Hannover, Germany-based Hannover Re reported a third-quarterloss of EUR395 million ($510 million), saying it was impacted bythe financial markets crisis and high catastrophe losses.

The loss compared with a profit of EUR284.3 million ($370million) a year earlier.

For the past nine months the company experience a loss ofEUR142.8 million ($185.8 million) compared with EUR577.3 million($750.9 million) profit in the comparable period of the previousyear.

Despite what it called a conservative investment strategy,Hannover Re said it once again had to take significantwrite-downs--particularly on equity holdings--in the thirdquarter.

The company said it has had catastrophe losses as of Sept. 30 ofEUR444.9 million ($584.4 million). It put the loss from HurricaneIke at about EUR220 million ($286 million).

Chief Executive Officer Wilhelm Zeller said in a statement thatas a major institutional investor the firm was "unable to escapethe turmoil on capital markets unscathed."

Hannover Re wrote down EUR200 million ($254.5 million) oninvestments and unrealized losses for the quarter.

However, the reinsurer advised that its long-term financialstrength remains "robust" despite the fall in profits and notedthat Standard & Poor's had confirmed its "double-A-minus"rating with a stable outlook at the end of October.

The company noted that the third-quarter results of 2007 hadbeen influenced by a positive special effect in the order of EUR180million ($234 million) associated with German corporate tax reform,and for the nine months were adversely impacted by the fact thatlosses on equities are not tax deductible in Germany, as aconsequence of which a tax load in excess of EUR100 million ($130million) was incurred despite posting a pretax deficit.

The firm said its withdrawal from specialty business and thedownward slide in exchange rates in the first half-year led itsgross written premium to contract by 5 percent.

Although the company said slipping prices were still evident onsome major markets, it found rate conditions were broadlyacceptable overall. In most cases it said it was possible to obtainprices commensurate with the risks.

"We have scaled back business that no longer satisfied ourprofitability requirements and reshuffled our portfolio in favor ofother segments. These include German business, the markets ofCentral and Eastern Europe, and agricultural covers worldwide, anarea where demand is growing," Mr. Zeller noted.

The company said it also remains actively involved in takafulreinsurance--business transacted according to Islamicprinciples--which is successfully written by the Bahrain-basedsubsidiary Hannover ReTakaful.

According to the firm, U.S. July reinsurance treaty renewalspointed to a slackening in non-life reinsurance prices; however,Hannover Re said it anticipates a trend reversal in view of thepresent crisis on financial markets.

Mr. Zeller said Hannover Re expects to see "stronger demand forreinsurance and hence hardening of the markets. This will lead torate increases--which will be substantial in some areas--and theoutcome of the 2009 renewals is therefore expected to befavorable."