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AIG shares gain on rising profit

Shares of American International Group Inc., the insurer sued by New York Attorney General Eliot Spitzer for improper accounting, had their biggest gain in eight months after profit jumped and some clients' concerns over probes eased.

AIG, which yesterday reported its first results since restating five years of earnings in May, said gains in Asian life insurance helped boost first-quarter net income 44 percent to $3.68 billion, or $1.40 a share. Clients who abandoned AIG's securities trading unit amid credit-rating cuts this year are starting to return, executives said on a conference call yesterday.

AIG, the world's largest insurer, said the probe of sham accounting and the loss of the company's AAA credit rating in March disrupted some U.S. business in the first and second quarters. Concerns have eased since AIG restated $3.9 billion of profit to correct abuses, prompting Standard & Poor's and Moody's Investors Service to end reviews for additional downgrades, Chief Executive Officer Martin Sullivan said yesterday.

Prosecutor declines charging Shell

NEW YORK » A federal prosecutor in Manhattan has decided not to prosecute Royal Dutch/Shell Group of Cos. for overstating oil and gas reserves, officially ending a Justice Department probe of the oil company.

In a statement yesterday, U.S. Attorney David Kelly announced that he had concluded "a criminal prosecution of Shell would not serve the public interest at this time."

Kelly credited the world's third-largest publicly traded oil company with cooperating with an investigation launched last year after it disclosed it had overstated its proven oil and natural gas reserves by 4.47 billion barrels, or about 23 percent, from 1997 through 2002.

The prosecutor also cited Royal Dutch/Shell's payment of a $120 million fine imposed by the Securities and Exchange Commission for accounting fraud. Under the SEC settlement, the company also agreed to spend $5 million on an internal compliance program.

Crude oil prices drop $1 a barrel

WASHINGTON » Oil prices fell by almost $1 a barrel yesterday after the U.S. government released data showing an increase in domestic supplies of oil, gasoline and heating oil.

Crude futures have declined by more than $3 a barrel in the past two days, retreating sharply from the $60 a barrel level Tuesday in trading that brokers attributed to profit-taking.

Yesterday, light sweet crude for August delivery declined by 94 cents to settle at $57.26 a barrel on the New York Mercantile Exchange.

Gasoline futures fell by 4.03 cents to $1.5845 per gallon, while heating oil futures declined by 1.88 cent to $1.6016 per gallon.

In London, Brent crude futures for August delivery slipped $1 to settle at $56.20 a barrel on the International Petroleum Exchange.