Hamilton, Bermuda-based XL Capital reported first-quarter net income of $244.4 million, down 57 percent from the same period a year ago when the company reported a net income of $562.5 million.

Brian M. O'Hara, XL president, chief executive officer and acting chairman, said results were impacted by the "extremely difficult" global credit market conditions.

Net realized losses on investments were $102.3 million compared to a gain of $9.3 million in the first quarter of 2007, XL Capital said.

In a conference call, Sarah Street, XL Capital executive vice president and CEO, said, "We have clearly felt the pain of the most turbulent credit market in history. However, we believe financial stability will ultimately return, and when it does, we are well positioned."

For the company's p-c insurance operations, gross premiums written were reported at $2.7 billion compared to just under $3 billion for the first quarter of 2007. The combined ratio was reported at 93.6 compared to 90.2 in 2007.

For the insurance segment, the combined ratio was 96.7 compared to 89.2 in the prior year quarter. In the conference call, Henry Keeling, XL Capital executive vice president and chief operating officer, said that four points of that difference are due to an increase in natural peril property losses, and the remainder is due to premium rate decreases and an anticipated increase in loss activity in professional lines.

"Our dual platforms of insurance and reinsurance continue to demonstrate solid performance," Mr. O'Hara said.

A Bank of America equity research report classified XL Capital's stock as a "high risk/high reward opportunity."

The report noted that it believes the sell-off in the stock price because of concerns over subprime and the company's relationship with bond insurer Security Capital Assurance "appears overdone." The report stated, "We believe XL Capital's exposure is manageable, and that investor focus will eventually return to the fundamentals of the p-c insurance business and the returns that the company is generating."

The report noted that XL Capital's p-c operating results were good, but below expectations for the quarter.