Shares of struggling bond insurer Ambac Financial Group, Inc fell after it announced a plan to raise $1.5 billion in capital to protect its valuable top-level credit rating following heavy losses linked to the subprime mortgage loans.

The New York-based firm will sell $1 billion in common stock and $500 million in equity units. The equity units are notes which investors can use to buy the company's common stock by May 2011. The insurer has been faced with billions of dollars in claims related to failures in the mortgage bond industry and other debt.

Skeptical investors reacted by selling the company's shares. Ambac stock fell $1.66, or 15.5 percent to $9.06 at 3:33 p.m. in New York.

Ambac has been under pressure to maintain its AAA credit rating, which is meant to assure investors that the bonds and other credit products it offers are protected. Hoping to keep more capital on hand, last week Ambac cut its dividend and suspended guaranteeing debt.

In late January, the company had planned to raise $1 billion in a stock sale but abandoned the idea after its shares fell sharply.

Ambac said it would transfer some of the money it raises to a subsidiary Ambac Assurance to raise its capital position.