Munich Re, the world's biggest reinsurer, has said tax provisions kept it in the red in the second quarter of the current year, but that underlying earnings improved.
Munich Re reported net losses of €365m in the period from April to June, only slightly narrower than the year-earlier loss of €383. The figure was worse than expected - analysts had been expecting the group to return to profit.
'Given the current legal uncertainty regarding the tax treatment of writedowns on and losses on the sale of shares in equity funds and the taxation of life and health insurers, we have made provision in the second quarter for the anticipated tax liabilities,' Munich Re explained.
Before taxes, however, the group performed a great deal better in the second quarter, chalking up pre-tax profit of €737m in the period from April to June compared with a profit of €40m in the preceding three months.
* Credit rating agency Standard and Poor's has decided to downgrade Munich Re's long-term debt rating to A+ from AA- partly as a result of the slower than expected recovery in earnings.
A reinsurer's debt rating is crucial when it comes to renewing contracts with primary insurers.
