NEW YORK (Bloomberg) - Assured Guaranty Ltd., the bond guarantor backed by billionaire Wilbur Ross, lost its top insurance rating from Fitch Inc.

The main unit of Hamilton, Bermuda-based Assured was cut two levels to AA from AAA because "mortgage-related exposures are a particular area of concern and potentially represent a material source of credit risk", New York-based Fitch said.

Assured, which plans to acquire competitor Financial Security Assurance Inc. (FSA), lost its top grade from Moody's Investors Service in November. At the time, Assured and FSA became the last of the bond insurers that entered the financial crisis with the highest rankings to be stripped of the distinction by one or more of the three biggest rating firms.

While the expected FSA-Assured merger may boost their capital and "could create a formidable and flexible franchise to meet pent up demand for financial guaranty insurance" the transaction has taken longer than expected to close, Fitch said. Along with providing $18.4 billion of insurance on mortgage-related debt, Assured covers $7.3 billion of collateralised debt obligations composed of trust preferred securities "and certain other structured finance transactions which have been subject to ratings downgrades" and may cause losses, Fitch said.

"While we appreciate that the ultimate performance of our US RMBS and TruPs exposures is uncertain, we believe that more time is necessary to allow our collateral performance to develop and also to see the potential benefit of the federal programmes that could affect the future performance," Assured CEO Dominic Frederico said in a statement. Residential-mortgage-backed securities, or RMBS, are used to package home loans into bonds. Trust preferred securities, or TruPs, are a type of note issued by banks and other companies that rank between debt and equity securities.