Ambac, the world’s second-biggest bond insurer, on Friday lost its crucial triple-A credit rating, undermining its ability to add new business and dealing a blow to the billions of dollars of securities it has guaranteed.

Rating agency Fitch cut the bond insurer’s credit rating to double-A, citing a $1bn capital shortfall caused by losses on mortgage-related bonds Ambac has guaranteed. Fitch did not rule out further downgrades, citing “significant uncertainty with respect to the company’s franchise, business model and strategic direction”.