ZURICH, Aug 8 (Reuters) - Swiss Re shrugged off the cost of floods in Europe to post better than expected second-quarter profit on Thursday and said it could beat its main annual performance target if claims remain stable in the second half.

The world's second largest reinsurer took a heavy hit from claims for the floods across Europe as well as in Canada, pushing it into lossmaking territory according to the industry's main measure of profitability for the first time in two years.

That prompted a 1 percent drop in shares, but Chief Financial Officer George Quinn said he was optimistic on the firm's profitability target for the year and most analysts agreed, saying prospects for a dividend payout also looked intact.

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