NEW YORK (Bloomberg) - CIFG Guaranty's bond insurer ratings were cut to below investment grade by Fitch Ratings on concern the company's losses may cause it to become insolvent.

The insurer financial strength rating was cut 11 levels to CCC from A-, New York-based Fitch said on Friday in a statement. CIFG is at risk of falling below its minimum regulatory capital requirements, which could trigger mark-to-market payments on $57 billion of credit-default swap contracts, Fitch said.

"Based on current market valuations, Fitch does not believe CIFG would have sufficient claims-paying resources to meet these obligations, triggering a likely default of its insurance subsidiaries," Fitch analysts Joo-Yung Lee and Thomas Abruzzo wrote in the report.

CIFG is among bond insurers struggling to maintain capital after expanding beyond their traditional business of municipal insurance to guarantees on collateralized debt obligations, pools of debt such as mortgages and slice them into new pieces with varying ratings.

The bond insurer is expected to lose $2.6 billion to $3.6 billion, on a present value basis, on CDOs backed by sub-prime mortgages, Fitch said.

"CIFG is focused on developing and implementing strategic alternatives for its problematic credits which will significantly improve the company's capital position," Michael Ballinger, a spokesman for the company said in an e-mailed statement.

CIFG insured $95 billion of debt at year-end, according to its website. The new credit ratings, which affect CIFG Guaranty, CIFG Europe, and CIFG Assurance North America, remain under review, Fitch said.

If CIFG is able to remediate some of its risks, it could improve its capital position significantly resulting in an upgrade, Fitch said. CIFG asked Fitch to stop rating it on March 31 after the credit rating company cut CIFG to A- from AAA.

French customer-owned banks Caisse d'Epargne and Banque Populaire in December took control of CIFG Guaranty from their jointly controlled investment bank Natixis SA.