Imagine Insurance Company Ltd. plans to boost its capital by $50 million, giving it the ability to take advantage of an expected rise in the rates charged for 2006 policies, the company said yesterday.

The capital is being raised by the group?s parent company, Imagine Group Holdings Ltd., through the issue of a ten-year $50 million subordinated note to an affiliate of its ultimate parent company Brookfield Asset Management Inc. And the capital injection has satisfied concerns from ratings agency A.M. Best had about the company?s capital adequacy, affirming the group?s A- (Excellent) rating.

Imagine, a privately-held group owned largely by closely-held Canadian investment firm Brookfield, formerly Brascan Corp., saw its financial strength rating put under review in September by AM Best, one of the most widely followed insurance rating agencies, because of concerns storm losses threatened to undermine its capital position. The company has estimated net losses from Hurricane Katrina to be in the region of $17 million.

In light of the planned capital injection, Imagine said Best removed its rating from ?under review with negative implications? but left the rating on negative outlook, which means a downgrade has not been wholly ruled out. Imagine?s ?A? (strong) financial strength rating from Fitch Ratings was affirmed in September, 2005.

In addition to the $50 million capital raising, Imagine said it also has negotiated a further $590 million to be available through various letter of credit facilities.Together the $50 million capital raising and letters of credit will give the group the opportunity to ramp up business in the new year.

Rates are expected to rise after Hurricane Katrina wiped up to $60 billion from insurance balance sheets.

Imagine is one of numerous reinsures to raise new capital in anticipation of harder market conditions. Insurers and reinsurers must hold a certain amount of capital in check, to satisfy regulators they have the money to pay future claims, before being able to sell more policies.

?Clearly this positions us well for the 2006 renewal season and beyond,? said Imagine Group co-chief executive and chief underwriting officer Bob Forness.

The group?s 2005 earnings, and the planned capital raising, will put the company?s capitalisation above $600 million.

Despite Katrina and other 2005 catastrophes, Imagine said it expected to double its net underwriting income in 2005 and also to post a profit for the year.