NEW YORK (Bloomberg) - Bermuda-based Primus Guaranty Ltd., a manager of $23 billion in credit-default swaps, posted its biggest loss after writing down the value of guarantees it has on mortgage-backed securities. The shares fell the most ever.

The fourth-quarter loss was $403.8 million, or $8.97 a share, the company said in a statement yesterday. Excluding the drop in market value of its credit-default swap portfolio, the company said its loss was $28 million, or 62 cents a share. The average analyst estimate was for a profit of 32 cents a share, according to survey by Bloomberg News.

The company, which is paid a fee in exchange for agreeing to cover losses on securities in case of a default, set aside $40.9 million last quarter to cover impairments on mortgage- backed debt. Delinquencies on home loans have surged to record rates, leading to $133 billion in writedowns and credit losses at the world's biggest banks and securities firms in the past year.

Primus fell 61 cents, or 13 percent, to $3.98 in New York Stock Exchange trading. The percentage decline is the worst since Primus first sold shares to the public in September 2004. The stock is down more than 65 percent in the past year.

Primus revenue, excluding the drop in market value and the provisions for losses on securities linked to sub-prime mortgages, rose 16 percent to $33.6 million as the company sold protection on a record $3.2 billion of debt last quarter.

The so-called economic revenue figure doesn't adhere to generally accepted accounting principles. Sub-prime loans are made to borrowers with poor or limited credit histories or high debt burdens.

In the year-earlier period, Primus reported profit of $25.3 million, or 57 cents a share, on a GAAP basis.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on the ability of a company or other borrowers to repay their debt.