Quanta Capital Holdings on Tuesday night announced it expected to sustain losses in the region of $50 million from hurricanes Katrina and Rita.

In an after-market announcement, Quanta, a Bermuda reinsurance and insurance company, said it expected losses from Katrina to come in between $40 million and $50 million. Hurricane Rita is projected to cost the company a further $2 million to $8 million.

Quanta was the last of the Bermuda-based publicly-listed insurers to make public a loss estimate from Katrina, the devastating hurricane that lashed the Gulf Coast five weeks ago.

Within hours of Quanta?s announcement, ratings agency A.M. Best moved to put the company on negative watch, indicating a possible downgrade of financial strength ratings, if the company cannot address rating analysts? concerns.

Quanta, which is only rated by A.M. Best, currently has an A- rating.

The company could have to boost its coffers to satisfy A.M. Best, which said its ratings warning followed concerns that Quanta could face a ?potential capital shortfall?.

Spokesperson Sabrena Tufts said the company is in talks with A.M. Best and that ?several options?, including raising capital, are being looked at. ?We are evaluating what steps we have to take.?

She said the company expects to say more about the ratings warning shortly.

Investment analysts at Fox-Pitt Kelton and Friedman Billings Ramsey, two of the firms that rate Quanta as an investment, said in client notes that they expect the company to take the capital raising route. Fox Pitt said up to $100 million could be raised in a share offering.

But it warned that there are risks if ?the company is forced to raise capital at unfavorable/dilutive terms or has difficulty raising enough capital? to allow it to operate at a profit.

A rating downgrade could leave Quanta scrambling for customers.

An insurer that sees its ratings fall out of the ?A? region, as Quanta would if downgraded, can lose business because many clients will only buy policies from A-rated companies.

The company?s capital base is already battered after claims from four hurricanes that damaged Florida last year took a bite. At the end of the year, Quanta shareholders? equity fell to $430.9 million from $487.48 million. Quanta posted $55 million in losses in 2004, the company?s first full year in operation.

The company?s 2005 hurricane loss estimates, which are preliminary and not based on claims, represent about 11 percent of the company?s total capital.

Friedman Billings Ramsey predicted Quanta will again post a loss this year but could become profitable in 2006.

Investors were cautiously upbeat on Quanta yesterday with shares on the Nasdaq gaining two cents to close at $5.88.