Late development: Security Capital put on ratings notice

Late today, Fitch Ratings put Security Capital Assurance on "rating watch negative." Fitch said the company's capital is more than $2 billion short of what's required to maintain a AAA rating. Fitch said Security Capital has four to six weeks to obtain commitments that would bolster its capital position, or it will cut the firm's rating two notches to AA. The problems stem from SCA's exposure to CDOs and RMBS (Residential Mortgage Backed Securities), including second-lien loans.

Why does this matter? Like MBIA and Ambac Financial, SCA is a bond insurance firm. If it loses its AAA rating, the impact on future business could be significant, to say nothing of the ratings on bonds that SCA insurers.

Here is SCA's comment on the matter. If you'll recall, MBIA recently announced a deal designed to bolster its capital position.