Munich Re has braced shareholders for a net profit slump in next week’s first-quarter earnings results.

CEO Nikolaus von Bomhard says turbulent financial markets are to blame, and writedowns will be made to reflect the impact on earnings.

“From January to March the incidence of major losses was once again low, but initial estimates now show the result for the first quarter will remain well below our expectations and the result for the first quarter of [last year],” he said.

“Capital markets were highly volatile in the first quarter. Share prices in particular fell, and we will be posting writedowns.”

The German reinsurer made a net profit of €790 million ($1.18 billion) in the first quarter of last year. Annual profit was €3.1 billion ($4.62 billion), down 1.4% from 2014.

It has maintained its profit forecast of €2.3-€2.8 billion ($3.42-$4.17 billion) for this year.

Mr von Bomhard says the reinsurer will continue to focus on product innovation, particularly in the area of digitalisation, which offers tremendous scope for expansion.

“Those who fail to innovate will end up a mere footnote in history,” he said. “I see digitalisation – and the whole issue of innovation – as a tremendous opportunity. The potential of profitable business opportunities lying before us is huge.”