NEW YORK (Bloomberg) — Bermuda-based Assured Guaranty Ltd., the bond insurer backed by billionaire Wilbur Ross, reported a loss of $170 million for the second quarter following a markdown related to credit derivatives contracts.

The loss of $1.82 a share compared with profit for the same period a year earlier of $545.2 million, or $5.96, the company said yesterday in a statement.

Assured Guaranty, which dominates the market for new-issue municipal-bond insurance as former competitors including MBIA Inc. and Ambac Financial Group Inc. have had their credit ratings tumble, reported a $190.2 million after-tax unrealised loss on derivatives in the quarter.

The company, which bought competitor Financial Security Assurance Holdings Ltd. this year, guaranteed 9.1 percent of the US public-finance new issues sold during the first half. The company insured 7.8 percent of new issues during the same period of 2008.

"The traditional market leaders have seen their franchise values permanently impaired," Rob Haines, an analyst with independent research firm CreditSights said last month during a presentation on the future of the bond insurance business. "Going forward, Assured Guaranty should dominate the market."

Assured Guaranty is rated Aa2 by Moody's, two levels below the former industry standard of Aaa. MBIA Insurance Corp.'s rating dropped 15 steps to B3 while Ambac Assurance Corp. dropped 17 levels to Caa2.