St. Paul Companies, an insurance and reinsurance group and the parent of St. Paul Canada — has released its yearend 1998 figures posting a dramatic decrease in earnings over 1997. Net income plummeted from 1997’s US$929 million to $89.3 million in 1998. While decreased revenues account for much of the decline from the company’s record 1997 results, costs stemming from an early 1998 merger with USF&G Corporation reduced revenues by $457.5 million.
The company’s property liability operations posted a decline in net written premiums and net investment (pretax) income. Net written premiums fell from 1997’s $6.93 billion to 1998’s $6.69 billion. Net investment (pretax) income dropped from 1997’s $1.32 billion to 1998’s $1.31 billion and the combined ratio rose from 1997’s 103.8 to 1998’s 112.5.
Despite the negative results, chief executive officer Doug Leatherdale is optimistic about future earnings. “Even though written premiums were down 3% from 1997, and we incurred commercial underwriting losses in a market characterized by a continued decline in price, several of our businesses turned in excellent results. And our performance in the final quarter of 1998, although worse than last year’s comparable results, reflect strong improvements over the second and third quarters of 1998,” he says.
St. Paul’s was hit particularly hard by catastrophe claims this past year. CU previously reported the company took a $175 million hit in the third quarter of 1998 on cat losses alone.