NEW YORK (Bloomberg) — Bermuda-based Primus Guaranty Ltd., a manager of $23 billion in credit-default swaps, posted a wider third-quarter net loss as it marked down the value of its contracts.

The net loss widened to $390.2 million, or $8.63 a share, from $128.4 million, or $2.85, a year earlier, the company said in a statement yesterday. Excluding the unrealised market-value losses of the contracts, the company said it had a loss of $62.1 million, or $1.37 a share.

"The third quarter was an extremely difficult operating environment for Primus, with the turmoil in the credit markets significantly impacting the company," said Primus chief executive officer Thomas Jasper. "New business activity continues to be adversely affected and we expect that it will remain so for the foreseeable future, even though we have high ratings and a substantial level of capital.

"Our primary focus now is on conserving capital, in particular the value embedded in our credit protection portfolio, for shareholders."

Primus shares rose eight cents (11 percent) to $0.75 in yesterday's trading.

Primus is limiting its trading activities as it works to address last month's loss of its top Aaa counterparty rating at Moody's Investors Service. The company disclosed it had sold $164.3 million in credit-default swap protection on Lehman Brothers Holdings Inc., Washington Mutual Inc. and Kaupthing Bank hf. Lehman and WaMu both filed for bankruptcy protection last month, and Kaupthing Bank was seized by the Icelandic government.

Primus, which has lost 90 percent of market value this year, also had to pay on $215 million in contracts linked to mortgage-finance companies Fannie Mae and Freddie Mac, which were taken over by the US government, triggering a technical default.

Primus Financial Products LLC, the company's swaps unit, was cut one grade to Aa1 on October 1 by Moody's, which said it may lower the rating further. Standard & Poor's has said it may also downgrade the unit.