The St. Paul Companies Completes Transfer of Ongoing Reinsurance Business to Platinum Underwriters Holdings

Business Wire, Nov 4, 2002

Business Editors

SAINT PAUL, Minn.--(BUSINESS WIRE)--Nov. 4, 2002

The St. Paul Companies (NYSE:SPC) today announced that it has completed the transfer of its continuing reinsurance business and related assets, including renewal rights, to Platinum Underwriters Holdings, Ltd. (NYSE:PTP). As part of this transaction, The St. Paul also has contributed $123 million of cash to Platinum and transferred approximately $350 million in assets relating to transferred insurance reserves. In exchange, The St. Paul has acquired six million common shares, representing a 14 percent ownership interest in Platinum and a ten-year option to buy up to six million additional common shares at an exercise price of $27 per share, which represents 120 percent of the initial public offering price. The St. Paul will retain reinsurance liabilities primarily relating to contracts issued prior to Jan. 1, 2002.

The St. Paul expects the transaction to result in an after-tax statutory gain, a pretax GAAP gain, and -- as a result of an anticipated write-off of a reinsurance-associated deferred tax asset -- an after-tax GAAP loss.

The St. Paul Companies, Inc., is headquartered in Saint Paul, Minn., and provides commercial property-liability insurance and asset management services.

Platinum Underwriters Holdings, Ltd. is a newly formed Bermuda holding company that will underwrite property and casualty reinsurance business on a worldwide basis. Registration statements relating to the Platinum Underwriters Holdings, Ltd. securities were filed with and declared effective by the Securities and Exchange Commission. The public offerings are each being made solely by means of a prospectus. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction where such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. A copy of each prospectus relating to these securities may be obtained by writing to: Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004; Merrill Lynch & Co., 4 World Financial Center, Prospectus Department, Street Level, New York, NY 10080; or Salomon Smith Barney, Brooklyn Army Terminal, 5th Floor, 140 58th Street, Brooklyn, NY 11220, Attention: Prospectus Department.

Certain statements made by the company in this release may constitute forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties including, but not limited to, the following: competitive considerations, including the ability to implement price increases; the frequency and severity of catastrophic events, including the risk of large losses from man-made catastrophes such as terrorist attacks; our achievement of planned expense savings; the timing and impact of our exiting of certain types of business; changes in the demand for, pricing of, or supply of reinsurance or insurance; uncertainties relating to reinsurance recoverables; increased competitive pressure; risks relating to the transfer of our ongoing reinsurance operations to Platinum Underwriters Holdings, Ltd. and the effect of such transfer on our ongoing business; the loss of significant customers; worse-than-anticipated loss developments from business written in prior years; losses due to foreign currency exchange rate fluctuations and losses in our investment portfolio; the risk that losses related to credit-sensitive products, including surety bonds, could be material in the event of a sustained economic downturn; changes in our estimate of insurance industry losses resulting from the Sept. 11, 2001, terrorist attack; the potential impact of the global war on terrorism and Federal solutions to make available insurance coverage for acts of terrorism; regulatory developments; general economic conditions, including changing interest rates, rates of inflation and the performance of the financial markets; judicial decisions and rulings; risks relating to the approval by the bankruptcy court of the settlement of the Western MacArthur matter; changes in domestic and foreign laws, regulations and taxes; effects of acquisitions and divestitures; and various other factors. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.