Security Capital's $1.5 billion loss

Bond insurer expects to post charge this month, reducing equity to under $100 million; stock off more than 90% in six months.

March 3 2008: 11:09 AM EST

NEW YORK (AP) -- Security Capital Assurance Ltd. expects to report $1.5 billion in credit costs for the fourth quarter, hammering the value of the bond insurer's assets.

The beleaguered bond insurer postponed filing its annual report with the Securities and Exchange Commission until later this month, saying the company is still working on its financial statements.

SCA (SCA), which writes insurance policies promising to repay bondholders when bond issuers default, expects to incur a $1.5 billion charge. This charge reflects how much value its contracts pledging to repay debt that is now considered more risky have lost.

At the end of the third quarter, the company reported shareholders' equity -- or assets minus liabilities -- of $1.59 billion. The charge will shrink the company's equity to less than $100 million.

May stop new business. Banc of America Securities analyst Tamara K. Kravec wrote in a client report she expects SCA to go into "runoff," or stop writing new business and just manage its existing book of policies.

SCA has been downgraded by all major ratings firms, and its stock has plunged more than 90 percent in the past six months.

The company expects $645 million in costs for its policies covering collateralized-debt obligations, or bundles of bonds backed by assets like mortgages. SCA expects $44 million in costs for insuring home-equity mortgage debt.