ZURICH: One of the world's biggest reinsurers, Swiss Re, on Thursday reported a 506-million-Swiss-franc annual net profit in 2009, edging away from a record loss suffered a year earlier in the financial crisis.

The net profit, equivalent to 472 million dollars or 345 million euros, was well within the range of analysts' expectations.

"Today, I am proud to say: we have come a long way," said chief executive Stefan Lippe in a statement.

Lippe said the company had restored its capital base, which was severely eroded during the crisis, and strengthened its balance sheet.

Nonetheless, Swiss Re's annual accounts suffered as it shed the risky investment policy that left a pillar of the global reinsurance industry trembling more than a year ago.

Annual net profit was hit by impairments of some 2.0 billion francs mainly on securitised products and by mark-to-market losses of 1.9 billion francs on corporate bond hedges, Swiss Re said.

The group shifted from corporate credit hedging to government securities and high grade corporate bonds and "terminated substantially all of its exposures" to Credit Default Swaps (CDS), one of the financial instruments that was blamed for precipitating the banking collapse in 2008.

However, Swiss Re said it expected a "further significant reduction in the remaining legacy exposures in 2010."

Last year's turnaround was most marked in the fourth quarter of 2009, with a 403-million-franc net profit compared to a 1.7-billion-franc loss in the equivalent period a year earlier.

The group said its core reinsurance business had continued to prosper through the year, notably with a 39 percent increase in operating income from property and casualty reinsurance, which reached 3.8 billion francs.

"The strong fundamentals of our business underpin my confidence in the future," said Lippe.

In 2008, Swiss Re posted its biggest ever loss of 864 million francs, largely due to investment losses.

That prompted the departure of chief executive officer Jacques Aigrain after he was widely blamed for having led the reinsurer into the risky world of investment banking, as the company turned to Wall Street sage Warren Buffett for fresh funds.

The only two other annual losses in the company's history were posted following the 9/11 attacks in New York.