NEW YORK (Bloomberg) — Security Capital Assurance may lose its AAA credit rating at Fitch Ratings, the first top-rated bond insurer put on notice since the industry came under scrutiny last month.

Security Capital plunged 22 percent in New York Stock Exchange composite trading after the top ranking of its XL Capital Assurance unit was placed on "rating watch negative" by Fitch yesterday.

The company's capital is at least $2 billion below what it needs to retain the AAA, Fitch said. SCA has four to six weeks to come up with "firm capital commitments" to meet the guidelines, or the rating will fall two levels to AA, Fitch said.

"It's simply the amount of capital needed to support their AAA ratings," Thomas Abruzzo, an analyst with Fitch Ratings in New York, said on a conference call with investors. "The actions we're taking are clearly proactive. It's not our intention to take actions today and take more actions down the road."

Security Capital is among seven AAA rated bond insurers that have been probed by Moody's Investors Service, Standard & Poor's and Fitch Ratings for the past month after declines in the credit quality of the securities they guarantee. A loss of its top ranking would wipe out XL's main business of using its AAA rating to guarantee $154.2 billion of debt.

"While we are disappointed with Fitch's decision today, we have a plan to address their additional capital requirements," Security Capital chief cxecutive officer Paul Giordano said in a statement yesterday. "Our plan involves a range of options for increasing our capital position within the time period indicated by Fitch."

If all the companies were to falter, $2.4 billion of insured securities would be thrown into doubt, costing as much as $200 billion, according to data compiled by Bloomberg.

Hamilton, Bermuda-based Security Capital is down 71 percent since it went public in August 2006. The shares fell $1.50 to $5.45.

Shares of other insurers fell on concerns Fitch may also deem their capital insufficient. Ambac Financial Group, also given a "moderate" chance of needing more capital by Fitch, tumbled 7.9 percent to $24.87. MBIA, the largest bond insurer, fell 3.3 percent to $31.92.

Security Capital and Ambac hasn't announced plans to raise additional capital. MBIA this week raised $1 billion in a sale of stock to Warburg Pincus to help avert a downgrade.

Credit-default swaps tied to the bonds of XL Capital soared 100 basis points to 540 basis points, according to data from broker Phoenix Partners Group and CMA Datavision in New York. The contracts, used to speculate on the company's ability to repay its debt, increase when investor sentiment deteriorates.

A basis point on a credit-default swap contract protecting $10 million of debt for five years is equivalent to $1,000 a year.

Security Capital is in discussions with Fitch, Moody's and S&P, Giordano said in the statement. Moody's and S&P are continuing their assessment, he said. The ratings companies stopped short of putting the insurers under formal review last month, giving them time to come up with fresh capital.

Fitch last month said XL Capital faced a "moderate" risk of falling below its benchmarks for its rating category.

The bond insurers reported combined losses of $2.9 billion in the third quarter after writing down the value of some of the collateralised debt obligations and other securities they guarantee amid the worst housing slump in two decades.'

Of the securities XL insures, 38 percent are municipal bonds, 46 percent are structured finance securities and 16 percent are international transactions.

Fitch focused its examination on $16.1 billion of CDOs backed by subprime mortgages. Most of those transactions were underwritten in 2006 and 2007, years that are showing the most credit deterioration, Fitch said today.

"The announcement on SCA reflects sharp downgrades on a number of structured finance CDOs insured by the company," Abruzzo said.

All of the CDOs that SCA insured were rated AAA at the time the company agreed to back them, and some have fallen to below investment grade in recent weeks, Abruzzo said. Fitch went through every CDO guaranteed by Security Capital before placing the debt on a formal review, Abruzzo said.

"We had to literally go through deal by deal and quite frankly that takes time," he said. "Our CDO analysts have been working around the clock to support the effort."