Quanta Capital Holdings Ltd. is set to be taken over by Catalina Holdings (Bermuda) Ltd. after the two companies entered into a definitive amalgamation agreement.

Pursuant to the amalgamation agreement, Catalina will acquire Bermuda holding company Quanta in a deal worth approximately $197 million.

At the closing of the proposed amalgamation, holders of the common shares of Quanta will receive $2.80 per share in cash, which represents a 55 percent premium to the volume-weighted average sale price per share over the 30 calendar days ending May 29, 2008.

The transaction is expected to close in the last quarter of 2008.

Quanta has interests in specialty insurance and reinsurance that it is actively running off, and maintains offices in Bermuda, Ireland and the US.

Bermuda-based Catalina is backed by significant blue chip financial institutions, and specialises in the acquisition and management of non-life insurance and reinsurance companies and portfolios in run-off.

In connection with the deal, Friedman, Billings, Ramsey & Co., Inc. is acting as Quanta's financial advisor and Baker & McKenzie LLP is acting as Quanta's legal advisor. Morgan Stanley & Co. Inc. and Allen & Overy LLP advised Catalina in connection with the transaction.

James Ritchie, Quanta's chairman of the board, said: "We are very pleased to announce this potential transaction, which, when combined with the $1.75 cash dividend per share the board of directors declared in March 2008, would enable us to return $4.55 per share to our shareholders during 2008.

"This represents approximately 91 percent of Quanta's December 31, 2007 book value, and approximately 95 percent of Quanta's book value on September 30, 2006, shortly after we placed it into run-off.

"This significant accomplishment would not have been possible without the excellent execution of Quanta's management team and employees who preserved significant shareholder value during Quanta's difficult transition into run-off. We owe them our sincere appreciation for all their efforts.

"I also appreciate the many contributions of my fellow directors in guiding Quanta through the strategic assessment process, sale of Quanta's interests in a Lloyds syndicate and signing of the amalgamation agreement.

"The acquisition of Quanta brings a solid balance sheet and run-off block to Catalina's operating structure. We wish them much success in bringing our company into their portfolio."

Chris Fagan, Catalina's chief executive, said: "We are pleased to have entered into a definitive agreement to acquire Quanta and we look forward to working with Quanta's employees and management to achieve a successful run off.

"This is an important acquisition for Catalina following the significant expansion of our capital base last year."