(Bloomberg) — Munich Re, the world's biggest reinsurer, took a 706 million-euro ($800 million) loss on derivatives contracts in the first quarter, caught off guard by a rally in stock markets.
The majority of the losses were incurred by hedging against gains in stocks, Chief Financial Officer Joerg Schneider said on a conference call on Thursday, when the company reported first- quarter earnings. He didn't provide further details.
Munich Re is among European reinsurance firms seeking ways to boost returns from investments after yields on European bonds fell to record lows and prices of coverage decreased. The losses contributed to a 16% drop in first-quarter profit to 790 million euros, the company said.
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