Shares in Bermuda-based Security Capital Assurance Ltd. shot up 30 percent yesterday on hopes that regulators will provide support to the struggling bond insurance industry by attracting new capital.

At the close of trading, SCA shares had climbed 50 cents to $2.15. XL Capital Ltd, which owns a 46-percent stake of SCA, also had a good day, rebounding from hitting an eight-year low share price last Friday, to close up 3.5 percent at $40.89.

Another Bermuda-based bond insurer, Assured Guaranty Ltd., which has suffered less damage on the markets than most of its rivals in recent months, also enjoyed a modest climb, gaining 1.9 percent to close at $17.79.

Bond insurers have been under intense pressure on mounting concerns that mortgage-related losses will undermine their business models. Fitch Ratings cut Ambac's crucial AAA rating last week and rival ratings agencies have warned they may do the same.

But yesterday, the New York Insurance Department gave investors some hope.

Superintendent Eric Dinallo said his department is in talks with unidentified parties about possible future capital investments in the bond insurance industry.

Ambac shares jumped 29 percent to close at $7.97 yesterday, while rival MBIA Inc. gained even more, up 48 percent to $12.65.