Munich Re said today a tax charge pushed it into the red for a fifth consecutive quarter despite solid business and criticised Standard & Poor's for cutting its credit rating.
News that the world's largest reinsurer had been cut by the ratings agency late yesterday to A-plus from AA-minus and the shock loss sent Munich Re shares down 4 per cent in early trade.
Munich Re's quarterly net loss widened to €365 million from €238 million in the first three months of the year, due to provisions for anticipated tax liabilities, the company said in a statement.
"Given the current legal uncertainty regarding the tax treatment of writedowns and losses on the sale of shares in equity funds and the taxation of life and health insurers, Munich Re has made provision for the anticipated tax liabilities," it said.
"Overall operationally it looks good but the market is concentrating more on the psychological effect of not returning to profit and the downgrade from S&P," said Mr Lorenzo Carcano, a fund manager at Metzler Asset Management in Frankfurt.
"The downgrade from S&P is important. It's still the biggest reinsurer in the world but the rating is everything for reinsurers. It affects new business and new growth."