MINNEAPOLIS (AP) _ The St. Paul Cos. said Thursday that first-quarter operating earnings increased 6 percent, partly because of stiff premium hikes. The company also announced the spinoff of its reinsurance business into a new publicly held reinsurer.

The St. Paul-based insurance company said it was transferring its reinsurance operations to Platinum Underwriters Holdings Ltd., based in Bermuda. The St. Paul will hold a 24.9 percent stake in Platinum, which will focus only on reinsurance, protection insurance companies buy to cover potential insurance losses.

The new company expects to raise about $1 billion through an initial public offering of the remaining shares, The St. Paul said.

The St. Paul reported operating earnings of $169.2 million, or 76 cents a share, for the quarter ended March 31, compared with $159.6 million, or 69 cents a share, a year earlier. That matched the consensus estimate of 12 analysts surveyed by Thomson Financial/First Call.

The St. Paul's shares closed down 2 percent Thursday, or $1.03, to $47.72 on the New York Stock Exchange.

Net income, including results of discontinued operations and investments, fell 31 percent to $139.3 million, or 63 cents a share, from $202.2 million, or 87 cents a share, in the first quarter of 2001.

Revenues rose to $2.32 billion, from $2.16 billion a year earlier.

The company said its premium rates increased 25 percent for U.S. primary insurance policies during the quarter, with hikes of 40 percent for international policies and 30 percent for reinsurance.

Jay Fishman, the company's chairman and chief executive, called the spinoff of its reinsurance business ``another major step in improving The St. Paul's competitive position.'' Fishman will have a seat on Platinum's board.

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The St. Paul Cos.: http://www.stpaul.com