Quanta's results hit hard by catastrophe losses
Quanta reported "disappointing" results for 2004 - after its first year's profits were wiped out by having to pay out $67.6m in windstorm catastrophe losses.
The new Bermuda-based company took a gamble for its inaugural year by weighting its portfolio heavily with reinsurance in order to boost profits for its new shareholders, but this plan fell flat on its face with multiple catastrophic events occurring during the year.
Now this new kid on the block - it was set up in the wake of the capital crunch caused by the September 11 terrorist attacks - is having to re-group and re-focus on the technically challenging specialty lines it was set up to cover.
"While we believe our reinsurance portfolio was well constructed and was well balanced around well-thought out risk management parameters, it was also a very significant weight of our total portfolio," said chief executive officer Tobey Russ. "The reinsurance in our portfolio in 2004 was intended in normal loss conditions to produce an attractive return in our first year of operation while we built up the infrastructure and established momentum in our specific insurance business."
While the net loss for the fourth quarter of 2004 was $14.4m and the net loss for the full year was $54.6m, Russ said the figures overshadowed other progress made during the year.
Quanta only listed on the NASDAQ in May 2004, just eight months after it raised $505m in initial net capital from investors. And 2004 has been busy - AM Best affirmed the financial strength rating of "A-" (Excellent), Quanta opened not only a Dublin office to expand its European business, but also set up a new specialty lines Lloyd's syndicate, Syndicate 4000 and became licensed in 44 US states as well as in Washington DC.
And Russ is upbeat about the future: "Despite the difficult start we had, we are committed to our strategy and future development of specialty lines services. We continue to gather momentum in each of our business lines."