The US insurer St Paul Travelers says it is seeking regulatory guidance on how to account for an additional $US1.63 billion in reserves. The decision may determine whether the company faces a loss of $US275-300 million in the second quarter.

The boost in reserves follows the merger between St Paul Travelers and Travelers Property Casualty Corporation in April. The US Securities and Exchange Commission will offer advice on whether the reserve adjustment should be reflected in the second-quarter income statement.

The commission may also suggest that the boost be accounted for in the company’s balance sheet. If that were the case, the insurer would report a net income of $US775-800 million.