Exhibit 18
August 14, 1998

The St. Paul Companies, Inc.
385 Washington St.
St. Paul, Minnesota  55102

Ladies and Gentlemen:

We have been furnished with a copy of Form 10-Q of The St. Paul
Companies, Inc. for the three months ended June 30, 1998, and
have read the Company's statements contained in Note 8 to the
consolidated financial statements included therein.  As stated in
Note 8, the Company changed its method of accounting for certain
workers' compensation reserves from an undiscounted to a
discounted basis and states that the newly adopted accounting
principle is preferable in the circumstances because discounting
these reserves more closely matches revenue and expense and more
reasonably portrays the economic impact of the time value of
money related to these reserves.  These reserves have an ultimate
cost and payment pattern that are fixed and determinable and,
accordingly, may be discounted in accordance with Staff
Accounting Bulletin No. 62, "Discounting by Property-Casualty
Insurance Companies."  Prior to the merger of USF&G Corporation
and The St. Paul Companies, Inc. in April of 1998, these
companies had different accounting policies relating to these
types of  workers' compensation reserves.  Therefore, in the
merged entity consolidated financial statements, prior years have
been retroactively restated to apply the preferable accounting
method for all periods presented.  In accordance with your
request, we have reviewed and discussed with Company officials
the circumstances and business judgment and planning upon which
the decision to make this change in method of accounting was
based.

We have not audited any consolidated financial statements of The
St. Paul Companies, Inc. as of any date or for any period
subsequent to December 31, 1997, nor have we audited the
information set forth in the aforementioned Note 8 to the
consolidated financial statements; accordingly, we do not express
an opinion concerning the factual information contained therein.

With regard to the aforementioned accounting change,
authoritative criteria have not been established for evaluating
the preferability of one acceptable method of accounting over
another acceptable method.  However, for purposes of The St. Paul
Companies, Inc.'s compliance with the requirements of the
Securities and Exchange Commission, we are furnishing this
letter.

Based on our review and discussion, with reliance on management's
business judgment and planning, we concur that the newly adopted
method of accounting is preferable in the Company's
circumstances.

Very truly yours,

/s/ KPMG Peat Marwick LLP
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    KPMG Peat Marwick LLP