Quanta Capital Raises $40 Million; Best Rates Insurer’s EU Sub ‘A-’

Bermuda-based Quanta Capital Holdings Ltd., which provides specialty insurance, reinsurance, and risk consulting services through its subsidiaries, announced that it has completed the private placement of $40 million of trust preferred securities as part of a pooled transaction.

In a separate announcement A.M. Best Co. said it has assigned a financial strength rating of “A-” (Excellent) and an issuer credit rating of “a-” to Dublin, Ireland-based Quanta Europe Ltd., with a stable outlook on both ratings. “The ratings reflect Quanta Europe’s importance to Quanta Reinsurance Ltd. (Quanta Re) (Bermuda), and its excellent risk-adjusted capitalisation. An offsetting factor is Quanta Europe’s limited business profile,” said Best.

CFO John Brittain, Jr., commented that the “proceeds from this transaction reflect a competitive cost of long-term capital which will be contributed to our insurance companies to grow our business.” Chairman and CEO Tobey Russ indicated: “Securing this capital provides Quanta with the additional resources to expand our premium writings in 2005 and to facilitate our business strategy to grow the core specialty lines insurance business.”

Best also noted that Quanta Europe’s capitalization is supported by a quota share reinsurance agreement and an unconditional guarantee of its liabilities, both provided by Quanta Re., an affiliate and the main operating company of the group. “Quanta Europe is expected to focus on specialty insurance products, mainly crime & fidelity (financial institutions), professional liability and environmental insurance.”

Best also said it “forecasts Quanta Europe’s gross written premiums to exceed 37.5 million euros ($50 million) in 2005, its first full year of operations. Technical result is expected to reach approximately 355,000 euros ($475,000) with an excellent combined ratio of approximately 80 percent.

“A.M. Best believes that while the co-operation with other Quanta subsidiaries will enable Quanta Europe to grow relatively quickly, Quanta Europe may still face challenges in establishing its presence on a stand alone basis.”