NEW YORK (Reuters) — Bermuda-based bond insurer Assured Guaranty Ltd. said it will cut as much as 20 percent of its workforce by March and expects to free up about $1 billion in capital over the next three to five years as it winds down a structured finance portfolio.

The company, which has reduced its head count to about 370 from 500, plans to cut a further 15 percent to 20 percent by March next year. A spokeswoman said yesterday that the move would have no impact on the company's Bermuda operations, which is based in the Ace Tempest Re Building, in Woodbourne Avenue.

On Monday, Assured said it would sell nearly 24 million of its shares, which, analysts believe, would help the company raise $500 million. This is way above Assured's previous target of $300 million, required to meet rating agency Moody's Aa3 rating.

Shares of the Hamilton, Bermuda-based company dropped 3.4 percent at $21.91 on the New York Stock Exchange. More than 15 million shares changed hands compared with a three-month average volume of less than two million.

J.P. Morgan Securities slashed its price target on the company's stock by 12 percent to $37 and said although the additional $200 million of proceeds will allow the company to avoid the reinsurance transaction, the deal could be 'fairly dilutive' to earnings.

Wells Fargo analyst Jim Shanahan said the company's shares should still continue to outperform financial peers, as it is the dominant remaining player in the market, with very profitable new business opportunities. Assured Guaranty, in which billionaire investor Wilbur Ross holds a stake, has largely escaped the credit problems that crippled rivals Ambac Financial Group Inc. and MBIA.

Ross pledged to invest as much as $1 billion in Assured last year as the municipal-bond insurer looked to boost its capital to take market share from weaker rivals. WL Ross & Co., the company controlled by Ross, owns 10.2 percent of Assured stock.