Bloomberg reports that Munich Re, the world's largest reinsurance company, has posted a third quarter loss of $851m and has confirmed that it will also lose money this quarter as it is forced to further write down the value of its investments following the dismal performance of world stock markets in the last two years.
The reinsurer was a heavy buyer of equities during the boom of the late 1990s. The fall in world markets has had a more profound effect on Munich Re than even the tragic events of September 11th.
Munich Re's investment in the finance sector clearly demonstrates the extent of its difficulties. It owns just over a fifth of Allianz, Germany's biggest insurer, whose own shares have fallen almost 60% so far this year. It also owns 26% of HVB Group and 10% of Commerzbank, both of whose shares have fallen by around 50% this year.
The reinsurer added $2.5bn to its reserves earlier this year to provide for losses at its American Re business and for additional losses following the September 11th terrorist attacks.