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Munich Re’s profit slumped as the reinsurer took a hit of almost $1 billion to its investment portfolio in a volatile quarter for financial markets.

The Munich-based company wrote down the value of its holdings by 908 million euros ($926 million) in the three months through June, mainly reflecting declines in the value of its equity investments. That reduced income from investments by half and profit for the group by 31 percent to 768 million euros, according to a statement Tuesday.

While Munich Re confirmed its target for a profit of 3.3 billion euros this year, it warned that volatile markets, an economic slowdown and the financial fallout from Russia’s invasion of Ukraine had increased uncertainty. Munich Re had suspended new business in Russia and Belarus in March and said it would stop investments there.

The reinsurer already wrote down the value of Russian and Ukrainian bonds by almost 700 million euros in the first quarter and also booked about 200 million euros in war-related reinsurance costs in the first half of the year.

“That is our current best estimate. We can only book numbers based on what we currently know,” Munich Re Chief Financial Officer Christoph Jurecka said in an interview on Bloomberg Television, referring to war costs. “It’s still in the early days with a lot of uncertainty around.”

Shares of Munich Re rose 1 percent at 10:52 a.m. in Frankfurt trading, with analysts pointing to a surprisingly strong solvency ratio, a key measure of financial strength. Investment income was lower than expected, analysts at Citigroup wrote in a note.

Major-loss expenditures from natural catastrophes are posing another challenge, increasing by about a quarter. The costliest natural catastrophe for Munich Re in the quarter was the drought in South America, with losses amounting to about 130 million euros.

Extreme heat and arid conditions this summer have also led to water scarcity and wildfires in Europe. It is difficult to put an exact figure on costs from those events as their effects take a while to emerge, Munich Re said.

In the July reinsurance renewals, Munich Re increased the volume of business written by 6 percent while keeping prices stable. The primary focus of the renewals was on the Americas and Australia, and with global clients.

–With assistance from Dani Burger, Mark Cudmore and Jan-Patrick Barnert.

Photograph: The burned-out remains of a destroyed restaurant at Lagune Beach in Gironde, France, on July 22, 2022. Firefighters battled wildfires in the Gironde region that have destroyed pine forests and campsites near the Dune of Pilat, the tallest sand dune in Europe and a popular tourist attraction. Photo credit: Nathan Laine/Bloomberg