Swiss Re makes fresh writedowns as Q1 profit halves

By Douwe Miedema

ZURICH (Reuters) - Swiss Re (RUKN.VX), the world's biggest reinsurer, announced another round of credit writedowns on Tuesday and said its first-quarter net profit had halved, missing analysts' forecasts and sending its shares lower.

Higher claims from a spate of catastrophes sapped profits, in stark contrast to Swiss Re's German rival Hannover Re (HNRGn.DE), which separately posted a forecast-beating 60 percent rise in first-quarter operating profit.

Swiss Re said on Tuesday it made fresh credit writedowns of 819 million Swiss francs ($776.3 million) in the first three months of the year, and signalled more to come.

"Swiss Re continues to be exposed to market value fluctuations on the underlying securities, and we estimate a further loss of 200 million francs for the month of April," the group said in a statement.

Unlike other reinsurers -- which reinsure risk for other insurance companies -- Swiss Re has been hit hard by the credit crisis, notching up writedowns of 1.2 billion francs in November in its financial services unit, which creates products to transfer risk to capital markets.

Net profit came in at 624 million francs, well below the 878 million francs average forecast in a Reuters poll of analysts. Hannover Re said operating profit was 245.6 million euros ($380.4 million), above the 224 million euro average forecast.

Swiss Re's fresh mark-to-market loss was on structured credit default swaps -- which are no longer being sold to new clients, or are in run-off -- and the group's return on investments excluding those CDS's was a solid 5.8 percent.

The remaining exposure on Swiss Re's books from the two CDS's at the source of its problems was 2.7 billion francs, Quinn said, but it was "extremely unlikely" that the group would have to write down their full value.