exhibit99-pressrelease.htm

Exhibit 99.1

Press Release

Triad Guaranty Inc. Reports Fourth Quarter and Year End Results

WINSTON-SALEM, N.C., February 25, 2010 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the quarter ended December 31, 2009 of $79.1 million compared to a net loss of $101.9 million for the third quarter of 2009 and a net loss of $122.2 million for the fourth quarter of 2008. The 2009 fourth quarter diluted loss per share was $5.26 compared to a diluted loss per share of $6.78 for the 2009 third quarter and $8.16 for the fourth quarter of 2008.

The net loss for the year ended December 31, 2009 was $595.6 million compared to a net loss of $631.1 million for the year ended December 31, 2008. The diluted loss per share was $39.70 for the year ended December 31, 2009 compared to a diluted loss per share of $42.27 for the year ended December 31, 2008.

Ken Jones, President and CEO, said, “The fourth quarter of 2009 continued to be a very difficult environment for our business. First-time defaults, while down moderately from earlier 2009 quarters, continued at a high volume. We have seen very little permanent impact to date from the existing loan modification programs and, consequently, the cure rates on existing defaults remain at historic lows and have shown little sign of improvement. 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.”

Total insurance in force declined to $50.5 billion at December 31, 2009, a 7.5% drop from September 30, 2009 and a 19.3% decline from December 31, 2008. Persistency rates have remained high over the past year due primarily to more restrictive credit standards in mortgage lending and declines in home prices, both of which limit the opportunities for borrowers to refinance existing mortgages. The majority of the decline in insurance in force over the past year is attributable to paid claims and rescinded coverage, as opposed to refinancing or sales. In addition, during the fourth quarter five Modified Pool contracts terminated in accordance with their terms after reaching the paid stop loss, which accounted for approximately 2% of the decline in insurance in force during the quarter.

Total revenues increased sequentially by $6.5 million to $57.8 million for the fourth quarter of 2009, as compared to $51.3 million in the third quarter of 2009 and $41.4 million in the fourth quarter of 2008. Driving the fourth quarter growth in revenues was a gain of $12.9 million related to the sale of the operating platform to Essent Guaranty, Inc. Earned premiums were essentially flat for the fourth quarter of 2009 when compared to the 2009 third quarter, but declined 30% when compared to the fourth quarter of 2008. The decline in year-over-year earned premiums was primarily due to the decline in insurance in force combined with the impact of refunds and expected refunds of premium relating to rescission activity. Revenues in the fourth quarter of 2008 were negatively impacted by an $18.9 million non-cash impairment loss, while the Company realized a small investment gain of $0.7 million in the fourth quarter of 2009.

Net losses and loss adjustment expenses were $128.9 million for the fourth quarter of 2009, down from $145.8 million in the 2009 third quarter and $178.1 million for the fourth quarter of 2008. Net settled claims totaled $153.7 million in the 2009 fourth quarter, down slightly from $157.9 million in the 2009 third quarter, but up significantly when compared to the $69.4 million settled in the fourth quarter of 2008. The increase in net settled claims during 2009 reflects the progression through the foreclosure process of a higher number of defaults from the 2006 and 2007 vintages. In the fourth quarter of 2009, loss reserves declined by $30.2 million compared to a decline of $15.8 million in the 2009 third quarter, while loss reserves increased by $106.1 million in the fourth quarter of 2008.

As a result of the Corrective Orders issued by the Illinois Department of Insurance, since June 1, 2009, all valid claims under Triad’s mortgage guaranty insurance policies have been settled 60% in cash and 40% by the creation of a deferred payment obligation (“DPO”) payable to the insured. The DPO requires that the Company accrue a carrying charge, or interest, based on the investment yield earned by its investment portfolio. Payments of the carrying charge and the DPO will be subject to the future financial performance of the operating insurance subsidiary and will require the approval of the Director of the Illinois Department of Insurance. Under U.S. generally accepted accounting principles, the DPOs and the related accrued interest are recorded as liabilities and are included in the “deferred payment obligation” line on our balance sheet. Other operating expenses were down moderately for the fourth quarter of 2009 as compared to the third quarter of 2009 and the fourth quarter of 2008 as the Company continues through the run-off process. The increase in interest expense in the fourth quarter of 2009 reflects an additional $1.5 million of accrued interest related to the DPOs.

We have updated the quarterly statistical and supplemental information for the 2009 fourth 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 – Fourth Quarter 2009”.

(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.

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 the Company’s 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, 2008 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.

SOURCE: Triad Guaranty Inc.

CONTACT: Bob Ogburn, Vice President and Treasurer, at 336.723.1282 ext. 1167 or bogburn@tgic.com

# # #

Triad Guaranty Inc.
Consolidated Statement of Operations

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	(Unaudited)						(Unaudited)

	2009			2008			2009			2008
	(Dollars in thousands except per share amounts)

Earned premiums	$	34,891		$	49,840		$	179,658		$	257,423
Net investment income		9,739			10,509			44,133		$	39,580
Net realized investment gains (losses)		649			(18,944	)		1,354			(26,559	)
Other income		12,536			2			12,666			8
Total revenues		57,815			41,407			237,811			270,452

Losses and loss adjustment expenses:
Net settled claims		153,749			69,373			515,413			237,080
Change in reserves		(30,195	)		106,080			272,553			665,549
Loss adjustment expenses		5,370			2,646			19,661			20,672
Net losses and loss adjustment expenses		128,924			178,099			807,627			923,301

Interest expense		2,243			694			6,034			3,557
DAC amortization		-			-			-			39,416
Other operating expenses - net		8,160			8,639			35,911			58,709
Loss before income taxes		(81,512	)		(146,025	)		(611,761	)		(754,531	)

Income tax benefit		(2,368	)		(23,818	)		(16,129	)		(123,404	)

Net loss	$	(79,144	)	$	(122,207	)	$	(595,632	)	$	(631,127	)

Diluted loss per share	$	(5.26	)	$	(8.16	)	$	(39.70	)	$	(42.27	)

Diluted weighted average common and common
stock equivalents outstanding (in thousands)		15,059			14,980			15,002			14,930

Triad Guaranty Inc.
Consolidated Balance Sheet

	(Unaudited)
	December 31,			December 31,
	2009			2008
	(Dollars in thousands except per share amounts)
Assets:
Invested assets:
Fixed maturities, available for sale, at market	$	784,830		$	854,186
Equity securities, available for sale, at market					583
Short-term investments		26,651			40,653
		811,481			895,422

Cash and cash equivalents		21,839			39,940
Prepaid federal income tax		-			15
Reinsurance recoverable		233,499			150,848
Other assets		58,007			44,309

Total assets	$	1,124,826		$	1,130,534

Liabilities:
Losses and loss adjustment expenses	$	1,537,043		$	1,187,840
Unearned premiums		12,153			15,863
Deferred income tax		-			-
Long-term debt		34,540			34,529
Deferred payment obligation		168,386			-
Other liabilities		79,062			28,968

Total liabilities		1,831,184			1,267,200

Stockholders' equity:
Accumulated deficit		(851,141	)		(255,509	)
Accumulated other comprehensive income		30,782			6,063
Other equity accounts		114,001			112,780

Total stockholders' deficit in assets		(706,358	)		(136,666	)

Total liabilities and stockholders' equity	$	1,124,826		$	1,130,534


Stockholders' deficit in assets per share:	$	(46.29	)	$	(9.01	)

Common shares outstanding		15,258,128			15,161,259

Triad Guaranty Inc.
Consolidated Statement of Cash Flow

	Twelve Months Ended
	December 31,

	(Unaudited)
	2009			2008
	(Dollars in Thousands)

OPERATING ACTIVITIES
Net loss	$	(595,632	)	$	(631,127	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Increase in loss and unearned premium reserves		345,493			825,971
Amounts due to/from reinsurer		(83,363	)		(150,839	)
Net realized investment (gains) losses		(1,354	)		26,559
Policy acquisition costs deferred		-			(3,173	)
Amortization of policy acquisition costs		-			39,416
Deferred income taxes		(13,311	)		(121,392	)
Redemption of Tax and Loss Bonds		15			115,993
Deferred payment obligation		168,386			-
Other operating activities		44,856			45,730

Net cash (used in) provided by operating activities		(134,910	)		147,138

INVESTING ACTIVITIES
Purchases of investment securities		(182,251	)		(839,372	)
Sales and maturities of investment securities		284,188			674,688
Net change in short-term investments		13,915			14,074
Other investing activities		957			(1,296	)

Net cash provided by (used in) investing activities		116,809			(151,906	)

FINANCING ACTIVITIES
Repayments on credit facility		-			(80,000	)
Excess tax benefits related to share based compensation		-			15

Net cash used in financing activities		-			(79,985	)

Foreign currency translation adjustment		-			(118	)

Net decrease in cash		(18,101	)		(84,871	)
Cash at beginning of period		39,940			124,811

Cash at end of period	$	21,839		$	39,940

TRIAD GUARANTY INC.
Sequential Quarterly Financial Statements
(unaudited)


	Condensed Statements of Operations For The Quarter Ended
	(Dollars in thousands)
	Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
	2009			2009			2009			2009			2008			2008			2008			2008			2007
Revenue:
Earned premiums	$	34,891		$	35,576		$	64,833		$	44,358		$	49,840		$	65,654		$	69,864		$	72,065		$	73,130
Net investment income		9,739			12,342			10,859			11,192			10,509			10,349			9,175			9,547			9,544
Realized investment gains (losses)		649			3,253			2,017			(4,565	)		(18,944	)		(6,519	)		(3,799	)		2,703			(29	)
Other income (loss)		12,536			127			2			2			2			2			2			2			2
Total revenues		57,815			51,298			77,711			50,987			41,407			69,486			75,242			84,317			82,647
Losses and expenses:
Net settled claims		153,749			157,881			149,863			53,920			69,372			59,357			68,263			40,471			36,341
Change in reserves		(30,195	)		(15,836	)		278,956			39,628			106,080			165,958			218,568			174,561			150,687
Loss adjustment expenses		5,370			3,713			2,549			8,029			2,647			5,879			5,918			6,227			4,624
Net losses and LAE		128,924			145,758			431,368			101,577			178,099			231,194			292,749			221,259			191,652
Change in premium deficiency reserve		-			-			-			-			-			-			(15,000	)		15,000			-
Interest expense		2,243			1,202			1,895			694			694			691			696			1,476			1,828
Amortization of DAC		-			-			-			-			-			-			-			39,416			4,637
Other operating expenses		8,160			9,659			8,680			9,411			8,639			8,726			27,238			14,106			10,895
Total losses and expenses		139,327			156,619			441,943			111,682			187,432			240,611			305,683			291,257			209,012
Income (loss) before income taxes		(81,512	)		(105,321	)		(364,232	)		(60,695	)		(146,025	)		(171,125	)		(230,441	)		(206,940	)		(126,365	)
Income taxes (benefit)		(2,368	)		(3,426	)		(4,813	)		(5,521	)		(23,818	)		(11,030	)		(31,630	)		(56,926	)		(51,406	)
Net income (loss)	$	(79,144	)	$	(101,895	)	$	(359,419	)	$	(55,174	)	$	(122,207	)	$	(160,095	)	$	(198,811	)	$	(150,014	)	$	(74,959	)


	Condensed Balance Sheets As Of
	(Dollars in thousands)
	Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,			Dec 31,
		2009			2009			2009			2009			2008			2008			2008			2008			2007
Assets
Invested assets	$	811,481		$	846,905		$	851,640		$	918,531		$	895,422		$	890,720		$	869,022		$	760,073		$	784,539
Cash		21,839			7,480			31,600			21,394			39,940			47,818			19,669			80,544			124,811
Real estate acquired		-			-			-			526			713			3,661			6,202			8,993			10,860
Deferred policy acquisition costs		-			-			-			-			-			-			-			-			36,243
Prepaid federal income tax		-			-			-			15			15			15			63,184			115,598			116,008
Reinsurance recoverable		233,499			245,436			234,248			182,589			150,848			111,827			55,316			93,244			5,815
Other assets		58,007			54,331			57,650			52,307			43,596			47,915			50,405			52,572			54,577
Total assets	$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956		$	1,063,798		$	1,111,024		$	1,132,853

Liabilities and stockholders' equity
Liabilities:
Losses and loss adjustment expenses	$	1,537,043		$	1,576,303		$	1,591,207		$	1,262,746		$	1,187,840		$	1,042,053		$	817,262		$	547,766		$	359,939
Premium deficiency reserve		-			-			-			-			-			-			-			96,073			-
Deferred income taxes		-			-			-			-			-			22,889			30,386			61,522			123,297
Borrowing under credit facility		-			-			-			-			-			-			-			-			80,000
Long term debt		34,540			34,537			34,535			34,532			34,529			34,527			34,527			34,522			34,519
Deferred payment obligation		168,386			97,048			27,020			-			-			-			-			-			-
Accrued expenses and other liabilities		91,215			71,291			52,066			59,477			44,831			30,887			40,714			32,699			36,247
Total liabilities		1,831,184			1,779,179			1,704,828			1,356,755			1,267,200			1,130,356			922,889			772,582			634,002
Total stockholders' equity (deficit in assets)		(706,358	)		(625,027	)		(529,690	)		(181,393	)		(136,666	)		(28,400	)		140,909			338,442			498,851
Total liabilities and stockholders' equity	$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956		$	1,063,798		$	1,111,024		$	1,132,853