MBIA, the world’s largest bond insurer, has attempted to reassure investors it will maintain its high credit rating despite revealing a $2.3 billion (£1.1 billion) loss in the fourth quarter due to underwriting bonds linked to sub-prime mortgage debt.

The bond insurer’s loss compares to a $181 million profit in the fourth quarter of 2006. MBIA said that its losses are due to the poor performance of insured complex financial assets containing sub-prime mortgage debt.

MBIA, which guarantees bond interest-rate payments against default, said it would write down $3.5 billion on its credit derivatives portfolio and would also set aside $713.5 million as a “loss reserve” on its exposure to sub-prime home loans.

Gary Dunton, the chairman and chief executive at MBIA, said that he was “disappointed” by the results but said that it had secured $1.5 billion worth of a $2 billion capital raising exercise what would help off-set its sub-prime write-offs, and maintain its AAA credit rating.

Mr Dunton said: “We believe that these steps, along with reduced capital requirements resulting from slower business growth, will result in our capital position surpassing rating agency Triple-A requirements as currently articulated and will allow us to continue serving the needs of our clients and investors."

A failure to maintain the triple A rating could lead to another round of write-offs from America’s investment banks, many of who have been forced to cut the value of assets linked to sub-prime mortgage debt.

Companies such as MBIA must maintain a high credit rating since many bond investors require that their debt must be underwritten by a AAA-rated insurer. Also, the loss of its AAA credit rating cuts the value of the bonds it insures.

So far, MBIA has maintained its rating through a number of measures including securing a $1 billion agreement from Warburg Pincus, the US buy-out group, to buy $500 million worth of stock and underwrite a $500 million rights issue.

However, its rival, Ambac, has already lost its AAA-rating and Egan Jones Ratings Company, a US-based ratings group, has given MBIA a B-plus rating which is 13 notches below the AAA-rating the bond insurer has from S&P, Moody's and Fitch.

Earlier this month, Moody’s said that even with the new capital, it may cut the top credit rating for MBIA’s main unit.

Egan Jones Ratings said that the country’s largest bond insurers need a $200 billion capital injection to maintain their AAA rating.

Last week New York Insurance Department, which regulates the state's insurance industry held a meeting with Wall Street banks to garner support for a multi-billion dollar bailout of the bond insurance industry to stop companies going bust.