Almost 40 staff face losing their jobs at the Bermuda headquarters of insurer XL Capital this year, as the company looks to cut costs after losing $2.6 billion in 2008.

XL chief executive officer Michael McGavick told The Royal Gazette that a consultation process with employees was aimed at eliminating “just below 40” posts — around 15 percent of the 260-strong workforce at the company’s Bermudiana Road headquarters.

The company announced last night that it intended to cut ten percent of its workforce worldwide and Mr. McGavick was due to tell staff at a town-hall meeting at XL House this morning what that would mean for them.

Around three-quarters of the company’s employees at XL House are Bermudian and that ratio would be reflected in the job cuts, Mr. McGavick expected.

“The job cuts will be focused on the corporate functional and support areas,” Mr. McGavick said. “This has a bit more effect in Bermuda than elsewhere because it’s a centre of corporate and functional areas, so we expect to have consultations with just below 40 people.”

Mr. McGavick stressed that did not necessarily mean there would be 40 redundancies, as the process will entail letting particular members of staff know their jobs may become redundant, then consulting with others in the same area of the business before the action takes place.

“To put that in perspective, last summer we said we would be consulting with 47 of our Bermuda staff,” Mr McGavick said. “Of those, 34 were eventually made redundant. And of those, we were able to place eight in other jobs at XL.”

As for those who did lose their jobs, the CEO said XL would go “beyond what the law requires” to give them a fair departure package.

“No-one who is made redundant will leave with less than 12 weeks’ assistance,” Mr. McGavick said. “The law has a maximum payment of 26 weeks’ assistance, but we have capped it at 52 weeks.

“We want to do right by our colleagues and believe it’s very important to do so. We want to be a world-class employer.”

XL employs approximately 4,000 staff in its 77 offices in 27 countries. It expects this year’s cost-cutting measures, which the company said would go beyond job cuts, to cut its expense base by more than $100 million per year from 2010.

The company last night announced a net loss of $1.43 billion for the fourth quarter and $2.6 billion for the year.

XL shares rocketed this morning and were up 38 percent to $4.00 by 11.29 a.m. Bermuda time.

* Full story and reaction in tomorrow’s Royal Gazette