Quanta Capital Holdings was better prepared for megastorm Katrina because of taking a loss on a wave of four storms last year, according to the company?s chief executive Tobey Russ.

The Bermuda start up company (2004 was its first full year in business) was launched into a turbulent reinsurance market turned upside down by the unprecedented Atlantic storm activity last year, as a costly string of hurricanes made landfall in the US. ?It was the right strategy but the wrong year,? chief executive Tobey Russ joked in an interview with Reactions in Monte Carlo this week. It was a lesson learned however, and one that left Quanta better protected by the time Katrina devastated New Orleans on August 29.

?We cut our PML [probable maximum loss relating to windstorm by 50 percent and put in place retro cover and industry-loss warranties to protect ourselves. As a result we did a lot better than in 2004,? Mr. Russ said. Retrocessional, or retro cover, are policies that a reinsurer can buy from a specialist reinsurer to held spread the risk in policies it has sold to insurers.

Quanta has yet to produce a loss estimate for Katrina. ?We really want to come out with a number we can stand behind,? Mr. Russ explained. ?It?s a complex process where models don?t do a great job. We?re looking at it from an underwriting perspective,? he said, after models have come under fire since Katrina.

Quanta?s original strategy was to write reinsurance business but then diversify quickly into speciality insurance lines. Its portfolio now comprises 65 percent speciality insurance and 35 percent speciality reinsurance. Reinsurance is insurance for insurers. Mr. Russ, who previously worked for Chubb and AIG, says Quanta will continue to develop the company?s speciality insurance business.

European business represented 18 percent of Quanta?s total net premiums through June.

Quanta formed a Dublin-based operation and later opened a Lloyd?s business in 2004. It won approval from the Financial Services Authority for its London branch earlier this year. While Mr. Russ believes Katrina is primarily viewed as a property-catastrophe loss, attention will soon switch to its impact on non-property lines.

?Nobody knows how significant that element is going to be yet. But as the numbers grow, there is going to be a profound impact across the business,? Mr. Russ said. He foresees serious disputes arising out of residential and commercial claims over what is flood damage and what is wind surge. ?It?s not that difficult to determine the difference but there is growing political and legal pressure to blur the line. That?s a shame because it means that there is no integrity in the flood exclusion,? echoing the views of another Bermuda executive, Partner Re?s Patrick Thiele (see separate story).