NEW YORK (Bloomberg) — Banks may lose $5 billion to $7 billion if bond insurers including those owned by MBIA Inc. and Ambac Financial Group Inc. lose their top ratings, less than what other analysts estimate, Morgan Stanley analysts said yesterday.

Even if the companies file for bankruptcy, the bond insurers themselves may continue to pay claims, Gregory Peters, the head of credit strategy at Morgan Stanley in New York, said on a conference call.

That would limit losses on credit-default swap contracts that banks and securities firms bought from the bond insurers to protect against losses on mortgage-linked securities.

The bond insurers "are still going to continue to pay claims, and so we think it's unreasonable to write down the entire amount," Peters said. Losses to banks and securities firms will be "negative, but not catastrophic," he said.

Oppenheimer & Co. analyst Meredith Whitney last week estimated banks may post $40 billion to $70 billion in write-downs should bond insurers lose their top ratings. Whitney didn't immediately return a telephone call yesterday seeking comment.

"That actually seems high to us to begin with," Peters said. "But that was a gross number. You need to consider the claims-paying resources" of the bond insurers.

Fitch Ratings last month stripped New York-based Ambac Assurance Corp. of its AAA rating, and Moody's Investors Service and Standard & Poor's are considering downgrading both Ambac and MBIA Insurance Corp. Bermuda-based Security Capital Assurance was also downgraded from AAA to A by Fitch.

Bond insurers guarantee $2.4 trillion of debt and are sitting on losses of as much as $41 billion, JPMorgan analysts Chris Flanagan and Kedran Garrison Panageas said in a January 25 report.