NEW YORK (Bloomberg) — Bermuda-based XL Capital Ltd., the biggest gainer in the Standard & Poor's 500 Index last year, said first-quarter profit surged on improved investment results.

Net income rose to $143.9 million from $3.1 million in the same period a year earlier, the Bermuda-based insurer said yesterday.

In a conference call later, the company revealed it has estimated property damage exposure of around $30 million to the Deepwater Horizon oil rig disaster in the Gulf of Mexico.

Operating income, which excludes some investment losses, was 44 cents per ordinary share, compared with the 23-cent average estimate of 15 analysts surveyed by Bloomberg.

Net realised losses on investments fell to $36.2 million from $251.9 million. XL has shifted its investment portfolio to lower-yielding holdings to reduce risk after it was hobbled by assets tied to sub-prime mortgages in 2008.

The insurer, led by chief executive officer Michael McGavick, is seeking to win back customers who left last year when the financial crisis caused the company to write down the value of its securities.

"A year ago a lot of clients ran for the hills because of the problems embedded in the balance sheets," Michael Paisan, an analyst at Stifel Nicolaus & Co., said before earnings were released. "Over the past year they've done a very good job of strengthening the balance sheet."

XL has declined 6.3 percent to $17.17 this year in New York Stock Exchange composite trading. In 2009, it increased almost fivefold to finish the year at $18.33.

"We obviously have the capital strength and revised investment portfolio to take doubts about capital levels and strength of balance sheet off the table," McGavick said at a March conference. "With our workforce having obviously stayed together, we're back to terms, conditions, and price, just like the old days."

XL faces claims from an earthquake in Chile and European Windstorm Xynthia. The 8.8-magnitude quake that struck Chile in February was the world's fifth-strongest in a century, toppling bridges, downing power lines, smashing factories and closing ports. Xynthia caused wind damages to property in France, Germany, Belgium and Spain in February.

Mr. McGavick replaced Brian O'Hara as CEO in May 2008. He cut jobs, reduced the dividend and raised more than $2.8 billion in stock to rescue a bond guarantor XL had co-founded. The bond insurer, Syncora Holdings Ltd., had sold coverage on collateralised debt obligations, and faced claims as the sub-prime mortgage market collapsed.