Loss in investment income during the first quarter translated into a 20 percent drop in net income for Munich, Germany-based insurer Munich Re Group, but the company's chief financial officer said the company remains on track to show targeted profit for the year.

The company reported net income of EUR785 million ($1.21 billion), off EUR189 million ($291 million) from the first quarter of last year. The sharpest earning drop came from investments that fell EUR1.5 billion ($2.3 billion) to EUR1.7 billion ($2.6 billion), a drop of 47 percent, Munich Re said.

The results also were negatively affected by a 2 percent drop in gross premium written, which fell EUR176 million ($271 million) to EUR9.8 billion ($15 billion).

On the reinsurance side, Munich Re reported a combined ratio of 103.8, a 2 point increase from the same period a year ago. Reinsurance property-casualty gross premium written was down 5 percent, or EUR215 million ($331 million), to EUR3.8 billion ($5.9 million).

Reinsurance was affected by "a random cluster of major losses," the company said, with the worst occurring in two coal mines in Queensland, Australia, in January and February. Claims costs from those events are expected to reach nearly EUR200 million ($308 million) combined. Winter storm Emma in Europe accounted for EUR75 million ($116 million). Total losses were pegged at EUR578 million ($890 million).

The company's primary insurance operations reported a 13.1 point improvement in the quarter to 89. Property-casualty gross premium written rose EUR43 million ($66 million) to EUR1.95 billion ($3 billion).

"Despite the greatly increased volatility of the capital markets and the growing pressure on prices in reinsurance, we aim to achieve a profit of [EUR3 billion-EUR3.4 billion ($4.6 billion-$5.2 billion)] in 2008," J?rg Schneider, Munich Re's chief financial officer, said in a statement.

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