WINSTON-SALEM, N.C.,
Aug. 11 /PRNewswire-FirstCall/ --
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.
Triad Guaranty
Inc.
Consolidated Statements of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(Dollars in thousands except per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned premiums
|
$ 72,330
|
|
$ 64,833
|
|
$ 118,218
|
|
$ 109,191
|
|
|
Net investment income
|
10,561
|
|
10,859
|
|
20,434
|
|
22,051
|
|
|
Net realized investment (losses)
gains
|
(985)
|
|
2,017
|
|
(1,227)
|
|
(2,548)
|
|
|
Other income
(expense)
|
-
|
|
2
|
|
(8)
|
|
4
|
|
|
Total revenues
|
81,906
|
|
77,711
|
|
137,417
|
|
128,698
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (benefit) losses and loss
adjustment expenses
|
(7,770)
|
|
431,368
|
|
64,468
|
|
532,945
|
|
|
Interest expense
|
2,816
|
|
1,895
|
|
5,285
|
|
2,589
|
|
|
Other operating
expenses
|
7,021
|
|
8,680
|
|
16,353
|
|
18,091
|
|
|
Total losses and
expenses
|
2,067
|
|
441,943
|
|
86,106
|
|
553,625
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
79,839
|
|
(364,232)
|
|
51,311
|
|
(424,927)
|
|
|
Income tax expense
(benefit)
|
717
|
|
(4,813)
|
|
-
|
|
(10,334)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$ 79,122
|
|
$ (359,419)
|
|
$ 51,311
|
|
$ (414,593)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per
share
|
$
5.24
|
|
$
(23.91)
|
|
$
3.40
|
|
$
(27.65)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common
and common
|
|
|
|
|
|
|
|
|
|
stock equivalents
outstanding (in thousands)
|
15,112
|
|
15,031
|
|
15,109
|
|
14,995
|
|
|
|
|
|
|
|
|
|
|
Triad Guaranty
Inc.
|
|
Consolidated Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
June 30,
|
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands except per
share amounts)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Invested assets:
|
|
|
|
|
|
|
|
|
|
Fixed maturities,
available for sale, at market
|
|
$
906,992
|
|
$
784,830
|
|
$
847,809
|
|
|
|
Equity securities,
available for sale, at market
|
|
-
|
|
-
|
|
31
|
|
|
|
Short-term
investments
|
|
29,166
|
|
26,651
|
|
3,800
|
|
|
|
|
|
936,158
|
|
811,481
|
|
851,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
35,576
|
|
21,839
|
|
31,600
|
|
|
|
Reinsurance
recoverable
|
|
49,829
|
|
233,499
|
|
234,248
|
|
|
|
Other assets
|
|
64,000
|
|
58,007
|
|
57,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ 1,085,563
|
|
$
1,124,826
|
|
$ 1,175,138
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses
|
|
$ 1,307,028
|
|
$
1,537,043
|
|
$ 1,591,207
|
|
|
|
Unearned premiums
|
|
11,346
|
|
12,153
|
|
14,890
|
|
|
|
Long-term debt
|
|
34,546
|
|
34,540
|
|
34,535
|
|
|
|
Deferred payment
obligation
|
|
292,169
|
|
168,386
|
|
27,020
|
|
|
|
Other liabilities
|
|
88,619
|
|
79,062
|
|
37,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
1,733,708
|
|
1,831,184
|
|
1,704,828
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
(799,830)
|
|
(851,141)
|
|
(670,102)
|
|
|
|
Accumulated other comprehensive
income
|
|
37,516
|
|
30,782
|
|
27,262
|
|
|
|
Other equity accounts
|
|
114,169
|
|
114,001
|
|
113,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit in
assets
|
|
(648,145)
|
|
(706,358)
|
|
(529,690)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$ 1,085,563
|
|
$
1,124,826
|
|
$ 1,175,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit in assets
per share:
|
|
$
(42.48)
|
|
$
(46.29)
|
|
$
(34.81)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding
|
|
15,258,128
|
|
15,258,128
|
|
15,215,378
|
|
|
|
|
|
|
|
|
|
|
Triad Guaranty
Inc.
|
|
Consolidated Statements of Cash
Flow
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
(Dollars in
Thousands)
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income (loss)
|
$ 51,311
|
|
$ (414,593)
|
|
Adjustments to reconcile net
income (loss) to net cash
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
Increase (decrease) in loss and
unearned premium reserves
|
(230,822)
|
|
402,394
|
|
|
Decrease (increase) in amounts
due to/from reinsurer
|
183,669
|
|
(84,004)
|
|
|
Net realized investment
losses
|
1,227
|
|
2,548
|
|
|
Deferred income taxes
|
-
|
|
(11,415)
|
|
|
Deferred payment
obligation
|
123,783
|
|
27,020
|
|
|
Other operating
activities
|
(995)
|
|
6,410
|
|
|
|
|
|
|
|
Net cash provided by (used in)
operating activities
|
128,173
|
|
(71,640)
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Purchases of investment
securities
|
(251,268)
|
|
(128,623)
|
|
|
Sales and maturities of
investment securities
|
138,918
|
|
155,188
|
|
|
(Increase) decrease in
short-term investments
|
(2,516)
|
|
36,769
|
|
|
Other investing
activities
|
430
|
|
(34)
|
|
|
|
|
|
|
|
Net cash provided by (used in)
investing activities
|
(114,436)
|
|
63,300
|
|
|
|
|
|
|
|
Net increase (decrease) in
cash
|
13,737
|
|
(8,340)
|
|
Cash at beginning of
period
|
21,839
|
|
39,940
|
|
|
|
|
|
|
|
Cash at end of
period
|
$ 35,576
|
|
$
31,600
|
|
|
|
|
|
|
TRIAD GUARANTY
INC.
Sequential Quarterly Financial
Statements
(unaudited)
|
|
|
|
|
|
|
|
|
Condensed Statements of
Operations For The Quarter Ended
(Dollars in
thousands)
|
|
|
|
|
|
Jun 30,
|
|
Mar 31,
|
|
Dec 31,
|
|
Sept 30,
|
|
Jun 30,
|
|
Mar 31,
|
|
Dec 31,
|
|
Sep 30,
|
|
Jun 30,
|
|
|
|
|
|
2010
|
|
2010
|
|
2009
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned premiums
|
|
|
$
72,330
|
|
$
45,888
|
|
$
34,891
|
|
$
35,576
|
|
$
64,833
|
|
$
44,358
|
|
$
49,840
|
|
$
65,654
|
|
$
69,864
|
|
|
Net investment income
|
|
|
10,561
|
|
9,873
|
|
9,739
|
|
12,342
|
|
10,859
|
|
11,192
|
|
10,509
|
|
10,349
|
|
9,175
|
|
|
Realized investment gains
(losses)
|
|
|
(985)
|
|
(242)
|
|
649
|
|
3,253
|
|
2,017
|
|
(4,565)
|
|
(18,944)
|
|
(6,519)
|
|
(3,799)
|
|
|
Other income (loss)
|
|
|
-
|
|
(8)
|
|
12,536
|
|
127
|
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
|
Total revenues
|
|
|
81,906
|
|
55,511
|
|
57,815
|
|
51,298
|
|
77,711
|
|
50,987
|
|
41,407
|
|
69,486
|
|
75,242
|
|
Losses and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net settled
claims
|
|
|
145,460
|
|
(43,684)
|
|
153,749
|
|
157,881
|
|
149,863
|
|
53,920
|
|
69,372
|
|
59,357
|
|
68,263
|
|
|
Change in
reserves
|
|
|
(158,058)
|
|
111,204
|
|
(30,195)
|
|
(15,836)
|
|
278,956
|
|
39,628
|
|
106,080
|
|
165,958
|
|
218,568
|
|
|
Loss adjustment
expenses
|
|
|
4,828
|
|
4,718
|
|
5,370
|
|
3,713
|
|
2,549
|
|
8,029
|
|
2,647
|
|
5,879
|
|
5,918
|
|
|
Net losses and LAE
|
|
|
(7,770)
|
|
72,238
|
|
128,924
|
|
145,758
|
|
431,368
|
|
101,577
|
|
178,099
|
|
231,194
|
|
292,749
|
|
|
Change in premium deficiency
reserve
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(15,000)
|
|
|
Interest expense
|
|
|
2,816
|
|
2,469
|
|
2,243
|
|
1,202
|
|
1,895
|
|
694
|
|
694
|
|
691
|
|
696
|
|
|
Other operating
expenses
|
|
|
7,021
|
|
9,332
|
|
8,160
|
|
9,659
|
|
8,680
|
|
9,411
|
|
8,639
|
|
8,726
|
|
27,238
|
|
|
Total losses and
expenses
|
|
|
2,067
|
|
84,039
|
|
139,327
|
|
156,619
|
|
441,943
|
|
111,682
|
|
187,432
|
|
240,611
|
|
305,683
|
|
Income (loss) before income
taxes
|
|
|
79,839
|
|
(28,528)
|
|
(81,512)
|
|
(105,321)
|
|
(364,232)
|
|
(60,695)
|
|
(146,025)
|
|
(171,125)
|
|
(230,441)
|
|
|
Income taxes
(benefit)
|
|
|
717
|
|
(717)
|
|
(2,368)
|
|
(3,426)
|
|
(4,813)
|
|
(5,521)
|
|
(23,818)
|
|
(11,030)
|
|
(31,630)
|
|
Net income (loss)
|
|
|
$
79,122
|
|
$
(27,811)
|
|
$
(79,144)
|
|
$ (101,895)
|
|
$ (359,419)
|
|
$
(55,174)
|
|
$ (122,207)
|
|
$ (160,095)
|
|
$ (198,811)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Balance Sheets
As Of
(Dollars in
thousands)
|
|
|
|
|
|
Jun 30,
|
|
Mar 31,
|
|
Dec 31,
|
|
Sept 30,
|
|
Jun 30,
|
|
Mar 31,
|
|
Dec 31,
|
|
Sep 30,
|
|
Jun 30,
|
|
|
|
|
|
2010
|
|
2010
|
|
2009
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invested assets
|
|
|
$
936,158
|
|
$
957,115
|
|
$
811,481
|
|
$
846,905
|
|
$
851,640
|
|
$
918,531
|
|
$
895,422
|
|
$
890,720
|
|
$
869,022
|
|
|
Cash
|
|
|
35,576
|
|
38,662
|
|
21,839
|
|
7,480
|
|
31,600
|
|
21,394
|
|
39,940
|
|
47,818
|
|
19,669
|
|
|
Real estate acquired
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
526
|
|
713
|
|
3,661
|
|
6,202
|
|
|
Prepaid federal income
tax
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
15
|
|
15
|
|
15
|
|
63,184
|
|
|
Reinsurance
recoverable
|
|
|
49,829
|
|
52,963
|
|
233,499
|
|
245,436
|
|
234,248
|
|
182,589
|
|
150,848
|
|
111,827
|
|
55,316
|
|
|
Other assets
|
|
|
64,000
|
|
54,406
|
|
58,007
|
|
54,331
|
|
57,650
|
|
52,307
|
|
43,596
|
|
47,915
|
|
50,405
|
|
|
Total assets
|
|
|
$ 1,085,563
|
|
$ 1,103,146
|
|
$ 1,124,826
|
|
$ 1,154,152
|
|
$ 1,175,138
|
|
$ 1,175,362
|
|
$ 1,130,534
|
|
$ 1,101,956
|
|
$ 1,063,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders'
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses
|
|
|
$ 1,307,028
|
|
$ 1,468,719
|
|
$ 1,537,043
|
|
$ 1,576,303
|
|
$ 1,591,207
|
|
$ 1,262,746
|
|
$ 1,187,840
|
|
$ 1,042,053
|
|
$
817,262
|
|
|
Deferred
payment obligation
|
|
|
292,169
|
|
229,953
|
|
168,386
|
|
97,048
|
|
27,020
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Accrued
expenses and other liabilities
|
|
|
134,511
|
|
102,677
|
|
91,215
|
|
71,291
|
|
52,066
|
|
59,477
|
|
44,831
|
|
30,887
|
|
40,714
|
|
|
Total liabilities
|
|
|
1,733,708
|
|
1,835,892
|
|
1,831,184
|
|
1,779,179
|
|
1,704,828
|
|
1,356,755
|
|
1,267,200
|
|
1,130,356
|
|
922,889
|
|
|
(Deficit in assets) total
stockholders' equity
|
|
|
(648,145)
|
|
(732,746)
|
|
(706,358)
|
|
(625,027)
|
|
(529,690)
|
|
(181,393)
|
|
(136,666)
|
|
(28,400)
|
|
140,909
|
|
|
Total liabilities and
stockholders' equity
|
|
|
$ 1,085,563
|
|
$ 1,103,146
|
|
$ 1,124,826
|
|
$ 1,154,152
|
|
$ 1,175,138
|
|
$ 1,175,362
|
|
$ 1,130,534
|
|
$ 1,101,956
|
|
$ 1,063,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Triad Guaranty Inc.
Copyright . 11 PR Newswire