Allianz, Europe's biggest insurer by gross premiums and the owner of Dresdner Bank AG, said it earned 665 million euros ($974.62 million) in the October-December period, down by more than half from nearly 1.4 billion euros a year earlier. The company blamed the slip on a bad quarter for Dresdner.

Revenue rose 4 percent gain to 25.9 billion euros ($37.9 billion) in the fourth quarter compared with 24.8 billion euros in the same quarter a year earlier.

Allianz shares rose 3 percent to 121.03 euros ($177.38) in Frankfort.

Allianz's U.S. units include Bill Gross' Pimco, one of the world's largest bond managers; Fireman's Fund; Oppenheimer Capital; and fund managers Nicholas-Applegate and RCM Capital.

For the year, the company confirmed its preliminary figures released last month, earning 8 billion euros ($11.7 billion), up 13 percent from 7 billion euros it earned in 2006. Revenue also rose to 102.6 billion euros ($150.4 billion) in 2007 compared with 101.1 billion euros in 2006.

"Despite challenging conditions in 2007, we were able to further improve our operating efficiency and profitable growth, and to achieve a record result for the year," said chief executive Michael Diekmann.

He said the results, despite the fourth-quarter narrowing, came because of "the well-diversified business activities of the group" which meant "we were less vulnerable to shocks and cycles in individual markets and segments."

Though the company's core insurance operations, including health and life insurance, as well as property and casualty insurance, were improved, the overall results were pulled lower by Dresdner, Germany's third-biggest bank, and its investment banking arm, Dresdner Kleinwort.

For the year, the bank's operating profit came in at 730 million euros ($1 billion), or about half the 1.4 billion euros it earned in 2006.

The report by Legislative Analyst Elizabeth Hill shifted the state's fledgling budget debate to whether new taxes should be part of the solution — an approach the Republican governor has opposed.

It also sparked the kind of partisan sniping that Democrats and Republicans had so far avoided in hopes of preventing a repeat of the protracted budget debate that paralyzed the capital last summer.

Schwarzenegger last month pegged the shortfall at $14.5 billion through June 2009, but Hill said it has grown to $16 billion. She said Schwarzenegger's proposal for the 2008-09 budget year was flawed because it fails to set funding priorities or correct the state's chronic imbalance between spending and revenue.

"A decline in revenue means we have a larger shortfall than the governor projected," she said. "Our recommendations will affect all Californians in some way. However, we think that will benefit all Californians in the long run."

Overturning a lower court decision that AIG could withhold the documents as privileged, a unanimous five-judge panel of the Appellate Division of New York State Supreme Court ruled that the two former AIG executives are entitled to the legal memoranda, which include some related to AIG’s allegedly fraudulent 2000 loss portfolio reinsurance deal with General Re Corp.

Yesterday’s appeals ruling stems from then-New York Attorney General Eliot Spitzer’s 2005 lawsuit charging Messrs. Greenberg and Smith with fraud related to the Gen Re deal and other allegedly sham transactions designed to manipulate AIG’s financial statements. AIG itself was originally a defendant, but settled with regulators in 2006, paying $1.6 billion.

Messrs. Greenberg and Smith have argued in part that they relied on the advice of legal counsel in the transactions cited in the attorney general’s lawsuit, and have sought copies of all legal memoranda related to the transactions prepared at the time they were AIG officers.

AIG refused to turn over the documents, and a New York judge ruled that they were protected by AIG’s attorney-client privilege.

The Appellate Division panel reversed that ruling, though, finding that the two former executives have a qualified right to inspect the memoranda.

The complaint seeks a permanent injunction and civil penalties against Mr. Bennett, as well as the surrender of ill-gotten gains. A lawyer for Mr. Bennett did not immediately return a phone call seeking comment on Tuesday.

Late Friday, Mr. Bennett, 59, pleaded guilty to a 20-count criminal indictment, including charges of conspiracy, securities fraud, bank fraud and making false filings with the S.E.C. Mr. Bennett, a British citizen, faces life in prison on the criminal charges under federal sentencing guidelines.

In his guilty plea last week, he admitted to concealing the fraud from the company’s auditors and investors and from the buyout firm Thomas H. Lee Partners, which bought a stake in Refco in 2004 and has been sued on accusations that it did not follow up on red flags at the company.

Mr. Bennett has been free on $50 million bail since shortly after his arrest in 2005 and is restricted to his home in New Jersey, where he is subject to electronic monitoring.

Refco sought bankruptcy protection in 2005, soon after the company announced it had discovered $430 million in debt owed to a private entity controlled by Mr. Bennett.

Mr. Bennett was expected to go to trial on the criminal charges next month, along with two other former Refco executives, Robert C. Trosten and Tone N. Grant. Prosecutors said last week that they intended to proceed with the trial against Mr. Trosten, who was chief financial officer, and Mr. Grant, the former president. Both have denied wrongdoing.

Joseph P. Collins, a longtime lawyer for Refco, also is separately facing criminal charges in the matter.

Santo C. Maggio, Refco’s former executive vice president, pleaded guilty to criminal charges in December and agreed to forfeit $23 million. Mr. Maggio, who has long been cooperating with prosecutors, is expected to testify at any criminal trials in the matter.

Delta Air Lines and Northwest Airlines are close to a deal that would create the world's largest carrier and could jump-start what is expected to be the biggest airline consolidation wave in decades.

The long-awaited pact between Delta, the nation's third-largest airline, and No. 5 Northwest could come as early as today, following an agreement by the airlines' pilots unions for a common contract.

The marriage - pending regulatory approval - would create a new and expanded Delta with a fleet of 1,115 planes and 85,000 employees. It would fly more than 130 million passengers annually to more than 1,100 cities. The combination would bring together two airlines that each emerged from bankruptcy only a year ago.

While the deal could mean higher fares for some passengers in some markets, widespread or prolonged increases are less likely, because the two airlines have fewer routes that overlap, analysts said. Also, the combined airline could face increased competition from low-cost carriers looking to move into markets left behind by the combined carrier.

"The impact on fares will be neutral," said Terry Trippler, an aviation consultant who runs TripplerTravel.com, a travel advice Web site. "I can't find too many places where these two airlines combining would create a monopoly."

A deal could still be delayed or even scuttled, particularly if pilots don't come to an agreement on meshing their seniority lists and other issues. Delta and Northwest don't want to repeat the expensive labor issues that have stymied the merger of US Airways and America West.

If a deal is struck, the new airline would retain the Delta name and base its headquarters in Atlanta, where Delta has its largest airport hub. In hope of winning political support in Minneapolis, Northwest's hometown, the combined airline is likely to keep major operations there, including maintaining Minneapolis-St. Paul International Airport as a second hub.

The deal is expected to encounter significant scrutiny from regulators.

Analysts believe the next combination could involve United Airlines, the nation's fourth-largest airline, and No. 6 Continental Airlines.

"The orchestra is playing and the dance is beginning, so you better pick a partner or you'll lose out," Trippler said.

The prospective Delta-Northwest deal marks the latest attempt at a merger in an industry that has seen a number of failed deals in recent years, including last year's hostile bid for Delta by US Airways and an attempt by United and Continental to tie the knot in 2001.

One investor group estimated that the Delta-Northwest merger could result in cost savings of $1.5 billion a year. The airlines together posted more than $31 billion in revenue last year.

Luxembourg parliament adopted a law late on Tuesday to legalize euthanasia and assisted suicide, adding the Grand Duchy to a small group of countries that allow the terminally ill to end their lives.

The law, expected to come into force towards the summer, was passed by 30 votes to 26. Luxembourg's media said it was a symbolic defeat for Prime Minister Jean-Claude Juncker whose Christian Social Party opposed it.

"The Christian Social Party and the Catholic church were against the euthanasia law, calling it murder but we said no, it's just another way to go," said Jean Huss, a member of parliament of the Green Party and co-sponsor of the bill.

Huss said he expected that the legislative process needed for the law to come into force would take a few more months and would most likely be implemented towards the summer.

The Netherlands became the first country to permit assisted deaths for the terminally ill in April 2002.

Opponents there had drawn parallels with Nazi Germany, where authorities killed thousands of disabled children and mentally ill adults.

Huss said fears that old people would be pressured to commit suicide were groundless, given the checks and balances built into the law.

Euthanasia would be allowed for the terminally ill and those with incurable diseases or conditions, only when they asked to die repeatedly and with the consent of two doctors and a panel of experts.

Wilyum Henderson, 50, entered the plea Tuesday in federal court in Beaumont.

The U.S. Attorney's Office said Henderson filed a fake claim with the Federal Emergency Management Agency for disaster housing and individual assistance for losses from the hurricane that hit the Gulf Coast in 2005. He received $2,000 in assistance.

Henderson could be sentenced to up to five years in prison and fined up to $250,000. A sentencing date hasn't been set.