Marine Insurance Company, and
the holding company was dissolved. Prior to that merger,
the debt obligations of USF&G's holding company were assumed
by The St. Paul Companies, Inc.

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
(In millions)

At December 31,
----------------------------------------------
Other
Gross loss, policy
Deferred loss adjustment claims
policy expense reserves Gross and
acquisition and policy unearned benefits
expenses benefits premiums payable
----------- --------------- --------- --------
1999
- ----
Property-Liability Insurance:
Commercial Lines Group $ 149 $ 8,268 $ 822 $ -
Specialty Commercial 131 3,872 807 -
Surety 88 289 304 -
------- ------- ------- -------
Total U. S. Underwriting 368 12,429 1,933 -
International 37 1,083 361 -
------- ------- ------- -------
Total Primary Underwriting 405 13,512 2,294 -
Reinsurance 98 3,925 436 -
------- ------- ------- -------
Total Property-Liability
Insurance 503 17,437 2,730 -

Life Insurance 439 4,885 - 122
------- ------- ------- -------
Total from
continuing operations 942 22,322 2,730 122

Discontinued operations 17 497 388 -
------- ------- ------- -------
Total $ 959 $22,819 $ 3,118 $ 122
======= ======= ======= =======

1998
- ----
Property-Liability Insurance:
Commercial Lines Group $ 215 $ 8,671 $ 958 $ -
Specialty Commercial 146 3,660 811 -
Surety 100 294 287 -
------- ------- ------- -------
Total U. S. Underwriting 461 12,625 2,056 -
International 20 1,280 163 -
------- ------- ------- -------
Total Primary Underwriting 481 13,905 2,219 -
Reinsurance 84 3,476 450 -
------- ------- ------- -------
Total Property-Liability
Insurance 565 17,381 2,669 -

Life Insurance 201 4,142 - 76
------- ------- ------- -------
Total from
continuing operations 766 21,523 2,669 76

Discontinued operations 112 805 423 -
------- ------- ------- -------
Total $ 878 $22,328 $ 3,092 $ 76
======= ======= ======= =======

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
(In millions)

Insurance losses
loss adjustment
expenses Amortization
Net and of policy Other
Premiums investment policy acquisition operating Premiums
1999 earned income benefits expenses expenses written
- ---- -------- --------- ---------- ----------- -------- --------
Property-Liability
Insurance:
Commmercial
Lines Group $ 1,944 $ - $ 1,490 $ 598 $ 117 $ 1,883
Specialty
Commercial 1,465 - 1,242 300 119 1,375
Surety 379 - 121 123 97 409
------- ------- ------- ------- ------- -------
Total U. S.
Underwriting 3,788 - 2,853 1,021 333 3,667
International 396 - 336 83 62 480
------- ------- ------- ------- ------- -------
Total Primary
Underwriting 4,184 - 3,189 1,104 395 4,147
Reinsurance 919 - 531 217 92 965
Net investment
income - 1,256 - - - -
Other - - - - 207 -
------- ------- ------- ------- ------- -------
Total Property-
Liability
Insurance 5,103 1,256 3,720 1,321 694 5,112
Life Insurance 187 298 367 4 39 -
------- ------- ------- ------- ------- -------
Total $ 5,290 $ 1,554 $ 4,087 $ 1,325 $ 733 $ 5,112
======= ======= ======= ======= ======= =======
1998
- ----
Property-Liability
Insurance:
Commercial
Lines Group $ 2,275 $ - $ 2,247 $ 733 $ 43 $ 2,117
Specialty
Commercial 1,447 - 1,176 289 128 1,348
Surety 340 - 81 114 73 376
------- ------- ------- ------- ------- -------
Total U. S.
Underwriting 4,062 - 3,504 1,136 244 3,841
International 333 - 277 69 54 378
------- ------- ------- ------- ------- -------
Total Primary
Underwriting 4,395 - 3,781 1,205 298 4,219
Reinsurance 1,039 - 684 226 121 1,057
Net investment
income - 1,293 - - - -
Other - - - - 366 -
------- ------- ------- ------- ------- -------
Total Property-
Liability
Insurance 5,434 1,293 4,465 1,431 785 5,276
Life Insurance 119 276 273 56 43 -
------- ------- ------- ------- ------- -------
Total $ 5,553 $ 1,569 $ 4,738 $ 1,487 $ 828 $ 5,276
======= ======= ======= ======= ======= =======

1997
- ----
Property-Liability
Insurance:
Commercial
Lines Group $ 2,616 $ - $ 1,930 $ 748 $ 110 $ 2,469
Specialty
Commercial 1,442 - 1,012 257 154 1,401
Surety 296 - 75 101 57 319
------- ------- ------- ------- ------- -------
Total U. S.
Underwriting 4,354 - 3,017 1,106 321 4,189
International 278 - 232 50 49 293
------- ------- ------- ------- ------- -------
Total Primary
Underwriting 4,632 - 3,249 1,156 370 4,482
Reinsurance 1,227 - 840 319 64 1,200
Net investment
income - 1,319 - - - -
Other - - - - 144 -
------- ------- ------- ------- ------- -------
Total Property-
Liability
Insurance 5,859 1,319 4,089 1,475 578 5,682
Life Insurance 137 253 277 12 37 -
------- ------- ------- ------- ------- -------
Total $ 5,996 $ 1,572 $ 4,366 $ 1,487 $ 615 $ 5,682
======= ======= ======= ======= ======= =======

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE IV - REINSURANCE
Years Ended December 31, 1999, 1998 and 1997
(In millions)

Percentage
Ceded to Assumed of amount
Gross other from other Net assumed to
amount companies companies amount net
-------- --------- --------- --------- ----------
1999
- ----
Life insurance
in force $12,284 $ 4,452 $ 114 $ 7,946 1.4%
======= ======= ======= ======= =======

Premiums earned:
Life insurance 202 16 1 187 0.5%
Property-
liability
insurance 4,621 1,055 1,537 5,103 30.1%
------- ------- ------- -------
Total premiums $ 4,823 $ 1,071 $ 1,538 $ 5,290 29.1%
======= ======= ======= ======= =======

1998
- -----
Life insurance
inforce $10,637 $ 2,305 $ 137 $ 8,469 1.6%
======= ======= ======= ======= =======

Premiums earned:
Life insurance 131 13 1 119 1.2%
Property-
liability
insurance 4,796 734 1,372 5,434 25.2%
------- ------- ------- -------
Total premiums $ 4,927 $ 747 $ 1,373 $ 5,553 24.7%
======= ======= ======= ======= =======

1997
- ----
Life insurance
inforce $10,613 $ 1,785 $ 135 $ 8,963 1.5%
======= ======= ======= ======= =======

Premiums earned:
Life insurance 143 8 2 137 1.1%
Property-
liability
insurance 5,153 817 1,523 5,859 26.0%
------- ------- ------- -------
Total premiums $ 5,296 $ 825 $ 1,525 $ 5,996 25.4%
======= ======= ======= ======= =======

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1999, 1998 and 1997
(In millions)

Additions
----------------------
Balance at Charged to Charged to Balance
beginning costs and other Deduc- at end
Description of year expenses accounts tions(1) of year
- ----------- --------- -------- ---------- --------- -------

1999
- ----
Real estate valuation
adjustment $ 16 - - 9 $ 7
====== ====== ====== ====== ======
Allowance for
uncollectible:
Agency loans $ 3 2 - - $ 5
====== ====== ====== ====== ======
Premiums
receivable from
underwriting
activities $ 42 8 - 5 $ 45
====== ====== ====== ====== ======
Reinsurance $ 28 1 - 1 $ 28
====== ====== ====== ====== ======
Uncollectible
deductibles $ 23 - - - $ 23
====== ====== ====== ====== ======

1998
- ----
Real estate valuation
adjustment $ 12 4 - - $ 16
====== ====== ====== ====== ======
Allowance for
uncollectible:
Agency loans $ 2 1 - - $ 3
====== ====== ====== ====== ======
Premiums
receivable from
underwriting
activities $ 41 8 - 7 $ 42
====== ====== ====== ====== ======
Reinsurance $ 30 - - 2 $ 28
====== ====== ====== ====== ======
Uncollectible
deductibles $ 19 8 - 4 $ 23
====== ====== ====== ====== ======

1997
- ----
Real estate valuation
adjustment $ 19 2 - 9 $ 12
====== ====== ====== ====== ======
Allowance for
uncollectible:
Agency loans $ 2 - - - $ 2
====== ====== ====== ====== ======
Premiums
receivable from
underwriting
activities $ 29 19 - 7 $ 41
====== ====== ====== ====== ======
Reinsurance $ 26 6 - 2 $ 30
====== ====== ====== ====== ======
Uncollectible
deductibles $ 16 3 - - $ 19
====== ====== ====== ====== ======

(1) Deductions include write-offs of amounts determined to be
uncollectible, unrealized foreign exchange gains and losses and, for
certain properties in real estate, a reduction in the valuation
allowance for properties sold during the year.

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE VII - PREDECESSOR AUDITORS' REPORT ON
CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Auditors

Board of Directors
USF&G Corporation

We have audited the consolidated statement of financial position
of USF&G Corporation as of December 31, 1997, and the related
consolidated statements of operations, cash flows and
shareholders' equity for the year then ended (not presented
separately herein). These financial statements are the
responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of USF&G Corporation at December 31, 1997, and
the consolidated results of its operations and its cash flows for
the year then ended, in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Baltimore, Maryland
February 20, 1998

THE ST. PAUL COMPANIES, INC. AND SUBSIDIARIES

SCHEDULE VII - PREDECESSOR AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES

CONSENT OF INDEPENDENT AUDITORS

We consent to the use of our report dated February 20, 1998, with
respect to the consolidated financial statements of USF&G
Corporation for the year ended December 31, 1997 (not included
separately herein) included as Schedule VII in The St. Paul
Companies, Inc.'s Annual Report (Form 10-K) for the year ended
December 31, 1999, filed with the Securities and Exchange
Commission.

Our audit also included the financial statement schedules of
USF&G Corporation listed in Item 14(a) of USF&G Corporation's
Annual Report (Form 10-K) for the year ended December 31, 1997
(not included separately herein). These schedules are the
responsibility of management. Our responsibility is to express
an opinion based on our audit. In our opinion, the financial
statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.

We also consent to the incorporation by reference in the
Registration Statements on Form S-8 (SEC File No. 33-15392,
No. 33-23446, No. 33-23948, No. 33-24220, No. 33-24575, No. 33-
26923, No. 33-49273, No. 33-56987, No. 333-01065, No. 333-22329,
No. 333-25203, No. 333-28915, No. 333-48121, No. 333-50935, No.
333-50937, No. 333-50941, No. 333-50943 and No. 333-67983), and
Form S-3 (SEC File No. 333-06465 and No. 333-67139), of The St.
Paul Companies, Inc., of our report dated February 20, 1998, with
respect to the consolidated financial statements and schedules of
USF&G Corporation (these financial statements and schedules are
not presented herein) included as Schedule VII in The St. Paul
Companies, Inc. Annual Report on Form 10-K filed with the
Securities and Exchange Commission.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Baltimore, Maryland
March 29, 2000

EXHIBIT INDEX*
-------------
Exhibit
- -------

(2) Plan of acquisition, reorganization, arrangement, liquidation,
or succession**......................................................
(3) Articles of incorporation and by-laws
(a) Articles of Incorporation***......................................
(b) By-laws***........................................................
(4) Instruments defining the rights of security holders, including
indentures
(a) Specimen Common Stock Certificate***..............................
(9) Voting trust agreements**.............................................
(10) Material contracts
(a) Amended and Restated Letter Agreement dated as of August 5,
1999 between The St. Paul and Mr. Steven W. Lilienthal
related to the terms of his employment............................(1)
(b) Amendment to The St. Paul's Directors Charitable Award
Program...........................................................(1)
(c) Employment Agreement between The St. Paul and Mr. James E.
Gustafson dated as of Jan. 6, 1999***.............................
(d) Restricted Stock Award Plan, as amended***........................
(e) 1988 Stock Option Plan***.........................................
(f) Non-Employee Director Stock Retainer Plan***......................
(g) The Amended and Restated Special Severance Policy***..............
(h) The Annual Incentive Plan***......................................
(i) The Amended and Restated 1994 Stock Incentive Plan***.............
(j) The Deferred Management Incentive Awards Plan***..................
(k) The Directors' Deferred Compensation Plan***......................
(l) Relocation Loan Payback Agreement with Mr. James F. Duffy***......
(m) Benefit Equalization Plan - 1995 Revision***......................
(n) First Amendment to Benefit Equalization Plan - 1995
Revision***.......................................................
(o) Executive Post-Retirement Life Insurance Plan - Summary
Plan Description***...............................................
(p) Executive Long-Term Disability Plan - Summary Plan
Description***....................................................
(q) The St. Paul Re Long-Term Incentive Plan***.......................
(r) Letter Agreement dated May 8, 1997 between The St. Paul
and Mr. Paul J. Liska related to the terms of his
employment***.....................................................
(s) Letter Agreement, agreed to January 20, 1997 between The
St. Paul and Mr. Paul J. Liska related to severance
benefits***.......................................................
(t) The Special Leveraged Stock Purchase Plan***......................
(u) The Directors' Charitable Award Program***........................
(v) Outside Directors' Retirement Plan -Summary Description***........
(w) Key Executive Special Incentive Arrangement***....................
(11) Statements re computation of per share earnings.......................(1)
(12) Statements re computation of ratios...................................(1)
(13) Annual report to security holders.....................................(1)
(16) Letter re change in certifying accountant**...........................
(18) Letter re change in accounting principles**...........................
(21) Subsidiaries of The St. Paul..........................................(1)
(22) Published report regarding matters submitted to vote
of security holders**................................................
(23) Consents of experts and counsel
(a) Consent of KPMG LLP...............................................(1)
(b) Consent of Ernst & Young LLP......................................(1)
(24) Power of attorney.....................................................(1)
(27) Financial data schedule...............................................(1)
(99) Additional exhibits**.................................................

* The exhibits are included only with the copies of
this report that are filed with the Securities and
Exchange Commission. However, copies of the
exhibits may be obtained from The St. Paul for a
reasonable fee by writing to the Corporate
Secretary, The St. Paul Companies, Inc., 385
Washington Street, St. Paul, Minnesota 55102.

** These items are not applicable.

*** These items are incorporated by reference as
described in Item 14(a)(3) of this report.

(1) Filed herewith.