NEW YORK (Associated Press) - Bermuda-based bond insurer Assured Guaranty Ltd. said a downgrade by Moody's Investors Service on Friday has stirred investors' fears and harmed the company's financial credibility.

Late on Friday, credit rating agency Moody's cut the company's issuer rating and the senior unsecured rating of its US holding company two notches to "A2" from "Aa3." It also cut the insurance financial strength rating of its reinsurance subsidiary and affiliated operating companies to "Aa3" from "Aa2." All the ratings are considered investment grade.

The credit rating agency attributed the cuts to greater weakness in the company's business model.

"In a market environment that requires more measured and consistent approaches from regulators, legislators and the rating agencies, Moody's behavior has been counterproductive," Assured's president and chief executive Dominic Frederico said in a statement late on Friday.

"Their repeated and prolonged credit review process has exacerbated investors' fears and harmed overall financial market credibility which ultimately has created more uncertainty about the value of our product than was necessary."

The company also suggested the downgrade was based more on broader market instability than Assured's own current financial standing. The moves are "especially disappointing", Assured said, considering its planned acquisition of Financial Security Assurance Holdings Ltd.

The company expects the $722 million deal, announced last week, to "provide investors with better risk diversification, greater claims paying resources and a larger capital base". Amid a broader market rally, Assured shares closed on Friday up 49 cents, or eight percent, to $6.61. The stock has ranged between $5.49 and $27.99 in the past year.

Assured was one of few companies in the financial guaranty business to have maintained triple-A ratings from three agencies, which has allowed the company to massively increase its share of new US municipal bonds insurance during the past year.