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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended June 30, 2004
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from   to  

Commission file number
000-50885

QUANTA CAPITAL HOLDINGS LTD.

(Exact name of registrant as specified in its charter)


Bermuda N/A
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)

1 Victoria Street, Fourth Floor
Hamilton HM11
Bermuda
(Address of principal executive offices and zip code)

441-294-6350
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes [ ]    No [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [ ]    No [X].

As of August 3, 2004 there were 56,798,218 common shares, $0.01 par value per share, outstanding.

    



QUANTA CAPITAL HOLDINGS LTD.

INDEX TO FORM 10-Q


    Page No.
PART I.    FINANCIAL INFORMATION
Item 1 Financial Statements
  Condensed Consolidated Balance Sheets at June 30, 2004 (unaudited) and
    December 31, 2003		 3
  Condensed Consolidated Statements of Operations and Comprehensive Income for
    the three months and six months ended June 30, 2004 and 2003 (unaudited)		 4
  Condensed Consolidated Statements of Changes in Shareholders' Equity for the six
    months ended June 30, 2004 (unaudited)		 5
  Condensed Consolidated Statements of Cash Flows for the six months ended
    June 30, 2004 and 2003 (unaudited)		 6
  Notes to the Unaudited Condensed Consolidated Financial Statements (unaudited) 7
Item 2 Management's Discussion and Analysis of Financial Condition and Results of
    Operations		 20
Item 3 Quantitative and Qualitative Disclosures about Market Risk 43
Item 4 Controls and Procedures 45
PART II.    OTHER INFORMATION
Item 1 Legal Proceedings 46
Item 2 Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities 46
Item 4 Submission of Matters to a Vote of Security Holders 46
Item 6 Exhibits and Report on Form 8-K 46


PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QUANTA CAPITAL HOLDINGS LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars except for share and per share amounts)


  June 30,
2004		 December 31,
2003
  (unaudited)  
Assets            
Investments at fair value (amortized cost: June 30, 2004, $466,263; December 31, 2003, $465,552) $ 461,777   $ 467,036  
Cash and cash equivalents   48,122     47,251  
Accrued investment income   4,233     2,995  
Premiums receivable   154,751     10,961  
Losses and loss adjustment expenses recoverable   2,284     3,263  
Other accounts receivable   10,362     8,957  
Deferred acquisition costs   38,495     6,616  
Deferred reinsurance premiums   23,256     1,925  
Property and equipment, net of accumulated depreciation of $652 (December 31, 2003: $185)   3,120     1,117  
Goodwill and other intangible assets   20,986     21,351  
Other assets   5,217     2,289  
Total assets $ 772,603   $ 573,761  
Liabilities            
Reserve for losses and loss adjustment expenses $ 51,545   $ 4,454  
Unearned premiums   183,749     20,044  
Environmental liabilities assumed   6,762     7,018  
Reinsurance balances payable   16,322     334  
Accounts payable and accrued expenses   11,783     17,609  
Net payable for investments purchased   15,922     34,766  
Deferred income and other liabilities   7,895     2,053  
Total liabilities $ 293,978   $ 86,278  
Shareholders' equity            
Preferred shares
($0.01 par value; 25,000,000 shares authorized; none issued and outstanding at June 30, 2004 and December 31, 2003)		 $ —   $ —  
Common shares
($0.01 par value; 200,000,000 shares authorized; 56,798,218 issued and outstanding at June 30, 2004 and December 31, 2003)		   568     568  
Additional paid-in capital   523,763     524,235  
Accumulated deficit   (41,187 )    (38,477 ) 
Accumulated other comprehensive (loss) income   (4,519 )    1,157  
Total shareholders' equity $ 478,625   $ 487,483  
Total liabilities and shareholders' equity $ 772,603   $ 573,761  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

3



QUANTA CAPITAL HOLDINGS LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Expressed in thousands of U.S. dollars except for share and per share amounts)


  Three Months Ended Six Months Ended  
  June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
    (Predecessor)   (Predecessor)
Revenues                        
Gross premiums written $ 134,971   $ —   $ 253,700   $ —  
Net premiums written $ 114,063   $ —   $ 226,518   $ —  
Change in net unearned premiums   (57,208 )    —     (142,428 )    —  
Net premiums earned   56,855     —     84,090     —  
Consulting revenues   8,346     6,959     14,853     13,230  
Net investment income   3,318     4     6,553     12  
Net realized (losses) gains on investments   (827 )    —     368     —  
Net foreign exchange (losses) gains   (96 )    —     128     —  
Other income   235     —