Triad Guaranty Inc. Reports Third Quarter Results
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WINSTON-SALEM, N.C., Nov. 10 /PRNewswire-FirstCall/ -- Triad Guaranty Inc. (Nasdaq: TGIC) today reported a net loss for the quarter ended September 30, 2009 of $101.9 million compared to a net loss of $359.4 million for the second quarter of 2009 and a net loss of $160.1 million for the third quarter of 2008. The 2009 third quarter diluted loss per share was $6.78 compared to a diluted loss per share of $23.91 for the 2009 second quarter and $10.69 for the third quarter of 2008.
The net loss for the nine months ended September 30, 2009 was $516.5 million compared to a net loss of $508.9 million for the nine months ended September 30, 2008. The diluted loss per share was $34.44 for the nine months ended September 30, 2009 compared to a diluted loss per share of $34.14 for the nine months ended September 30, 2008.
Ken Jones, President and CEO, said, "The third quarter continued to be a very difficult environment for our business. First-time defaults were down slightly from the second quarter of 2009, but continued at a high volume. Compounding the problem, the cure rates on existing defaults were at historic lows and have shown little sign of improving. 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."
Mr. Jones continued, "Our financial position continued to deteriorate during the third quarter and we reported a deficit in assets of $625 million at September 30, 2009. To meet all of our existing obligations, we will need to earn at least $625 million during the run-off of our existing business."
For additional information concerning our results for the third quarter of 2009 and our financial position at September 30, 2009, please see our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which will be filed today with the Securities and Exchange Commission and will be available at www.sec.gov or via our web site www.triadguaranty.com. We have updated the quarterly statistical and supplemental information for the 2009 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 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; our ability to maintain the listing of our common stock on The NASDAQ Stock Market; 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.
Triad Guaranty Inc.
Consolidated Statement of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) (Unaudited)
2009 2008 2009 2008
---- ---- ---- ----
(Dollars in thousands except per
share amounts)
Earned premiums $35,576 $65,654 $144,767 $207,583
Net investment income 12,342 10,349 34,393 29,071
Net realized
investment gains
(losses) 3,253 (6,519) 705 (7,615)
Other income 127 2 131 6
--- --- --- ---
Total revenues 51,298 69,486 179,996 229,045
Losses and loss
adjustment expenses:
Net settled claims 157,881 59,357 361,664 167,708
Change in reserves (15,836) 165,958 302,748 559,469
Loss
adjustment
expenses 3,713 5,879 14,291 18,025
----- ----- ------ ------
Net losses and loss
adjustment expenses 145,758 231,194 678,703 745,202
Interest expense 1,202 691 3,791 2,863
Policy acquisition costs - - - 39,416
Other operating
expenses - net 9,659 8,726 27,750 50,070
----- ----- ------ ------
Loss before income taxes (105,321) (171,125) (530,248) (608,506)
Income tax benefit (3,426) (11,030) (13,760) (99,586)
------ ------- ------- -------
Net loss $(101,895) $(160,095) $(516,488) $(508,920)
========= ========= ========= =========
Diluted loss per share $(6.78) $(10.69) $(34.44) $(34.14)
Diluted weighted
average common and
common stock equivalents
outstanding (in
thousands) 15,033 14,973 14,995 14,907
Triad Guaranty Inc.
Consolidated Balance Sheet
(Unaudited) (Unaudited)
September 30, December 31, September 30,
2009 2008 2008
---- ---- ----
(Dollars in thousands except per share
amounts)
Assets:
Invested assets:
Fixed maturities,
available for sale, at
market $814,821 $854,186 $862,486
Equity securities,
available for sale, at
market 56 583 615
Short-term investments 32,028 40,653 27,619
------ ------ ------
846,905 895,422 890,720
Cash and cash equivalents 7,480 39,940 47,818
Prepaid
federal
income tax - 15 15
Reinsurance recoverable 245,436 150,848 111,827
Other assets 54,331 44,309 51,576
------ ------ ------
Total assets $1,154,152 $1,130,534 $1,101,956
========== ========== ==========
Liabilities:
Losses and loss
adjustment
expenses $1,576,303 $1,187,840 $1,042,053
Unearned premiums 13,385 15,863 16,870
Deferred income tax - - 22,889
Long-term debt 34,537 34,529 34,527
Deferred
payment
obligation 97,048 - -
Other liabilities 57,906 28,968 14,016
------ ------ ------
Total liabilities 1,779,179 1,267,200 1,130,355
Stockholders' equity:
Accumulated deficit (771,997) (255,509) (133,302)
Accumulated other
comprehensive
income 33,626 6,063 (7,913)
Other equity accounts 113,344 112,780 112,816
------- ------- -------
Total
stockholders'
deficit in assets (625,027) (136,666) (28,399)
-------- -------- -------
Total liabilities and
stockholders' equity $1,154,152 $1,130,534 $1,101,956
========== ========== ==========
Stockholders' deficit
in assets per share: $(40.96) $(9.01) $(1.88)
Common shares
outstanding 15,258,128 15,161,259 15,116,259
Triad Guaranty Inc.
Consolidated Statement of Cash Flow
Nine Months Ended
September 30,
(Unaudited)
2009 2008
---- ----
(Dollars in Thousands)
OPERATING ACTIVITIES
Net loss $(516,488) $(508,920)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Increase in loss and
unearned premium reserves 385,985 681,191
Amounts due to/
from reinsurer (95,275) (111,419)
Net realized
investment (gains)
losses (705) 7,615
Policy acquisition
costs deferred - (3,173)
Amortization of policy
acquisition costs - 39,416
Deferred income taxes (14,841) (94,991)
Redemption of Tax
and Loss Bonds 15 115,993
Deferred payment
obligation 97,048 -
Other operating
activities 29,192 24,926
------ ------
Net cash provided by
operating activities (115,069) 150,638
-------- -------
INVESTING ACTIVITIES
Purchases of investment
securities (171,049) (782,316)
Sales and maturities of
investment securities 245,225 612,418
Net change in short-
term investments 8,538 26,692
Other investing
activities (105) (1,348)
---- ------
Net cash provided by (used
in) investing activities 82,609 (144,554)
------ --------
FINANCING ACTIVITIES
Repayments on
credit facility - (80,000)
---- -------
Net cash used in
financing activities - (80,000)
---- -------
Foreign currency
translation adjustment - (3,077)
---- ------
Net decrease in cash (32,460) (76,993)
Cash at beginning of period 39,940 124,811
------ -------
Cash at end of period $7,480 $47,818
====== =======
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,
2009 2009 2009
---- ---- ----
Revenue:
Earned premiums $35,576 $64,833 $44,358
Net investment income 12,342 10,859 11,192
Realized investment gains
(losses) 3,253 2,017 (4,565)
Other income (loss) 127 2 2
--- --- ---
Total revenues 51,298 77,711 50,987
------ ------ ------
Losses and expenses:
Net settled claims 157,881 149,863 53,920
Change in reserves (15,836) 278,956 39,628
Loss adjustment expenses 3,713 2,549 8,029
----- ----- -----
Net losses and LAE 145,758 431,368 101,577
Change in premium deficiency
reserve - - -
Interest expense 1,202 1,895 694
Amortization of DAC - - -
Other operating expenses 9,659 8,680 9,411
----- ----- -----
Total losses and expenses 156,619 441,943 111,682
------- ------- -------
Income (loss) before income taxes (105,321) (364,232) (60,695)
Income taxes (benefit) (3,426) (4,813) (5,521)
------ ------ ------
Net income (loss) $(101,895) $(359,419) $(55,174)
========= ========= ========
Dec 31, Sep 30, Jun 30, Mar 31,
2008 2008 2008 2008
---- ---- ---- ----
Revenue:
Earned premiums $49,840 $65,654 $69,864 $72,065
Net investment income 10,509 10,349 9,175 9,547
Realized investment gains
(losses) (18,944) (6,519) (3,799) 2,703
Other income (loss) 2 2 2 2
--- --- --- ---
Total revenues 41,407 69,486 75,242 84,317
------ ------ ------ ------
Losses and expenses:
Net settled claims 69,372 59,357 68,263 40,471
Change in reserves 106,080 165,958 218,568 174,561
Loss adjustment expenses 2,647 5,879 5,918 6,227
----- ----- ----- -----
Net losses and LAE 178,099 231,194 292,749 221,259
Change in premium deficiency
reserve - - (15,000) 15,000
Interest expense 694 691 696 1,476
Amortization of DAC - - - 39,416
Other operating expenses 8,639 8,726 27,238 14,106
----- ----- ------ ------
Total losses and expenses 187,432 240,611 305,683 291,257
------- ------- ------- -------
Income (loss) before
income taxes (146,025) (171,125) (230,441) (206,940)
Income taxes (benefit) (23,818) (11,030) (31,630) (56,926)
------- ------- ------- -------
Net income (loss) $(122,207) $(160,095) $(198,811) $(150,014)
========= ========= ========= =========
Dec 31, Sep 30,
2007 2007
---- ----
Revenue:
Earned premiums $73,130 $72,090
Net investment income 9,544 8,370
Realized investment gains
(losses) (29) 85
Other income (loss) 2 2
--- ---
Total revenues 82,647 80,547
------ ------
Losses and expenses:
Net settled claims 36,341 28,471
Change in reserves 150,687 76,612
Loss adjustment expenses 4,624 1,730
----- -----
Net losses and LAE 191,652 106,813
Change in premium deficiency
reserve - -
Interest expense 1,828 1,161
Amortization of DAC 4,637 4,567
Other operating expenses 10,895 11,686
------ ------
Total losses and expenses 209,012 124,227
------- -------
Income (loss) before income taxes (126,365) (43,680)
Income taxes (benefit) (51,406) (11,831)
------- -------
Net income (loss) $(74,959) $(31,849)
======== ========
Condensed Balance Sheets As Of
(Dollars in thousands)
----------------------
Sept 30, Jun 30, Mar 31,
2009 2009 2009
---- ---- ----
Assets
Invested assets $846,905 $851,640 $918,531
Cash 7,480 31,600 21,394
Real estate acquired - - 526
Deferred policy acquisition costs - - -
Prepaid federal income tax - - 15
Reinsurance recoverable 245,436 234,248 182,589
Other assets 54,331 57,650 52,307
------ ------ ------
Total assets $1,154,152 $1,175,138 $1,175,362
========== ========== ==========
Liabilities and stockholders' equity
Liabilities:
Losses and loss adjustment
expenses $1,576,303 $1,591,207 $1,262,746
Premium deficiency reserve - - -
Deferred income taxes - - -
Borrowing under credit
facility - - -
Long term debt 34,537 34,535 34,532
Deferred payment obligation 97,048 27,020 -
Accrued expenses and other
liabilities 71,291 52,066 59,477
------ ------ ------
Total liabilities 1,779,179 1,704,828 1,356,755
Total stockholders' equity
(deficit in assets) (625,027) (529,690) (181,393)
-------- -------- --------
Total liabilities and
stockholders' equity $1,154,152 $1,175,138 $1,175,362
========== ========== ==========
Dec 31, Sep 30, Jun 30, Mar 31,
2008 2008 2008 2008
---- ---- ---- ----
Assets
Invested assets $895,422 $890,720 $869,022 $760,073
Cash 39,940 47,818 19,669 80,544
Real estate acquired 713 3,661 6,202 8,993
Deferred policy
acquisition costs - - - -
Prepaid federal income tax 15 15 63,184 115,598
Reinsurance recoverable 150,848 111,827 55,316 93,244
Other assets 43,596 47,915 50,405 52,572
------ ------ ------ ------
Total assets $1,130,534 $1,101,956 $1,063,798 $1,111,024
========== ========== ========== ==========
Liabilities and stockholders'
equity
Liabilities:
Losses and loss
adjustment
expenses $1,187,840 $1,042,053 $817,262 $547,766
Premium deficiency
reserve - - - 96,073
Deferred income taxes - 22,889 30,386 61,522
Borrowing under credit
facility - - - -
Long term debt 34,529 34,527 34,527 34,522
Deferred payment
obligation - - - -
Accrued expenses and
other liabilities 44,830 30,887 40,714 32,699
------ ------ ------ ------
Total liabilities 1,267,199 1,130,356 922,889 772,582
Total stockholders' equity
(deficit in assets) (136,665) (28,400) 140,909 338,442
-------- ------- ------- -------
Total liabilities and
stockholders' equity $1,130,534 $1,101,956 $1,063,798 $1,111,024
========== ========== ========== ==========
Dec 31, Sep 30,
2007 2007
---- ----
Assets
Invested assets $784,539 $794,373
Cash 124,811 30,617
Real estate acquired 10,860 12,566
Deferred policy acquisition costs 36,243 35,574
Prepaid federal income tax 116,008 168,817
Reinsurance recoverable 5,815 2
Other assets 54,577 54,724
------ ------
Total assets $1,132,853 $1,096,673
========== ==========
Liabilities and stockholders' equity
Liabilities:
Losses and loss adjustment
expenses $359,939 $200,455
Premium deficiency reserve - -
Deferred income taxes 123,297 170,477
Borrowing under credit
facility 80,000 80,000
Long term debt 34,519 34,517
Deferred payment obligation - -
Accrued expenses and other
liabilities 36,247 39,754
------ ------
Total liabilities 634,002 525,203
Total stockholders' equity
(deficit in assets) 498,851 571,470
------- -------
Total liabilities and
stockholders' equity $1,132,853 $1,096,673
========== ==========
SOURCE Triad Guaranty Inc.
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