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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549






                                    FORM 8-K
                                 CURRENT REPORT






     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934






      DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) - FEBRUARY 24, 1999







                              MINNESOTA POWER, INC.


                             A Minnesota Corporation
                           Commission File No. 1-3548
                   IRS Employer Identification No. 41-0418150
                             30 West Superior Street
                             Duluth, Minnesota 55802
                           Telephone - (218) 722-2641





ITEM 5.  OTHER EVENTS.

Reference is made to the Annual Report on Form 10-K for the year ended  December
31, 1998 (1998 Form 10-K) of Minnesota Power, Inc.  (Minnesota Power or Company)
for background  information on the following  update.  The cited reference is to
the Company's 1998 Form 10-K.


Ref. Page 22 - Fifth and Six Paragraphs.

Minnesota  Power has a 21 percent  equity  investment in Capital Re  Corporation
(Capital Re), a financial guaranty  reinsurance and specialty insurance company.
On  February  24,  1999  Capital Re  reported  that its 1998  financial  results
included a $44.1 million pre-tax charge.  The charge is due to the establishment
of a loss reserve with respect to Capital Re's reinsurance of approximately $150
million of three issues of  asset-backed  securities  originated  by  Commercial
Financial Services Inc. (CFS). CFS is under  investigation by the Securities and
Exchange Commission,  and the Oklahoma Securities  Commission for allegations of
irregularities relating to these securities. CFS filed for Chapter 11 bankruptcy
protection  on  December 11,  1998.  Capital Re believes the CFS loss reserve is
conservative  and  represents a best estimate of all currently  anticipated  and
probable future losses.  Minnesota  Power's first quarter 1999 financial results
will be reduced by a one-time  charge of  approximately  $1.7 million to reflect
the impact of the reserve established by Capital Re.

Excluding the CFS loss,  Capital Re's operating  results for 1998 are consistent
with the expectations of its management.  Total revenue comprised principally of
net premiums earned,  investment income and fee income,  increased 36 percent to
$236.5  million  ($173.4  million  in  1997).  Gross  and net  premiums  written
increased 25 percent and net premiums earned increased 46 percent.

        Capital Re Financial Information
        Year Ended December 31                       1998            1997
        ----------------------------------------------------------------------
        Millions

             Investment Portfolio                  $1,175.1        $1,008.0
             Other Assets                            $333.7          $337.8
             Liabilities                             $417.1          $327.8
             Deferred Revenue                        $405.9          $374.0
             Net Revenue                             $236.5          $173.4
             Net Income                               $41.5           $70.1
 
        ----------------------------------------------------------------------

Capital Re also announced that ACE Bermuda  Insurance,  Ltd. (ACE), a subsidiary
of ACE  Limited,  has  agreed to invest  $75  million  in  Capital  Re through a
purchase of common  stock.  The proceeds  will be used to augment the surplus of
Capital Re's operating subsidiaries.  Upon completion of the stock purchase, ACE
will have an ownership  interest of approximately 11 percent.  Minnesota Power's
ownership  interest  will  decline  from 21  percent to 18  percent.  Closing is
contingent on customary  conditions,  the affirmation of the financial  strength
ratings of Capital Re's major subsidiaries,  which are currently under review by
Standard and Poor's and Moody's  Investors  Service,  and  regulatory  approval.
Capital Re and ACE  Limited  have had a strategic  joint  venture in place since
1997. Minnesota Power continues to view Capital Re as a sound investment and may
increase its ownership interest through open market purchases.

                                      -1-




                                  SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                                    Minnesota Power, Inc.
                                              --------------------------------
                                                        (Registrant)





February 26, 1999                                      D. G. Gartzke
                                              --------------------------------
                                                       D. G. Gartzke
                                              Senior Vice President - Finance
                                                 and Chief Financial Officer





                                      -2-