NEW YORK (Bloomberg) — Bermuda-based Security Capital Assurance Ltd., which stopped writing new business after being stripped of its AAA bond insurer rating, posted a $96.8 million first-quarter loss.

The loss amounted to $1.51 a share, and compares with net income of $37.3 million, or 58 cents, a year earlier, the bond insurer said in a statement yesterday.

"The credit environment in the first quarter of 2008 continued to be very difficult," SCA chief executive officer Paul Giordano said in the statement. "We are focused on trying to restructure our company."

XL Capital Assurance and XL Financial Assurance, SCA's bond insurance and reinsurance units, lost their AAA ratings after failing to raise capital to offset an increase in expected defaults on mortgage-backed securities the companies insured. Moody's Investors Service and Standard & Poor's cut the insurers' ratings six levels to the equivalent of A-, while Fitch Ratings slashed its rankings 11 levels to BB, below investment grade.

The company reduced the value of guarantees on credit derivatives by $187.2 million, causing the net loss.

SCA, which first sold shares to the public in 2006, has lost 97 percent of its market value in the past year. Trading of the company's shares on the New York Stock Exchange was suspended in March. The shares closed at 82 cents yesterday in over-the-counter trading.

SCA is asking stockholders for approval to change the company's name to Syncora Holdings Ltd. at a May 20 meeting. XL Capital Ltd., the Bermuda-based business insurer, said earlier this year it had written off its investment in SCA by $117 million, to nothing.