Health insurer VHI in on course to almost halve its losses this year, chief executive Jimmy Tolan said.

Tolan said underwriting losses in 2010 will be "closer to €40m" after a €75m deficit in 2009. Investment income this year will be about €25-27m.

The losses will also fall because the drain of customers has stemmed and fees paid to hospitals and medical consultants have been cut.Tolan also said the state's capital injection into the VHI may only be €200m.

The cash infusion into the VHI forms part of plans to have the company regulated by the Financial Regulator and the introduction of risk equalisation in the health insurance market in 2013.

In May, health minister Mary Harney said the government may have to provide €338m to the VHI and was also beginning the process of privatising the company.

Tolan added that the VHI will launch general insurance products – staring with life insurance – once it is regulated and is also eyeing the savings and investment market.