Attached files
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| 8-K - FORM 8-K - 1Q2011 EARNINGS RELEASE - TRIAD GUARANTY INC | form8k-1q2011earnings.htm |
Exhibit 99.1
Press Release
Triad Guaranty Inc. Reports First Quarter Results
WINSTON-SALEM, N.C., May 13, 2011 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the quarter ended March 31, 2011 of $4.9 million compared to net income of $26.8 million for the fourth quarter of 2010 and a net loss of $27.8 million for the first quarter of 2010. The 2011 first quarter diluted loss per share was $0.32 compared to diluted income per share of $1.76 for the 2010 fourth quarter and a diluted loss per share of $1.84 for the first quarter of 2010.
Ken Jones, President and CEO, said, “After three consecutive quarters of profits, we reported a small loss during the 2011 first quarter. Although we had a decrease in new defaults from the fourth quarter of 2010, we did not receive as much benefit from the positive development of our reserves during the quarter compared to the fourth quarter of 2010. Net settled claims declined 23% and 26% compared to the fourth quarter of 2010 and the first quarter of 2010, respectively. We believe the drop in our net settled claims is primarily related to loan servicers’ issues surrounding foreclosure policies and practices, including in some cases, foreclosure moratoriums. The drop in net settled claims had little impact on our 2011 first quarter financial results because we continue to reserve for a default until we settle the default or receive definitive information from the servicer that the default has cured.”
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 $593.7 million at March 31, 2011. We continue to believe that, absent significant positive changes in the economy and the residential real estate market, our existing assets and future premiums may not be sufficient to meet our current and future policyholder obligations.”
We have updated the quarterly statistical and supplemental information for the 2011 first 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 – First Quarter 2011”.
1
(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.
SOURCE: Triad Guaranty Inc.
CONTACT: Bob Ogburn, Vice President and Treasurer, at 336.723.1282 ext. 1167 or bogburn@tgic.com
####
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Consolidated Statements of Operations
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(Unaudited)
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Three Months Ended
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March 31,
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2011
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2010
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(Dollars in thousands except per share amounts)
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Revenues:
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Earned premiums
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$ | 37,128 | $ | 45,888 | ||||
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Net investment income
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8,491 | 9,873 | ||||||
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Net realized investment losses
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(436 | ) | (242 | ) | ||||
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Other income (losses)
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27 | (8 | ) | |||||
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Total revenues
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45,210 | 55,511 | ||||||
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Losses and Expenses:
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Net settled claims
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106,909 | 144,973 | ||||||
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Change in reserves
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(66,694 | ) | (77,453 | ) | ||||
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Loss adjustment expenses
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1,490 | 4,718 | ||||||
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Net losses and loss adjustment expenses
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41,705 | 72,238 | ||||||
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Interest expense
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3,978 | 2,469 | ||||||
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Other operating expenses
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4,437 | 9,332 | ||||||
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Total losses and expenses
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50,120 | 84,039 | ||||||
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Loss before income taxes
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(4,910 | ) | (28,528 | ) | ||||
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Income tax benefit
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- | (717 | ) | |||||
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Net loss
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$ | (4,910 | ) | $ | (27,811 | ) | ||
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Per Share Information:
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Diluted loss per share
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$ | (0.32 | ) | $ | (1.84 | ) | ||
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Diluted weighted average common stock and common
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stock equivalents outstanding (in thousands of shares)
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15,225 | 15,099 | ||||||
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Consolidated Balance Sheets
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(Unaudited)
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(Unaudited)
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March 31,
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December 31,
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March 31,
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2011
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2010
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2010
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(Dollars in thousands)
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Assets:
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Invested assets:
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Fixed maturities, available for sale, at market
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$ | 810,439 | $ | 812,335 | $ | 811,040 | ||||||
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Short-term investments
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32,469 | 39,561 | 146,075 | |||||||||
| 842,908 | 851,896 | 957,115 | ||||||||||
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Cash and cash equivalents
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39,073 | 38,762 | 38,662 | |||||||||
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Reinsurance recoverable
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33,499 | 40,806 | 52,963 | |||||||||
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Other assets
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48,528 | 60,161 | 54,406 | |||||||||
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Total assets
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$ | 964,008 | $ | 991,625 | $ | 1,103,146 | ||||||
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Liabilities:
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Losses and loss adjustment expenses
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$ | 990,494 | $ | 1,060,036 | $ | 1,468,719 | ||||||
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Unearned premiums
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9,220 | 9,057 | 12,210 | |||||||||
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Long-term debt
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- | - | 34,543 | |||||||||
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Deferred payment obligation
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464,342 | 415,657 | 229,953 | |||||||||
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Other liabilities
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93,691 | 93,075 | 90,467 | |||||||||
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Total liabilities
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1,557,747 | 1,577,825 | 1,835,892 | |||||||||
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Stockholders' deficit:
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Accumulated deficit
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(723,956 | ) | (719,046 | ) | (878,951 | ) | ||||||
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Accumulated other comprehensive income
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15,963 | 18,609 | 32,114 | |||||||||
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Other equity accounts
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114,254 | 114,237 | 114,091 | |||||||||
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Deficit in assets
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(593,739 | ) | (586,200 | ) | (732,746 | ) | ||||||
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Total liabilities and stockholders' deficit
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$ | 964,008 | $ | 991,625 | $ | 1,103,146 | ||||||
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Common shares outstanding
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15,258,128 | 12,258,128 | 15,258,128 | |||||||||
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Triad Guaranty Inc.
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Consolidated Statements of Cash Flow
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(Unaudited)
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Three Months Ended
March 31,
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2011
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2010
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(Dollars in thousands)
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OPERATING ACTIVITIES
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Net loss
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$ | (4,910 | ) | $ | (27,811 | ) | ||
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Adjustments to reconcile net loss to net cash
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provided by operating activities:
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Decrease in loss and unearned premium reserves
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(69,379 | ) | (68,267 | ) | ||||
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Decrease in amounts due to/from reinsurer
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7,307 | 180,536 | ||||||
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Net realized investment losses
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436 | 242 | ||||||
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Decrease in deferred income taxes
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- | (717 | ) | |||||
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Increase in deferred payment obligation
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48,685 | 61,567 | ||||||
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Other operating activities
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12,835 | 11,704 | ||||||
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Net cash (used in) provided by operating activities
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(5,026 | ) | 157,254 | |||||
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INVESTING ACTIVITIES
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Purchases of investment securities
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(27,539 | ) | (72,318 | ) | ||||
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Sales and maturities of investment securities
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26,514 | 50,729 | ||||||
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Decrease (increase) in short-term investments
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7,092 | (119,425 | ) | |||||
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Other investing activities
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(730 | ) | 583 | |||||
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Net cash provided by (used in) investing activities
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5,337 | (140,431 | ) | |||||
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Net increase in cash
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311 | 16,823 | ||||||
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Cash at beginning of year
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38,762 | 21,839 | ||||||
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Cash at end of year
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$ | 39,073 | $ | 38,662 | ||||
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Sequential Quarterly Financial Statements
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(unaudited)
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Condensed Statements of Operations For The Quarter Ended
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(Dollars in thousands)
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Mar. 31,
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Dec. 31,
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Sept. 30,
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Jun. 30,
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Mar. 31,
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2011
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2010
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2010
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2010
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2010
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Revenue:
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Earned premiums
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$ | 37,128 | $ | 40,920 | $ | 44,278 | $ | 72,330 | $ | 45,888 | ||||||||||
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Net investment income
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8,491 | 8,658 | 9,681 | 10,560 | 9,873 | |||||||||||||||
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Realized investment (losses) gains
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(436 | ) | (950 | ) | 14,694 | (985 | ) | (242 | ) | |||||||||||
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Other income (expense)
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27 | 60 | (29 | ) | - | (8 | ) | |||||||||||||
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Total revenues
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45,210 | 48,688 | 68,624 | 81,905 | 55,511 | |||||||||||||||
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Losses and Expenses:
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Net settled claims
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106,909 | 139,435 | 132,139 | 145,460 | 144,973 | |||||||||||||||
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Change in reserves
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(66,694 | ) | (129,993 | ) | (97,229 | ) | (158,058 | ) | (77,453 | ) | ||||||||||
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Loss adjustment expenses
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1,490 | 322 | 491 | 4,828 | 4,718 | |||||||||||||||
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Net losses and LAE expense (benefit)
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41,705 | 9,764 | 35,401 | (7,770 | ) | 72,238 | ||||||||||||||
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Interest expense
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3,978 | 3,836 | 2,642 | 2,816 | 2,469 | |||||||||||||||
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Other operating expenses
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4,437 | 8,319 | 6,206 | 7,021 | 9,332 | |||||||||||||||
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Total losses and expenses
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50,120 | 21,919 | 44,249 | 2,067 | 84,039 | |||||||||||||||
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Income (loss) before taxes and extraordinary item
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(4,910 | ) | 26,769 | 24,375 | 79,838 | (28,528 | ) | |||||||||||||
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Income taxes (benefit)
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- | - | - | 717 | (717 | ) | ||||||||||||||
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Income (loss) before extraordinary item
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(4,910 | ) | 26,769 | 24,375 | 79,121 | (27,811 | ) | |||||||||||||
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Extraordinary item - gain from repurchase
and retirement of long-term debt
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- | - | 29,640 | - | - | |||||||||||||||
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Net income (loss)
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$ | (4,910 | ) | $ | 26,769 | $ | 54,015 | $ | 79,121 | $ | (27,811 | ) | ||||||||
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Condensed Balance Sheets As Of
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Mar. 31,
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Dec. 31,
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Sept. 30,
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Jun. 30,
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Mar. 31,
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| 2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
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Assets
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Invested assets
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$ | 842,908 | $ | 851,896 | $ | 905,758 | $ | 936,158 | $ | 957,115 | ||||||||||
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Cash
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39,073 | 38,762 | 36,823 | 35,576 | 38,662 | |||||||||||||||
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Reinsurance recoverable
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33,499 | 40,806 | 48,155 | 49,829 | 52,963 | |||||||||||||||
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Other assets
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48,528 | 60,161 | 65,416 | 64,000 | 54,406 | |||||||||||||||
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Total assets
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$ | 964,008 | $ | 991,625 | $ | 1,056,152 | $ | 1,085,563 | $ | 1,103,146 | ||||||||||
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Liabilities and stockholders' deficit
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Liabilities:
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Losses and loss adjustment expenses
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$ | 990,494 | $ | 1,060,036 | $ | 1,200,518 | $ | 1,307,028 | $ | 1,468,719 | ||||||||||
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Long-term debt
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- | - | - | 34,546 | 34,543 | |||||||||||||||
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Deferred payment obligation
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464,342 | 415,657 | 351,720 | 292,169 | 229,953 | |||||||||||||||
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Accrued expenses and other liabilities
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102,911 | 102,132 | 99,292 | 99,965 | 102,677 | |||||||||||||||
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Total liabilities
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1,557,747 | 1,577,825 | 1,651,530 | 1,733,708 | 1,835,892 | |||||||||||||||
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Deficit in assets
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(593,739 | ) | (586,200 | ) | (595,378 | ) | (648,145 | ) | (732,746 | ) | ||||||||||
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Total liabilities and stockholders' deficit
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$ | 964,008 | $ | 991,625 | $ | 1,056,152 | $ | 1,085,563 | $ | 1,103,146 | ||||||||||