Triad Guaranty Inc. Reports Second Quarter Loss as Reported Defaults and
Foreclosures Continue to Rise
WINSTON-SALEM, N.C., Aug. 4 /PRNewswire-FirstCall/ -- Triad Guaranty Inc.
(Nasdaq: TGIC) today reported a net loss for the quarter ended June 30, 2008
of $198.8 million compared with net income of $12.0 million for the same
quarter in 2007. The loss per share was $13.36 for the second quarter of 2008
compared to diluted earnings per share of $0.80 for the second quarter of
2007. The net loss for the six months ended June 30, 2008 was $348.8 million
compared to net income of $29.3 million for the same period in 2007. The loss
per share was $23.45 for the first six months of 2008 compared to diluted
earnings per share of $1.96 for the same period last year.
William T. Ratliff, III, Chairman and CEO, said, "As I take on this
additional leadership role, Triad and the entire mortgage industry are facing
significant challenges. During the second quarter we announced that Triad was
going into run-off and we stopped issuing commitments for new mortgage
insurance coverage effective July 15, 2008. Concurrent with the move to
run-off, we took actions to reduce our workforce by approximately 45%. Our
focus now is on the efficient and effective servicing of our insured
portfolio, particularly around loss mitigation. We intend to continue to
improve our processes in this area by examining and refining all aspects of
our default management and claims process, including assessing servicer
effectiveness, pursuing acquisitions of properties in foreclosure when
appropriate and enhancing our investigations of potential fraud in the
mortgage commitment process, particularly for recent policy years."
Mr. Ratliff continued, "The size of our second quarter loss reflects the
depth and breadth of the collapse of the housing and mortgage markets. The
continued growth in the number of defaults and foreclosures during the quarter
required a significant increase in reserves. The distressed markets of
California, Florida, Arizona and Nevada continue to be adversely impacted by
declining home prices, and reserves for defaults in these states comprised
approximately 68% of the increase in our reserves for the quarter."
To understand and assess the future performance of Triad requires
information about the risk in our insured portfolio and performance to date.
In our continuing effort to provide meaningful information, we have updated
the supplemental information for the 2008 second quarter results related to
product differentiation, risk structures, additional portfolio characteristics
and performance 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 2008".
(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 voluntary run-off of
its existing in-force book of business. For more information, please visit
the Company's web site at www.triadguaranty.com.
Diluted realized investment gains (losses) per share, net of taxes, is a
non-GAAP financial measure. The Company believes this is relevant and useful
information to investors because, except for losses on impaired securities, it
shows the effect that the Company's discretionary sale of investments had on
earnings.
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 our
ability to transition our business into run-off, the possibility of general
economic and business conditions that are different than anticipated,
legislative, regulatory, and other similar developments, changes in interest
rates, the housing market, the mortgage industry and the stock market, as well
as the factors described under "Risk Factors" and under "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, 2007 and in other reports
and statements that we file 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.
Triad Guaranty Inc.
Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
(Dollars in thousands except per share amounts)
Premiums written:
Direct $84,560 $83,153 $173,946 $161,561
Ceded (15,480) (12,988) (31,475) (25,689)
Net premiums written $69,080 $70,165 $142,471 $135,872
Earned premiums $69,864 $69,732 $141,929 $133,680
Net investment income 9,175 7,673 18,722 15,022
Net realized investment losses (3,799) (3,867) (1,096) (3,105)
Other income 2 2 4 4
Total revenues 75,242 73,540 159,559 145,601
Net losses and loss adjustment
expenses 292,749 41,893 514,008 74,474
Net change in premium
deficiency reserve (15,000) - - -
Interest expense on debt 696 694 2,172 1,387
Policy acquisition costs - 4,670 39,416 9,293
Other operating expenses - net 27,238 10,716 41,344 21,047
(Loss) income before income taxes (230,441) 15,567 (437,381) 39,400
Income taxes (benefit) (31,630) 3,541 (88,556) 10,051
Net (loss) income $(198,811) $12,026 $(348,825) $29,349
Basic (loss) earnings per share $(13.36) $0.81 $(23.45) $1.98
Diluted (loss) earnings per share $(13.36) $0.80 $(23.45) $1.96
Weighted average common and
common stock equivalents
outstanding (in thousands)
Basic 14,879 14,835 14,874 14,824
Diluted 14,879 14,951 14,874 14,946
CERTAIN NON-GAAP FINANCIAL
MEASURES:
Diluted earnings (losses) per
share contribution from
realized losses
Net realized investment losses $(3,799) $(3,866) $(1,096) $(3,105)
Income tax benefit at 35% (1,330) (1,353) (384) (1,087)
After tax realized losses $(2,469) $(2,513) $(712) $(2,018)
Diluted weighted average
shares outstanding (in
thousands) 14,879 14,951 14,874 14,946
Diluted earnings (losses)
per share contribution
from realized losses $(0.16) $(0.17) $(0.05) $(0.14)
Diluted realized investment losses per share, net of taxes is a non-GAAP
financial measure. We believe this is relevant and useful information to
investors because, except for losses on impaired securities, it shows the
effect that the Company's discretionary sale of investments had on
earnings.
Triad Guaranty Inc.
Consolidated Balance Sheet
(Unaudited) (Unaudited)
June 30, December 31, June 30,
2008 2007 2007
(Dollars in thousands except per share amounts)
Assets:
Invested assets:
Fixed maturities, available
for sale, at market $843,951 $725,631 $618,034
Equity securities, available
for sale, at market 1,749 2,162 3,781
Short-term investments 23,322 56,746 52,384
869,022 784,539 674,199
Cash and cash equivalents 19,669 124,811 26,711
Deferred policy acquisition costs - 36,243 35,157
Prepaid federal income tax 63,184 116,008 170,076
Reinsurance recoverable 55,316 - -
Other assets 56,607 71,252 54,134
Total assets $1,063,798 $1,132,853 $960,277
Liabilities:
Losses and loss adjustment expenses $817,262 $359,939 $122,061
Premium deficiency reserve - - -
Unearned premiums 18,360 17,793 15,461
Revolving line of credit - 80,000 -
Deferred income tax 30,386 123,297 177,889
Long-term debt 34,527 34,519 34,514
Other liabilities 22,354 18,454 15,729
Total liabilities 922,889 634,002 365,654
Stockholders' equity:
Retained earnings 26,793 375,618 482,426
Accumulated other comprehensive
income 2,585 13,405 4,507
Other equity accounts 111,531 109,828 107,690
Total stockholders' equity 140,909 498,851 594,623
Total liabilities and stockholders'
equity $1,063,798 $1,132,853 $960,277
Stockholders' equity per
share: $9.32 $33.43 $39.85
Common shares outstanding 15,116,259 14,920,243 14,920,108
Triad Guaranty Inc.
Consolidated Statement of Cash Flow
(Unaudited)
For the Six Months
Ended June 30,
2008 2007
OPERATING ACTIVITIES
Net income (loss) $(348,825) $29,349
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Increase in loss and unearned premium reserves 457,890 39,977
Decrease (increase) in amounts due to/from
reinsurer (56,026) 1,202
Net realized investment losses 1,096 3,105
Policy acquisition costs deferred (3,173) (9,307)
Amortization of policy acquisition costs 39,416 9,293
Increase (decrease) in deferred income taxes (88,554) 6,526
Redemption (purchases) of Tax and Loss Bonds 52,824 (3,168)
Other operating activities 23,565 (3,331)
Net cash provided by operating activities 78,213 73,646
INVESTING ACTIVITIES
Purchases of investment securities (584,572) (128,425)
Sales and maturities of investment securities 450,706 90,597
Decrease (increase) in short-term investments 31,655 (47,083)
Other investing activities (1,080) (3,404)
Net cash used in investing activities (103,291) (88,315)
FINANCING ACTIVITIES
Borrowings (repayments) on credit facility (80,000) -
Excess tax benefits related to share based
compensation - 175
Proceeds from exercise of stock options - 616
Net cash provided by (used in) financing activities (80,000) 791
Foreign currency translation adjustment (64) 1,980
Net decrease in cash (105,142) (11,898)
Cash at beginning of period 124,811 38,609
Cash at end of period $19,669 $26,711
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance in force:
- Flow business $41,645 $42,086 $41,840 $40,610 $38,590
- Structured bulk
transactions 4,248 4,374 4,525 4,700 4,133
Total Primary
insurance in force 45,894 46,459 46,365 45,310 42,724
Modified Pool insurance in
force 20,439 21,187 21,863 22,737 23,649
Total insurance in
force $66,333 $67,646 $68,228 $68,047 $66,373
Number of insured loans:
- Primary 267,689 272,289 273,798 269,681 258,163
- Modified Pool 97,960 101,723 105,109 109,133 113,725
Total number of
insured loans 365,649 374,012 378,907 378,814 371,888
Average loan size: ($ in
thousands)
- Primary $171.4 $170.6 $169.3 $168.0 $165.5
- Modified Pool $208.6 $208.3 $208.0 $208.3 $208.0
Credit quality of Primary
insurance in force(1)
Prime 76.9% 76.5% 75.8% 74.9% 74.8%
Alt-A 19.6% 19.9% 20.5% 21.4% 21.5%
A Minus 3.1% 3.1% 3.2% 3.2% 3.2%
Sub Prime 0.5% 0.5% 0.5% 0.5% 0.6%
Primary Alt-A insurance in
force by credit score:
FICO between 620 and 659 7.4% 7.5% 7.6% 7.7% 8.3%
FICO between 660 and 699 29.2% 29.2% 29.1% 29.3% 29.8%
FICO between 700 and 739 35.5% 35.4% 35.4% 35.1% 34.4%
FICO greater than 739 28.0% 27.9% 28.0% 27.9% 27.5%
Primary flow insurance in
force subject to captive
reinsurance arrangements 57.9% 58.8% 59.0% 58.0% 56.8%
Primary annual persistency rate 85.1% 83.3% 81.4% 79.1% 77.7%
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance in force:
- Flow business $35,366 $32,779 $31,012 $30,064
- Structured bulk transactions 2,616 1,330 1,094 719
Total Primary insurance in
force 37,982 34,109 32,106 30,783
Modified Pool insurance in force 23,507 22,719 21,779 20,022
Total insurance in force $61,489 $56,828 $53,885 $50,804
Number of insured loans:
- Primary 239,326 225,531 219,287 216,458
- Modified Pool 114,711 112,555 110,650 107,653
Total number of insured loans 354,037 338,086 329,937 324,111
Average loan size: ($ in thousands)
- Primary $158.7 $151.2 $146.4 $142.2
- Modified Pool $204.9 $201.9 $196.8 $186.0
Credit quality of Primary insurance
in force(1)
Prime 77.1% 80.4% 81.5% 82.9%
Alt-A 19.1% 15.4% 14.1% 12.3%
A Minus 3.2% 3.5% 3.6% 3.9%
Sub Prime 0.6% 0.7% 0.8% 0.9%
Primary Alt-A insurance in force by
credit score:
FICO between 620 and 659 8.9% 10.1% 11.6% 14.4%
FICO between 660 and 699 30.9% 32.5% 33.9% 34.4%
FICO between 700 and 739 33.7% 31.9% 30.3% 28.2%
FICO greater than 739 26.5% 25.5% 24.2% 22.9%
Primary flow insurance in force
subject to captive reinsurance
arrangements 57.9% 61.0% 63.0% 62.7%
Primary annual persistency rate 77.0% 76.6% 75.3% 72.7%
(1) The credit quality of loans notated above are defined as follows:
Prime - All business that is not Alt-A, A Minus, or Sub Prime;
Alt A - Loans with credit scores >= 620 and that were underwritten
with low or no documentation; A Minus - Loans with credit scores
>= 575 and <= 619; Sub-Prime - Loans with credit scores < 575
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
(Dollars in millions unless otherwise indicated)
Risk in Force - Primary
Primary net risk in force:
- Flow business $9,524 $9,671 $9,642 $9,350 $8,866
- Structured bulk business 1,425 1,470 1,525 1,583 1,373
Total Primary net risk
in force $10,949 $11,141 $11,166 $10,933 $10,239
Primary risk in force by
credit score
FICO less than 575 0.4% 0.4% 0.5% 0.5% 0.5%
FICO between 575 and 619 3.0% 3.1% 3.1% 3.2% 3.2%
FICO between 620 and 659 15.4% 15.5% 15.6% 15.6% 15.6%
FICO between 660 and 699 25.0% 25.0% 24.9% 24.9% 24.9%
FICO between 700 and 739 26.4% 26.4% 26.4% 26.4% 26.2%
FICO greater than 739 29.8% 29.6% 29.5% 29.4% 29.5%
Primary risk in force by
policy year
2001 and prior 2.2% 2.3% 2.5% 2.7% 3.0%
2002 2.7% 2.8% 3.0% 3.3% 3.7%
2003 8.8% 9.2% 9.6% 10.3% 11.7%
2004 8.5% 8.8% 9.2% 10.0% 11.3%
2005 12.6% 12.9% 13.5% 14.4% 16.2%
2006 21.2% 21.6% 22.4% 23.6% 26.0%
2007 38.9% 39.3% 39.8% 35.8% 28.0%
2008 5.2% 3.1% - - -
Primary risk in force by loan
type:
- Fixed 66.1% 65.6% 64.7% 63.5% 62.6%
- Interest Only 10.4% 10.6% 10.7% 11.0% 9.6%
- ARM (amortizing) Fixed
Period 5 Years or Greater 8.8% 9.1% 9.4% 10.3% 11.0%
- ARM (amortizing) Fixed
Period Less than 5 Years 2.2% 2.3% 2.4% 2.3% 2.7%
- ARM (potential negative
amortization) 12.4% 12.5% 12.8% 13.0% 14.0%
Primary risk in force by
property type:
- Condominium 10.6% 10.5% 10.4% 10.4% 10.3%
- Other (principally single-
family detached) 89.4% 89.5% 89.6% 89.6% 89.7%
Primary risk in force by
occupancy status:
- Primary residence 87.7% 87.7% 87.7% 87.7% 87.7%
- Second home 7.9% 7.9% 7.9% 7.9% 7.9%
- Non-owner occupied 4.4% 4.4% 4.4% 4.5% 4.5%
Primary risk in force by
mortgage amount:
- $200,000 or less 47.2% 47.5% 48.0% 48.6% 49.8%
- Greater than $200,000 52.8% 52.5% 52.0% 51.4% 50.2%
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
(Dollars in millions unless otherwise indicated)
Risk in Force - Primary
Primary net risk in force:
- Flow business $8,094 $7,447 $7,016 $6,781
- Structured bulk business 843 377 305 185
Total Primary net risk in force $8,937 $7,824 $7,321 $6,966
Primary risk in force by credit score
FICO less than 575 0.5% 0.6% 0.7% 0.7%
FICO between 575 and 619 3.2% 3.6% 3.7% 3.9%
FICO between 620 and 659 15.9% 16.4% 16.7% 17.3%
FICO between 660 and 699 24.7% 24.5% 24.5% 24.5%
FICO between 700 and 739 25.9% 25.2% 24.7% 24.2%
FICO greater than 739 29.8% 29.7% 29.8% 29.3%
Primary risk in force by policy year
2001 and prior 3.7% 4.4% 5.0% 5.7%
2002 4.6% 5.5% 6.3% 7.1%
2003 14.3% 17.1% 19.4% 22.0%
2004 13.9% 16.8% 19.3% 21.9%
2005 19.6% 23.4% 26.3% 29.1%
2006 30.5% 32.8% 23.7% 14.2%
2007 13.5% - - -
2008 - - - -
Primary risk in force by loan type:
- Fixed 64.4% 68.9% 70.2% 72.0%
- Interest Only 7.4% 5.9% 5.0% 3.6%
- ARM (amortizing) Fixed Period 5
Years or Greater 11.0% 9.4% 10.0% 10.7%
- ARM (amortizing) Fixed Period Less
than 5 Years 3.6% 4.5% 5.4% 6.3%
- ARM (potential negative
amortization) 13.6% 11.3% 9.4% 7.4%
Primary risk in force by property
type:
- Condominium 10.1% 9.6% 9.2% 8.7%
- Other (principally single-family
detached) 89.9% 90.4% 90.8% 91.3%
Primary risk in force by occupancy
status:
- Primary residence 88.1% 89.4% 89.6% 90.3%
- Second home 7.7% 7.4% 7.0% 6.2%
- Non-owner occupied 4.2% 3.2% 3.3% 3.4%
Primary risk in force by mortgage
amount:
- $200,000 or less 53.5% 57.9% 60.8% 63.8%
- Greater than $200,000 46.5% 42.1% 39.2% 36.2%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
(Dollars in millions unless otherwise indicated)
Risk in Force - Modified Pool
Modified Pool risk in force net
of stop loss $875 $903 $913 $922 $935
Deductibles on modified pool risk $103 $108 $112 $115 $117
Modified Pool risk in force by
credit score(2):
FICO less than 575 0.1% 0.1% 0.1% 0.1% 0.1%
FICO between 575 and 619 0.7% 0.7% 0.7% 0.7% 0.7%
FICO between 620 and 659 10.7% 10.7% 10.7% 10.7% 10.8%
FICO between 660 and 699 31.4% 31.3% 31.3% 31.3% 31.3%
FICO between 700 and 739 30.0% 29.9% 29.9% 29.9% 29.8%
FICO greater than 739 27.1% 27.3% 27.3% 27.3% 27.3%
Modified Pool risk in force by
policy year
2001 and prior 2.2% 2.3% 2.4% 2.5% 2.6%
2002 2.5% 2.6% 2.8% 3.0% 3.1%
2003 14.0% 13.9% 14.0% 14.5% 14.5%
2004 16.4% 16.0% 16.3% 16.2% 16.1%
2005 27.5% 27.7% 29.9% 28.7% 29.1%
2006 33.3% 33.7% 30.9% 31.3% 31.1%
2007 4.1% 3.9% 3.8% 3.7% 3.5%
Modified Pool risk in force by loan
type(2):
- Fixed 26.2% 26.1% 26.2% 26.8% 26.8%
- Interest Only 23.3% 23.4% 23.3% 23.0% 22.9%
- ARM (amortizing) Fixed Period 5
Years or Greater 31.4% 31.5% 31.4% 33.7% 33.6%
- ARM (amortizing) Fixed Period
Less than 5 Years 5.7% 5.8% 6.1% 4.0% 4.1%
- ARM (potential negative
amortization) 13.5% 13.2% 13.0% 12.6% 12.5%
Modified Pool risk in force by
property type(2):
- Condominium 9.5% 9.5% 9.4% 9.3% 9.3%
- Other (principally single-family
detached) 90.5% 90.5% 90.6% 90.7% 90.7%
Modified Pool risk in force by
occupancy status(2):
- Primary residence 73.4% 73.5% 73.6% 73.6% 73.7%
- Second home 6.1% 6.2% 6.2% 6.2% 6.2%
- Non-owner occupied 20.4% 20.4% 20.3% 20.2% 20.1%
Modified Pool risk in force by mortgage
amount(2):
- $200,000 or less 35.2% 35.4% 35.5% 35.5% 35.7%
- Greater than $200,000 64.8% 64.6% 64.5% 64.5% 64.3%
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
Risk in Force - Modified Pool
Modified Pool risk in force net of
stop loss $933 $890 $837 $764
Deductibles on modified pool risk $114 $101 $94 $90
Modified Pool risk in force by credit
score(2):
FICO less than 575 0.1% 0.2% 0.2% 0.2%
FICO between 575 and 619 0.7% 0.8% 0.9% 1.0%
FICO between 620 and 659 10.9% 11.3% 11.6% 12.0%
FICO between 660 and 699 31.3% 31.0% 30.6% 30.2%
FICO between 700 and 739 29.8% 29.4% 29.4% 29.5%
FICO greater than 739 27.2% 27.3% 27.3% 27.1%
Modified Pool risk in force by policy
year
2001 and prior 2.8% 3.1% 3.7% 4.3%
2002 3.4% 3.7% 4.3% 5.2%
2003 14.7% 15.4% 16.4% 18.1%
2004 16.0% 16.6% 17.6% 19.5%
2005 29.2% 30.4% 32.3% 35.6%
2006 29.9% 30.8% 25.7% 17.3%
2007 4.0% - - -
Modified Pool risk in force by loan
type(2):
- Fixed 28.1% 30.8% 31.8% 35.0%
- Interest Only 23.0% 24.5% 26.4% 28.8%
- ARM (amortizing) Fixed Period 5
Years or Greater 32.5% 27.2% 25.2% 24.8%
- ARM (amortizing) Fixed Period Less
than 5 Years 4.3% 4.5% 5.0% 5.7%
- ARM (potential negative
amortization) 12.0% 13.1% 11.6% 5.7%
Modified Pool risk in force by
property type(2):
- Condominium 8.9% 8.0% 7.3% 7.2%
- Other (principally single-family
detached) 91.1% 92.0% 92.7% 92.8%
Modified Pool risk in force by
occupancy status(2):
- Primary residence 73.8% 73.7% 73.7% 73.9%
- Second home 6.1% 6.2% 6.0% 5.9%
- Non-owner occupied 20.1% 20.1% 20.3% 20.1%
Modified Pool risk in force by
mortgage amount(2):
- $200,000 or less 36.5% 37.8% 39.1% 41.4%
- Greater than $200,000 63.5% 62.2% 60.9% 58.6%
(2) Percentages represent distribution of direct risk in force (RIF) on a
per policy basis and do not account for applicable stop loss amounts.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
(Dollars in millions unless otherwise indicated)
Production
New insurance written
(NIW):
- Primary flow business $1,148 $1,913 $2,680 $3,720 $5,089
- Primary structured bulk
business - - - 694 1,702
Total Primary 1,148 1,913 2,680 4,414 6,791
- Modified Pool - - - 1,406
Total NIW $1,148 $1,913 $2,680 $4,414 $8,196
New risk written:
- Primary (gross) $252 $451 $678 $1,203 $1,860
- Modified Pool - - - - 51
Total new risk written $252 $451 $678 $1,203 $1,912
Primary NIW by loan-to-value
ratio (LTV):
- Greater than 95.00% 11.1% 9.6% 29.7% 37.4% 36.1%
- 90.01% to 95.00% 25.2% 29.1% 25.8% 23.1% 23.3%
- 90.00% and below 63.7% 61.3% 44.5% 39.5% 40.7%
Percent of Primary NIW from
refinancings 36.2% 43.1% 27.6% 25.7% 36.9%
Percent of Primary flow NIW
subject to captive
reinsurance arrangements 22.0% 43.9% 53.2% 47.6% 34.3%
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
(Dollars in millions unless otherwise indicated)
Production
New insurance written (NIW):
- Primary flow business $4,372 $3,612 $2,844 $2,559
- Primary structured bulk business 1,327 304 436 385
Total Primary 5,699 3,916 3,280 2,944
- Modified Pool 1,925 2,130 2,956 2,980
Total NIW $7,624 $6,046 $6,236 $5,924
New risk written:
- Primary (gross) $1,576 $991 $865 $730
- Modified Pool 69 78 106 92
Total new risk written $1,645 $1,069 $971 $822
Primary NIW by loan-to-value ratio
(LTV):
- Greater than 95.00% 26.2% 16.2% 20.7% 12.2%
- 90.01% to 95.00% 23.8% 25.3% 23.3% 22.0%
- 90.00% and below 50.0% 58.5% 56.0% 65.8%
Percent of Primary NIW from
refinancings 44.1% 41.5% 28.9% 32.5%
Percent of Primary flow NIW subject
to captive
reinsurance arrangements 28.1% 31.9% 61.5% 61.2%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
(Dollars in millions unless otherwise indicated)
Delinquencies and Claim
Information
Total Primary delinquent
loans 16,075 13,322 10,419 7,541 5,940
- Flow business 13,710 11,576 9,166 6,807 5,504
- Bulk business 2,365 1,746 1,253 734 436
Total Modified Pool
delinquent loans 10,526 8,594 6,402 4,826 3,913
- Structured with
deductibles (3) 6,221 5,128 4,072 3,104 2,508
- Structured without
deductibles 4,305 3,466 2,330 1,722 1,405
Total Primary delinquency
rate 6.01% 4.89% 3.81% 2.80% 2.30%
Modified Pool delinquency
rate 10.75% 8.45% 6.09% 4.42% 3.44%
Primary average paid
severity ($ thousands) $52.4 $42.6 $41.6 $36.9 $30.9
- Flow business $49.3 $41.4 $40.9 $36.9 $30.9
- Bulk business $90.8 $68.3 $63.9 $35.9 $30.1
Primary net paid
claims ($ thousands) $48,071 $29,209 $27,012 $23,058 $16,687
- Flow business $41,805 $27,091 $25,798 $22,090 $15,965
- Bulk business $6,266 $2,119 $1,214 $968 $722
Modified Pool average paid
severity ($ thousands) $55.6 $65.0 $57.9 $41.3 $26.6
Modified Pool net paid
claims ($ thousands) $20,192 $10,852 $9,328 $5,413 $1,386
Gross Case Reserves as
percent of risk in
default (4) 45.0% 40.5% 36.6% 32.1% 26.9%
Financial Information (5)
Loss ratio - GAAP 419.0% 307.0% 262.1% 148.2% 60.1%
Expense ratio - GAAP 39.4% 25.5% 20.8% 22.4% 21.9%
Combined ratio - GAAP 458.4% 332.5% 282.9% 170.6% 82.0%
Risk-to-capital ratio 42.7:1 27.7:1 20.5:1 17.8:1 16.0:1
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
(Dollars in millions unless otherwise indicated)
Delinquencies and Claim
Information
Total Primary delinquent loans 5,632 5,565 5,201 5,001
- Flow business 5,335 5,265 4,892 4,666
- Bulk business 297 300 309 335
Total Modified Pool delinquent
loans 3,366 3,001 2,387 1,944
- Structured with deductibles (3) 2,176 1,897 1,578 1,330
- Structured without deductibles 1,190 1,104 809 614
Total Primary delinquency rate 2.35% 2.47% 2.37% 2.31%
Modified Pool delinquency rate 2.93% 2.67% 2.16% 1.81%
Primary average paid severity
($ thousands) $31.3 $28.1 $25.7 $25.8
- Flow business $31.1 $27.9 $25.0 $25.0
- Bulk business $34.0 $29.8 $37.6 $32.5
Primary net paid claims
($ thousands) $16,447 $15,100 $13,016 $13,501
- Flow business $15,122 $13,880 $11,887 $11,614
- Bulk business $1,325 $1,220 $1,129 $1,887
Modified Pool average paid
severity ($ thousands) $23.7 $26.2 $18.8 $19.4
Modified Pool net paid claims
($ thousands) $1,281 $1,493 $603 $930
Gross Case Reserves as percent of
risk in default (4) 27.3% 27.0% 22.9% 24.3%
Financial Information (5)
Loss ratio - GAAP 50.9% 70.9% 35.7% 34.1%
Expense ratio - GAAP 22.8% 22.8% 24.8% 25.6%
Combined ratio - GAAP 73.7% 93.7% 60.5% 59.7%
Risk-to-capital ratio 13.8:1 12.5:1 12.0:1 11.8:1
(3) We record reserves in our financial statements for defaults on
contracts where the incurred losses have exceeded the amount of the
deductible. At June 30, 2008 there were approximately 2,670 defaults
in structures in which the incurred losses had exceeded the
deductible.
(4) Reflects gross case reserves, which excludes IBNR and ceded reserves,
as a percent of risk in default for total primary delinquent loans and
total modified pool delinquent loans. Previous numbers have been
restated to conform to current presentation. (5) The Loss & Expense
Ratios do not reflect any impact from establishment of Premium
Deficiency Reserve.
(5) The Loss & Expense Ratios do not reflect any impact from establishment
of Premium Deficiency Reserve.
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, Sep 30, Jun 30,
2008 2008 2007 2007 2007
Revenue:
Earned premiums $69,864 $72,065 $73,130 $72,090 $69,732
Net investment
income 9,175 9,547 9,544 8,371 7,673
Other income (loss) (3,797) 2,705 (27) 86 (3,864)
Total revenues 75,242 84,317 82,647 80,547 73,540
Losses and expenses:
Net losses and LAE 292,749 221,259 191,652 106,813 41,893
Change in premium
deficiency reserve (15,000) 15,000 - - -
Interest expense on
debt 696 1,476 1,827 1,161 694
Amortization of DAC - 39,416 4,637 4,567 4,670
Other operating
expenses 27,238 14,106 10,895 11,686 10,717
Total Losses and
expenses 305,683 291,257 209,011 124,228 57,973
Income (loss) before
income taxes (230,441) (206,940) (126,364) (43,680) 15,567
Income taxes
(benefit) (31,630) (56,926) (51,405) (11,832) 3,541
Net income (loss) $(198,811) $(150,014) $(74,959) $(31,849) $12,026
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
Revenue:
Earned premiums $63,949 $58,222 $54,077 $50,668
Net investment income 7,349 7,178 6,761 6,534
Other income (loss) 763 (50) (34) 777
Total revenues 72,061 65,350 60,804 57,979
Losses and expenses:
Net losses and LAE 32,581 41,300 19,305 17,271
Change in premium deficiency
reserve - - - -
Interest expense on debt 694 693 693 693
Amortization of DAC 4,624 4,180 4,108 4,118
Other operating expenses 10,330 9,268 9,278 8,497
Total Losses and expenses 48,228 55,442 33,386 30,579
Income (loss) before income taxes 23,832 9,909 27,418 27,400
Income taxes (benefit) 6,510 1,805 8,027 7,814
Net income (loss) $17,322 $8,104 $19,392 $19,587
Condensed Balance Sheets As Of
(dollars in thousands)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2008 2008 2007 2007 2007
Assets
Invested
Assets: $869,022 $760,073 $784,539 $794,373 $674,199
Cash 19,669 80,544 124,811 30,617 26,711
Real estate
acquired 6,202 8,993 10,860 12,566 7,923
Deferred policy
acquisition costs - - 36,243 35,574 35,157
Prepaid federal
income tax 63,183 115,598 116,008 168,817 170,076
Reinsurance
recoverable 55,316 93,244 5,815 2 1
Other assets 50,406 52,572 54,577 54,724 46,210
Total assets $1,063,798 $1,111,024 $1,132,853 $1,096,673 $960,277
Liabilities and
stockholders'
equity
Liabilities:
Losses and loss
adjustment
expenses $817,262 $547,766 $359,939 $200,455 $122,061
Premium
deficiency
reserve - 96,073 - - -
Deferred income
taxes 30,386 61,522 123,297 170,477 177,889
Borrowing under
credit facility - - 80,000 80,000 -
Long term debt 34,527 34,522 34,519 34,517 34,514
Accrued expenses
and other
liabilities 40,714 32,699 36,247 39,754 31,191
Total liabilities 922,889 772,582 634,002 525,203 365,655
Total stockholders'
equity 140,909 338,442 498,851 571,470 594,623
Total liabilities
and stockholders'
equity $1,063,798 $1,111,024 $1,132,853 $1,096,673 $960,277
Mar 31, Dec 31, Sep 30, Jun 30,
2007 2006 2006 2006
Assets
Invested Assets: $669,160 $607,312 $611,176 $575,315
Cash 10,429 38,609 9,230 5,191
Real estate acquired 9,765 10,170 7,982 8,614
Deferred policy
acquisition costs 35,035 35,143 34,681 34,203
Prepaid federal
income tax 166,693 166,908 159,268 151,908
Reinsurance
recoverable 211 840 1 1
Other assets 40,223 36,648 35,641 33,791
Total assets $931,515 $895,631 $857,979 $809,023
Liabilities and
stockholders' equity
Liabilities:
Losses and loss
adjustment expenses $98,721 $84,352 $60,123 $54,905
Premium deficiency
reserve - - - -
Deferred income
taxes 180,232 176,483 175,728 163,436
Borrowing under
credit facility - - - -
Long term debt 34,512 34,510 34,508 34,505
Accrued expenses
and other
liabilities 30,898 30,061 26,698 25,025
Total liabilities 344,363 325,407 297,057 277,870
Total stockholders' equity 587,152 570,224 560,922 531,153
Total liabilities and
stockholders' equity $931,515 $895,631 $857,979 $809,023
SOURCE Triad Guaranty Inc.
Ken Jones, Senior Vice President and Chief Financial Officer, Triad Guaranty
Inc., +1-336-723-1282 ext. 1105, kjones@tgic.com
