Munich Re, the world's biggest reinsurance company, has posted a fifth consecutive quarterly loss despite recording a pre-tax operating profit of €737m in the second quarter of 2003.
The German company said its net loss for the quarter was €365m, which was slightly better than its loss of €383m for the same period in 2002. Pre-tax operating profit rose to €737m from a loss of €1,321m in 2002.
The reinsurer blamed the loss on write-offs by a subsidiary, claims for tornado and hail damage in the US and preparations for anticipated tax changes in Germany.
However, the company's core underwriting business showed substantial improvement with its combined ratio dropping to 94.9% from 164.5% in the same quarter last year.
Gross written premiums rose to €9.9bn from €9.7bn. Munich Re's premium income for the first half of the year was €20.8bn, up from €20.4bn for the first six months of 2002.
Standard & Poor's, the ratings agency, cut the reinsurer's debt rating to A-plus from AA-minus despite reports this week that the company was preparing to raise additional capital in order to keep its credit rating.
S&P said its expectations of "substantial capital-raising initiatives in the short-term" were factored into the lowered rating for the company.
"The downgrade primarily reflects a re-evaluation of Standard & Poor's of reinsurance industry risk, and of Munich Re's position within that industry following the historic relative underperformance in its non-life underwriting profitability," S&P analyst Nigel Bond wrote in a statement.
The rating was assigned a stable outlook based on S&P's expectations that the company would rebuild capital, improve earnings and maintain its business position in both the non-life and life reinsurance markets.
