GM replacing communications, human resources heads

DETROIT — General Motors is replacing its chiefs of communications and human resources.

The company says communications head Selim Bingol and human resources chief Melissa Howell are leaving GM to pursue other interests.

GM named John Quattrone to replace Howell. No replacement has been named for Bingol.

The company is struggling with a series of embarrassing recalls, including 2.6 million small cars worldwide due to a faulty ignition switches. GM says at least 13 deaths have been linked to the ignition switch problem. Family members of those killed say the death toll is much higher.

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Citigroup's earnings edge higher in first quarter

NEW YORK — Citigroup's its first-quarter earnings rose as the bank got a boost from declines in expenses and provisions for bad loans. The earnings improved even as revenue from mortgage refinancing and bond trading fell.

EARNINGS: Citigroup reported a profit of $4.1 billion in the first quarter, after stripping out the effects of an accounting change and a tax item. That was up 2.5 percent from the same period a year earlier, when it made $4 billion.

EXPECTATIONS EXCEEDED: On a per-share basis, the earnings amounted to $1.30 compared with $1.29 a year ago. That was better than estimates of analysts polled by FactSet, who were expecting $1.14 per share.

LOWER REVENUE: Revenue was $20.1 billion. That was down 2 percent from the same period last year when the bank generated revenue of $20.6 billion. Analysts had forecast revenue of $19.5 billion.

'BAD BANK' BETTER: Citi got a boost from improving results in its Citi Holdings unit, which is selling off assets such as mortgages that soured in the financial crisis. Losses at Citi Holdings narrowed to $284 million from $804 million in the same period a year earlier. The bank also benefited from a small drop in expenses. Citi's Chief Financial Officer John Gerspach said on a call with reporters that the bank wants to reduce the losses to "as close to zero as possible" by 2015.

SOUTH OF THE BORDER: Citi also revealed another fraud at its Mexican unit. The bank reduced its 2013 earnings by $235 million in February, saying it was a victim of fraud committed by a Mexican oil services company which secured hundreds of millions of dollars in short-term loans. The company, Oceanografia S.A. de C.V., or OSA, overstated by $400 million the business it was doing with Mexico's state-owned oil company Petróleos Mexicanos, or Pemex.

Citi's Gerspach said the bank's Mexican unit uncovered another fraud of under $30 billion in dealing with another supplier, which Citi did not name. Gerspach said that the supplier had already started to return the funds and that Citi expected to get all of its money back.

STOCK REACTION: Citi's stock rose $1.37, or 3 percent, to $47.07 in morning trading, paring the bank's loss for the year to 9 percent.

MORTAGE WEAKNESS: Citi's global consumer banking revenue fell 5 percent to $9.3 billion from a year ago, driven by "significantly lower" mortgage refinancing in the U.S. The increase in bond yields since last summer has caused mortgage rates to rise, which in turn has slowed refinancing of home loans.

BOND TRADING: Fixed-income revenue dropped 18 percent to $3.9 billion from a year earlier. Bond markets were quieter in the most recent quarter compared with the same period a year ago. JPMorgan also reported a big drop on in its bond trading business on Friday.

CAPITAL PLAN: Last month the Federal Reserve rejected Citi's request to increase its dividend and buy back more of its own stock. The decision, a setback for Citi, came as part of the Fed's annual "stress tests" of major U.S. banks. Gerspach said the Fed rejected the plan mainly because of the how the bank identified and quantified its risk in certain scenarios, rather than the absolute level of capital that Citi held.

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No ruling in Massachusetts painkiller ban

BOSTON — Massachusetts' ban of the powerful new painkiller Zohydro remains in effect for now.

U.S. District Court Judge Rya Zobel heard arguments Monday in a lawsuit claiming the state's first-in-the-nation ban is unconstitutional, but declined to rule on whether an immediate but temporary halt to the ban was needed.

The court is weighing whether the ban should be permanently vacated.

Gov. Deval Patrick ordered the ban as he declared prescription drug abuse a public health emergency in Massachusetts. It is believed to be the first attempt by a state to block a federally-approved drug.

The state argues that the drug will "exacerbate a severe public health crisis."

Drug maker Zogenix argues that the ban is unconstitutional because the U.S. Food and Drug Administration has already approved Zohydro's use.

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Canadian tax ID numbers stolen in breach

OTTAWA, Ontario — Canada's tax agency says the ID numbers of roughly 900 people were stolen from its systems, which were left vulnerable by a computer bug called "Heartbleed."

The Canada Revenue Agency blocked public access to its online services for several days last week until it addressed the security risk, but said Monday there was nonetheless a data breach over a six-hour period.

The agency said Monday everyone affected will receive a registered letter and free access to credit protection services.

The Heartbleed bug has caused major security concerns across the Internet. It is caused by a flaw in OpenSSL software, which is used on the Internet to provide security.

The bug is affecting many global IT systems in both private and public sector organizations and can expose private data.

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US stocks rise on retail sales increase

A government report showing March retail sales notched their biggest increase in 18 months helped give U.S. stocks a lift Monday. Better-than-expected results from Citigroup helped ease worries that first-quarter corporate earnings would be weak.

KEEPING SCORE: The Standard & Poor's 500 index rose 16 points, or 0.9 percent, to 1,832 at 11:07 a.m. Eastern Time. The Dow Jones industrial average gained 123 points, or 0.8 percent, to 16,150. The Nasdaq added 48 points, or 1.2 percent, to 4,047.

The S&P 500 dropped 2.7 percent last week, its worst weekly showing since January. The Nasdaq composite notched its third consecutive weekly decline.

CITI: Citigroup reported a 2.5 percent increase in first-quarter profit. Both income and revenue beat Wall Street's expectations. The lender got a boost from improving results in its Citi Holdings unit, which is selling off assets such as mortgages that soured in the financial crisis. Citi's shares surged $1.91, or 4.2 percent, to $47.58.

SALES UP: Retail sales rose 1.1 percent in March, the best showing since September 2012, the Commerce Department reported. The government also revised February's figure to a 0.7 percent gain, more than double its previous estimate. Sales dropped in January and December.

"Retail sales was a really big number and very impressive," said Doug Cote, chief market strategist at ING U.S. Investment Management. "It bodes well for the market."

SECTOR WATCH: All 10 sectors in the S&P 500 index rose, led by energy and technology.

HEART STOPPER: Medical device maker Edwards Lifesciences rose the most of any stock in the S&P 500 index. A federal judge on Friday reaffirmed an earlier ruling that Medtronic's CoreValve system infringes on Edwards' patent for a replacement heart valve. Edwards soared $9.80, or 13.5 percent, to $83.79. Medtronic fell $1.29, or 2 percent, to $57.90.

STOCK SPOTLIGHT: Among the biggest risers in morning trading were F5 Networks, up $5.65, or 5.5 percent, to $108.60, and Allegheny Technologies, which added $1.63, or 4.2 percent, to $40.75. Decliners included Intuitive Surgical, which shed $5.63, or 1.3 percent, to $434. Gap slipped 57 cents, or 1.5 percent, to $37.83.

BONDS AND COMMODITIES: In government bond trading, the yield on the 10-year Treasury note inched up to 2.65 percent from 2.63 percent late Friday. The price of crude oil rose 10 cents to $103.83 a barrel. Gold rose $10.90 to $1,329.90 an ounce.

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Ohio finds probable link between fracking, quakes

Ohio geologists have found a probable connection between fracking and several mild earthquakes in a region that had never experienced a temblor until recently, according to a state report.

The report, which coincided with Ohio's announcement of some of the nation's strictest limits on fracking near faults, marked the strongest link to date between nerve-rattling quakes and hydraulic fracturing — the process of firing water, sand and chemicals deep into the earth to extract oil and natural gas from ancient rock.

Last month, the state indefinitely shut down Hilcorp Energy Co.'s fracking operation near the Pennsylvania border after five earthquakes, including one magnitude 3 temblor that shook many Ohioans awake.

Federal scientists have previously linked earthquakes in part to the use of injection wells, where post-fracking wastewater is forced back deep into the earth for storage. None of the seven wells near the Ohio quakes were used for waste disposal, leaving Ohio scientists to go a step further to find a significant relationship between the initial blast of fluid and the earthquakes shortly thereafter.

They "believe the sand and water injected into the well during the hydraulic fracturing process may have increased pressure on an unknown microfault in the area," the Ohio Department of Natural Resources said in a statement about the operation in Poland, Ohio.

The new rules require companies to install "sensitive seismic monitors" before beginning to drill sideways into underground rock "within 3 miles of a known fault or area of seismic activity greater than a 2.0 magnitude."

Humans can generally feel earthquakes in excess of magnitude 3.

Drilling would be suspended pending investigation whenever the monitors detect anything above magnitude 1.

"While we can never be 100 percent sure that drilling activities are connected to a seismic event, caution dictates that we take these new steps to protect human health, safety and the environment," department Director James Zehringer said.

Data gathered by the monitors would be used to improve fault maps, he said.

Hilcorp Energy said that it was reviewing the new permitting rules and that it remained "fully committed to public safety and acting in a manner consistent with being a good corporate citizen."

Officials from Ohio and several other states that have seen an increase in seismic activity met recently to discuss how to handle the expansion of fracking to new beds of rock, where faults might not be well mapped.

Gerry Baker, associate executive director of the Interstate Oil and Gas Compact Commission, called Ohio's new rules a "sensible response to a serious issue that regulators across the country are closely examining."

Oklahoma, Texas, Arkansas and Kansas have been among those seeing the largest surges in seismic activity.

Critics of fracking have long warned of a possible connection between earthquakes and the expanded drilling for oil and gas in shale deposits. They have also raised concerns about possible groundwater contamination by fracking chemicals.

Ray Beiersdorfer, a Youngstown State University geology professor whose wife co-founded Frackfree America, said the new regulations mirrored what he had been seeking.

He has asked Ohio officials to make public the data they used to find the connection as well as set the new restrictions.

"The whole problem is no one knows about these faults until the earthquakes happen because the faults haven't been researched," he said.

Oil and gas companies have tended to avoid the well-known fault lines in Ohio, according to the industry publication Natural Gas Intelligence. But industry leaders maintained there is scant evidence that fracking causes earthquakes and labeled the temblors isolated incidents.

At Hilcorp's site directly above last month's earthquakes, the state has banned further fracking but has allowed wells already fracked to resume operating.

"This is also expected to have the beneficial effect of reducing underground pressure and decreasing the likelihood of another seismic event," the state said.

———

©2014 Los Angeles Times

Visit the Los Angeles Times at www.latimes.com

Distributed by MCT Information Services

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Endurance offers to buy Aspen Insurance for $3.2B

PEMBROKE, Bermuda — Endurance Specialty Holdings Ltd. said Monday that it is moving forward with a proposal to buy Aspen Insurance Holdings Ltd. for about $3.2 billion after being snubbed by the fellow insurance company.

Endurance told Aspen's board of directors that it's offering $47.50 for each share of the company, a nearly 21 percent increase from Aspen's closing price of $39.37 on Friday. For each Aspen share, shareholders can select cash, 0.8826 of an Endurance share or a combination.

"Despite our repeated attempts since late January to engage in confidential and friendly discussions, Aspen's board and management have rebuffed our proposal and refused to engage with us," said Endurance CEO John Charman in a statement.

Representatives from Aspen did not immediately respond to a request for comment.

Charman said the deal could increase profits, save costs by more than $100 million a year and increase earnings per share for Endurance.

The combined company would have over $5 billion in annual gross premiums written, Endurance said.

In midday trading, Aspen shares rose $4.43, or 11 percent, to $43.80. Endurance shares fell 92 cents to $52.90.

Both insurance companies are based in Bermuda.

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A gallon of gas in Massachusetts up a penny

BOSTON — The price of a gallon of gasoline in Massachusetts has inched up by a penny for the second consecutive week.

AAA Southern New England reports Monday that a gallon of self-serve, regular is up to an average of $3.53 per gallon.

That's 11 cents lower than the national average and 6 cents lower than the in-state price at the same time last year, but 2 cents higher than a month ago.

AAA found self-serve, regular selling for as low as $3.39 per gallon and as high as $3.75.

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Boston mayor seeks tax breaks for Fenway project

BOSTON — Mayor Martin J. Walsh proposed $4.6 million in tax breaks to spark construction of a $550 million retail and residential development that would straddle the Massachusetts Turnpike near Fenway Park.

A Boston Redevelopment Authority board vote on the financing is scheduled for Thursday.

The project known as Fenway Center has languished for years due to legal and permitting challenges, and the developer has struggled to generate enough funding to move forward.

"This is a positive partnership that's going to help to spur growth," Walsh told The Boston Globe (http://b.globe.com/1hAEaNs ). "The city is open for business, and we're going to work with developers on good solid projects that can be supported by the community."

Fenway Center would have residential and commercial space in five buildings between Brookline Avenue and Beacon Street. It would include 420 apartments, space for stores, restaurants and offices, and nearly 1,000 parking spaces. Plans also call for a farmers market and a bike-sharing station.

The project is particularly costly and complex because it requires construction of a $35 million deck over the Mass Pike to support its main parking garage and a 27-story tower with offices, apartments and stores.

"We are going to cover up the highway and build a new neighborhood out of thin air," said John Rosenthal, president of developer Meredith Management Corp.

The tax relief would be structured to help fund construction of the project's retail spaces, not its apartments, Rosenthal and city officials said. The deal would reduce the project's taxes over a six-year period during its construction and early years of operation. After its completion, Fenway Center is expected to generate about $5 million a year in taxes.

Currently, the property generates about $152,000 a year.

The tax deal needs approval from the City Council and state economic officials, in addition to the redevelopment authority board.

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World stocks recover after strong US data

LONDON — Global stock markets recovered Monday as strong economic and corporate news from the U.S. offset concerns about the crisis in Ukraine.

A 1.1 percent rise in U.S. retail sales in March — the biggest in 18 months — boosted sentiment, as did better-than-expected earnings from Citigroup bank.

Investors had earlier been cautious, selling off stocks in Europe, on concern of a flare-up in Ukraine's crisis. Ukrainian and Western officials have accused Moscow of instigating a pro-Russian insurgency in eastern Ukraine. That raised the prospect of more sanctions against Russia, possibly affecting the valuable energy trade.

In Europe, Germany's DAX closed 0.3 percent higher at 9,339.17 and France's CAC-40 gained 0.4 percent to 4,384.56. Separate data earlier showed industrial production rose 0.2 percent in the eurozone in February. Though the rise was up from no growth in January, it is still relatively weak.

Britain's FTSE 100 rose 0.3 percent to 6,583.76. Russia's MICEX index failed to recover, dropping 1.3 percent.

On Wall Street, the Dow Jones industrial average rose 0.8 percent to 16,156.54 while the broader S&P 500 rose 0.9 percent to 1,832.

Investors have been cautious for the past week in the U.S. due to suggestions that technology stocks were overvalued. The tech-heavy Nasdaq index was up 1.1 percent on Monday.

Earlier, in Asia, Tokyo's Nikkei 225 shed 0.4 percent to close at 13,910.16 and Sydney's S&P/ASX 200 tumbled 1.3 percent to 5,358.9. China's benchmark Shanghai Composite Index was little changed at 2,131.54 while Seoul's Kospi held steady at 1,997.02.

Hong Kong's Hang Seng index was the region's only major gainer, rising 0.2 percent to 23,048.40.

In other markets, benchmark U.S. crude for May delivery was up 10 cents to $103.84. The dollar rose to 101.83 yen from 101.63 yen late Friday. The euro fell to $1.3823 from $1.3852.

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