NY Insurance regulator tells FGIC not to pay claims

* Order follows capital impairment

* Deadline of Jan. 5 to have plan to rectify situation

* NY insurance dept raises prospect of liquidation

NEW YORK, Nov 24 (Reuters) - New York's insurance regulator has told bond insurer Financial Guaranty Insurance Co to suspend paying claims as of Tuesday, because it is in violation of the state's minimum capital requirements, the company said.

FGIC, a smaller rival to bond insurers Ambac Financial Group ABK.N and MBIA Inc (MBI.N), said it would cease to make the payments, as ordered.

The order comes four days after FGIC filed its quarterly statement with the New York Insurance Department, which showed that it had a deficit of $865.8 million at the end of September.

FGIC said it was working on a restructuring plan to address the capital shortfall. Steps it could take may include transactions to rid it of certain liabilities, including the commutation, or cancellation, of guarantees it sold for certain asset-backed securities.

FGIC must submit a plan showing how it would restore capital to the New York insurance superintendent no later than Jan. 5, 2010, according to the company's statement. Failure to do so could result in the New York insurance department moving to either take-over or liquidate the company.

FGIC's owners include mortgage insurer PMI Group Inc PMI.N and private equity firm Blackstone Group LP (BX.N).

Bond insurers' difficulties in early 2008 threw the financial markets into a swoon as investors feared the companies would lose their top ratings and force investors to sell insured bonds, weighing on credit markets that were already strained.

Now, the companies are moving closer to actual failure, and although investors have had more than a year to prepare, some analysts have expressed concern that bond insurers' difficulties could trigger credit market trouble again.

Earlier on Tuesday, Ambac said its chief financial officer had resigned, sending its shares down 4.4 percent. (Reporting by Lilla Zuill; Editing by Tim Dobbyn) ((lilla.zuill@thomsonreuters.com;+1 646 223 6281))