Ratings agencies lowered their ratings on Munich Re after its first half results.
Both Standard & Poor's and AM Best lowered the group's financial strength rating to A+ from A++.
The changes followed weak bottom line results at Munich Re which reported an after-tax loss of E603m (£417m) for the first half of 2003 as it was hit by a one-off tax charge.
The reinsurer managed to improve its key combined ratios both for non-life reinsurance and primary property-casualty insurance to 95.9% and 96% respectively, indicating profitable underwriting.
Last year's figures were 133.1% and 101.8% respectively, by comparison.
The company pointed to improving underlying profitability indicated by the improvement in pre-tax result, which hit E737m in the second quarter after a miserly E40m in the first.
Fitch, the ratings agency, has a negative outlook on its AA+ rating for Munich Re.
It said: "Fitch expects the combined ratio for the full 2003 calendar year to stay well below 100%, barring a major catastrophe, significant reserve strengthening or other extreme loss event."
The agency continued: "Furthermore, the agency expects that Munich Re's near and long-term underwriting profitability as measured by the combined ratio will be better than the reinsurance industry's average."