Forty-seven employees face losing their jobs at XL Capital Ltd.'s Bermuda headquarters, as the company aims to trim its operating costs in difficult insurance market conditions.

XL's chief executive officer Michael McGavick told The Royal Gazette that an ongoing consultation process with employees was aimed at eliminating 47 posts — almost 15 percent of the 320-strong workforce at XL House in Hamilton.

Just under three-quarters of XL's Bermuda-based employees are Bermudian, Mr. McGavick said, and that ratio would likely be reflected among those losing their jobs.

Globally, the business insurer is aiming to eliminate about 165 jobs among its roughly 4,000 staff, based in 27 countries. Additionally, the company has decided not to fill 120 vacant positions.

Falling rates for the insurance and reinsurance coverage that XL sells and a strategic streamlining of the corporate infrastructure were the main drivers behind the job losses, Mr. McGavick said.

The CEO, who succeeded Brian O'Hara in May, addressed a mass meeting of employees on Wednesday and said there was an overwhelming sense of sadness at the company.

"It doesn't matter how many it is — one is painful," Mr. McGavick said. "You have to take it as affecting individuals and their families. These are incredibly hard and emotional decisions for everyone involved.

"XL is a relatively small company — none of our operations is particularly massive. And so everybody knows everybody and this is just extremely painful for everybody."

Mr. McGavick said he could not specify what jobs would go until the consultation process was complete, but he said employees in certain categories had been told their jobs may be made redundant.

Those let go by XL will receive, on top of their standard redundancy payments, half a year's bonus at the target payout, and medical benefits continued for three months following their departure. Mr. McGavick said the company had decided to be "more generous than either law or regular practice would require", as the circumstances were extraordinary.

On Monday, XL announced it would pay out $1.78 billion in cash, plus eight million shares, to its affiliate Security Capital Assurance Ltd. (SCA) in an agreement that rids XL of reinsurance exposure to huge potential future losses.

Mr. McGavick stressed that the job eliminations were not connected to the SCA agreement. The company has begun efforts to raise $2.5 billion of equity capital to pay for the deal.

The CEO added that XL had worked closely with the Ministry of Labour, Home Affairs and Housing to ensure the company followed good practice.

Labour Minister David Burch said on Wednesday: "XL spoke to us before the announcement on Monday addressing staff redundancy. We are very pleased with [XL] and will be working with XL and Labour to place any employees needing employment."

XL plans to reduce the amount it spends on sponsorships and events. No plans have yet been made for office space that may become vacant in XL House.

But Mr. McGavick stressed that the company's charitable arm, the XL Foundation, would not change its philosophy, nor the amounts of money it donated.

In an interview with The Royal Gazette, Mr. McGavick said declining insurance rates made it tough for insurers to make good returns. "That means there's a lot of pressure on expenses at a time like this," he added. "Many insurance companies around the world have made announcements, with attention to expenses leading to job losses."

He added that XL had made clear its intention to streamline its corporate infrastructure as it refocused on its core property and casualty insurance operations.

"When you decide to make a strategic decision to be a simpler organisation with fewer businesses, you simply don't need the same level of infrastructure," he said.

"There are places that will be affected more than others, depending where you do that kind of work. If you're doing corporate headquarters kind of work, then that infrastructure support for that larger organisation that's now going to be smaller, then places like Stamford, Connecticut and London and Bermuda will be more affected, because that's where this kind of work is done.

"We're in the beginning of a consultation process. As quickly as we can reach people, we are making people aware that their job may become redundant. When you do that, you have to talk to all of the people in that same category of work, so that they know these changes are going on. And then there's a conversation with those folks to hear their view of it."

XL staff first learned of potential job cuts in a letter from Mr. McGavick, circulated after the markets closed on Monday. At the same time, the company publicly announced its second-quarter results, the agreement with SCA and the cost-cutting drive that would include the elimination of some jobs.

Asked about the mood among staff, Mr. McGavick said: "I think the overwhelming sense is a sense of sadness that this is happening. We would all wish that it were otherwise.

"We can all be as empathetic as possible, but it's what happens to the individual that matters. While it's a sad day for all of us, for a few of us it's very unsettling and you can never pretend to share that emotion. You have to be as aware and accessible and as effective as you can in conveying how you feel.

"That's why the town hall (meeting) was important, because it's my job to stand up and be accountable for these decisions."