SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 11-K
X Annual Report Pursuant to Section 15(d) of the
--- Securities Exchange Act of 1934 (Fee Required)
or
Transition Report Pursuant to Section 15(d) of
--- the Securities Exchange Act of 1934(no fee required)
for the transition period from to .
--------- ----------
For the fiscal year ended December 31, 2002
Commission file number 001-10898
---------------------------------
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
AND
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL MINNESOTA 55102
(Full title of the Plan and address of the Plan)
------------------------------
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL, MINNESOTA 55102
(Name and address of principal executive
offices of the issuer of the securities)
-------------------------------
REQUIRED INFORMATION
--------------------
The St. Paul Companies, Inc. Savings Plus Plan (the "Savings Plus
Plan") and the St. Paul Companies, Inc. Stock Ownership Plan (the
"Stock Ownership Plan") are subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Prior
to March 28, 2002, the Savings Plus Plan contained a St. Paul
Companies, Inc. common stock fund (the "Stock Fund") as an investment
option under the Savings Plus Plan. Effective March 28, 2002, the
Stock Fund was transferred to the Stock Ownership Plan. Thereafter,
any investment in the Stock Fund through the Savings Plus Plan will
involve the automatic transfer of the investment amount into the Stock
Ownership Plan. For purposes of satisfying the requirements of Form
11-K, the Savings Plus Plan and Stock Ownership Plan have included for
filing herewith the financial statements and schedule for each plan
for the year ended December 31, 2002 prepared in accordance with the
financial reporting requirements of ERISA because both plans held the
Stock Fund for at least a portion of 2002.
Financial Statements and Schedule Page
--------------------------------- ----
Savings Plus Plan:
Independent Auditors' Report for Savings Plus Plan . 3
Statements of Net Assets Available for Benefits
under Savings Plus Plan . . . . . . . . . . . . . . 4
Statements of Changes in Net Assets Available for
Benefits under Savings Plus Plan . . . . . . . . . . 5
Notes to Financial Statements for Savings Plus Plan . . 6-13
Schedule H, Line 4i-Schedule of Assets
(Held at End of Year) for Savings Plus Plan . . . . . 14
Signature for Savings Plus Plan . . . . . . . . . . . . 15
Stock Ownership Plan:
Independent Auditors' Report for Stock Ownership Plan . 17
Statements of Net Assets Available for Benefits
under Stock Ownership Plan . . . . . . . . . . . . . . 18-19
Statements of Changes in Net Assets Available for
Benefits under Stock Ownership Plan . . . . . . . . . . 20-21
Notes to Financial Statements for Stock Ownership Plan . . 22-30
Schedule H, Line 4i-Schedule of Assets
(Held at End of Year) for Stock Ownership Plan . . . . . 31
Schedule H, Line 4j-Schedule of Reportable Transactions
for Stock Ownership Plan . . . . . . . . . . . . . . . . 32
Signature for Stock Ownership Plan . . . . . . . . . . . . 33
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . 34
INDEPENDENT AUDITORS' REPORT
------------------------------
The Plan Administrative Committee and Plan Participants
The St. Paul Companies, Inc. Savings Plus Plan:
We have audited the accompanying statements of net assets
available for benefits of The St. Paul Companies, Inc. Savings
Plus Plan (the Plan) as of December 31, 2002 and 2001, and the
related statements of changes in net assets available for
benefits for the years then ended. These financial statements
are the responsibility of the Plan's administrator. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. 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 audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of The St. Paul Companies, Inc. Savings
Plus Plan as of December 31, 2002 and 2001, and the changes in
net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the
United States of America.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedule of assets (held at end
of year) is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's
administrator. The supplemental schedule has been subjected to
the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements
taken as a whole.
KPMG LLP
--------
KPMG LLP
Minneapolis, Minnesota
June 20, 2003
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001
2002 2001
------------ ------------
Assets:
Investments (See Note 5) $496,589,083 $641,816,683
Receivables:
Accrued dividends - 461,402
Other receivables - 29,965
------------ ------------
Total receivables - 491,367
------------ ------------
Total assets 496,589,083 642,308,050
------------ ------------
Liabilities:
Other payables 43,168 836,057
------------ ------------
Total liabilities 43,168 836,057
------------ ------------
Net assets available for benefits $496,545,915 $641,471,993
============ ============
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2002 and 2001
2002 2001
-------------- -------------
Additions:
Additions to net assets attributed to:
Investment income (loss):
Net appreciation (depreciation) in
fair value of investments:
Mutual funds $(76,166,906) $(58,058,904)
Common stock 2,765,035 (17,469,664)
-------------- -------------
Total net depreciation in
fair value of investments (73,401,871) (75,528,568)
-------------- -------------
Interest 3,818,251 4,753,236
Dividends 8,184,278 12,423,519
-------------- -------------
(61,399,342) (58,351,813)
Contributions:
Participant pretax 37,384,757 36,180,033
Participant rollovers 8,114,529 4,891,849
-------------- -------------
45,499,286 41,071,849
-------------- -------------
Transfer from the St. Paul
Companies, Inc. Stock Ownership Plan 2,693,647 -
-------------- -------------
Total reductions (13,206,409) (17,279,931)
-------------- -------------
Deductions:
Deductions from net assets attributed to:
Retirement and termination distribution
benefits and withdrawals:
Paid to participants in cash 50,035,285 60,375,605
Common stock distributed
at market value 60,497 2,069,208
Other (400,875) 36,517
Administrative expenses 207,643 106,109
Transfer to the St. Paul Companies,
Inc. Stock Ownership Plan 81,817,119 -
-------------- -------------
Total deductions 131,719,669 62,587,439
-------------- -------------
Net decrease (144,926,078) (79,867,370)
Net assets available for benefits:
Beginning of year 641,471,993 721,339,363
-------------- -------------
End of year $496,545,915 $641,471,993
============== =============
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 1 Description of the Plan
-----------------------
General Provisions
------------------
The following brief description of the St. Paul Companies, Inc.
Savings Plus Plan (the Plan) is provided for general information
purposes. Participants should refer to the Plan document and the
employee benefits program manual for a more complete description of
the Plan's provisions.
The Plan is a defined contribution plan, which provides retirement
and other benefits to eligible employees of participating
companies. The St. Paul Companies, Inc. (the Company) and its
subsidiaries, St. Paul Fire and Marine Insurance Company, St. Paul
Reinsurance Management Corporation and Octagon Risk Services, Inc.
currently participate in the Plan. Fidelity and Guaranty Life
Insurance Company (F&G Life) and Management Science
Associates, Inc. (MSA) each withdrew from the Plan effective
September 28, 2001 and July 27, 2001, respectively, pursuant to the
sales of F&G Life and MSA by the Company. The Company has
appointed the Administrative Committee as the Plan Administrator
and the Benefit Plans Investment Committee as the delegated
authority for management and control of the assets of the Plan
(including the designation of investment funds). Fidelity
Management Trust Company is the trustee for the trust maintained in
connection with the Plan. The Plan is subject to the provisions of
the Employee Retirement Income Security Act (ERISA).
Participation, Vesting and Forfeitures
--------------------------------------
All employees of participating companies, as defined by the Plan,
are eligible to participate immediately upon employment.
Participants are 100% vested in their contributions and related
earnings. Participants become vested in pre-1999 Company
contributions at the rate of 20% after two years of service,
increasing 20% per year of additional service and are 100% vested
after six years of service. Participants are immediately vested in
any post-1998 Company contributions. Nonvested Company
contributions are forfeited by terminating participants. The
forfeiture is transferred to a forfeiture account, which is
maintained for the Plan as a whole and is not attributable to any
given participant. The balance of the forfeiture account may be
used to correct errors in the accounts of other participants,
restore prior forfeitures, pay Plan administrative expenses or
reduce contributions to the Plan, as directed by the Company. At
December 31, 2002 accumulated forfeitures totaled $329,124. Upon
termination of the Plan or change in control of the Company (as
defined), participant account balances would vest in full.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 1 Description of the Plan (continued)
----------------------------------
Contributions
-------------
Each year, participants may elect to contribute to their account a
percentage of their pretax annual compensation, as defined in the
Plan. Effective in 2002, participant contributions are currently
limited to 50% of employees' annual base salary with an annual
maximum of $11,000. A participant who is at least 50 years old can
make additional catch-up contributions to a limit of $1,000. Catch-
up contributions are not subject to the company match.
Effective March 29, 2002, if a Plan participant has chosen to
invest a portion of their pretax contributions in the St. Paul
Common Stock Fund, each portion of their future contributions is
transferred from the Plan to the St. Paul Companies, Inc. Stock
Ownership Plan (see Note 3).
Participating companies make matching contributions of one dollar
for every dollar of participant contributions up to 4% of their
base salary. This matching contribution is made in the form of The
St. Paul Companies, Inc. Preferred Stock and is invested in The St.
Paul Companies, Inc. Stock Ownership Plan.
Allocation
----------
Participants may elect to have their contributions invested in the
funds listed in the Plan's provisions as they choose and may also
transfer their balances daily within these funds.
Investment Income
-----------------
Investment income of each fund is allocated daily to participant
accounts on the basis of each participant's respective share of the
assets of each applicable fund.
Distribution of Benefits
------------------------
Distribution of benefits from the Plan is made upon retirement,
permanent total disability, death or employment termination.
Distributions from the Company Stock Fund may be made either in
shares of common stock of The St. Paul Companies, Inc., cash or any
combination thereof at the discretion of the participant.
Distributions are based on a participant's share of the market
value of the assets in the applicable funds when the distribution
occurs.
Participants are permitted withdrawals from their share of Company
match and pretax contributions for financial hardship
reasons, as defined by the Plan.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 1 Description of the Plan (continued)
----------------------------------
Participant Loans
-----------------
Participants may request to receive as a loan from the Plan up to
50% of their vested account balance subject to a minimum of $500
and a maximum of $50,000. Loans are made at the current prime
interest rate plus 1/2% and must be repaid by payroll deduction
over a maximum period of five years (ten years if the loan is
designated as a primary residence loan). Participants pay a $75.00
set-up fee for each loan through a reduction in their account
balance.
Fidelity BrokerageLink Fees
---------------------------
The Fidelity BrokerageLink investment option, first available on
July 1, 2001, allows a participant to establish a brokerage account
with Fidelity, which provides the opportunity to select from
thousands of mutual funds, stocks, bonds, certificates of deposit,
U.S. Treasury securities and mortgage-backed securities. The
BrokerageLink account has an annual fee of $100, which is paid by
the participant.
Taxes
-----
Company match contributions invested in the Plan and participant
pretax contributions invested in the Plan are not taxed to the
participant until received as a distribution from the Plan. Any
appreciation of shares of common stock of The St. Paul Companies,
Inc. distributed to a participant is not taxed until the
participant disposes of such shares. Under certain circumstances a
distribution may be subject to excise taxes of 10% in addition to
normal income tax.
Plan loans to participants are generally not considered taxable
income.
Taxes on rollover transfers are deferred until the rollover amounts
are received as a distribution from the Plan.
Administrative Expenses
-----------------------
The Administrative Expenses presented in the Statement of Changes
in Net Assets Available for Benefits primarily consist of loan fees
to participants, BrokerageLink account fees and F&G Life fees to
administer their benefit-responsive investment contract.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 2 Significant Accounting Policies
-------------------------------
The accompanying Plan financial statements are prepared in
conformity with United States generally accepted accounting
principles (GAAP).
The preparation of these financial statements requires management
to rely on estimates and assumptions that affect the reported
amounts of assets and liabilities and changes therein, and
disclosure of contingent assets and liabilities. We continually
review our estimates and make adjustments as necessary, but actual
results could turn out to be significantly different from what we
expected when we made these estimates.
The Plan provides for investment in a variety of investment
funds. Investments in general are exposed to various risks,
such as interest rate, credit and overall market volatility.
Due to the level of risk associated with certain investments,
it is reasonably possible that changes in the values of the
investments will occur in the near term and that such changes
could materially affect participants' account balances and
the amounts reported in the statements of net assets available
for benefits.
The investment in common stock of The St. Paul Companies, Inc. and
in shares or units of investment funds are stated at market value,
based on published market quotations.
Realized gains or losses on sales of these investments and the
change in unrealized appreciation or depreciation in market value
of these investments are presented in total in the statements
of changes in net assets available for benefits. The average
cost method is used to determine cost of shares sold or distributed.
Purchases and sales of investments are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date.
Participant loans are carried at unpaid principal amounts
and are included in investments in the Statements
of Net Assets Available for Benefits.
Money market fund and short-term investments are carried at cost
plus accrued interest or amortized discount, which approximates
market value. The benefit-responsive investment contract is valued
at contract value (see Note 6).
A portion of the administration expenses of the Plan is paid by the
Company and are not reflected in the accompanying financial
statements. Plan administrative expenses paid by the Plan are paid
out of forfeitures and Plan assets.
Benefits are recorded when paid.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 3 Plan Amendment
--------------
All shares of common stock of the Company held in the
Common Stock Fund of the Plan, as well as the participant account
balances under the Plan reflecting an interest in the Common Stock
Fund, were transferred to the Company's Stock Ownership Plan
effective at the close of business and the completion of all Plan
transactions on March 28, 2002.
All investment options (other than common or preferred stock of the
Company) held in the Stock Ownership Plan to allow for
diversification elections under the terms of the Stock Ownership
Plan, as well as the participant account balances under the Stock
Ownership Plan reflecting an interest in such investment options were
transferred to the Plan effective at the close of business and the
completion of all Plan transactions on March 28, 2002.
Note 4 Transfers from Other Plans
--------------------------
The Plan allows for rollover transfers to be made to the Plan by
employees of participating companies. These rollover transfers are
lump-sum distributions from other tax-qualified plans of previous
employers that participants elect to have invested in the Plan
within sixty days of receipt.
PAGE>
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 5 Investments
-----------
The following presents the current market value for investment
positions that represent 5 percent or more of the Plan's net assets
available for benefits.
December 31,
----------------------------
2002 2001
------------ ------------
The St. Paul Companies, Inc. common
stock, 0 and 1,656,866 shares,
respectively $ - $72,852,398
Fidelity U.S. Bond Index Fund,
7,982,091 and 7,701,853 shares,
respectively 89,718,706 83,180,007
Fidelity Puritan Fund, 4,077,684 and
4,095,241 shares, respectively 64,386,637 72,362,900
Fidelity U.S. Equity Index Commingled
Pool, 2,213,676 and 2,339,254 pool
units, respectively 58,153,279 78,949,821
Fidelity Blue Chip Growth Fund,
3,043,169 and 3,201,785 shares,
respectively 97,198,816 137,484,654
Fidelity Retirement Money Market
Portfolio, 26,930,753 and 26,598,558
shares, respectively 26,930,753 *
Fidelity Equity-Income Fund, 647,282
and 634,249 shares, respectively 25,677,662 30,932,308
Fidelity Managed Income Portfolio II
Class 1 Fund, 49,739,145 and 0 pool
units, respectively 49,739,145 -
F&G Life Stable Interest Fund,
investment contract, 6% interest - 37,329,175
Franklin Small-Mid Cap Growth Fund
Class A, 1,037,148 and 1,040,174
shares, respectively * 32,422,232
* Less than 5% of net assets available for benefits
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 6 Investment Contract
-------------------
The Plan had a benefit-responsive investment contract with F&G
Life, represented by the investment in the F&G Life Stable
Interest Fund, which was elimated as an investment option
effective at the close of business on July 1, 2002. F&G Life
maintained the contributions in a general account. The account
was credited with earnings on the underlying investments and
charged for participant withdrawals and administrative expenses.
The contract was included in the financial statements at contract
value as reported to the Plan by F&G Life. Contract value
represents contributions made under the contract, plus earnings,
less participant withdrawals and administrative expenses.
Participants could ordinarily direct the withdrawal or transfer of
all or a portion of their investment at contract value.
There were no reserves against contract value for credit risk of
the contract issuer or otherwise. The average yield and crediting
interest rate was 5.25 percent for 2002 and 6.00 percent for 2001,
respectively. The crediting interest rate was reset annually
based on projections of the investment returns for the forthcoming
year, but may not be less than 4 percent.
Note 7 Party-in-Interest Transactions
------------------------------
Transactions resulting in Plan assets being transferred to or used
by a related party are prohibited under ERISA unless a specific
exemption applied. Fidelity Management Trust Company (Fidelity) is
a party-in-interest as defined by ERISA as a result of being
trustee of the Plan. The Plan invests in funds managed by
Fidelity. The Plan also engages in transactions
involving the acquisition or disposition of common stock and the
short-term pool of The St. Paul Companies, Inc., a party-in-
interest with respect to the Plan. These transactions are covered
by an exemption from the "prohibited transactions" provisions of
ERISA and the Internal Revenue Code.
Note 8 Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has
the right under the Plan to terminate the Plan subject to the
provisions of ERISA. Upon such termination, the Plan administrator
would direct the Plan trustee to distribute participant account
balances. Upon termination of the Plan or change in control of the
Company (as defined), participant account balances would vest in
full.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Notes to Financial Statements, continued
December 31, 2002 and 2001
Note 9 Tax Status
----------
The Internal Revenue Service has determined and informed the
Company by a letter dated October 13, 1994, that the Plan is
designed in accordance with applicable Section 401 (a) of the
Internal Revenue Code and that the trust created thereunder is
exempt from federal income taxes under Section 501(a) of the
Internal Revenue Code. Although the Plan has been amended since
receiving the determination letter, the Plan administrator and the
Plan's tax counsel believe that the Plan as amended and currently
being operated is in compliance with the applicable requirements of
Section 401(a) of the Internal Revenue Code.
Note 10 Subsequent Events
-----------------
Effective January 1, 2003, the Company increased matching
contributions of one dollar for every dollar of participant salary
conversion contributions up to 6% of their base salary. This
matching contribution is made in the form of The St. Paul
Companies, Inc. Preferred Stock and is invested in the St. Paul
Companies, Inc. Stock Ownership Plan and is subject to a three-
year cliff vesting provision.
Beginning in 2003, a participant who has an Employee Stock
Ownership Plan (ESOP) account in the St. Paul Companies, Inc. Stock
Ownership Plan has the ability to move money out of the ESOP
account into other investment options in the Plan. ESOP
diversification will be phased in during 2003 according to the
following schedule:
February 1, 2003 Up to 25% of ESOP shares can be diversified
April 1, 2003 Up to 50% of original ESOP shares can be diversified
June 1, 2003 Up to 75% of original ESOP shares can be diversified
August 1, 2003 Full ESOP Balance can be diversified
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN
Schedule 1
Schedule H, line 4i-Schedule of Assets (Held at End of Year)
December 31, 2002
Description of Current
Identity of Issue Investment Cost Value**
-------------------------- ------------------- ---------- -----------
*Fidelity U.S. Bond Index 7,982,091 mutual
Fund fund shares $ 86,037,038 $ 89,718,706
*Fidelity Puritan Fund 4,077,684 mutual
fund shares 77,433,420 64,386,637
*Fidelity U.S. Equity
Index Commingled Pool 2,213,676 pool units 68,218,564 58,153,279
*Fidelity Blue Chip Growth 3,043,169 mutual
Fund fund shares 140,108,049 97,198,816
*Fidelity Diversified 1,310,447 mutual
International Fund fund shares 26,205,680 22,487,266
*Fidelity Retirement Money 26,930,753 mutual
Market Portfolio fund shares 26,930,753 26,930,753
*Fidelity Equity-Income 647,282 mutual fund
Fund shares 33,357,754 25,677,662
*Fidelity Managed Income
Portfolio II Class 1 Fund 49,739,145 pool units 49,739,145 49,739,145
Franklin Small-Mid Cap 1,037,148 mutual
Growth Fund-Class A fund shares 35,756,263 22,765,390
Neuberger Berman Genesis 1,080,744 mutual
Fund fund shares 20,262,665 21,247,423
Nuveen Balanced Stock and 26,409 mutual fund
Bond Fund (Class R) shares 572,423 558,821
Nuveen Large-Cap Value 17,817 mutual fund
Fund (Class R) shares 356,269 317,668
Nuveen Rittenhouse Growth 15,540 mutual fund
Fund (Class R) shares 282,921 263,248
*Fidelity BrokerageLink 3,970,986 3,675,498
*Participant loans 5.25% to 12.00%,
maximum 5 years - 13,425,603
Short-term investments:
*St. Paul Short-Term 1.368%, due on
Pool demand 43,168 43,168
----------- -----------
Total investments $569,275,098 $496,589,083
=========== ===========
*Party-in-interest
**For ERISA reporting purposes current value is equal to market value, except
for participant loans, which is equal to unpaid principal.
See accompanying independent auditors' report.
SIGNATURE
----------
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
June 30, 2003 THE ST. PAUL COMPANIES, INC.
SAVINGS PLUS PLAN
(The Plan)
By John P. Clifford Jr.
--------------------
John P. Clifford Jr.
Senior Vice President,
Human Resources
Member of the Administrative
Committee for The St. Paul
Companies, Inc. Savings Plus
Plan
REQUIRED INFORMATION
--------------------
The St. Paul Companies, Inc. Stock Ownership Plan (the "Plan") is
subject to the provisions of the Employee Retirement Income
Securities Act of 1974, as amended ("ERISA"), and for purposes
of satisfying the requirements of Form 11-K has included for
filing herewith the Plan financial statements and schedule
prepared in accordance with the financial reporting requirements
of ERISA.
Independent Auditors' Report
----------------------------
The Plan Administrative Committee and Plan Participants
The St. Paul Companies, Inc. Stock Ownership Plan:
We have audited the accompanying statements of net assets
available for benefits of The St. Paul Companies, Inc. Stock
Ownership Plan (the Plan) as of December 31, 2002 and 2001, and
the related statements of changes in net assets available for
benefits for the years then ended. These financial
statements are the responsibility of the Plan's administrator.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. 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 audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for plan benefits of The St. Paul Companies, Inc. Stock
Ownership Plan as of December 31, 2002 and 2001, and the changes
in the net assets available for benefits for the years then
ended in conformity with accounting principles generally accepted
in the United States of America.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules of assets (held at end of year) and
reportable transactions are presented for the purpose of
additional analysis and are not a required part of the basic
financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act
of 1974. These supplemental schedules are the responsibility of
the Plan's administrator. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the
basic financial statements and in our opinion, are fairly stated
in all material respects in relation to the basic financial
statements taken as a whole.
KPMG LLP
--------
KPMG LLP
Minneapolis, Minnesota
June 20, 2003
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Net Assets Available for Benefits
December 31, 2002
Allocated
-------------------------------
Assets: Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Investments:
-----------
Preferred stock of The
St. Paul Companies, Inc.* $154,061,804 $ - $47,288,353 $201,350,157
Common stock of The
St. Paul Companies, Inc.* 161,439,222 60,341,605 - 221,780,827
Cash and short-term
investments 1,910,368 450,544 2,174,782 4,535,694
----------- ---------- ---------- -----------
Total investments 317,411,394 60,792,149 49,463,135 427,666,678
Receivables:
-----------
Participating companies'
contributions - - 5,337,124 5,337,124
Accrued dividends and
interest 1,380,539 515,286 2,490 1,898,315
Other receivable 400,037 - - 400,037
----------- ---------- ---------- -----------
Total receivables 1,780,576 515,286 5,339,614 7,635,476
----------- ---------- ---------- -----------
Total assets 319,191,970 61,307,435 54,802,749 435,302,154
----------- ---------- ---------- -----------
Liabilities:
-----------
Long-term debt - - 40,469,582 40,469,582
Accrued expenses 69,365 - 1,585,058 1,654,423
Other payable 48,287 366,213 - 414,500
----------- ---------- ---------- -----------
Total liabilities 117,652 366,213 42,054,640 42,538,505
----------- ---------- ---------- -----------
Net assets available for
benefits $319,074,318 $60,941,222 $12,748,109 $392,763,649
=========== ========== ========== ===========
* Investment represents 5 percent or more of the Plan's net
assets available for benefits.
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Net Assets Available for Benefits
December 31, 2001
Allocated
-------------------------------
Assets: Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Investments:
-----------
Preferred stock of The
St. Paul Companies, Inc.* $183,819,225 $ - $90,141,761 $273,960,986
Common stock of The
St. Paul Companies, Inc.* 226,209,821 - - 226,209,821
Mutual funds - 1,741,624 - 1,741,624
Commingled pool - 229,295 229,295
Cash and short-term
investments 2,675,346 - 2,302,718 4,978,064
----------- ---------- ---------- -----------
Total investments 412,704,392 1,970,919 92,444,479 507,119,790
Receivables:
-----------
Participating companies'
contributions - - 3,046,047 3,046,047
Accrued dividends and
interest 1,445,335 - 4,135 1,449,470
----------- --------- ---------- -----------
Total receivables 1,445,335 - 3,050,182 4,495,517
----------- ---------- ---------- -----------
Total assets 414,149,727 1,970,919 95,494,661 511,615,307
----------- ---------- ---------- -----------
Liabilities:
-----------
Long-term debt - - 53,568,392 53,568,392
Accrued expenses 113,300 - 2,098,095 2,211,395
----------- ---------- ---------- -----------
Total liabilities 113,300 - 55,666,487 55,779,787
----------- ---------- ---------- -----------
Net assets available for
benefits $414,036,427 $ 1,970,919 $39,828,174 $455,835,520
=========== ========== ========== ===========
* Investment represents 5 percent or more of the Plan's net
assets available for benefits.
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 2002
Allocated
----------------------------
Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Additions (reductions):
---------------------
Investment income (loss):
Dividends $ 11,794,868 $ 2,016,588 $ 2,707,940 $16,519,396
Interest 46,084 15,894 25,313 87,291
Net depreciation in
in market value
of investments (88,630,403) (18,757,739) (19,575,570) (126,963,712)
------------ ---------- ---------- -----------
Net investment
loss (76,789,451) (16,725,257) (16,842,317) (110,357,025)
Participating companies'
contributions - - 11,190,849 11,190,849
Other income 2,276 - - 2,276
Transfer from St. Paul
Companies, Inc.
Savings Plus Plan - 81,817,119 - 81,817,119
----------- ---------- ---------- -----------
Total additions
(reductions) (76,787,175) 65,091,862 (5,651,468) (17,346,781)
----------- ---------- ---------- -----------
Deductions:
----------
Interest expense - - 4,283,118 4,283,118
Administrative expenses 205,655 - - 205,655
Other expense - 6,977 - 6,977
Paid to participants
in cash 24,697,001 2,808,812 - 27,505,813
Common stock distributed
at market value 9,636,369 1,393,511 - 11,029,880
Transfer to St. Paul
Companies, Inc.
Savings Plus Plan 781,388 1,912,259 - 2,693,647
----------- ---------- ---------- -----------
Total deductions 35,320,413 6,121,559 4,283,118 45,725,090
----------- ---------- ---------- -----------
Net increase (decrease)
prior to interfund
transfers (112,107,588) 58,970,303 (9,934,586) (63,071,871)
Interfund transfers:
-------------------
Allocation of 82,383 shares
of preferred stock,
at market 23,277,838 - (23,277,838) -
Transfer of dividend income
for debt service (6,132,360) - 6,132,360 -
----------- ---------- ---------- -----------
Net increase (decrease) (94,962,110) 58,970,303 (27,080,064) (63,071,871)
Net assets available for
benefits:
Beginning of year 414,036,428 1,970,919 39,828,173 455,835,520
----------- ---------- ---------- -----------
End of year $319,074,318 $60,941,222 $12,748,109 $392,763,649
=========== ========== ========== ===========
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
Allocated
----------------------------
Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Additions (Reductions):
---------------------
Investment income (loss):
Dividends $ 11,676,847 $ 26,369 $ 3,533,994 $15,237,210
Interest 125,355 19,947 60,894 206,196
Net depreciation
in market value
of investments (97,695,943) (127,665) (24,801,002) (122,624,610)
----------- --------- ---------- -----------
Net investment
income (loss) (85,893,741) (81,349) (21,206,114) (107,181,204)
Participating companies'
contributions - - 4,681,955 4,681,955
Other income 364 41,660 - 42,024
----------- --------- ---------- -----------
Total reductions (85,893,377) (39,689) (16,524,159) (102,457,225)
----------- --------- ---------- -----------
Deductions:
----------
Interest expense - - 5,331,880 5,331,880
Administrative expenses 261,709 - - 261,709
Paid to participants
in cash 27,777,442 265,630 - 28,043,072
Common stock distributed
at market value 8,894,213 - - 8,894,213
----------- --------- ---------- -----------
Total deductions 36,933,364 265,630 5,331,880 42,530,874
----------- --------- ---------- -----------
Net increase (decrease)
prior to interfund
transfers (122,826,741) (305,319) (21,856,039) (144,988,099)
Interfund transfers:
-------------------
Diversification and other (976,077) 976,077 - -
Allocation of 55,578 shares
of preferred stock,
at market 20,538,086 - (20,538,086) -
Transfer of dividend income
for debt service (5,754,458) - 5,754,458 -
------------ --------- ---------- -----------
Net increase (decrease) (109,019,190) 670,758 (36,639,667) (144,988,099)
Net assets available for
benefits:
Beginning of year 523,055,618 1,300,161 76,467,840 600,823,619
----------- --------- ---------- -----------
End of year $414,036,428 $1,970,919 $39,828,173 $455,835,520
=========== ========= ========== ===========
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 1 Description of the Plan
-----------------------
General Provisions
------------------
The following brief description of the St. Paul Companies,
Inc. Stock Ownership Plan (the Plan) is provided for
general information purposes. Plan participants should
refer to the Plan document for more complete information.
Effective January 1, 1998, The St. Paul Companies, Inc.
Savings Plus Preferred Stock Plan (PSOP) and The St. Paul
Companies, Inc. Employee Stock Ownership Plan (ESOP) were
merged into one plan, thereby creating the Plan. The Plan
is a defined contribution plan under which guaranteed
matching contributions are made, with respect to employees'
pretax 401(k) contributions to The St. Paul Companies, Inc.
Savings Plus Plan (Savings Plus Plan). In addition, the
Plan provides a discretionary annual allocation to
qualified U.S. employees based on the financial performance
of The St. Paul Companies, Inc. (Company). The Company and
certain of its subsidiaries, St. Paul Fire and Marine
Insurance Company, St. Paul Reinsurance Management
Corporation, and Octagon Risk Services, Inc. currently
participate in the Plan. Fidelity and Guaranty Life
Insurance Company (F&G Life) and Management Science
Associates, Inc. (MSA) each withdrew from the Plan
effective September 28, 2001 and July 27, 2001,
respectively, pursuant to the sales of F&G Life and MSA by
the Company.
U.S. Bank National Association is the Trustee for the ESOP
Common Stock Fund portion of The St. Paul Companies, Inc.
Stock Ownership Trust (Trust). Fidelity Management Trust
Company (FMTC) is the Trustee for the remaining portion of
the Trust. The Company has appointed an Administrative
Committee which acts as Plan Administrator.
The plan was amended in 2002 as follows:
All shares of common stock of the Company currently held in
the Common Stock Fund of the Savings Plus Plan, as well as
the participant account balances under the Savings Plus Plan
reflecting an interest in the Common Stock Fund, were transferred
to the Plan effective at the close of business and the
completion of all Plan transactions on March 28, 2002.
All investment options (other than common or preferred
stock of the Company) currently held in the Plan
to allow for diversification elections under the terms
of the Plan, as well as the participant account
balances under the Plan reflecting an interest
in such investment options were transferred to the
Company's Savings Plus Plan effective at the close of
business and the completion of all Plan transactions on
March 28, 2002.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 1 Description of the Plan (continued)
----------------------------------
Participation, Vesting and Allocations
--------------------------------------
Employees of the Company and participating subsidiaries,
who participated in the ESOP or PSOP on December 31, 1997
became Plan participants on January 1, 1998. Employees of
the Company and participating subsidiaries, who were not
participants in the ESOP or PSOP on December 31, 1997
become participants as of the later of January 1, 1998 or
their employment date.
Participants are fully vested in their pre-1999 matching,
performance-based and ESOP allocations after six years of
service. Participants become 20% vested in these
allocations of Company stock after two years of service,
increasing an additional 20% for each additional year of
service. Participants also become vested in full upon
retirement, permanent and total disability, death, or upon
termination of the Plan or a change in control of the
Company, as defined by the Plan. Participants are
immediately vested in their post-1998 matching allocations.
The Plan allocates shares of the Company's Series B
Convertible Preferred Stock (preferred stock) to those
employees participating in the Savings Plus Plan. Shares
of the Company's preferred stock are allocated to eligible
participants semi-annually based on their Savings Plus Plan
contributions through June 30 and December 31. This
matching allocation is equivalent to 100% of employees'
contributions up to a maximum of 4% of their salary.
Except for cases of retirement, permanent and total
disability, or death, this matching allocation is made only
to participants actively employed on the last working day
of June or December, respectively.
Depending upon the Company's financial performance for the
year, shares of the Company's preferred stock are also
allocated to participants based on their compensation.
Except for cases of retirement, permanent and total
disability, or death, this performance-based allocation is
made only to participants actively employed on the last
working day of the calendar year. The Company did not make
a performance-based contribution for the years ended
December 31, 2002 and 2001.
Over a period of ten years, shares of the Company's common
stock were allocated, from the former ESOP, to participants
based on compensation. The final ESOP allocation was made
as of December 31, 1997. Except for cases of death,
retirement or permanent and total disability, the
allocation was made only to participants actively employed
on the last working day of the calendar year.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 1 Description of the Plan (continued)
----------------------------------
Long Term Debt
--------------
Prior to the merger that created the Plan, the PSOP had
obtained long-term financing from St. Paul Fire and Marine
Insurance Company to purchase Company preferred stock for
future allocation to PSOP participants. This loan
principal and interest continues to repaid by the Plan
using participating Company contributions and dividends
received on allocated and unallocated shares of Company
preferred stock held by the Trust. See Note 7 for more
information.
Distribution of Benefits
------------------------
Distribution of vested benefits from the Trust is made upon
a participant's retirement, permanent and total disability,
death or employment termination. Distribution of vested
benefits from the Preferred Stock or ESOP Common Stock
Funds, at the participant's election, will be either in the
form of cash, or full shares of Company common stock and
cash in lieu of any fractional shares of such stock.
ESOP Common Stock Fund dividends are distributed to
participants as soon as practicable following the dividend
pay date.
Diversification
---------------
Participants do not have investment discretion regarding
the Preferred Stock Fund and ESOP Common Stock Fund
portions of their account balances. Participants who have
attained age 55 may elect to diversify a portion of their
Preferred Stock and ESOP Common Stock Fund balances, once a
year for six years, up to a maximum amount. Between
January 1, 2002 and March 31, 2002, diversifications were
made in the form of a distribution or a transfer to the
mutual funds and commingled pool investment options
available under the plan. As of April 1, 2002,
diversifications are made through transfers out of the Plan
for investment in The St. Paul Companies, Inc. Savings Plus
Plan.
Forfeitures
-----------
Under the Plan, forfeitures are used in the following
priority:
- to restore benefits to participants returning to the Plan;
- to make any necessary corrective allocations or
distributions to participants;
- to pay administrative expenses, and;
- any remaining forfeitures are reallocated to participants as
described in the Plan.
Under those terms the Company plans to utilize a portion of
these forfeitures to reduce future employer contributions.
Forfeited non-vested accounts totaled $3.2 million and $4.7
million at Dec. 31, 2002 and 2001, respectively. Forfeitures
used to reduce employer contributions totaled zero in 2002
and $2.5 million in 2001, respectively.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 1 Describtion of the Plan (continued)
----------------------------------
Plan Termination
----------------
Although the Company expects to continue the Plan
indefinitely, it has reserved the right to terminate the
Plan at any time. Upon such termination, the Plan
Administrative Committee would consider directing the
Trustee to distribute participant account balances. Upon
termination of the Plan participant account balances would
vest in full.
Tax Status
----------
The Internal Revenue Service has determined and informed
the Company by letter dated May 13, 2003, that the Plan as
designed is in accordance with applicable Section 401-
1(b)(3) and the Trust is qualified under Section 501(a) of
the Internal Revenue Code. Although the Plan has been
amended as of March 2002 (see above) the Plan administrator
and the Plan's tax counsel believe that the Plan as amended
and currently being operated is in compliance with the
applicable requirements of Section 401 of the Internal
Revenue Code.
Note 2 Significant Accounting Policies
-------------------------------
The accompanying Plan financial statements are prepared in
conformity with United States generally accepted accounting
principles (GAAP).
The preparation of these financial statements requires
management to rely on estimates and assumptions that affect
the reported amounts of assets and liabilities and changes
therein, and disclosure of contingent assets and
liabilities. We continually review our estimates and make
adjustments as necessary, but actual results could turn out
to be significantly different from what we expected when we
made these estimates.
The Plan provides for investment in a variety of investment
funds. Investments in general are exposed to various risks,
such as interest rate, credit and overall market volatility.
Due to the level of risk associated with certain investments,
it is reasonably possible that changes in the values of the
investments will occur in the near term and that such changes
could materially affect participants' account balances and
the amounts reported in the statements of net assets available
for benefits.
The investment in preferred and common stock of the Company
and in shares or units of mutual funds and the commingled
pool are carried at market value as discussed in Note 8.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 2 Significant Accounting Policies (continued)
------------------------------------------
Realized gains or losses on the sales of investments
and the change in unrealized appreciation or depreciation
in the market value of investments are presented in
total in the statements of changes in net assets available
for plan benefits. The average cost method is used to
determine cost of shares sold or distributed. Purchases
and sales of investments are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date.
Interest is recorded when earned.
Money market portfolios and short-term investments
are carried at cost plus accrued interest or
amortized discount, which approximates market value.
A portion of administrative expenses of the Plan are paid
by the participating companies and are not reflected in the
accompanying financial statements. Plan administrative
expenses paid by the Plan are paid out of forfeitures.
Benefits are recorded when paid.
Note 3 Investment in Preferred Stock of the Company
--------------------------------------------
Information regarding the Plan's investment in preferred
stock of the Company follows:
Allocated Unallocated Total
---------- ----------- --------
December 31, 2002
-----------------
Number of shares 559,391 171,701 731,092
Cost $80,720,084 $24,776,549 $105,496,633
Market value $154,061,804 $47,288,353 $201,350,157
Market value per share $275.41
December 31, 2001
-----------------
Number of shares 518,136 254,085 772,221
Cost $74,767,072 $36,664,476 $111,431,548
Market value $183,819,225 $90,141,761 $273,960,986
Market value per share $354.77
Each share of the Company's preferred stock has a
guaranteed minimum value of $144.30, a dividend rate of
$11.724 annually and is convertible into eight shares of
the Company's common stock.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 4 Investment in Common Stock of the Company
-----------------------------------------
Information regarding the Plan's investment in common stock
of the Company follows. All shares are considered
allocated.
Total
December 31, 2002 ------------
-----------------
Number of shares 6,513,387
Cost $109,415,823
Market value $221,780,827
Percent of total Company shares outstanding 2.9%
Market value per share $34.05
December 31, 2001
-----------------
Number of shares 5,144,640
Cost $62,650,930
Market value $226,209,821
Percent of total Company shares outstanding 2.5%
Market value per share $43.97
Note 5 Net Appreciation (Depreciation) in Market Value of Investments
--------------------------------------------------------------
Plan investments, including gains and losses on investments
bought and sold as well as held during the year,
appreciated (depreciated) as follows:
December 31, 2002 December 31, 2001
----------------- -----------------
Preferred Stocks $ (59,843,734) $ (66,462,826)
Common Stocks (67,134,258) (56,034,119)
Mutual Funds 13,216 (104,025)
Commingled Pool 1,064 (23,640)
------------ ------------
Net Appreciation
(Depreciation) $ (126,963,712) $ (122,624,610)
============ ============
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 6 Party-in-Interest Transactions
------------------------------
Transactions resulting in Plan assets being transferred to
or used by a related party are prohibited under the
Employee Retirement Income Security Act of 1974 (ERISA)
unless a specific exemption applied. U.S. Bank National
Association (U.S. Bank) and Fidelity Management Trust
Company (FMTC), are parties-in-interest as defined by ERISA
as a result of being trustees of the Plan. U.S. Bank and
FMTC are investing plan assets in their respective short-
term investment fund. Certain Plan investments are in
shares of mutual funds or a commingled pool managed by
Fidelity Investments. The Plan also engages in
transactions involving the acquisition or disposition of
units of participation in preferred and common stock of The
St. Paul Companies, Inc., a party-in-interest with respect
to the Plan. These transactions are covered by an
exemption from the "prohibited transactions" provisions of
ERISA and the Internal Revenue Code.
Note 7 Long Term Debt
--------------
To finance the preferred stock purchase for future
allocation to qualified employees, the Trust (formerly the
PSOP) borrowed $150 million from St. Paul Fire and Marine
Insurance Company, at an interest rate of 9.4%. This long-
term debt matures on January 31, 2005, and requires
semiannual interest payments. Payments of principal will
be made in order to provide the targeted benefits of the
Plan. Any remaining unpaid balance is due on maturity
date. Each participating company's cash contribution to
the Trust is based on its percentage of the total Company
match and performance-based allocation. When these loan
payments are made, a pro rata amount of preferred stock is
allocated from unallocated shares to Participants' Plan
accounts. These allocations are characterized as either
matching contributions, performance-based contributions or
as dividends on participants' allocated preferred shares.
Repayment of this loan is guaranteed by the Company. The
outstanding balance of this debt was $40,469,582 and
$53,568,392, as of December 31, 2002 and 2001,
respectively.
Future maturities of long-term debt are as follows:
Year ending December 31
-----------------------
2003 $ 7,747,167
2004 -
2005 32,722,415
----------
$40,469,582
==========
PAGE>
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 8 Disclosures About Fair Value of Financial Instruments
-----------------------------------------------------
The following methods and assumptions were used to estimate
the fair value of each class of financial instrument for
which it is practicable to estimate that value.
Cash, Short-term Investments and the Fidelity Retirement
Money Market Portfolio are carried at cost plus accrued
interest or amortized discount, which approximates the fair
value.
Preferred stock is based on valuations performed by an
independent appraiser.
Common stock of The Company and investments in mutual funds
are based on published market prices.
The fair value of the investment in the commingled pool is
based on valuations performed by FMTC, who manages the
pool.
The fair values of the Plan's long-term debt is based
primarily on the fair value of debt securities in the
market that have terms similar to the Plan's debt.
The carrying amounts and estimated fair values of the
Plan's financial instruments at December 31 are as follows:
2002 2001
------------------------ -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- ------- --------- ------
Cash, short-term
investments & Fid. Ret.
Money Mrkt Portfolio $ 4,535,694 $ 4,535,694 $ 5,158,870 $ 5,158,870
Preferred stock of
The St. Paul
Companies, Inc. 201,350,157 201,350,157 273,960,986 273,960,986
Common stock of
The St. Paul
Companies, Inc. 221,780,827 221,780,827 226,209,821 226,209,821
Mutual Funds - - 1,560,818 1,560,818
Commingled Pool - - 229,295 229,295
----------- ----------- ----------- -----------
Total Investments $427,666,678 $427,666,678 $507,119,790 $507,119,790
=========== =========== =========== ===========
Long-term debt $ 40,469,582 $ 45,466,361 $ 53,568,392 $ 59,953,744
=========== =========== =========== ===========
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Note 9 Subsequent Event
----------------
Effective January 1, 2003, the Company increased matching
contributions of one dollar for every dollar of participant
salary conversion contributions up to 6% percent of their
base salary. This matching contribution is made in the
form of The St. Paul Companies, Inc. Preferred Stock and is
invested in the Plan and is subject to a 3 year cliff
vesting provision. The discretionary annual allocation to
employees based on the financial performance of The St.
Paul Companies, Inc. has been eliminated.
Beginning in 2003, a participant who has an ESOP account in
the Plan has the ability to move money out of the ESOP
account into other investment options in the Plan. ESOP
diversification will be phased in during 2003 according to
the following schedule:
February 1, 2003 Up to 25% of ESOP shares can be diversified
April 1, 2003 Up to 50% of original ESOP shares can be diversified
June 1, 2003 Up to 75% of original ESOP shares can be diversified
August 1, 2003 Full ESOP balance can be diversified
SCHEDULE 1
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
Identity of Issue Description of Investment Cost Current Value
----------------- ------------------------- ---------- -------------
*The St. Paul Series B Convertible
Companies, Inc. Preferred Stock, no par
value, 731,092 shares $ 105,496,633 $ 201,350,157
*The St. Paul Common stock, no par
Companies, Inc. value, 6,513,387 shares 109,415,823 221,780,827
*U.S. Bank N.A.,
First American
Prime Obligation,
Class Y
Institutional Fund Mutual fund 4,535,694 4,535,694
----------- -----------
Total Investments $ 219,448,149 $ 427,666,678
=========== ===========
* Party-in-interest
See accompanying independent auditors' report.
SCHEDULE 2
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
Year Ended December 31, 2002
(a) (b) (c) (d) (f)
Expenses
Description Incurred
Identity of of Purchase Selling with
Issuer Investment Price Price Transaction
-------------- ---------- -------- ------- -----------
* The St. Paul
Companies, Common $12,962,001 $ - $ -
Inc. Stock - 29,188,402 17,877
* U.S. Bank,
N.A. First
American Prime
Obligation
Class Y
Institutional 12,716,577 - -
Fund - 13,017,987 -
* Fidelity Institutional
Management Cash
Trust Company Portfolio MM
Fund Class I 23,236,115 - -
Shares - 23,827,619 -
(g) (h) (i)
Current
Value
Description on
Identity of of Distribution
Issuer Investment Cost Date Net Gain
-------------- ---------- -------- ------- -----------
* The St. Paul
Companies, Common $12,962,001 $12,962,001 $ -
Inc. Stock 17,845,756 29,188,402 11,342,646
* U.S. Bank,
N.A. First
American Prime
Obligation
Class Y
Institutional 12,716,577 12,716,577 -
Fund 13,017,987 13,017,987 -
* Fidelity Institutional
Management Cash
Trust Company Portfolio MM
Fund Class I 23,236,115 23,236,115 -
Shares 23,827,619 23,827,619 -
* Party-in-interest
See accompanying independent auditors' report.
SIGNATURE
---------
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the trustees (or other persons who
administer the employee benefit plan) have duly caused this
annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
June 30, 2003 THE ST. PAUL COMPANIES, INC.
SAVINGS PLUS PLAN
(The Plan)
By John P. Clifford Jr.
--------------------
John P. Clifford Jr.
Senior Vice President, Human Resources
Member of the Administrative
Committee for The St. Paul
Companies, Inc. Stock
Ownership Plan
Exhibit Index
-------------
Exhibit Number Description
-------------- ----------------------------------------
23.1 Consent of KPMG LLP, Independent Auditors
99.1 Certification of John P. Clifford Jr.,
Senior Vice President, Human Resources, of
The St. Paul Companies, Inc., pursuant to
18 U.S.C. Section 1350