NEW YORK (Bloomberg) — Bermuda-based Security Capital Assurance Ltd., under pressure from Fitch Ratings to come up with $2 billion, said it won't raise new capital.

"The unprecedented uncertainty and instability affecting our industry make it impractical to consider raising new capital at the present time," the bond insurer said yesterday in a statement after the close of regular trading on US exchanges.

Instead, Security Capital said it will seek to lower its capital needs through reinsurance. Reinsurers assume premiums and risks of insurance companies, reducing the amount of capital an insurer needs in reserve to pay claims.

Losses on mortgage-related bonds have left bond insurers struggling to retain the AAA credit ratings they use to guarantee $2.4 trillion in assets. Ambac Financial Group Inc., the second-largest bond insurer after Armonk, New York-based MBIA Inc., lost its AAA grade from Fitch this month on concern that claims will rise from bonds tied to sub-prime mortgages.

Security Capital spokesman Michael Gormley said the company would seek reinsurance from "a variety" of providers in the market.

Security Capital, which has AAA ratings from Fitch, Standard & Poor's and Moody's Investors Service, is being scrutinised by all three rating companies for possible downgrade.

The company fell 39 cents to $3.40 in extended New York Stock Exchange trading. The stock had risen $1.64, or 76 percent, to $3.79 in regular trading after the New York Insurance Department said it met with banks to discuss raising capital for the bond guarantors. The company has lost 86 percent of its market value in the past 12 months.

XL Capital Ltd., the Bermuda-based insurer that founded Security Capital and owns 46 percent of the stock, rose $5.41, or 13 percent, to $46.30. The stock is down 32 percent in the past year.

Moody's last month said it's reviewing XL's A3 senior debt and the Aa3 financial strength grade of its insurance units, because of financial ties to Security Capital, including reinsuring some of the bond insurer's obligations. XL Capital chairman Michael Esposito resigned from the board in December to focus on his duties as chairman of Security Capital.