NEW YORK (Bloomberg) — MBIA Inc. and Ambac Financial Group Inc., the two largest bond insurers, as well as Bermuda-based Security Capital Assurance Ltd., are considering raising capital through reinsurance or sales of debt or stock to maintain their AAA ratings, executives said.

"We're going to defend the AAA credit rating," Ambac chief financial officer Sean Leonard said yesterday at a conference arranged by Bank of America Corp. in New York.

MBIA, Ambac and Bermuda-based Security Capital Assurance Ltd. are among at least eight bond insurers seeking to ward off potential credit-rating downgrades by Moody's Investors Service, Fitch Ratings and Standard & Poor's. Lower ratings would cast doubt over the rankings of the $2.4 trillion of debt that the companies guarantee, potentially causing losses of as much as $200 billion, according to Bloomberg data.

The ratings companies are examining the insurers, also known as monolines, to see if they have enough capital to support their top rankings after downgrades of the securities they guaranteed.

"If any major monoline were to have a rating change it would have a real impact on all of the business of the monolines," MBIA chief financial officer Chuck Chaplin told the conference.

SCA could add capital of $75 million to $125 million each quarter if it stopped underwriting, Edward Hubbard, president of XL Capital Assurance, SCA's bond insurance unit, told the conference. The company has no plans to do that, he said. Hamilton-based SCA may also raise about $200 million of debt and pass the proceeds along to XL, he said.

"Job No. 1 is to show that we have the stability around our AAA ratings that investors expect," Hubbard said.

Ambac will consider reinsuring some of its assets to bolster capital, Leonard said. The New York-based company has also stopped buying back shares, he said.

MBIA, based in Armonk, New York, is also considering reinsuring assets as well as the sale of debt or equity securities, Chaplin said. MBIA has reinsurance agreements with a group of companies under which it reinsures about 10 percent of its business, Chaplin said. Limits under those agreements would allow the company to insure about 30 percent, he added.

"All the options are on the table," Chaplin said.

As well as using reinsurance, the companies could reduce new business, allowing capital to build up.

Moody's and Fitch, both based in New York, said earlier this month that Ambac faced "moderate" risk of falling below benchmarks for its rating category. They said MBIA had a low risk. Moody's described SCA has having a "moderate" chance of failing its new capital test.

The ratings companies are reviewing the guarantors' insurance of collateralised debt obligations backed by subprime mortgages, many of which have been downgraded in the past four months. CDOs take pools of securities and then slice them into pieces with different credit ratings, from no rating through AAA.

Ambac fell 24 cents to $23.78 at 12.39 p.m. in New York Stock Exchange Composite trading. The shares had fallen 73 percent this year before yesterday. MBIA dropped $1.43 to $31.63 and SCA rose 73 cents to $5.18.

Ambac, which pioneered municipal-bond insurance in 1971, has been rated AAA since 1979. When backing debt, the financial guarantors agree to make principal and interest payments if an issuer can't, allowing the debt to get the highest rankings.