NEW YORK (Bloomberg) — Security Capital Assurance rose 5.3 percent in New York trading yesterday after the bond insurer and reinsurer reported a 50 percent increase in new business.

Security Capital's adjusted gross premiums, a measure of new business production, likely rose to $140 million in the third quarter from $91 million a year earlier, the Bermuda-based company said in a statement after market hours.

The shares closed up $1.11 to $21.98 in New York Stock Exchange composite trading. They had fallen 25 percent this year prior to yesterday.

"We continue to believe SCA is materially undervalued without merit, and we reiterate our overweight rating," JPMorgan Securities analysts Andrew Wessel and Daniel Kim wrote in a research note.

Security Capital, the former XL Capital unit that sold shares to the public in August 2006, provides financial guarantees to debt issues and reinsurance to other guarantee insurers. The company disclosed the jump in new business in a statement that also revealed a $145 million mark-to-market loss on credit derivatives. The unrealised loss likely resulted in a net loss for the quarter, the company said. Security Capital plans to report full results on October 25.