Train crash to hit St Paul profitability

The Paddington train disaster has come at a bad time for St Paul. The US-based insurer of both trains made profits of only $90m (£55m) in 1998 on a turnover of $9bn. In its 1999 report, American rating agency Moody's said St Paul will be challenged to improve the profitability in many of its core business segments. It is now estimating that the latest disaster will cost at least $10m. An analyst at Watson Wyatt believed that while St Paul is likely to suffer a considerable gross liability loss, the net loss would be smaller because it would have a reinsurance programme in place. AM Best said that the crash could even lead to a pricing refocus, which could help boost the insurer's profitability in the long term. A St Paul spokesman said it reassessed its rates every year and Paddington would be taken into account within the next review.