Munich Re and Swiss Re are set to preside over a continuing hard market for reinsurance after announcing difficult results. Munich Re`s 2002 Euro1.1bn (£761m)net profit was lower than the Euro1.8bn (£1.2bn) markets had hoped for, despite being quadruple the Euro250m (£173m)made in 2001.

Only asset sales of Euro4.7bn (£3.3bn)saved the German group from posting a full year loss after a fourth quarter loss of Euro2.2bn (£1.5bn). It was not enough to satisfy analysts and Standard &
Poor`s downgraded the reinsurer to AA - from AA+.

The ratings agency was concerned the German group`s capital base had weakened and described as "questionable "Munich Re`s plans to hit a combined ratio of 104%.

Swiss Re narrowed its net loss in 2002,as strong performances from property/casualty and life/health business helped offset huge impairment charges.

The group posted a loss of SFr91m (£43m)compared to a SFr165m (£77m)loss in 2001,after SFr3.9bn (£1.8bn) of investment writedowns.