A.M. Best Co. has affirmed and removed from under review the ratings of Quanta Reinsurance Ltd. and its subsidiaries. The A- rating has a negative outlook.

The ratings action reflects the completion of Quanta?s common stock and preferred shares offerings this week and the capital these offerings have provided to support the group?s current ratings, Best said.

Recent senior management changes and the strategic initiatives being implemented to allocate capital to business lines supported by specialised underwriting expertise also had an impact on the ratings.

Quanta has increasingly focused on its specialty insurance lines where it has underwriting expertise while accelerating the reduction of its writings of reinsurance property and technical property business and de-emphasising the writing of casualty reinsurance business, Best said.

?The group?s reduced property book, in combination with expected enhanced reinsurance coverage, effective January 1, 2006, will substantially reduce its net exposure to catastrophe losses and lower its risk-adjusted capital requirements.

?Following anticipated substantial losses in the fourth quarter 2005, largely related to hurricane Wilma and, to a lesser degree, severance costs, A.M. Best?s expectations are focused on substantially improved profitability in 2006,? Best said.

The positive factors are however offset by the significant challenges and uncertainties associated with the successful execution of management?s revised business plans and ability to diversify and grow Quanta?s businesses profitably.

?In its first two years of operations, Quanta has fallen far short of profitability and capital level projections, instead reporting substantial losses, albeit in large measure associated with catastrophe losses,? Best said.

While significant changes in business and senior management including the recent appointment of Robert Lippincott, III as interim chief executive officer are viewed favourably, Best said that these have created near-term uncertainties related to the stability of Quanta?s operations, market positioning, the profitability of the group?s existing book of business and its ability to generate profitable business going forward.

Upward development of Quanta?s Katrina, Rita and Wilma hurricane lossesparticularly related to hurricane Katrina where Quanta has exhausted its reinsurance coverageand charges related to the changes in its business plans are also viewed as risks.

The ratings agency added that Quanta is currently operating with a far above-average expense ratio, which it is addressing and expects to significantly lower in 2006, although to a level that will still be high.

Despite the continued net losses expected to be reported in the fourth quarter 2005, debt plus preferred-to-total capital is anticipated to remain stable at approximately 24 percent year-end, Best said.

It added that Quanta will maintain approximately one year of interest and dividend paymentsapproximately $14 millionin cash at the holding company in 2006.

Mr. Lippincott termed Best?s action a ?welcome and significant step in positioning Quanta for future growth, with a reinforced capital position, a more efficient operating structure, and a focused strategy?.

He added that the in conjunction with $131.5 million in capital raising, a sharpened focus on the company?s core specialty lines business and a reduction of the company?s CAT exposure and volatility through the discontinuation of writing new premiums in certain property lines of business, ?we expect to emerge as a stronger company in the New Year, building on the momentum of our specialty lines platform.?