First-quarter net profit at Swiss Re dropped by half, a bigger fall than expected, and the world's biggest reinsurer announced fresh credit writedowns of 819 million Swiss francs ($776.3 million).

Unlike other reinsurers, Swiss Re has been hit hard by the credit crisis, notching up witedowns of 1.2 billion francs in November in its financial services unit, which creates products to transfer risk to capital markets.

"Swiss Re continues to be exposed to market value fluctuations on the underlying securities and we estimate a further loss of 200 million francs for the month of April," the group said in a statement on Tuesday.

Net profit came in at 624 million francs, well below the 878 million francs average forecast in a Reuters poll of 13 analysts.

The additional mark-to-market loss was on Swiss Re's structured credit default swaps in run-off since November and the group's annualised return on investments excluding those CDS's was 5.8 percent.

Shareholder equity decreased 13 percent to 27.8 billion francs compared with the end of last year due to the depreciation of the dollar against the franc, mark-to-market effects on its investment portfolio and share buybacks.

Higher claims for man-made losses and lower premium volumes had weakened underwriting profitability.

In its core reinsurance business, the combined ratio -- which measures underwriting profitability -- rose 3.1 percentage points to 96.9 percent. The lower the ratio below 100 percent, the higher the profitability.

Swiss Re has been criticised by analysts after announcing shock losses in November last year, and the stock is trading at one of the lowest price-earnings multiples in the sector.

The Dow Jones Stoxx insurance sector average 2009 price-earnings multiple is 7.7 times and Swiss Re trades at 6.5. Its closest rival Munich Re stands at 7.7 times, according to Reuters data.

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