Quanta Capital Holdings, a Bermuda reinsurer, said it is developing a capital raising plan after estimating about $50 million in capital could be drained by claims from Katrina and Rita.

And it will suspend selling two kinds of property reinsurance policies until it assesses whether it has the tools to continue selling the policies for a profit, chief executive Tobey J. Russ said last night in a statement.

The young company ? 2004 was its first full year in operation ? sustained losses in the region of $50 million from 2004 hurricane activity. And on Tuesday night it said it expects losses again in the region of $50 million from Hurricanes Rita and Katrina.

The ratings for Quanta Reinsurance Ltd. and Quanta Europe were put under review with negative implications by rating agency A.M. Best Company, one of the largest insurance rating and information agencies, within hours of Quanta?s Tuesday loss estimate.

The ratings warning was based on concerns that hurricane claims could eat away 2005 earnings, and create a capital shortfall, A.M. Best said

Mr. Russ said he was ?disappointed? at the ratings warning. ?We believe that A.M. Best?s actions, while unfortunate, are consistent with their view of the industry in the aftermath of hurricanes Katrina and Rita.?

Industry estimates put the insured cost for Hurricane Katrina as high as $60 billion. Rita, by estimates, could cost the industry an additional $18 billion.

?We continue to work closely with A.M. Best as well as seek their affirmation of our rating at the A- (Excellent) level,? Mr. Russ said.

Quanta?s business prospects would be adversely affected by a ratings downgrade. Customers generally will only buy insurance and reinsurance from A rated companies, and most contracts carry an exit clause if the rating falls into the ?B? region, which Quanta would, if downgraded.

Mr. Russ said Quanta is ?currently reviewing our capital structure and developing a capital raising plan?.

During the year Quanta worked to develop its specialty insurance and reinsurance businesses, he said.

?Unfortunately, our results have been overshadowed by the unprecedented frequency and magnitude of the windstorm events over the last two years.

?The frequency and severity of these events have caused us grave concerns about the prospects for profitability in our technical risk property and property reinsurance lines of business.?

Because of these concerns, Quanta said it won?t sell these kind of property policies until an internal analysis determines whether risk modelling techniques can effectively assess what rates must be charged to turn a profit.

Quanta shares yesterday closed down 6.6 percent, or 39 cents, to $5.49 in trading on the Nasdaq.