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

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

For the past nine months the company experience a loss of EUR142.8 million ($185.8 million) compared with EUR577.3 million ($750.9 million) profit in the comparable period of the previous year.

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

The company said it has had catastrophe losses as of Sept. 30 of EUR444.9 million ($584.4 million). It put the loss from Hurricane Ike at about EUR220 million ($286 million).

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

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

However, the reinsurer advised that its long-term financial strength remains "robust" despite the fall in profits and noted that 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 had been influenced by a positive special effect in the order of EUR180 million ($234 million) associated with German corporate tax reform, and for the nine months were adversely impacted by the fact that losses on equities are not tax deductible in Germany, as a consequence of which a tax load in excess of EUR100 million ($130 million) was incurred despite posting a pretax deficit.

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

Although the company said slipping prices were still evident on some major markets, it found rate conditions were broadly acceptable overall. In most cases it said it was possible to obtain prices commensurate with the risks.

"We have scaled back business that no longer satisfied our profitability requirements and reshuffled our portfolio in favor of other segments. These include German business, the markets of Central and Eastern Europe, and agricultural covers worldwide, an area where demand is growing," Mr. Zeller noted.

The company said it also remains actively involved in takaful reinsurance--business transacted according to Islamic principles--which is successfully written by the Bahrain-based subsidiary Hannover ReTakaful.

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

Mr. Zeller said Hannover Re expects to see "stronger demand for reinsurance and hence hardening of the markets. This will lead to rate increases--which will be substantial in some areas--and the outcome of the 2009 renewals is therefore expected to be favorable."

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Hannover Re Reports $510 Million Third-Quarter Loss

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