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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Jim Spitz who wrote (33345)	8/22/2001 9:25:22 AM
From: Jim Spitz	Respond to of 37746

The St. Paul goes on the road to assure Wall Street Dee DePass Star Tribune Published 08/22/01 NEW YORK -- Rocked by three high-level executive departures in the past year, longtime St. Paul Companies CEO Douglas Leatherdale took his new senior management team to New York City this week in a bid to show Wall Street that the insurance giant still has a deep well of executive talent. With Leatherdale set to retire in May and no obvious successor tapped to succeed him, analysts considered this first-of-its-kind road show by The St. Paul to be critical. That's especially so after the company last month cut its second-quarter earnings projections by half and reduced its annual expectations by 14 percent. More than 100 investors and analysts attended while another 300 listened to the live Webcast. Robin Abanese, an analyst with with Lehman Brothers, said: 'They want you to see that the company is not just run by Doug Leatherdale and that it has a great breadth of knowledge. Sure some left, but they filled those slots. ... and they have a decentralized management.' In a meeting with reporters on Tuesday, Leatherdale emphasized: 'We have lots of people in this room, so it's not that we are leaderless. And I am still here. I have said that if we don't have someone in place [in May] that I would be willing to stay around for a little while.' Leatherdale's latest executive team includes new U.S. insurance head Marita Zuraitis, who took the helm of The St. Paul's $4 billion U.S. commercial and specialty insurance unit three weeks ago when Executive Vice President Steve Lilienthal resigned to head CNA's surety unit. Also on the team is new CFO Tom Bradley, who replaced Paul Liska two months ago, and new head of global specialty lines Mike Miller. All of them gave presentations, including veteran international lines leader Kent Urness, surety and construction head Bob Lamendola, reinsurance chairman Jim Duffy and global reinsurance head Mike Schell. The tone of the meetings was upbeat, despite last month's news that The St. Paul would miss its second-quarter earnings expectations. The company blamed storm losses and inadequate reserves in its medical malpractice unit. Problems in its reinsurance, Lloyds of London syndicates and international units appeared to be on the mend. The St. Paul executives emphasized their expectations for a 13-percent return on equity, continued price increases and a beefed up litigation department to combat escalating jury awards. They also stressed the company's specialty strategy that will focus on health care, technology, surety, construction and professional sectors. Still 'price increases' became the mantra. After a decade of bargain-basement pricing in the property-casualty markets, price increases finally are helping The St. Paul stay profitable. Most price increases were 10 to 65 percent. Several analysts held or upgraded their buy recommendations following the meeting. 'The company satisfied or tempered most of the outstanding investor issues in our view,' wrote analyst Paul Newsome of Lehman Brothers. Goldman Sachs analysts wrote that they 'continue to believe [the company] is taking the right steps to improve its underlying operations and that the company remains among the industry leaders in terms of its financial operating position. However, we believe that [it] needs to regain investors' confidence over the next several quarters by delivering on expectations.' Leatherdale said he expects the firm to hit its revised year-end operating earnings target of $2.50 to $2.75. He also reiterated that the company plans to remain independent, notwithstanding persistent takeover rumors and the ongoing consolidation of the industry. 'Nobody has been approaching us and it doesn't seem to be a serious issue,' Leatherdale said. But investor Thomas Kahn of Kahn Brothers & Co. in New York City said he's not so sure. The quickly orchestrated New York trip and the company's ever-changing succession plans prompted Kahn to question whether the roadtrip was a play to sell the company. 'Doug has been pushing the stock. They have lost a lot of executives and there is no succession plan,' Kahn said. 'If I was a European company, I would think this is the time to start discussions.' Kahn said his firm owns an estimated $10 million in The St. Paul stock. Abanese said potential bidders would include German-based Allianz and other European insurance giants. But other analysts noted that the takeover speculation was two years old and not very reliable. Shares of The St. Paul fell 17 cents in Tuesday's trading to close at $43.84. -- Dee DePass is at ddepass@startribune.com . © Copyright 2001 Star Tribune. All rights reserved.