Bad debts knock Swiss Re profits

Swiss Re's UK office is based in the distinctive tower of the same name

Swiss Re has reported an 87% fall in quarterly profits after the firm was hit by an already-announced bad debt insurance payout.

The world's largest reinsurer said last November that it would lose 1.2bn Swiss francs ($1.1bn; £525m) after a client had insured against mortgage debt loss.

As a result, Swiss Re said on Friday that its profit for last three months of 2007 totalled 170m Swiss francs.

This compares with a profit of 1.3bn Swiss francs a year earlier.

'Stronger organisation'

Looking forward, Swiss Re said it expected 240m Swiss francs of additional losses on bad mortgage debt insurance.

"We have learned from the mistake and are confident that we have a stronger organisation as a result," the company said in a statement.

Swiss Re's profits for 2007 as a whole were down 6% to 4.16bn Swiss francs.

However, its results were better than market expectations and the company's shares rose 4.4%.