* Q2 net profit down 22 pct to $637 million, beating estimates
* Property and casualty combined ratio 101 percent
* CFO says prices remain under pressure
* CFO estimates full-year catastrophe outlays of $1.2 bln, under $1.5 bln budget
* Tailored deals up 76 pct in July renewals seasons (Recasts with CFO comments)
By Brenna Hughes Neghaiwi
ZURICH, July 29 (Reuters) - Swiss Re on Friday set its focus on specialised business for its clients, after a series of natural disasters and continually tough pricing hit half-year returns at the world's second-largest reinsurer.
Reinsurers, squeezed by low interest rates and falling industry prices, were hit hard in the second quarter by flooding in Europe, earthquakes in Japan and the Fort McMurray wildfire that broke out in Canada in May. Net profit at Swiss Re fell 22 percent to $637 million.
The tough environment means Swiss Re is shifting towards more profitable specialised business away from some activities in the general reinsurance business.
"We're not withdrawing from the industry, we're deploying our capital in other risk pools," Chief Financial Officer David Cole told Reuters, which he said involved moving away from some of its syndicated business.
"We're focusing more on tailored and unique transactions with our clients."
The Swiss reinsurer increased the volume of contracts it signed in the July renewal season through a focus on these large and tailored transactions, a key strategy that saw overall renewals grow 10 percent and provided the group with an edge over its competitors, management said.
Losses from large natural disasters climbed to roughly $350 million in its general reinsurance business in the second quarter, up from just under $80 million the year before, Cole said. That included a $220 million provision for claims from Canada's costliest natural disaster.
Overall, Swiss Re's general insurance business wrote out more claims losses than it garnered in premiums for the quarter.
Its second-quarter property and casualty combined ratio, a measure of underwriting profitability, rose to 101 percent, with a figure above 100 percent indicating a loss.
Management said it nonetheless stayed within its half-year natural catastrophe budget after a quieter first quarter and did not expect outlays to exceed its $1.5 billion budget in 2016.
Insurance shouldered the bill for $27 billion of the half-year's natural disaster losses, a study by larger rival Munich Re showed earlier in July, nearly twice the long-term average.
Pension funds and other specialised investors have been pouring money into reinsurance, competing with traditional reinsurers and putting pressure on prices.
That could drop off as margins, hit by the low interest rate environment and catastrophe losses, lose attractiveness and companies scale back business, Chief Executive Christian Mumenthaler told a news conference.
But, despite some stabilisation, those headwinds had not yet arrived, Cole said.
The higher catastrophe losses, often expected to move reinsurance prices upwards, were not immediately expected to have a significant impact on pricing, he added.
"Pricing shows no sign of an inflection point," Cole said. (Reporting by Brenna Hughes Neghaiwi; Editing by David Holmes and Elaine Hardcastle)