XL Insurance CEO David Duclos says the past two months have seen "really encouraging" signs for an organisation whose employees have emerged "battle ready" from a fight for survival.

The head of XL Capital's global insurance operations said he believed many companies would not have survived the multiple challenges that shook the foundations of the Bermuda-based commercial insurance giant last year.

Having announced plans to shed 10 percent of its global workforce this year to trim expenses and continuing the process of "de-risking" the investment portfolio that suffered hefty losses last year, XL is well positioned to compete for business, according to Mr. Duclos.

Speaking at the XL Insurance booth at the RIMS Conference in Orlando, Mr. Duclos said January 1 European renewals had been very strong, although market conditions had been generally slow between early December and February.

"I think we've weathered the storm," Mr. Duclos said.

"There was a brief period of time when we lost business at a rate we were not happy with.

"But the most recent trends of the last 30 to 60 days, since we came out with our full-year results in February, have been really encouraging." He did not give more detail, as now is a pre-earnings 'quiet period', with XL due to post first-quarter results next week.

Last year, the company made a $2.6 billion loss. The major expense was the $1.9 billion in cash and shares that XL paid to bond insurer Security Capital Assurance (now Syncora Holdings) last August to extricate itself from financial guaranty reinsurance exposures.

The company successfully then raised around $3 billion on the capital markets but its stock price plummeted late in the year as rumours swirled about the size of its credit-exposed investments.

XL Capital CEO Mike McGavick, who succeeded Brian O'Hara last May, has led continuing efforts to "de-risk" the investment portfolio, by selling off investments such as commercial mortgage-backed securities.

"Despite the noise factor and the issues we've been dealing with, XL Insurance's business retention rate was only slightly below historical levels, 83 percent last year compared to 87 percent the prior year," Mr. Duclos said.

"We also managed to write $900 million of new business and we achieved a 17 percent ROE (return on equity).

"The reason we were able to accomplish this was that we managed to retain our people - our staff retention rate last year was better than in 2007 or 2006 - and because of strong relationships with our broker partners and clients."

The morale of staff had been affected by the impact of last year's events, Mr. Duclos conceded, but employees had shown their mettle in overcoming adversity.

"We made the SCA settlement in July and raised the capital and we were doing well," Mr. Duclos said. "Then the share price dropped in early October because of the rumours over the investment portfolio.

"There was a morale impact. There was some head-hanging at first, but the mood changed to more of a fighting position. We have, in a way, become battle ready.

"Our people feel proud to be part of an organisation that has survived what we have been through over the past 18 months, something that I'm not sure many others would have survived."

Mr. McGavick has stated that XL will emerge this year as a more streamlined operation, focused on its core property-casualty underwriting operations and writing a smaller book of business.

Mr. Duclos said all insurers were facing pressure on revenues from macro-economic factors, as well as price competitiveness.

"We are seeing some accounts now, where rates have not gone down, but the premium charged has fallen by as much as 25 percent because the client's sales or manufacturing output has gone down," Mr. Duclos said.

"That's something all insurers are having to deal with.

Having made the painful decision in February to reduce our staff, we feel pretty well positioned in this competitive marketplace.

"We feel good about the de-risking of our investment portfolio. Clearly it's not something we've been able to fix overnight. We have tried to be very transparent in the amount of detailed financial information we provide, so analysts can peg out the ongoing mark-to-market situation pretty accurately.

"It's not easy, but what has been encouraging is that since the close of the first quarter, we are seeing some of the benefits of the stimulus package in bringing credit spreads down."

The goal was to create an investment portfolio that was reflective of the risk appetite of clients, he added.

XL will report its first-quarter earnings after the markets close next Monday.