EX-99.1 2 exhibit99-press_release.htm PRESS RELEASE ANNOUNCING 2ND QUARTER 2012 EARNINGS

Exhibit 99.1
Press Release

Triad Guaranty Inc. Reports Second Quarter Results

WINSTON-SALEM, N.C., August 14, 2012 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the quarter ended June 30, 2012 of $31.3 million compared to a net loss of $37.7 million for the first quarter of 2012 and a net loss of $4.4 million during the second quarter of 2011.  The 2012 second quarter diluted loss per share was $2.05 compared to a diluted loss per share of $2.47 for the 2012 first quarter and $0.29 for the second quarter of 2011.

The net loss for the six months ended June 30, 2012 was $69.0 million compared to a net loss of $9.3 million for the six months ended June 30, 2011.  The diluted loss per share was $4.52 for the six months ended June 30, 2012 compared to a diluted loss per share of $0.61 for the six months ended June 30, 2011.

Ken Jones, President and CEO, said, "During the second quarter, we continued to see a drop in the number of new defaults as well as the total risk in default.  Primary risk in default declined by 8.2% during the second quarter of 2012 compared to a sequential decline of 7.4% in the first quarter of 2012 and 6.9% in the second quarter of 2011. Net losses and loss adjustment expenses for the second quarter amounted to $68.2 million compared to $67.9 million in the first quarter of 2012, and up substantially from the $41.3 million reported in the second quarter of 2011.  Comparisons to the second quarter of 2011 is difficult due to the positive impact of reserve adjustments during that period.  Settled claims were $108.1 million in the second quarter of 2012 compared to $97.1 million during the 2012 first quarter and $111.6 million in the second quarter of 2011. Persistency, the key driver of our earned premiums, remained at elevated levels compared to historical norms as many borrowers are finding it difficult to sell or refinance their homes."

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 $771.4 million at June 30, 2012.  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 2012 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 2012".

(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, or for other reasons, 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, 2011 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.

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 Statements of Operations
 
(Unaudited)
 
 
 
   
   
   
 
  
 
Three Months Ended
   
Six Months Ended
 
 
 
June 30,
   
June 30,
 
(Dollars in thousands except per share amounts)
 
2012
   
2011
   
2012
   
2011
 
Revenues:
 
   
   
   
 
Earned premiums
 
36,760
   
35,394
   
71,297
   
72,522
 
Net investment income
   
5,874
     
8,126
     
11,983
     
16,617
 
Net realized investment gains
   
807
     
3,000
     
980
     
2,564
 
Other income
   
2,513
     
29
     
2,516
     
56
 
Total revenues
   
45,954
     
46,549
     
86,776
     
91,759
 
Losses and Expenses:
                               
Net settled claims
   
108,134
     
111,583
     
205,266
     
218,492
 
Decrease in reserves
   
(41,024
)
   
(70,752
)
   
(71,556
)
   
(137,446
)
Loss adjustment expenses
   
1,074
     
469
     
2,456
     
1,959
 
Net losses and loss adjustment expenses
   
68,184
     
41,300
     
136,166
     
83,005
 
 
                               
Interest expense
   
4,938
     
4,469
     
9,919
     
8,447
 
Other operating expenses
   
4,136
     
5,178
     
9,720
     
9,615
 
Total losses and expenses
   
77,258
     
50,947
     
155,805
     
101,067
 
Loss before income taxes
   
(31,304
)
   
(4,398
)
   
(69,029
)
   
(9,308
)
Income tax expense
   
-
     
-
     
-
     
-
 
Net loss
 
(31,304
)
 
(4,398
)
 
(69,029
)
 
(9,308
)
 
                               
Per Share Information:
                               
Diluted loss per share
 
(2.05
)
 
(0.29
)
 
(4.52
)
 
(0.61
)
 
                               
Diluted weighted average common stock and common stock equivalents outstanding (in thousands of shares)
   
15,293
     
15,258
     
15,275
     
15,241
 





 
Triad Guaranty Inc.
 
Consolidated Balance Sheets
 
 
 
   
   
 
  
 
(Unaudited)
       
(Unaudited)
 
 
 
June 30,
   
December 31,
   
June 30,
 
(Dollars in thousands)
 
2012
   
2011
   
2011
 
Assets:
 
   
   
 
Invested assets:
 
   
   
 
Fixed maturities, available for sale, at market
 
705,250
   
746,238
   
757,124
 
Short-term investments
   
34,014
     
30,102
     
65,894
 
 
   
739,264
     
776,340
     
823,018
 
Cash and cash equivalents
   
36,037
     
40,590
     
40,277
 
Reinsurance recoverable
   
19,372
     
22,988
     
31,230
 
Other Assets
   
53,351
     
56,309
     
46,141
 
Total assets
 
848,024
   
896,227
   
940,666
 
 
                       
Liabilities:
                       
Losses and loss adjustment expenses
 
779,179
   
854,188
   
910,530
 
Unearned premiums
   
7,116
     
6,871
     
8,642
 
Deferred payment obligation
   
723,551
     
629,700
     
517,193
 
Other liabilities
   
109,576
     
109,042
     
97,629
 
Total liabilities
   
1,619,422
     
1,599,801
     
1,533,994
 
 
                       
Stockholders' deficit:
                       
Accumulated deficit
   
(895,844
)
   
(826,815
)
   
(728,354
)
Accumulated other comprehensive income
   
10,175
     
8,977
     
20,769
 
Other equity accounts
   
114,271
     
114,264
     
114,257
 
Deficit in assets
   
(771,398
)
   
(703,574
)
   
(593,328
)
Total liabilities and stockholders' deficit
 
848,024
   
896,227
   
940,666
 
 
                       
Common shares outstanding (in thousands)
   
15,368
     
15,328
     
15,328
 






Triad Guaranty Inc.
 
Consolidated Statements of Cash Flow
 
(Unaudited)
 
 
 
   
 
  
 
Six Months Ended
 
  
 
June 30,
 
(Dollars in thousands)
 
2012
   
2011
 
OPERATING ACTIVITIES
 
   
 
Net loss
 
(69,029
)
 
(9,308
)
Adjustments to reconcile net loss to net cash  used in operating activities:
               
Decrease in loss and unearned premium reserves
   
(74,764
)
   
(149,921
)
Decrease in amounts due to/from reinsurer
   
3,616
     
9,576
 
Net realized investment gains
   
(980
)
   
(2,564
)
Increase in deferred payment obligation
   
93,851
     
101,536
 
Collection of income taxes recoverable
   
-
     
11,707
 
Other operating activities
   
5,269
     
7,881
 
Net cash used in operating activities
   
(42,037
)
   
(31,093
)
 
               
INVESTING ACTIVITIES
               
Purchases of investment securities
   
(30,782
)
   
(35,338
)
Sales and maturities of investment securities
   
71,757
     
94,372
 
Purchases of short-term investments
   
(3,909
)
   
(26,333
)
Other investing activities
   
418
     
(94
)
Net cash provided by investing activities
   
37,484
     
32,607
 
 
               
Net (decrease) increase in cash
   
(4,553
)
   
1,514
 
Cash at beginning of year
   
40,590
     
38,762
 
Cash at end of period
 
36,037
   
40,276
 





Triad Guaranty Inc.
 
Sequential Quarterly Financial Statements
 
(unaudited)
 
 
 
   
   
   
   
 
  
 
Condensed Statements of Operations For The Quarter Ended
 
 
 
Jun. 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
   
Jun. 30,
 
(Dollars in thousands)
 
2012
   
2012
   
2011
   
2011
   
2011
 
Revenue:
 
   
   
   
   
 
Earned premiums
 
36,760
   
34,537
   
39,111
   
49,719
   
35,394
 
Net investment income
   
5,874
     
6,109
     
6,779
     
7,364
     
8,126
 
Realized investment gains
   
807
     
173
     
11,296
     
1,349
     
3,000
 
Other income
   
2,513
     
3
     
1
     
10
     
29
 
Total revenues
   
45,954
     
40,822
     
57,187
     
58,442
     
46,549
 
Losses and Expenses:
                                       
Net settled claims
   
108,134
     
97,131
     
113,936
     
132,545
     
111,583
 
Change in reserves
   
(41,024
)
   
(30,531
)
   
(5,885
)
   
(44,192
)
   
(70,752
)
Loss adjustment expenses (benefit)
   
1,074
     
1,382
     
(633
)
   
(511
)
   
469
 
Net losses and LAE expense
   
68,184
     
67,982
     
107,418
     
87,842
     
41,300
 
Interest expense
   
4,938
     
4,981
     
4,984
     
4,813
     
4,469
 
Other operating expenses
   
4,136
     
5,584
     
4,583
     
4,450
     
5,178
 
Total losses and expenses
   
77,258
     
78,547
     
116,985
     
97,105
     
50,947
 
Loss before taxes
   
(31,304
)
   
(37,725
)
   
(59,798
)
   
(38,663
)
   
(4,398
)
Income tax expense (benefit)
   
-
     
-
     
1,134
     
(1,134
)
   
-
 
Net loss
 
(31,304
)
 
(37,725
)
 
(60,932
)
 
(37,529
)
 
(4,398
)
 
                                       
  
 
Condensed Balance Sheets As Of
 
 
 
Jun. 30,
   
Mar. 31,
   
Dec. 31,
   
Sept. 30,
   
Jun. 30,
 
 
 
2012
   
2012
   
2011
   
2011
   
2011
 
Assets
                                       
Invested assets
 
739,264
   
784,896
   
776,340
   
773,078
   
823,018
 
Cash
   
36,037
     
17,355
     
40,590
     
65,051
     
40,277
 
Reinsurance recoverable
   
19,372
     
19,712
     
22,988
     
23,719
     
31,230
 
Other assets
   
53,351
     
53,732
     
56,309
     
56,897
     
46,141
 
Total assets
 
848,024
   
875,695
   
896,227
   
918,745
   
940,666
 
 
                                       
Liabilities and stockholders' deficit
                                       
Liabilities:
                                       
Losses and loss adjustment expenses
 
779,179
   
821,512
   
854,188
   
864,049
   
910,530
 
Deferred payment obligation
   
723,551
     
674,191
     
629,700
     
576,510
     
517,193
 
Accrued expenses and other liabilities
   
116,692
     
117,771
     
115,913
     
109,095
     
106,271
 
Total liabilities
   
1,619,422
     
1,613,474
     
1,599,801
     
1,549,654
     
1,533,994
 
Deficit in assets
   
(771,398
)
   
(737,779
)
   
(703,574
)
   
(630,909
)
   
(593,328
)
Total liabilities and stockholders' deficit
 
848,024
   
875,695
   
896,227
   
918,745
   
940,666