MBIA and Ambac, the top two bond insurers, said they won't seek to raise new capital to save their insurance units' AAA ratings, after Moody's said it would likely downgrade the bond units' credit ratings yesterday. The two firms have raised a combined $4.1 billion in the last six months to stave off downgrades, as a surge in mortgage defaults threatened to drain the insurers' capital reserves. "The disconnect between the market's perception and the rating agencies' assigned ratings has finally become an elephant in the room too big to ignore," said Gimme Credit analyst Kathleen Shanley. ( Bloomberg ) A credit downgrade would likely cripple the insurers' ability to write new business. ( Reuters )