NEW YORK (Bloomberg) — MBIA Inc. chief executive officer Gary Dunton said the world's largest bond insurer has more than enough capital to keep its AAA credit rating and dismissed speculation the company may go bankrupt.

Dunton, speaking on a conference call after Armonk, New York-based MBIA reported a $2.3 billion fourth-quarter loss, blamed "fear mongering" and "distortion" for driving the company's stock down more than 80 percent in the past year.

"It's very difficult to see the reputation of a company you love coming under fire," Dunton said. "The ground has literally opened up below us in the industry," he said.

MBIA is in the best position among its peers to survive the losses and downgrades on securities the industry guaranteed, Dunton said. MBIA's capital raising efforts will exceed the requirements necessary to keep its top credit ranking at Moody's Investors Service, he said, adding that speculation about MBIA's holding company liquidity risk is "nothing further from truth".

Dunton's comments helped alleviate concerns that the company would lose its top ranking, driving MBIA up as much as 14 percent in New York Stock Exchange trading and fuelling a rally in the Standard & Poor's 500 Index. Without the AAA stamp, MBIA's business would be crippled and ratings on $678 billion of securities would be thrown into doubt.

MBIA, which fell more than 15 percent in early New York Stock Exchange composite trading, rose 99 cents, or 7 percent, to $14.95 at 1:30 p.m., after Dunton made his remarks.

MBIA only allowed questions on the conference call yesterday to be submitted in advance through e-mail. This was MBIA's way of "taking the microphone away" from people who had "abused the privilege and ranted" in the past, Greg Diamond, head of investor relations said on the call. These people had become adversaries of the company, its employees, and its business relationships, Diamond said, without naming anyone specific.

The stock has been battered by investor concerns that MBIA might not have enough capital to cover losses on its guarantees, as well as by questions from hedge fund manager William Ackman as to whether the company had been completely forthcoming about its exposure to the slumping sub-prime mortgage market.

Short interest in MBIA was 46 million shares as of January 15, almost triple that of a year earlier as hedge funds including Ackman's Pershing Square Capital Management LP made bets on the stock declining further. Short sellers sell borrowed stock with the purpose of profiting by repurchasing the securities later at a lower price and returning them to the holder.

Ackman began questioning MBIA's AAA rating in 2002 and has since become one of the company's most vocal critics.

MBIA, Ambac Financial Group Inc. and other bond insurers have been hurt after expanding beyond their traditional business of backing municipal bonds to guaranteeing debt linked to riskier sub-prime mortgages as well as collateralised debt obligations. Fitch Ratings has already cut AAA rankings on three insurers, including Bermuda-based Security Capital Assurance (SCA).

"We're paying for those mistakes and I don't just mean MBIA, I mean all the monolines," Dunton said.

MBIA's fourth-quarter loss, which amounted to $18.61 a share, compared with profit of $181 million, or $1.32 a share, a year earlier. The results led to a full-year net loss of $1.9 billion, or $15.22 a share, snapping a streak of annual profitability dating back to at least 1991.

CDOs repackage assets such as mortgage bonds and buyout loans into new securities with varying risk. As the value of some CDOs plummet, ratings companies are pressing the insurers to add more capital.