St. Paul Travelers Cos. Inc. said Monday that it has determined the accounting treatment for previously announced reserve adjustments and will record the adjustments as a charge against its second-quarter income statement.
On July 23 St. Paul Travelers said that it was seeking guidance from the Securities and Exchange Commission on the appropriate accounting treatment for certain reserve adjustments being made in connection with the April 1 merger that created it out of St. Paul Cos. Inc. and Travelers Property Casualty Corp. Based on the general guidance it got from the SEC staff, St. Paul Travelers said, it is appropriate to reflect the adjustments in the income statement.
Accordingly, consistent with its prior earnings estimate, St. Paul Travelers expects to report a second-quarter net loss of $275 million to $300 million. The second-quarter operating loss would be $310 million to $335 million, it said. The difference between estimated net loss and estimated operating loss is a $35 million, after-tax realization of investment gains. Also as previously reported, St. Paul Travelers will not raise additional capital in connection with these adjustments.
