Bermuda-based Quanta Capital Holdings Ltd. may be nearing the end of the line as an operating company. Its recently released financial results for the second quarter reveals a $42.9 million net loss, and the waiver of the loan defaults it obtained in June, expires tomorrow, August 11, unless it is extended.
Heavily impacted by last fall’s hurricanes, Quanta ceased underwriting or seeking new business and placed most of its remaining specialty insurance and reinsurance lines into orderly run-off (See IJ Website May 26). It continued to operate Lloyd’s Syndicate 4000 and ESC’s environmental consulting business. It has started the process of organizing its run-off plan with regulators.
Best subsequently downgraded the ratings, which were then withdrawn at the company’s request (See IJ Website June 8). The action caused a default under Quanta’s credit facility. The bulletin noted that, “Quanta obtained a waiver of this default until August 11, 2006 and continues to work with the lenders and others regarding an amendment to the credit facility and an extension to the waiver period.”
The earnings bulletin noted that the “Company continues to pursue strategic alternatives which may include the sale of the Company or some or all of its businesses, the commutation of certain contracts, sale of renewal rights of certain business lines, the engagement of an administrator to run-off all or a portion of its book of business or a combination of one or more of these alternatives.”
Quanta said its “Second quarter 2006 results include additional provision for employee severance of approximately $10.7 million which is a direct result of the Company’s decision to place most of its specialty insurance and reinsurance lines into orderly run-off and $3.6 million in additional losses from the 2005 hurricanes. The Company also recognized $12.6 million as goodwill impairment expense related to its investment in ESC as Quanta’s insurance companies are no longer writing environmental policies that complement ESC’s ongoing business.
“Gross written premiums for the second quarter of 2006 were $32.9 million and net written premiums were $10.1 million. This includes $23.3 million and $15.8 in gross and net written premium from Lloyd’s and $24.9 million and $10.4 million in gross and net written premium from our home builder’s program, known as HBW. We expect that HBW will continue to generate premium until December 2006 when it will be terminated. The Company also returned $27.7 million in gross written premium to policyholders following policy cancellation and commutations. In future periods, the Company believes that comparisons versus prior year results are not meaningful as the Company is underwriting a limited amount of new policies. ”
The full earnings report and a webcast of the earnings conference call may be obtained on the Company’s Website at: www.quantaholdings.com.
Was this article valuable?
Here are more articles you may enjoy.