In response to the 10-Q filing disclosure, Standard & Poor's in New York put the "double-A-minus" financial strength ratings of the companies on CreditWatch with negative implications because of the heightened uncertainty created by the disclosure. The rating agency said it would meet with the company within the next two weeks to review this development.

In its SEC filing, The St. Paul also revealed that the company is a defendant in a coverage suit that involves a distributor and installer of asbestos products, Western Asbestos Company, which was insured by The St Paul for several years prior to 1961. Coverage rights are now being asserted by Western MacArthur, a company that acquired rights to some assets of Western Asbestos in 1967.

"Significant issues exist as to the scope of coverage," the filing said, describing this exposure as its largest known asbestos exposure, without providing potential dollar figures.

The disclosure came a day after two other insurers, Travelers Property Casualty and The Hartford Financial Services Group, both in Hartford, announced what their share was in a $2.7 billion asbestos liability settlement involving Pittsburgh-based PPG Industries.

PPG is a 50 percent shareholder in Pittsburgh Corning, a former maker of asbestos pipe insulation.

Travelers said the present value of its exposure is $240 million, while Hartford put its exposure at $120-to-$150 million, net of discounting and reinsurance.

In its announcement, The Hartford said the settlement would resolve what it believed to be its largest currently known asbestos exposure.

The Chubb Corporation in Warren, N.J., a day later announced that it expects to pay out up to $34 million to cover its share of the PPG settlement.

While roughly three dozen insurers are participating in that settlement, rating agency A.M. Best in Oldwick, N.J., said the settlement is unlikely to have a direct impact on the financial strength or credit ratings of the participating insurers.

"The increasing trend in asbestos claims and average annual payments for asbestos losses by insurers, as well as large settlements such as PPG, are explicitly incorporated into A.M. Best's existing ratings," the rating agency said.

Similarly, the London office of S&P said this morning that a Law Lords ruling in a mesothelioma case announced yesterday would have minimal impact on the financial strength ratings of U.K. insurers.

While the ruling allows more than one insurer to be found liable for negligence, S&P said that insurers and reinsurers most likely to be affected by a speed up in asbestos claims implied by the ruling already had a clear understanding of those issues.