UPDATE 2-XL Capital Q4 profit falls short of Wall Street view

* Q4 oper EPS $0.69 vs est $0.70

* Lower investment income hurts

* Sees '10 net investment income of $800 mln-$950 mln

* Shares fall 3 pct in extended trade



(Adds details from conference call)

Feb 9 (Reuters) - Bermuda-based insurer and reinsurer XL Capital's operating profit fell short of Wall Street expectations, hurt by lower investment income.

Operating income, a measure commonly used by analysts as it excludes any investment gains or losses, rose to $235.8 million, or 69 cents share, compared with $189.5 million, or 57 cents a share, a year earlier.

Analysts on average expected the company to post earnings of 70 cents a share, according to Thomson Reuters I/B/E/S.

Fourth-quarter net loss attributable to common shareholders was $40.3 million, or 12 cents a share, compared with a net loss of $1.43 billion, or $4.33 a share, in the year-ago period.

The company's strong operating income for the quarter was offset by total after-tax net realized losses on investments in the fourth quarter of $254.8 million, resulting in a loss attributable to ordinary shareholders.

Net investment income for the quarter fell 20 percent to $316.4 million in the quarter. Fee income, however, rose 7 percent to $12.7 million.

For 2010, the company expects net investment income in the range of $800 million to $950 million. Operating expenses are expected to be anywhere between $900 million to $1,000 million .

Reinsurers assume risk from policies already sold by insurers, spreading the risk of losses among several carriers.

The Hamilton, Bermuda-based reinsurer was hit hard last year by structured-finance losses recorded by Syncora Capital, a bond insurer in which it was the majority owner.

Shares of XL Capital were trading down 3 percent at $16.60 after the bell. The stock closed at $17.02 in regular session on the New York Stock Exchange.

(Reporting by Sweta Singh in Bangalore; Editing by Anne Pallivathuckal) Keywords: XLCAPITAL/ ([e-mail]; within U.S. [phone]; outside U.S. [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.