WINSTON-SALEM, N.C.,
May 11 /PRNewswire-FirstCall/ --
Triad Guaranty Inc. (OTC Bulletin Board: TGIC) today reported a net
loss of $27.8 million for its first
quarter ended March 31, 2010 compared
to a net loss of $79.1 million for
the fourth quarter of 2009 and a net loss of $55.2 million for the first quarter of 2009.
The 2010 first quarter diluted loss per share was
$1.84 compared to a diluted loss per
share of $5.26 for the 2009 fourth
quarter and $3.68 for the 2009 first
quarter.
Ken Jones, President and CEO,
said, "We saw improvement in several key areas during the 2010
first quarter, including the amount of risk in default, the number
of loans in default and the number of first-time defaults. Our cure
rates increased for the first time since the first quarter of 2009,
which we believe was due in part to improved results from the GSE
loan modification efforts during the quarter. The first
quarter has traditionally yielded improvements in cure rates and a
decline in first-time defaults due to the impact of tax refunds
that typically are received during the quarter. At this time,
however, we are unable to determine whether the lower first notices
of default and the improved cure rates experienced during the
quarter reflect typical seasonality, or whether they mark the
beginning of a recovery in the U.S. mortgage and housing markets."
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
encouraged by our 2010 first quarter results compared to all of
2008 and 2009, our financial position continued to deteriorate
slightly during the first quarter as the deficit in assets
increased to $732.7 million at
March 31, 2010. To meet all of
our existing obligations, we will need to earn at least
$733 million during the remaining
run-off of our existing business. We received $188.7 million in cash and investments during the
first quarter following the commutation of our two largest lender
captives; however, the receipt of these assets did not impact our
net loss as the losses ceded to the captives had previously been
recognized as a reinsurance recoverable in our financial
statements."
For additional information concerning our results for the first
quarter of 2010 and our financial position at March 31, 2010, please see our Quarterly Report
on Form 10-Q for the quarter ended March 31,
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 first 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 – First 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.
|
Triad Guaranty
Inc.
Consolidated
Statements of Operations
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
(Dollars in
thousands except per share amounts)
|
|
|
|
|
|
|
|
|
Earned premiums
|
$
45,888
|
|
$
44,358
|
|
|
Net investment income
|
9,873
|
|
11,192
|
|
|
Net realized investment
losses
|
(242)
|
|
(4,565)
|
|
|
Other income (expense)
|
(8)
|
|
2
|
|
|
Total revenues
|
55,511
|
|
50,987
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses
|
72,238
|
|
101,577
|
|
|
Interest expense
|
2,469
|
|
694
|
|
|
Other operating expenses -
net
|
9,332
|
|
9,411
|
|
|
Total losses and
expenses
|
84,039
|
|
111,682
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
(28,528)
|
|
(60,695)
|
|
|
Income tax benefit
|
(717)
|
|
(5,521)
|
|
|
|
|
|
|
|
|
Net loss
|
$
(27,811)
|
|
$
(55,174)
|
|
|
|
|
|
|
|
|
Diluted loss per share
|
$
(1.84)
|
|
$
(3.68)
|
|
|
|
|
|
|
|
|
Diluted weighted average common and
common stock equivalents outstanding (in thousands)
|
15,099
|
|
14,994
|
|
|
|
|
|
|
|
|
Triad Guaranty
Inc.
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
|
March
31,
|
|
December
31,
|
|
March
31,
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands except per share amounts)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Invested assets:
|
|
|
|
|
|
|
|
|
Fixed maturities, available for
sale, at market
|
$
811,040
|
|
$
784,830
|
|
$
904,904
|
|
|
|
Equity securities, available
for sale, at market
|
-
|
|
-
|
|
491
|
|
|
|
Short-term
investments
|
146,075
|
|
26,651
|
|
13,136
|
|
|
|
|
957,115
|
|
811,481
|
|
918,531
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
38,662
|
|
21,839
|
|
21,394
|
|
|
|
Reinsurance recoverable
|
52,963
|
|
233,499
|
|
182,589
|
|
|
|
Other assets
|
54,406
|
|
58,007
|
|
52,848
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
1,103,146
|
|
$
1,124,826
|
|
$
1,175,362
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses
|
$
1,468,719
|
|
$
1,537,043
|
|
$
1,262,746
|
|
|
|
Unearned premiums
|
12,210
|
|
12,153
|
|
15,958
|
|
|
|
Long-term debt
|
34,543
|
|
34,540
|
|
34,532
|
|
|
|
Deferred payment obligation
|
229,953
|
|
168,386
|
|
-
|
|
|
|
Other liabilities
|
90,467
|
|
79,062
|
|
43,519
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
1,835,892
|
|
1,831,184
|
|
1,356,755
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
(878,952)
|
|
(851,141)
|
|
(310,683)
|
|
|
|
Accumulated other comprehensive
income
|
32,114
|
|
30,782
|
|
16,316
|
|
|
|
Other equity accounts
|
114,092
|
|
114,001
|
|
112,974
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit in
assets
|
(732,746)
|
|
(706,358)
|
|
(181,393)
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
equity
|
$
1,103,146
|
|
$
1,124,826
|
|
$
1,175,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit in assets per
share:
|
$
(48.02)
|
|
$
(46.29)
|
|
$
(11.92)
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding
|
15,258,128
|
|
15,258,128
|
|
15,215,378
|
|
|
|
|
|
|
|
|
|
|
|
Triad Guaranty
Inc.
Consolidated
Statements of Cash Flow
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in
Thousands)
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net loss
|
$
(27,811)
|
|
$
(55,174)
|
|
|
Adjustments to reconcile net loss to
net cash
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
Increase (decrease) in loss and
unearned premium reserves
|
(68,267)
|
|
75,001
|
|
|
Decrease (increase) in amounts due
to/from reinsurer
|
180,536
|
|
(31,459)
|
|
|
Net realized investment
losses
|
242
|
|
4,565
|
|
|
Deferred income taxes
|
(717)
|
|
(5,521)
|
|
|
Deferred payment obligation
|
61,567
|
|
-
|
|
|
Other operating activities
|
11,704
|
|
15,923
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
157,254
|
|
3,335
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
Purchases of investment
securities
|
(72,318)
|
|
(88,391)
|
|
|
Sales and maturities of investment
securities
|
50,729
|
|
38,942
|
|
|
(Increase) decrease in short-term
investments
|
(119,425)
|
|
27,566
|
|
|
Other investing activities
|
583
|
|
2
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
(140,431)
|
|
(21,881)
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash
|
16,823
|
|
(18,546)
|
|
|
Cash at beginning of period
|
21,839
|
|
39,940
|
|
|
|
|
|
|
|
|
Cash at end of period
|
$
38,662
|
|
$
21,394
|
|
|
|
|
|
|
|
|
TRIAD GUARANTY
INC.
Sequential
Quarterly Financial Statements
(unaudited)
|
|
|
|
|
Condensed
Statements of Operations For The Quarter Ended
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
|
Mar
31,
|
|
Dec
31,
|
|
Sept
30,
|
|
Jun
30,
|
|
Mar
31,
|
|
Dec
31,
|
|
Sep
30,
|
|
Jun
30,
|
|
Mar
31,
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
2008
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned premiums
|
|
$
45,888
|
|
$
34,891
|
|
$
35,576
|
|
$
64,833
|
|
$
44,358
|
|
$
49,840
|
|
$
65,654
|
|
$
69,864
|
|
$
72,065
|
|
|
Net investment income
|
|
9,873
|
|
9,739
|
|
12,342
|
|
10,859
|
|
11,192
|
|
10,509
|
|
10,349
|
|
9,175
|
|
9,547
|
|
|
Realized investment gains
(losses)
|
|
(242)
|
|
649
|
|
3,253
|
|
2,017
|
|
(4,565)
|
|
(18,944)
|
|
(6,519)
|
|
(3,799)
|
|
2,703
|
|
|
Other income (loss)
|
|
(8)
|
|
12,536
|
|
127
|
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
|
Total revenues
|
|
55,511
|
|
57,815
|
|
51,298
|
|
77,711
|
|
50,987
|
|
41,407
|
|
69,486
|
|
75,242
|
|
84,317
|
|
|
Losses and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net settled claims
|
|
(43,684)
|
|
153,749
|
|
157,881
|
|
149,863
|
|
53,920
|
|
69,372
|
|
59,357
|
|
68,263
|
|
40,471
|
|
|
Change in reserves
|
|
111,204
|
|
(30,195)
|
|
(15,836)
|
|
278,956
|
|
39,628
|
|
106,080
|
|
165,958
|
|
218,568
|
|
174,561
|
|
|
Loss adjustment
expenses
|
|
4,718
|
|
5,370
|
|
3,713
|
|
2,549
|
|
8,029
|
|
2,647
|
|
5,879
|
|
5,918
|
|
6,227
|
|
|
Net losses and LAE
|
|
72,238
|
|
128,924
|
|
145,758
|
|
431,368
|
|
101,577
|
|
178,099
|
|
231,194
|
|
292,749
|
|
221,259
|
|
|
Change in premium deficiency
reserve
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(15,000)
|
|
15,000
|
|
|
Interest expense
|
|
2,469
|
|
2,243
|
|
1,202
|
|
1,895
|
|
694
|
|
694
|
|
691
|
|
696
|
|
1,476
|
|
|
Amortization of DAC
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
39,416
|
|
|
Other operating expenses
|
|
9,332
|
|
8,160
|
|
9,659
|
|
8,680
|
|
9,411
|
|
8,639
|
|
8,726
|
|
27,238
|
|
14,106
|
|
|
Total losses and
expenses
|
|
84,039
|
|
139,327
|
|
156,619
|
|
441,943
|
|
111,682
|
|
187,432
|
|
240,611
|
|
305,683
|
|
291,257
|
|
|
Income (loss) before income
taxes
|
|
(28,528)
|
|
(81,512)
|
|
(105,321)
|
|
(364,232)
|
|
(60,695)
|
|
(146,025)
|
|
(171,125)
|
|
(230,441)
|
|
(206,940)
|
|
|
Income taxes (benefit)
|
|
(717)
|
|
(2,368)
|
|
(3,426)
|
|
(4,813)
|
|
(5,521)
|
|
(23,818)
|
|
(11,030)
|
|
(31,630)
|
|
(56,926)
|
|
|
Net income (loss)
|
|
$
(27,811)
|
|
$
(79,144)
|
|
$
(101,895)
|
|
$
(359,419)
|
|
$
(55,174)
|
|
$
(122,207)
|
|
$
(160,095)
|
|
$
(198,811)
|
|
$
(150,014)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Balance Sheets As Of
|
|
|
|
|
(Dollars in
thousands)
|
|
|
|
|
Mar
31,
|
|
Dec
31,
|
|
Sept
30,
|
|
Jun
30,
|
|
Mar
31,
|
|
Dec
31,
|
|
Sep
30,
|
|
Jun
30,
|
|
Mar
31,
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
2008
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invested assets
|
|
$
957,115
|
|
$
811,481
|
|
$
846,905
|
|
$
851,640
|
|
$
918,531
|
|
$
895,422
|
|
$
890,720
|
|
$
869,022
|
|
$ 760,073
|
|
|
Cash
|
|
38,662
|
|
21,839
|
|
7,480
|
|
31,600
|
|
21,394
|
|
39,940
|
|
47,818
|
|
19,669
|
|
80,544
|
|
|
Real estate acquired
|
|
-
|
|
-
|
|
-
|
|
-
|
|
526
|
|
713
|
|
3,661
|
|
6,202
|
|
8,993
|
|
|
Prepaid federal income tax
|
|
-
|
|
-
|
|
-
|
|
-
|
|
15
|
|
15
|
|
15
|
|
63,184
|
|
115,598
|
|
|
Reinsurance recoverable
|
|
52,963
|
|
233,499
|
|
245,436
|
|
234,248
|
|
182,589
|
|
150,848
|
|
111,827
|
|
55,316
|
|
93,244
|
|
|
Other assets
|
|
54,406
|
|
58,007
|
|
54,331
|
|
57,650
|
|
52,307
|
|
43,596
|
|
47,915
|
|
50,405
|
|
52,572
|
|
|
Total assets
|
|
$
1,103,146
|
|
$
1,124,826
|
|
$
1,154,152
|
|
$1,175,138
|
|
$1,175,362
|
|
$1,130,534
|
|
$1,101,956
|
|
$1,063,798
|
|
$1,111,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders'
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses
|
|
$
1,468,719
|
|
$
1,537,043
|
|
$
1,576,303
|
|
$1,591,207
|
|
$1,262,746
|
|
$1,187,840
|
|
$1,042,053
|
|
$
817,262
|
|
$ 547,766
|
|
|
Premium deficiency
reserve
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
96,073
|
|
|
Deferred payment
obligation
|
|
229,953
|
|
168,386
|
|
97,048
|
|
27,020
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Accrued
expenses and other liabilities
|
|
102,677
|
|
91,215
|
|
71,291
|
|
52,066
|
|
59,477
|
|
44,831
|
|
30,887
|
|
40,714
|
|
32,699
|
|
|
Total liabilities
|
|
1,835,892
|
|
1,831,184
|
|
1,779,179
|
|
1,704,828
|
|
1,356,755
|
|
1,267,200
|
|
1,130,356
|
|
922,889
|
|
772,582
|
|
|
(Deficit in assets) total stockholders'
equity
|
|
(732,746)
|
|
(706,358)
|
|
(625,027)
|
|
(529,690)
|
|
(181,393)
|
|
(136,666)
|
|
(28,400)
|
|
140,909
|
|
338,442
|
|
|
Total liabilities and stockholders'
equity
|
|
$
1,103,146
|
|
$
1,124,826
|
|
$1,154,152
|
|
$1,175,138
|
|
$1,175,362
|
|
$1,130,534
|
|
$1,101,956
|
|
$1,063,798
|
|
$ 1,111,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Triad Guaranty Inc.