NEW YORK (Bloomberg) - XL Capital Ltd., the Bermuda-based business insurer, fell the most in almost four weeks of New York trading after first-quarter profit plunged 57 percent, missing analysts' estimates.

Net income fell to $244.4 million, or $1.20 a share, from $562.5 million, or $3.06, a year earlier, the company said late on Tuesday. Excluding realised investment losses, XL earned $1.57 cents a share, trailing the $2.24 average estimate of 19 analysts surveyed by Bloomberg.

"Investors should be focused on another quarter of weak results from the insurance" operations, David Small, analyst at Bear Stearns Cos. in New York, said yesterday in a research note. "Results were uninspiring". He rates XL "peer perform".

Michael McGavick, who becomes chief executive officer May 1, will focus on selling more property and casualty coverage outside the US, where prices have been falling. He will try to reassure investors that risks from sub-prime mortgages are in the past after a $1.2 billion loss in the fourth quarter when XL wrote down the value of investments including a stake in bond guarantor Security Capital Assurance Ltd.

First-quarter realised investment losses totaled $98.4 million, compared with a gain of $13 million a year earlier.

"It was a brutal period in the capital markets," Sarah Street, chief investment officer of XL, said today in a conference call. In the first quarter there was "a sell-off of risk assets without regard for economic value."

Profit from insurance underwriting dropped 65 percent to $40.7 million. Underwriting profit from reinsurance, or coverage for other insurers, rose 55 percent to $67.4 million.

XL fell $1.65, or 5.5 percent, to $28.39 in New York Stock Exchange composite trading at 12:53 p.m., the biggest drop since March 26. The firm has dropped about 61 percent in the past year.

• NEW YORK (Bloomberg) - Everest Re Group Ltd., the Bermuda-based reinsurer, dropped the most in a month in New York trading on Tuesday after quarterly profit missed analysts' estimates on lower sales.

Operating income, which excludes realised investment losses, fell 29 percent to $190.6 million, or $3.03 a share in the first quarter, the company said in a statement late yesterday. The average estimate of 12 analysts compiled by Bloomberg was $3.50 a share.

The results "do not give us confidence about the operating prowess of Everest Re", Joshua Shanker, an analyst at Citigroup Inc., wrote yesterday in a note to clients. Mr. Shanker raised his rating to "buy" after the decline, saying "valuation below book value represents a buying opportunity".

Everest said its US reinsurance business had the biggest decline as increased competition pressured the prices charged to insurers for coverage. Reinsurance supply is exceeding demand, and rates are expected to fall another 10 percent to 15 percent for national accounts in the US during the midyear renewal season, according to a report last week by Aon Corp., the world's second-largest insurance broker.

Everest fell $2.39, or 2.5 percent, to $92.10 at 4.15pm in New York Stock Exchange composite trading on Tuesday, the biggest drop since March 17. Earlier, the shares traded down as much as 5.5 percent.

Net income tumbled 74 percent to $77.9 million. Premium revenue fell 9.2 percent to $912 million and the company realized investment losses of $136.4 million, compared with a gain of $40.9 million a year earlier.