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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 March 31, 2005

[ ]  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   [X]    No   [ ]

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

As of May 5, 2005 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 March 31, 2005 (unaudited) and December 31, 2004   3  
  Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months ended March 31, 2005 and 2004   4  
  Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2005 and 2004   5  
  Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004   6  
  Notes to the Unaudited Condensed Consolidated Financial Statements   7  
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations   18  
Item 3 Quantitative and Qualitative Disclosures about Market Risk   40  
Item 4 Controls and Procedures   42  
PART II. OTHER INFORMATION      
Item 1 Legal Proceedings   44  
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds   44  
Item 6 Exhibits   44  

2



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)


  March 31,
2005		 December 31,
2004
  (unaudited)  
Assets
Investments at fair value (amortized cost: March 31, 2005, $657,881;
December 31, 2004, $600,161)		            
Available for sale investments $ 611,019   $ 559,430  
Trading investments related to deposit liabilities   39,633     40,492  
Total investments at fair value   650,652     599,922  
Cash and cash equivalents   52,985     32,775  
Restricted cash and cash equivalents   53,441     42,482  
Accrued investment income   4,513     4,719  
Premiums receivable   187,609     146,784  
Losses and loss adjustment expenses recoverable   24,874     13,519  
Other accounts receivable   9,424     11,575  
Deferred acquisition costs, net   46,285     41,496  
Deferred reinsurance premiums   57,445     47,416  
Property and equipment, net of accumulated depreciation of $2,282
(December 31, 2004: $1,625)		   5,391     4,875  
Goodwill and other intangible assets   20,432     20,617  
Other assets   25,402     14,553  
Total assets $ 1,138,453   $ 980,733  
Liabilities            
Reserve for losses and loss expenses $ 215,403   $ 159,794  
Unearned premiums   309,356     247,936  
Environmental liabilities assumed   6,406     6,518  
Reinsurance balances payable   26,540     24,929  
Accounts payable and accrued expenses   14,986     17,360  
Net payable for investments purchased   32,128     3,749  
Deposit liabilities   42,676     43,365  
Deferred income and other liabilities   4,089     4,935  
Junior subordinated debentures   61,857     41,238  
Total liabilities $ 713,441   $ 549,824  
Commitments and contingencies (Note 8)            
Shareholders' equity            
Preferred shares
($0.01 par value; 25,000,000 shares authorized; none issued and outstanding at March 31, 2005 and December 31, 2004) $ —   $ —  
Common shares
($0.01 par value; 200,000,000 shares authorized; 56,798,218 issued and outstanding at March 31, 2005 and December 31, 2004)   568     568  
Additional paid-in capital   523,771     523,771  
Accumulated deficit   (91,670 )    (93,058 ) 
Accumulated other comprehensive loss   (7,657 )    (372 ) 
Total shareholders' equity $ 425,012   $ 430,909  
Total liabilities and shareholders' equity $ 1,138,453   $ 980,733  

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 LOSS
(Expressed in thousands of U.S. dollars except for share and per share amounts)


  For the three
months ended
March 31, 2005		 For the three
months ended
March 31, 2004
Revenues
Gross premiums written $ 172,726   $ 118,729  
Net premiums written $ 142,877   $ 112,455  
Change in net unearned premiums   (51,391 )    (85,220 ) 
Net premiums earned   91,486     27,235  
Technical services revenues   7,150     6,507  
Net investment income   5,225     3,235  
Net realized (losses) gains on investments   (483 )    1,195  
Net foreign exchange (losses) gains   (112 )    224  
Other income   1,686     191