Swiss Re writes down less than feared, keeps targets

ZURICH (Reuters) - Swiss Re said on Thursday its investment portfolio remains sound despite tough financial markets and reaffirmed its targets as additional writedowns were lower than many had expected.

The world's second-largest reinsurer also said it had taken steps to reduce its exposure to corporate bonds, equities and the underlying quality of its reinsurance business.

"The company is doing the right thing because it said it will reduce exposure to corporate bonds and structured assets," said analyst Rene Locher at Sal. Oppenheim.

Swiss Re shares were indicated to open some 2 percent higher, according to premarket data from Clariden Leu.

Swiss Re said it maintains its targets of earnings per share growth of 10 percent and return on equity of 14 percent over the cycle and sees opportunities for attractive returns from its Life & Health and Admin Re operations.

But the reinsurer had a mark-to-market loss of 245 million Swiss francs ($225 million) from 30 June 2008 to 31 August 2008 in structured credit default swaps (CDS), the company said in a slide presentation.

For the period from the end of August to September 19, the company estimated a CDS mark-to-market loss of 32 million francs.

These add to previous writedowns of some 2.7 billion francs in its financial services unit, which creates products to transfer risk to capital markets.

"Structured CDS is the weak spot and we may see more of these (writedowns), but this is as the market expected," Locher said when asked if today's additional writedowns came as a surprise.

Swiss Re also said it had hedged sub-prime exposures within its trading portfolio and gross notional exposure was now 3.2 billion francs.

(Editing by Greg Mahlich)

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