St. Paul Companies Securities Litigation

On October 4, 2002, The St. Paul Companies shareholders filed a class action lawsuit on behalf of all persons who purchased St. Paul Companies securities between November 5, 2001 and July 9, 2002 (“Class Period”). The action was filed in the United States District Court for the District of Minnesota, alleging The St. Paul Companies and certain executive officers and directors disseminated materially false and misleading statements and/or concealed material adverse facts concerning St. Paul Companies' exposure from a lawsuit filed in 1993 in California state court (Western MacArthur Co., et al. v. United States Fidelity Guaranty Co., et al.). The shareholders allege that these omissions and misleading statements caused the Company’s stock price to become artificially inflated, inflicting damages on investors. Specifically, the Complaint alleges the Company failed to adequately disclose the amount of potential liability exposure that it might suffer as a result of litigation, the status of the Western MacArthur Litigation and the adequacy of the Company's related reserves.

In fact it was not until June 3, 2002 that St. Paul Companies disclosed that a Settlement in the Western MacArthur Litigation had been reached, whereby the Company would pay approximately $1 billion to satisfy claims asserted in the lawsuit. News of the Western MacArthur Settlement caused the Company’s stock to decline during the class period from a high of $49.20 on November 5, 2001 to a low of $34.65 on July 9, 2002.

On August 13, 2004, District Court Judge Paul A. Magnuson granted final approval of the proposed $6.3 million settlement.