A.M. Best Assigns Rating to St. Paul's Trust Preferred Securities.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 8, 2001

A.M. Best Co. has assigned an "a" rating to the trust preferred securities to be issued by St. Paul Capital Trust I and placed the rating under review with developing implications. Proceeds of approximately $500 million are to be used for general corporate purposes, including the repayment of existing short-term debt.

On September 27, 2001, A.M. Best placed the financial strength and debt ratings of St. Paul Companies under review with developing implications. This rating action was based on the September 11 World Trade Center terrorist attacks and the potential impact this event may have on the group's operating performance and capitalization based on management's then preliminary loss estimates, the downturn in the equity markets and the growth in reinsurance leverage. In addition, the likelihood of further prior year loss reserve development in the group's healthcare book of business in the near term was a consideration.

St. Paul has increased its estimated net pretax loss from the WTC attacks to $866 million from its initial $700 million estimate, primarily as a result of the group's intention not to cede losses from the September 11 event to its 2001 corporate aggregate stop loss program. In addition, it reported weaker than anticipated 2001 third-quarter operating earnings, particularly for its international operations. It also has disclosed that the group's new chief executive officer, Jay S. Fishman, has initiated a comprehensive strategic and financial review of all its business segments and that the review likely will result in the group's announcement of significant strategic initiatives by mid-December of this year, including potential initiatives affecting the group's global healthcare, international and reinsurance segments. A.M. Best believes these actions may result in additional fourth-quarter charges.

A.M. Best will meet with St. Paul's management shortly to discuss the group's strategic and financial initiatives and the impact they may have on its operating performance, capitalization, leverage and holding company cash flow. A.M. Best's review of St. Paul's ratings may result in their being assigned negative outlooks or the ratings being lowered.

The St. Paul Companies, Inc. (NYSE: SPC) is a holding company that, through its subsidiaries, is primarily engaged in providing commercial property/casualty insurance and reinsurance products and services worldwide. Through its majority owned subsidiary, The John Nuveen Company, the company also provides asset management services. At September 30, 2001, the company maintained assets of $37.7 billion and equity of $6.0 billion.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.