Investment losses have weighed on Bermuda-based insurer XL Capital in the three months to December 31, but a net loss of $US40.3 million ($45.4 million) is a vast improvement on a $US1.43 billion ($1.6 billion) deficit in the previous fourth quarter.

Net profit for the year was $US206.6 million ($232.7 million), compared with the previous year’s $US2.6 billion ($2.93 billion) loss.

The soft market helped push annual revenues down 13.5% to $US6.19 billion ($6.96 billion).

XL notes it has cut costs and repositioned its investment portfolio to reduce inherent volatility.

The combined ratio on property and casualty operations improved to 93.6% for the full year from 94.9% in 2008.