Swiss Re has reported a large capital loss, as expected, following a string of natural disasters.

The reinsurer reported a $665m loss for the first quarter of 2011, compared with a $158m profit for the same period in 2010.

The loss was a direct result of the reinsurer’s property and casualty division being hit by “exceptionally high” natural catastrophe losses in Australia, New Zealand and Japan.

Property and casualty reported an operating loss of $1.2bn, compared to an operating income of $259m in Q1 2010.

Swiss Re chief executive Stefan Lippe said: “The first quarter of 2011 represented a test of strength for the insurance and reinsurance industry.”

“The impact of natural catastrophe losses in the first quarter creates an additional challenge but it will also accelerate the market turn we had previously expected in 2012/2013.”

Swiss Re’s Q1 combined ratio was 163.7%, which Jeffries analyst James Schuck said was “12 percentage points higher than our estimate largely due higher than expected Nat Cats in the quarter.”

Schuck also echoed Lippe’s views on a cycle change, but added: “A turn is closer than before, but it hasn't turned yet.”

Swiss Re loss mirrors a market trend of first quarter losses from other (re)insurers including Flagstone Re, PartnerRe, Everest, Aspen, Montpelier Re, Transatlantic Re and RenRe.