Triad Guaranty Inc. (TGIC) News

WINSTON-SALEM, N.C. -- Triad Guaranty Inc. (OTC Bulletin Board: TGIC) today reported net income of $79.1 million for its second quarter ended June 30, 2010 compared to a net loss of $27.8 million for the first quarter of 2010 and a net loss of $359.4 million for the second quarter of 2009.  The 2010 second quarter diluted income per share was $5.24 compared to a diluted loss per share of $1.84 for the 2010 first quarter and a diluted loss per share of $23.91 for the 2009 second quarter.

The net income for the six months ended June 30, 2010 was $51.3 million compared to a net loss of $414.6 million for the six months ended June 30, 2009.  The diluted income per share was $3.40 for the six months ended June 30, 2010 compared to a diluted loss per share of $27.65 for the six months ended June 30, 2009.

Ken Jones, President and CEO, said, "We continued to see improvement in several key areas during the second quarter of 2010, which allowed us to decrease the reserves held for existing defaults at June 30, 2010.  Higher actual cures experienced during the first two quarters of 2010 caused us to adjust our reserve factors during the second quarter for future cure rates on existing defaults. These adjustments, along with modestly higher rescission expectations, allowed us to reduce our estimated reserve for losses.  The impact of the change in reserve factors on our second quarter financial results, coupled with an additional accrual of earned premiums during the quarter, were the primary drivers of our net income reported for the quarter.  The earned premium accrual reflects the present value of estimated future premiums on Modified Pool structures where we have already paid out the maximum amount that we are contractually required to pay.  While we are seeing improvements in the performance of our insured portfolio, we remain cautious about the outlook for the remainder of 2010 and continuing into 2011, as many economists are now expecting a slower recovery with lingering high unemployment rates and continued pressure on the residential real estate market and home prices."  

Mr. Jones continued, "As a company in run-off, our primary focus remains the efficient and effective servicing of our insured portfolio, particularly with respect to loss management, in order to maximize our claims-paying ability.  While we are pleased by our 2010 results compared to 2008 and 2009, the income reported in the second quarter of 2010 was due to items that we believe are unlikely to occur in the future in similar amounts and it is unlikely that we will report similar levels of income, and may report no income at all, in future periods. Furthermore, our financial position improved only slightly during the second quarter, and our deficit in assets was $648.1 million at June 30, 2010.  To meet all of our existing obligations, we will need to earn at least $649 million during the remaining run-off of our business.  We believe that absent significant, positive changes in the economy and the residential real estate market, our existing assets and future premiums may not be sufficient to meet our current and future policyholder obligations."

For additional information concerning our results for the second quarter of 2010 and our financial position at June 30, 2010, please see our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, which will be filed with the Securities and Exchange Commission and will be available at www.sec.gov or via our web site at www.triadguaranty.com.  We have updated the quarterly statistical and supplemental information for the 2010 second quarter results on our web site at www.triadguaranty.com.  The supplemental information can be found under "Investors" and then under "Webcasts and Presentations" by the title "Supplemental Information – Second Quarter 2010".

(Relevant Triad Guaranty Inc. financial and statistical information follows)

Triad Guaranty Inc.'s wholly owned subsidiary, Triad Guaranty Insurance Corporation, is a nationwide mortgage insurer pursuing a run-off of its existing in-force book of business.  For more information, please visit the Company's web site at www.triadguaranty.com.

Certain of the statements contained in this release are "forward-looking statements" and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include estimates and assumptions related to economic, competitive, regulatory, operational and legislative developments. These forward-looking statements are subject to change, uncertainty and circumstances that are, in many instances, beyond our control and they have been made based upon our current expectations and beliefs concerning future developments and their potential effect on us. Actual developments and their results could differ materially from those expected by us, depending on the outcome of a number of factors, including: the possibility that the Illinois Department of Insurance may take various actions regarding Triad if it does not operate its business in accordance with its revised financial and operating plan and the corrective orders, including seeking receivership proceedings; our ability to operate our business in run-off and maintain a solvent run-off; our ability to continue as a going concern; the possibility of general economic and business conditions that are different than anticipated; legislative, regulatory, and other similar developments; changes in interest rates, employment rates, the housing market, the mortgage industry and the stock market; the possibility that there will not be adequate interest in our common stock on the over the counter markets to ensure efficient pricing; and various factors described under "Risk Factors" and in the "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995" in our Annual Report on Form 10-K for the year ended December 31, 2009 and in other reports and statements filed with the Securities and Exchange Commission.  Forward-looking statements are based upon our current expectations and beliefs concerning future events and we undertake no obligation to update or revise any forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made, except as otherwise required by law.

SOURCE Triad Guaranty Inc.