ST. PAUL, Minn. - St. Paul Cos. Inc. said yesterday that its second-quarter profit will fall by 35-40 cents because of storm and medical malpractice losses.
The No. 4 U.S. business insurer said losses from Tropical Storm Allison, which hit Texas in June, are expected to be $50 million, or 14 cents a share. The company's total storm losses, which include losses stemming from storms in 16 states from Texas to Pennsylvania, would be $70 million, or 20 cents a share.
The company said worse-than-expected claims at its medical malpractice liability division also will crimp second-quarter earnings as it added $100 million, or 29 cents a share, in pretax reserves.
"The other segments of our business are performing exceptionally well and are offsetting the operating earnings impact of our pending sale of F&G Life, now reported in discontinued operations, as well as the higher-than-expected level of second-quarter catastrophes," said Douglas W. Leatherdale, St. Paul's chairman and chief executive.
Leatherdale said the company has been "aggressively" raising prices, especially in its medical malpractice liability business where price increases have exceeded 20 percent.
Analysts expected the insurer to earn 76 cents a share in the second quarter.
The company said for the full year 2001, it expects operating earnings to be in the range of $2.50 to $2.75 per share.
St. Paul Cos. has operations in Baltimore from its 1998 purchase of USF&G Corp.
The company's shares gained 17 cents to $48.92 in New York trading yesterday.