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