Security Capital Assurance suffered a huge loss of almost $90 million in the third quarter, mainly due to a $143 million pre-tax unrealised mark-to-market decline on financial guarantee obligations.

Net income slumped from $28.4 million or 49 cents per share in the third quarter 2006 to (minus) -$89.9 million or (minus) -$1.40 per share for the same period this year.

But operating income for the third quarter 2007 increased 45 percent to $46 million or 72 cents per share, compared to 2006's like of like figures of $31.8 million or 55 cents per share.

This was largely down to earned premium and investment income growth during the quarter.

Paul Giordano, SCA's president and CEO, said: "We posted solid operating results this third quarter amid very challenging conditions in the credit markets.

"New business production in the third quarter was one of the strongest in our history, fuelled by generally higher pricing and stronger credit terms.

"Our triple-A ratings remain strong despite the stress on the residential mortgage market and we are well prepared to take advantage of the improved environment for new business."