Business Desk
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
NEW YORK
BERMUDA INSURANCE FIRM HEEDS WARNING FROM SPITZER
Ace Ltd., the Bermuda-based insurer cited in New York Attorney General Eliot Spitzer’s investigation of alleged payoffs and bid rigging, said yesterday it will no longer pay insurance brokers fees for steering business its way.
Ace was mentioned, though not charged, in a civil lawsuit Mr. Spitzer filed last Thursday against Marsh & McLennan Cos., the world’s largest insurance brokerage. An Ace executive pleaded guilty to a criminal charge in connection with the case.
Mr. Spitzer’s suit accuses Marsh of taking advantage of clients by accepting payments from insurers in exchange for giving them business. The suit alleged Marsh was so intent on getting the fees that the brokerage and four insurers including Ace fabricated insurance quotes in order to give the appearance of competition for a client’s business.
“The New York Attorney General’s lawsuit raised the question of the continuing appropriateness of placement service agreements,” Ace Chief Executive Officer Evan Greenberg said in an employee letter posted on the company’s Web site. “Therefore, effective immediately, we will discontinue all PSAs throughout our organization.”
– Bloomberg News
NATIONAL
CHICAGO FUTURES MARKET CHIEF SAYS OIL COULD REACH $75
Crude oil prices, which rose to a record $55 a barrel in New York on Friday, may increase further and peak at $75 a barrel, said Bernard Dan, president of the Chicago Board of Trade, the second-biggest American futures market.
“Given that some production is going on around the world, I can’t see it much higher than $75 unless there are disruptions in supply lines,” Mr. Dan said on Publishing & Broadcasting Ltd.’s Nine Network’s Business Sunday program in Sydney. “I think that the U.S. economy is strong enough to absorb that.”
Crude oil for November delivery on Friday closed at $54.93 a barrel on the New York Mercantile Exchange after reaching $55 during the day, the highest since futures began in 1983. Oil in New York has surged 26% in the past month.
– Bloomberg News
FOREIGN
RECORD PRICES ENABLE SAUDI OIL PRODUCERS TO EXPAND
Record oil prices are likely to reduce the chances that companies such as Exxon Mobil Corp. or BP PLC will be asked to develop new crude output capacity in Saudi Arabia as the kingdom doesn’t need their capital, Aramco oil company officials and analysts said.
The approximately $16 billion the kingdom will need to invest to add more than 3 million barrels a day of capacity, or 30 percent, can be financed by state-owned Saudi Aramco, said Amin Nasser, the company’s chief petroleum engineer.
“It costs us between $2,500 and $5,000 a barrel to develop an existing oil field, and these costs are unlikely to change for the next 10 years,” Nasser said in an interview in Abu Dhabi. “Whatever capital is required, if the oil market calls for it, we will put it,” he said.
– Bloomberg News