Quanta Capital Holdings Ltd. has entered into a new joint venture with a Lloyd's specialty insurer following the downgrade and ratings withdrawal of its insurance subsidiaries by A.M. Best.
Best downgraded the troubled Bermuda carrier's financial strength ratings to B from B plus plus on Wednesday and then withdrew the ratings at the company's request to be unrated.
The rating action followed another downgrade in early March after the carrier announced a significant fourth-quarter net loss. Most of Quanta's insurance and reinsurance operations have been placed in run-off. The company is continuing operations of its Lloyd's Syndicate 4000 and ESC environmental consulting business.
"A.M. Best maintained a conservative view in evaluating the group's run-off given the potential for catastrophe and non-catastrophe-related adverse reserve development, exposure to potential 2006 catastrophes due to the risk attaching nature of the remaining reinsurance business, and execution risk with regard to dismantling the existing infrastructure," the agency said.
Yesterday, Quanta said it reached an agreement with Chaucer Holdings PLC, the specialist Lloyd's insurer, and the senior underwriting team of Syndicate 4000 under which a new managing agency will be created called Pembroke Managing Agency Ltd.
Quanta Chairman Jim Ritchie said that deal will help assure the long-term financial success of the Syndicate by aligning the underwriting team with Chaucer and Quanta "around the common goal of providing superior underwriting results."
The venture will preserve the value of Quanta's investment in Syndicate 4000 and enable the carrier to realize the underwriting results from the Syndicate's existing portfolio, Mr. Ritchie said.
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