No 1 reinsurer Munich Re has taken a drubbing after reporting a first-half loss of $1.07 billion, getting itself into an argument with ratings agency Standard & Poor’s (S&P) that it just can’t win.

Blaming tough business conditions, the German giant recorded a $3.4 billion writedown on assets and tax provisions of $1.9 billion. Net income was $6.2 billion.

S&P, which has been reviewing reinsurers’ risk, then downgraded the Munich Re group from AA- to A+, citing its “under-performance” as well as its slow recovery from last year’s huge losses.

In a lengthy statement rebutting S&P’s comments, Munich Re described the downgrading as “unjustified and unconvincing”. Chairman Hans-Jurgen Schinzler said the group is “is virtually unparalleled among international financial service providers with regard to quality, experience, global structure and networking… It is regrettable that the standard model agency Standard & Poor’s obviously fails to take account of the strengths of Munich Re.”

The ratings agency fired back, with London-based analyst Nigel Bond quoted by several media sources as saying Munich Re’s present capital level is “below A+ and closer to BBB”.

Munich Re has not yet responded.