Swiss Re's net income dropped a staggering 91% in the first half of the year compared to the same period last year.
But the company warned that insurers would face higher prices and tougher conditions for their reinsurance in the upcoming renewals.
Bad investment results and a CHF 250m share of the cost of floods across Europe all hit the company's results for the first half of the year.
The giant reinsurer is looking to squeeze more money out of the direct market after seeing its net income fall to CHF118m in the first half of 2002 from CHF1.34bn in the same period last year.
The drastic fall came as a result of a plunging investment result, which fell to CHF 2.604bn from CHF 3.931bn the time before.
The poor investment result did not prevent Swiss Re from improving its property and casualty combined ratio to 104% from 113% in the first half of last year as Swiss Re's customers bought more protection and paid more for
it.
The combined ratio measures claims and costs as a percentage of premiums.
Despite the underwriting improvement, net income from property and casualty business declined to CHF 104m for the first half from CHF 1.032bn in the same period last year as a result of the poor investment result.
The company estimated the flooding that devastated much of central Europe this summer would cost at least Euros 15bn and estimated its share at about CHF 250m.
Swiss Re plans to cash in on the hard market for reinsurance and forecast a double whammy for direct insurers of higher prices and stiffer exclusions.
It said: "Swiss Re expects the sustained improvement in market conditions to continue across the reinsurance business in the second half of the year.
"As a result, prices and conditions in the non-life business are expected to continue to firm in the upcoming renewals.
"Swiss Re will take advantage of favourable opportunities as they occur."
But it sounded a note of warning.
Unless stock markets recover from the lows they sank to at the end of June, the group will be hit by further losses.
Only if shares stage a "modest recovery" and there are no unusually large losses will the group's full-year result be "satisfactory", it said.
