Quanta Capital Holdings Ltd. posted a loss of $42.9 million or 61 cents per share in the second quarter 2006 versus income of $8.5 million, or 15 cents per share, for the second quarter of 2005.

The results reflect the company?s decision to cease underwriting or seek new business and to place most of its remaining specialty insurance and reinsurance lines into orderly run-off as a result of ratings downgrades and the subsequent withdrawal of its ratings.

The second quarter 2006 loss excluding net realised losses on investments was $36.2 million, or 52 cents per share compared with income excluding realised gains on investments for the second quarter of 2005 of $7.7 million, or 14 cents per share.

This year?s quarterly results include a $10.7 million provision for employee severance as a result of the decision to run-off most of its lines. Results also include $3.6 million in additional losses from the 2005 hurricanes. Quanta also recognised $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.

Quanta?s Lloyd?s syndicate and environmental consulting business, ESC, are not included in the run-off plan and will continue to seek new business. Ratings actions by A.M. Best caused a default under Quanta?s credit facility. The company said in last night?s earning release that it 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.

Quanta has also started the process of communicating its run-off plan with its regulators while it continues to pursue strategic alternatives such as the sale of 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.

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 million in gross and net written premium from Lloyd?s and $24.9 million and $10.4 million in gross and net written premium from its home builder?s programme, known as HBW. Quanta expects 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.