The St. Paul also will transfer certain renewal opportunities and related assets of The St. Paul's reinsurance operation, St. Paul Re, in exchange for a 24.9 percent stake in the new company, which will have 9.9 percent of the voting rights. The offering is expected to close in about three months, subject to regulatory approvals and market conditions, the company said.

Platinum will not reinsure the reinsurance liabilities of St. Paul Fire and Marine Insurance Company and St. Paul Reinsurance Company Ltd. relating to reinsurance contracts that began prior to Jan. 1. St. Paul will retain the reserves related to those liabilities.

"We are comfortable retaining the liabilities for the reinsurance business prior to 2002," said Jay Fishman, chairman and chief executive officer, The St. Paul Companies, in a statement. "Given the long-term nature of the liabilities, investment returns from the assets backing the $3.7 billion in net reserves for this business will continue to contribute to our earnings for some time."

"This transaction is yet another step to improve the competitive positioning of The St. Paul," Mr. Fishman added.

The company said it expects the impact of the transaction, which is subject to market and other conditions, to be immaterial to operating earnings and to result in a net realized capital gain, the amount of which will depend on the outcome of the offering.

Platinum will operate through subsidiaries in the United States, the United Kingdom and Bermuda.

"Our plan to hold a 24.9 percent stake in Platinum demonstrates our belief in the long-term prospects of its business," said Mr. Fishman, who will serve on the new company's board.

"The transaction will create in Platinum, with anticipated capital of approximately $1 billion, an organization focused on a single business?reinsurance?with an operating platform consisting of the ongoing business, management, infrastructure, customer and broker relationships, and systems of St. Paul Re," he added.

Steven H. Newman will become chairman of the new company. He served as chairman, president and chief executive officer of Underwriters Re Group prior to its acquisition in May 2000 by Swiss Re.

Mr. Newman has previously served as president of the Home Insurance Company, vice president and casualty actuary at American International Group, chairman of the board of GCR Holdings, a Bermuda catastrophe reinsurer, and a director of Capital Re.

Mr. Newman joins Jerry Fadden, who was named chief executive officer of St. Paul Re on March 6. Mr. Fadden will become CEO of Platinum and a member of the board.