Swiss Re, the world's second-biggest reinsurer, reported a surprise third-quarter net loss of 304 million Swiss francs ($263.2 million), hurt by investment losses.

Zurich-based Swiss Re said on Tuesday it wrote down another 572 million Swiss francs on investments for the third quarter and reported a 289 million franc unrealised mark-to-market loss on credit default swaps (CDS).

It maintained its targets of earnings per share growth of 10 percent and return on equity of 14 percent over the cycle.

Swiss Re has been hurt more than its competitors by the financial crisis, writing down around 3 billion francs on its investments so far in its financial services unit, which creates products to transfer risk to capital markets.

The reinsurer had been expected to post net profit of 236 million francs for the third quarter, according to a Reuters poll of 10 analysts.

Excluding realised investment losses, Swiss Re reported operating income fell to 22 million francs from 868 million in the previous quarter.

Swiss Re said it had suspended its share buyback because of high financial market volatility and a significant increase in demand for reinsurance.

The company said it significantly reduced its exposure to corporate credit during the third quarter through hedging and that the market value of its corporate bonds was under notional hedging at the end of the quarter.

The reinsurer estimated its net claims from Hurricane Ike at $315 million, against a previous estimate of $250 million, adding aggregate net claims for hurricanes Gustav and Ike will be around $365 million.

Swiss Re shares trade at around 4.4 percent forecast 2009 earnings, at a small discount to the European insurance sector. -Reuters