Beleaguered Bermuda insurer Quanta Capital Holdings has filed with regulators to raise up to $113 million through the sale of both common and preferred shares.

Quanta, in a filing yesterday with the US Securities and Exchange Commission, said it planned to sell up to 3 million series A preferred shares, to raise expected net proceeds of $71.8 million, and up to 10.7 million common shares, to raise expected net proceeds of $41.9 million, for general corporate purposes.

The offerings are being handled by investment firms Friedman, Billings, Ramsey and BB&T Capital Markets.

Spokeswoman Sabrena Tufts said there was no set closing date for the offerings, and that the success of the capital raising exercise would depend on market response.

Quanta, which has taken a string of losses over its two-year history, has been under pressure to boost its capital position after sustaining third quarter storm losses from hurricanes Katrina and Rita in the area of $68.5 million. The company also expects to see additional losses of between $8 million and $15 million from fourth-quarter storm Hurricane Wilma. The company also sustained storm losses in the region of $50 million in 2004.

The size of Quanta?s storm losses put its financial strength rating under threat for a downgrade, unless it boosted its capital position. And it has previously said it must raise additional capital before the end of the year, or be downgraded by leading insurance ratings agency AM Best.

It is understood Quanta may have considered other means to raise capital, in hopes that it could bypass a common share offering which creates new shares and could significantly dilute the value of existing shares.

During the company?s third quarter conference call then-chief executive Tobey Russ said: ?We need to continue to work with AM Best, have our rating reaffirmed with a stable outlook, so that we can re-engage the marketplace, and take what is a cloud hanging over us away and if that requires the raising of expensive capital without diluting our existing shareholders, then that?s the action that we?re going to take,? he told investors.

Quanta, which trades on the Nasdaq, has seen the value of its shares drop to $4 a share in the aftermath of August 29?s Hurricane Katrina, a storm that battered the Gulf Coast region to leave the industry with losses of up to $60 billion.

Quanta shares, which closed unchanged yesterday, have traded as high as $10.25 in the last year but are now trading at about $2.50 below book value. And the net effect of the share offerings could be a further dilution of shareholder value.

The company?s total shareholders? equity at the end of September was $372.2 million, while market capitalisation stood at $227.4 million.

A company?s book value is a measure of its intrinsic worth while market capitalisation measures where the company?s share price, a measure of investor confidence, is trading at any particular time.

Quanta said once it is able to raise the capital under the proposed offering, it expects AM Best to affirm its ?A-? financial strength rating.

The rating is likely to continue to be assigned a ?negative? outlook, which means a downgrade will still not have been ruled out.

Quanta said it expected a continued negative outlook on its rating to ?adversely affect our business, our opportunities to write new and renewal business and our ability to retain key employees?.

The company has already lost a number of staff including its chief executive Tobey Russ. No reason was given for Mr. Russ? departure last month but the company did disclose in a regulatory filing that he may be paid $3.5 million in severance, which is $2 million more than specified in his contract. Any options held or due to Mr. Russ for Quanta shares were also allowed to vest immediately.

Quanta?s contract with Mr. Russ, which was filed publicly, called for him to be paid twice his base salary of $750,000.

Yesterday Ms Tufts said the final amount Mr. Russ is paid was still under negotiation.

And she said that the $3.5 million being discussed includes the salary benefits that would be expected under a severance agreement, as well as other associated costs.

An interim chief executive, Robert Lippincott III, has been named until a permanent replacement can be found.

The company also saw its chief financial officer John Brittain leave in the summer. The position was initially filled by interim chief financial officer Jonathan J.R. Dodd, a post made permanent last month.

Former chief operating officer Michael Murphy also left that position in the summer, moving to the less senior role of chairman of the office of strategic innovation. The COO post has not since been filled.

And Quanta saw its senior most reinsurance executives Rick Pagnani in the US and David Whiting in Bermuda leave the company in recent weeks.

Mr. Pagnani and Mr. Whiting, who was responsible for the Bermuda operations, are believed to have left Quanta to join one of a dozen new reinsurers currently being formed in Bermuda to take advantage of an expected rise in premium pricing in 2006.

Kean Driscoll, a senior vice-president, property reinsurance, based in Bermuda is also believed to be leaving or have left Quanta to join one of the new start-up companies.