The subprime mortgage crisis is claiming more victims as shares of bond insurers Ambac Financial Group, Inc. and MBIA, Inc. fell sharply on Thursday over concerns that they could lose their AAA credit ratings.

Ambac shares closed down $6.73 or 51.89 percent to $6.24. MBIA shares dropped $4.18, or 31.19 percent to $9.22.

Moody's Investor Service warned today that it is considering downgrade both firms' ratings, which would effectively removing the trust necessary for them to gain new business.

Merrill Lynch said on Thursday that it wrote down $3.1 billion in hedges bought from ACA Capital Holdings, whose shares also sank more than 20 percent.

Yesterday, Ambac said it would raise $1 billion after it cut its dividend by two-thirds, replaced its chief executive and wrote down $5.4 billion.

Combined, Ambac and MBIA insure over $1 trillion in debt.

Merrill Lynch