WINSTON-SALEM, N.C.,
Nov. 11, 2011 /PRNewswire/ -- Triad
Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the
quarter ended September 30, 2011 of
$37.5 million compared to a net loss
of $4.4 million for the second
quarter of 2011 and net income of $54.0
million for the third quarter of 2010. The 2011 third
quarter diluted loss per share was $2.46 compared to a diluted loss per share of
$0.29 for the 2011 second quarter and
diluted income per share of $3.56 for
the third quarter of 2010.
The net loss for the nine months ended September 30, 2011 was $46.8 million compared to net income of
$105.3 million for the nine months
ended September 30, 2010. The
diluted loss per share was $3.07 for
the nine months ended September 30,
2011 compared to diluted income per share of $6.96 for the nine months ended September 30, 2010.
Ken Jones, President and CEO,
said, "Our risk in default and the corresponding reserve for losses
continued to decline during the third quarter. However,
incurred losses for the third quarter of 2011 were up sequentially
compared to the second quarter of 2011 and on a year-over-year
basis compared to the third quarter of 2010. During the third
quarter of 2011, benefits from adjustments to frequency factors
based on the development of our reserves were substantially lower
than in the second quarter of 2011 and the comparable prior year
period, and while newly reported defaults continued to decrease,
the rate of decline slowed from prior quarters. The third
quarter of 2010 also contained an extraordinary gain of
$29.6 million from the repurchase and
retirement of our long-term debt. High unemployment, tight
credit and depressed home prices have prevented any meaningful
recovery in the housing market, which continues to negatively
impact our financial results."
Mr. Jones continued, "As a company in run-off, our primary focus
remains on the efficient and effective servicing of our insured
portfolio, particularly with respect to loss management, in order
to maximize our claims-paying ability. Our deficit in assets
remains substantial and was $631
million at September 30, 2011.
We believe that, absent significant positive changes in the
economy and the residential real estate market, our existing assets
and future premiums likely will not be sufficient to meet our
current and future policyholder obligations."
We have updated the quarterly statistical and supplemental
information for the 2011 third 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 – Third Quarter 2011".
(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; legal and other proceedings
regarding modifications and refinancing of mortgages and/or
foreclosure proceedings; 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, 2010 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
|
|
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
(Dollars in
thousands except per share amounts)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Earned premiums
|
$
49,719
|
|
$
44,278
|
|
$
122,241
|
|
$
162,496
|
|
|
Net investment income
|
7,364
|
|
9,681
|
|
23,981
|
|
30,115
|
|
|
Net realized investment
gains
|
1,349
|
|
14,694
|
|
3,913
|
|
13,467
|
|
|
Other income (loss)
|
10
|
|
(29)
|
|
66
|
|
(37)
|
|
|
Total revenues
|
58,442
|
|
68,624
|
|
150,201
|
|
206,041
|
|
|
Losses and
Expenses:
|
|
|
|
|
|
|
|
|
|
Net settled claims
|
132,545
|
|
132,139
|
|
351,037
|
|
422,573
|
|
|
Decrease in reserves
|
(44,192)
|
|
(97,229)
|
|
(181,638)
|
|
(332,740)
|
|
|
Loss adjustment expenses
(benefit)
|
(511)
|
|
491
|
|
1,448
|
|
10,036
|
|
|
Net losses and loss adjustment
expenses
|
87,842
|
|
35,401
|
|
170,847
|
|
99,869
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
4,813
|
|
2,642
|
|
13,260
|
|
7,927
|
|
|
Other operating
expenses
|
4,450
|
|
6,206
|
|
14,065
|
|
22,559
|
|
|
Total losses and
expenses
|
97,105
|
|
44,249
|
|
198,172
|
|
130,355
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes and extraordinary item
|
(38,663)
|
|
24,375
|
|
(47,971)
|
|
75,686
|
|
|
Income tax benefit
|
(1,134)
|
|
-
|
|
(1,134)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before extraordinary
item
|
(37,529)
|
|
24,375
|
|
(46,837)
|
|
75,686
|
|
|
Extraordinary item - gain from
repurchase and retirement
of long-term
debt
|
-
|
|
29,640
|
|
-
|
|
29,640
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
(37,529)
|
|
$
54,015
|
|
$
(46,837)
|
|
$
105,326
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Information:
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income per share
before extraordinary item
|
$
(2.46)
|
|
$
1.61
|
|
$
(3.07)
|
|
$
5.00
|
|
|
Diluted income per share for
extraordinary item
|
-
|
|
1.95
|
|
-
|
|
1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income per
share
|
$
(2.46)
|
|
$
3.56
|
|
$
(3.07)
|
|
$
6.96
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common
stock and common
|
|
|
|
|
|
|
|
|
|
stock equivalents
outstanding (in thousands of shares)
|
15,258
|
|
15,185
|
|
15,274
|
|
15,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Triad
Guaranty Inc.
|
|
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
September
30,
|
|
December
31,
|
|
September
30,
|
|
|
|
2011
|
|
2010
|
|
2010
|
|
|
|
(Dollars in
thousands)
|
|
|
Assets:
|
|
|
|
|
|
|
|
Invested assets:
|
|
|
|
|
|
|
|
Fixed maturities,
available for sale, at market
|
$
739,604
|
|
$
812,335
|
|
$
879,050
|
|
|
Short-term
investments
|
33,474
|
|
39,561
|
|
26,708
|
|
|
|
|
|
|
|
|
|
|
|
773,078
|
|
851,896
|
|
905,758
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
65,051
|
|
38,762
|
|
36,823
|
|
|
Reinsurance
recoverable
|
23,719
|
|
40,806
|
|
48,155
|
|
|
Other Assets
|
56,897
|
|
60,161
|
|
65,416
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
918,745
|
|
$
991,625
|
|
$
1,056,152
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Losses and loss adjustment
expenses
|
$
864,049
|
|
$
1,060,036
|
|
$
1,200,518
|
|
|
Unearned premiums
|
7,636
|
|
9,057
|
|
10,197
|
|
|
Deferred payment
obligation
|
576,510
|
|
415,657
|
|
351,720
|
|
|
Other liabilities
|
101,459
|
|
93,075
|
|
89,095
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
1,549,654
|
|
1,577,825
|
|
1,651,530
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
|
|
|
Accumulated deficit
|
(765,883)
|
|
(719,046)
|
|
(745,815)
|
|
|
Accumulated other comprehensive
income
|
20,714
|
|
18,609
|
|
36,228
|
|
|
Other equity accounts
|
114,260
|
|
114,237
|
|
114,209
|
|
|
|
|
|
|
|
|
|
|
Deficit in
assets
|
(630,909)
|
|
(586,200)
|
|
(595,378)
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' deficit
|
$
918,745
|
|
$
991,625
|
|
$
1,056,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding
|
15,328,128
|
|
15,258,128
|
|
15,258,128
|
|
|
|
|
|
|
|
|
|
Triad
Guaranty Inc.
|
|
|
Consolidated
Statements of Cash Flow
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Months
Ended
September
30,
|
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net (loss) income
|
$
(46,837)
|
|
$
105,326
|
|
|
Adjustments to reconcile net
(loss) income to net cash
|
|
|
|
|
|
provided by (used in) operating
activities:
|
|
|
|
|
|
Decrease in loss and unearned
premium reserves
|
(197,408)
|
|
(338,481)
|
|
|
Decrease in amounts due to/from
reinsurer
|
17,087
|
|
185,343
|
|
|
Net realized investment
gains
|
(3,913)
|
|
(13,467)
|
|
|
Extraordinary gain on repurchase
of long-term debt
|
-
|
|
(29,640)
|
|
|
Increase in deferred payment
obligation
|
160,853
|
|
183,334
|
|
|
Other operating
activities
|
12,398
|
|
(1,562)
|
|
|
Net cash (used in) provided by
operating activities
|
(57,820)
|
|
90,853
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Purchases of investment
securities
|
(92,206)
|
|
(453,699)
|
|
|
Sales and maturities of
investment securities
|
171,536
|
|
382,297
|
|
|
Increase in short-term
investments
|
6,087
|
|
(58)
|
|
|
Other investing
activities
|
(1,308)
|
|
497
|
|
|
Net cash provided by (used in)
investing activities
|
84,109
|
|
(70,963)
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Repurchase of long-term
debt
|
-
|
|
(4,906)
|
|
|
Net cash used in financing
activities
|
-
|
|
(4,906)
|
|
|
|
|
|
|
|
|
Net increase in cash
|
26,289
|
|
14,984
|
|
|
Cash at beginning of
year
|
38,762
|
|
21,839
|
|
|
|
|
|
|
|
|
Cash at end of
period
|
$
65,051
|
|
$
36,823
|
|
|
|
|
|
|
|
Triad
Guaranty Inc.
|
|
|
Sequential
Quarterly Financial Statements
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Statements of Operations For The Quarter Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands)
|
Sept.
30,
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Dec.
31,
|
|
Sept.
30,
|
|
|
|
2011
|
|
2011
|
|
2011
|
|
2010
|
|
2010
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Earned premiums
|
$ 49,719
|
|
$ 35,394
|
|
$ 37,128
|
|
$
40,920
|
|
$
44,278
|
|
|
Net investment income
|
7,364
|
|
8,126
|
|
8,491
|
|
8,658
|
|
9,681
|
|
|
Realized investment gains
(losses)
|
1,349
|
|
3,000
|
|
(436)
|
|
(950)
|
|
14,694
|
|
|
Other income
(expense)
|
10
|
|
29
|
|
27
|
|
60
|
|
(29)
|
|
|
Total revenues
|
58,442
|
|
46,549
|
|
45,210
|
|
48,688
|
|
68,624
|
|
|
Losses and
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Net settled
claims
|
132,545
|
|
111,583
|
|
106,909
|
|
139,435
|
|
132,139
|
|
|
Change in
reserves
|
(44,192)
|
|
(70,752)
|
|
(66,694)
|
|
(129,993)
|
|
(97,229)
|
|
|
Loss adjustment expenses
(benefit)
|
(511)
|
|
469
|
|
1,490
|
|
322
|
|
491
|
|
|
Net losses and LAE
expense
|
87,842
|
|
41,300
|
|
41,705
|
|
9,764
|
|
35,401
|
|
|
Interest expense
|
4,813
|
|
4,469
|
|
3,978
|
|
3,836
|
|
2,642
|
|
|
Other operating
expenses
|
4,450
|
|
5,178
|
|
4,437
|
|
8,319
|
|
6,206
|
|
|
Total losses and
expenses
|
97,105
|
|
50,947
|
|
50,120
|
|
21,919
|
|
44,249
|
|
|
Income (loss) before taxes and
extraordinary item
|
(38,663)
|
|
(4,398)
|
|
(4,910)
|
|
26,769
|
|
24,375
|
|
|
Income taxes
|
(1,134)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Income (loss) before
extraordinary item
|
(37,529)
|
|
(4,398)
|
|
(4,910)
|
|
26,769
|
|
24,375
|
|
|
Extraordinary item - gain from
repurchase and retirement
of long-term
debt
|
-
|
|
-
|
|
-
|
|
-
|
|
29,640
|
|
|
Net income (loss)
|
$ (37,529)
|
|
$
(4,398)
|
|
$
(4,910)
|
|
$
26,769
|
|
$
54,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Balance Sheets As Of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept.
30,
|
|
Jun.
30,
|
|
Mar.
31,
|
|
Dec.
31,
|
|
Sept.
30,
|
|
|
|
2011
|
|
2011
|
|
2011
|
|
2010
|
|
2010
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Invested assets
|
$ 773,078
|
|
$ 823,018
|
|
$ 842,908
|
|
$
851,896
|
|
$
905,758
|
|
|
Cash
|
65,051
|
|
40,277
|
|
39,073
|
|
38,762
|
|
36,823
|
|
|
Reinsurance
recoverable
|
23,719
|
|
31,230
|
|
33,499
|
|
40,806
|
|
48,155
|
|
|
Other assets
|
56,897
|
|
46,141
|
|
48,528
|
|
60,161
|
|
65,416
|
|
|
Total assets
|
$ 918,745
|
|
$ 940,666
|
|
$ 964,008
|
|
$
991,625
|
|
$ 1,056,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders'
deficit
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses
|
$ 864,049
|
|
$ 910,530
|
|
$ 990,494
|
|
$ 1,060,036
|
|
$ 1,200,518
|
|
|
Deferred
payment obligation
|
576,510
|
|
517,193
|
|
464,342
|
|
415,657
|
|
351,720
|
|
|
Accrued
expenses and other liabilities
|
109,095
|
|
106,271
|
|
102,911
|
|
102,132
|
|
99,292
|
|
|
Total liabilities
|
1,549,654
|
|
1,533,994
|
|
1,557,747
|
|
1,577,825
|
|
1,651,530
|
|
|
Deficit in assets
|
(630,909)
|
|
(593,328)
|
|
(593,739)
|
|
(586,200)
|
|
(595,378)
|
|
|
Total liabilities and
stockholders' deficit
|
$ 918,745
|
|
$ 940,666
|
|
$ 964,008
|
|
$
991,625
|
|
$ 1,056,152
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Triad Guaranty Inc.