NEW YORK (Bloomberg) - Primus Guaranty Ltd., the Bermuda-based company with $14 billion in credit-default swaps backing corporate and government debt, likely will not have to post collateral on its guarantees after regulators implement new rules for derivatives, according to a letter to shareholders.

A preliminary analysis of the Dodd-Frank Act signed into law by President Barack Obama last month does not appear to subject Primus' existing swaps to collateral and margin requirements, CEO Thomas Jasper wrote today in the letter posted on the company's website.

The company was concerned regulators would seek to require it to put up collateral to protect its trading partners, mostly banks, against losses on the guarantees, Mr. Jasper said May 13 on a conference call. Primus, which two years ago had $24.2 billion in outstanding credit swaps, posts no collateral under the terms of the trades.

"This means that Primus Financial could not be forced by the new law into posting margin on contracts that expressly forbid us from doing so," Mr. Jasper said today.

Primus is seeking to rebuild its business of selling debt guarantees to financial companies and said it hired investment bank Berkshire Capital Securities LLC to advise on "strategic alternatives" for its asset-management unit.

Primus hired Berkshire to help it find a strategic partner to acquire its approximately $3.5 billion credit investment management business, a person familiar with the discussions said last month.

The business includes eight collateralized loan obligations of about $2.8 billion, about $600 million of collateralised swap obligations and three hedge funds with more than $100 million of assets, according to the person.

The company, whose credit-swaps unit was shut out of the market amid the financial crisis that toppled Lehman Brothers Holdings Inc., Washington Mutual Inc. and other financial companies it bet on, is recovering from a surge in defaults that at one point wiped out almost a fifth of its capital.

Primus has said it's exploring a new credit-protection business while restructuring its swaps deals with banks to limit future losses.

The company reported today a second-quarter profit of $6.8 million, 18 cents a share, excluding market-value losses of $194.8 million on its swaps guarantees. Accounting for the unrealised losses, it had a net loss of $188.4 million, or $4.84 a share, in the three months ended in June, according to a statement. In the year-earlier period, Primus had net income of $596.9, or $14.46 a share.

The credit swaps declined to $14.1 billion as of June 30, from $16.4 billion in March.

Credit-default swaps, which are used to hedge against losses or to speculate on a company's ability to repay its debt, pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent.

Primus fell 15 cents, or 3.4 percent, to $4.23 at 11.26 a.m. in New York Stock Exchange composite trading. The stock gained 44 percent this year through Wednesday after more than doubling in 2009.