WINSTON-SALEM, N.C., Jan. 27 /PRNewswire-FirstCall/ -- Triad Guaranty Inc.
(Nasdaq: TGIC) today reported fourth quarter 2004 net income of $15.2 million
compared to $13.6 million in the fourth quarter of 2003, a 12 percent
increase. Diluted earnings per share increased 11 percent for the quarter to
$1.03 compared to $0.93 in the fourth quarter of 2003. Realized investment
gains, net of taxes, had no meaningful effect on diluted earnings per share in
the fourth quarter of 2004 compared to a contribution of $0.07 per share in
the fourth quarter of 2003.
Net income for the full year 2004 was $58.4 million compared to
$51.1 million last year, an increase of 14 percent. For the full year 2004,
diluted earnings per share was $3.98 compared to $3.52 for 2003, an increase
of 13 percent. Included in net income for 2004 were $0.5 million of realized
investment gains compared to $3.0 million of gains in 2003.
Darryl W. Thompson, President and Chief Executive Officer, said, "We are
pleased to report record earnings for both the fourth quarter and the full
year. We continued to experience strong earned premium growth and
improvements in persistency rates. Despite an overall decline in mortgage
originations, our insurance in force had solid growth and our results continue
to demonstrate the strength of our company. We are encouraged by our core
results and the continued success of our strategic initiatives to expand our
relationships and penetration in the marketplace."
Insurance in force reached $36.8 billion at December 31, 2004, an increase
of 16 percent over the past year. Total insurance written for the fourth
quarter of 2004 was $4.1 billion, down from $5.2 billion in the fourth quarter
of 2003. For the full year 2004, total insurance written amounted to
$17.2 billion, a decrease of 16 percent from the prior year. Insurance
written on flow business in the fourth quarter of 2004 totaled $2.5 billion,
down from $3.2 billion in the fourth quarter of 2003, primarily reflecting a
significant drop in refinance activity. For the year, insurance written on
flow business amounted to $10.5 billion in 2004 compared to $16.6 billion in
2003. Insurance written attributable to structured bulk transactions totaled
$1.6 billion in the fourth quarter and $6.7 billion for all of 2004 compared
to $2.0 billion and $3.9 billion for the same periods of 2003.
Refinance business accounted for 30.1 percent of flow insurance written
for the fourth quarter of 2004 compared to 38.5 percent for the same period of
2003. Persistency, or the percentage of insurance remaining in force compared
to one year prior, was 67.6 percent at December 31, 2004 compared to
50.7 percent at December 31, 2003.
The Company's expense ratio was 27.8 percent in the fourth quarter of 2004
compared to 34.0 percent in the fourth quarter of 2003. For the full year
2004, the expense ratio was 28.8 percent compared to 32.3 percent in 2003.
The loss ratio was 27.0 percent for the fourth quarter of 2004 and
25.4 percent for the full year, compared to 21.6 percent and 19.9 percent for
the same periods of 2003. The Company's ratio of delinquent loans to total
policies in force was 2.04 percent at December 31, 2004 compared to
1.80 percent at December 31, 2003. Incurred losses amounted to $10.0 million
in the fourth quarter of 2004 compared to $7.1 million in the fourth quarter
of 2003. The increase in delinquencies and losses reflect the further
seasoning of insurance in force.
According to Thompson, "2004 was another strong year for Triad. The
decline in refinancing activity moderated flow production levels in 2004.
However, increased persistency and strong growth in the bulk arena contributed
to a net 16 percent increase in insurance in force for the year. Our loss
development for 2004 continues to meet our expectations based upon the age and
the mix of business of our insurance in force. We anticipate further
increases in the loss ratio offset to some extent by further decreases in the
expense ratio. We are encouraged by the outlook for 2005. We expect continued
growth in earned premiums through a combination of increased persistency and
further penetration into the bulk and flow marketplaces."
Triad Guaranty Inc.'s wholly owned subsidiary, Triad Guaranty Insurance
Corporation, is a nationwide mortgage insurer providing mortgage insurance
(MI) to residential mortgage lenders. Private MI makes homeownership
available to borrowers with equity of less than 20%, facilitates the sale of
mortgage loans in the secondary market and protects lenders from default-
related expenses. For more information about Triad Guaranty Insurance
Corporation, visit the company's web site at http://www.triadguaranty.com .
Diluted realized gains/(losses) per share, net of taxes is a non-GAAP
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 sales of investments had on earnings.
This document contains forward-looking statements which involve various
risks and uncertainties. Actual results may differ from those set forth in
the forward-looking statements. Attention is directed to the discussion of
risks and uncertainties as part of the Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995 contained in the Company's most
recent annual report, Form 10-K and other reports filed with the Securities
and Exchange Commission.
Triad Guaranty Inc.
Consolidated Income Statement
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
(Unaudited) (Unaudited)(Unaudited)
(Dollars in thousands except per share amounts)
Premiums written:
Direct $47,898 $41,694 $176,696 $154,046
Ceded (9,506) (7,598) (35,365) (27,310)
Net premiums written $38,392 $34,096 $141,331 $126,736
Earned premiums $37,178 $33,011 $140,992 $119,732
Net investment income 5,315 4,187 19,754 17,082
Realized investment gains 88 1,502 504 3,029
Other income 6 3 16 24
Total revenues 42,587 38,703 161,266 139,867
Net losses and loss
adjustment expenses 10,046 7,135 35,864 23,833
Interest expense on debt 693 693 2,772 2,772
Amortization of deferred
policy acquisition costs 3,951 5,355 14,256 18,112
Other operating expenses -
net 6,715 6,239 26,483 22,776
Income before income taxes 21,182 19,281 81,891 72,374
Income taxes 5,980 5,720 23,474 21,283
Net income $15,202 $13,561 $58,417 $51,091
Basic earnings per share $1.05 $0.94 $4.04 $3.57
Diluted earnings per share $1.03 $0.93 $3.98 $3.52
Weighted average common and
common stock equivalents
outstanding (in thousands)
Basic 14,504 14,433 14,458 14,322
Diluted 14,725 14,627 14,681 14,510
NON-GAAP INFORMATION:
Diluted realized gains
(losses) per share,
net of taxes $- $0.07 $0.02 $0.13
Triad Guaranty Inc.
Consolidated Balance Sheet
December 31, December 31,
2004 2003
(Unaudited)
(Dollars in thousands
except per share amounts)
Assets:
Invested assets:
Fixed maturities, available for
sale, at market $454,121 $375,097
Equity securities, available for
sale, at market 10,272 12,771
Short-term investments 16,095 25,659
480,488 413,527
Cash 6,865 973
Deferred policy acquisition costs 32,453 29,363
Prepaid federal income tax 119,132 98,124
Other assets 33,097 33,592
Total assets $672,035 $575,579
Liabilities:
Losses and loss adjustment expenses $34,042 $27,186
Unearned premiums 15,942 15,629
Deferred income tax 137,925 115,459
Long-term debt 34,493 34,486
Other liabilities 12,290 12,889
Total liabilities 234,692 205,649
Stockholders' equity:
Retained earnings 330,628 272,211
Accumulated other comprehensive
income 13,218 11,190
Other equity accounts 93,497 86,529
Total stockholders' equity 437,343 369,930
Total liabilities and stockholders'
equity $672,035 $575,579
Stockholders' equity per share:
Including unrealized gains or
losses on investments $29.89 $25.62
Excluding unrealized gains or
losses on investments $28.99 $24.85
Common shares outstanding 14,631,678 14,438,637
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Dec 31, Sep 30, Jun 30, Mar 31,
2004 2004 2004 2004
(Dollars in millions unless
otherwise indicated)
Direct insurance in force $36,827 $35,821 $34,757 $33,886
- Flow business $28,191 $27,936 $27,385 $27,224
- Bulk business $8,636 $7,885 $7,372 $6,662
Alt-A insurance in force $10,136 $9,092 $8,202 $7,345
- Flow business $1,836 $1,600 $1,315 $1,238
- Bulk business $8,300 $7,492 $6,887 $6,107
Direct risk in force (gross) $7,627 $7,506 $7,309 $7,207
Net risk in force $7,049 $6,956 $6,797 $6,734
Risk-to-capital ratio 13.9:1 14.4:1 14.6:1 15.2:1
Number of insured loans 266,574 260,591 254,510 249,683
- Flow business 212,596 211,300 208,384 207,314
- Bulk business 53,978 49,291 46,126 42,369
Annual persistency 67.6% 66.8% 59.9% 54.6%
Quarterly persistency run rate 61.9% 63.0% 56.9% 68.5%
Average loan size ($ thousands)
- Flow business $132.6 $132.2 $131.4 $131.3
- Bulk business $160.0 $160.0 $159.8 $157.2
Average severity ($ thousands)
- Flow business $24.1 $21.2 $25.6 $27.4
- Bulk business $27.0 $17.6 $22.5 $30.2
Net paid claims and LAE ($ thousands) $8,551 $7,453 $6,879 $6,124
- Flow business $6,339 $6,368 $6,024 $5,355
- Bulk business $2,212 $1,085 $855 $769
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2003 2003 2003 2003 2002
(Dollars in millions unless otherwise indicated)
Direct insurance in force $31,748 $29,291 $26,914 $26,004 $25,379
- Flow business $26,901 $25,918 $24,680 $23,400 $22,464
- Bulk business $4,847 $3,373 $2,234 $2,604 $2,915
Alt-A insurance in force $5,436 $3,986 $2,871 $2,824 $2,937
- Flow business $1,203 $1,117 $978 $811 $676
- Bulk business $4,233 $2,869 $1,893 $2,013 $2,261
Direct risk in force (gross) $7,024 $6,610 $6,245 $6,002 $5,791
Net risk in force $6,590 $6,210 $5,893 $5,699 $5,534
Risk-to-capital ratio 15.3:1 15.1:1 15.0:1 15.2:1 15.5:1
Number of insured loans 236,234 221,053 205,046 195,928 190,480
- Flow business 205,033 198,366 189,161 178,868 171,723
- Bulk business 31,201 22,687 15,885 17,060 18,757
Annual persistency 50.7% 49.0% 54.6% 59.1% 60.9%
Quarterly persistency run rate 46.3% 19.3% 33.6% 50.8% 32.1%
Average loan size ($ thousands)
- Flow business $131.2 $130.7 $130.5 $130.8 $130.8
- Bulk business $155.4 $148.7 $140.7 $152.7 $155.4
Average severity ($ thousands)
- Flow business $28.2 $25.0 $22.5 $22.5 $20.5
- Bulk business $26.9 $20.0 $12.3 $27.5 $14.8
Net paid claims and LAE
($ thousands) $5,466 $4,933 $4,046 $3,560 $3,025
- Flow business $4,632 $4,070 $3,800 $3,419 $2,948
- Bulk business $834 $863 $246 $141 $77
Note: The Company periodically enters into structured transactions
involving loans that have insurance effective dates within the current
reporting period but for which detailed loan information regarding the
insured loans is not provided until later. When this occurs, the Company
accrues due premium in the reporting period based on each loan's
insurance effective date; however, the loans are not reflected in the
Company's inforce and related data totals until the loan level detail is
reported to the Company. At December 31, 2004, the Company had
approximately $685 million of structured transactions with effective
dates within the fourth quarter for which loan level detail had not been
received.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't)
(Unaudited)
Dec 31, Sep 30, Jun 30, Mar 31,
2004 2004 2004 2004
(Dollars in millions unless
otherwise indicated)
Total delinquent loans 5,445 5,008 4,765 4,722
- Flow business 3,739 3,469 3,319 3,343
- Bulk business 1,706 1,539 1,446 1,379
With deductibles 410 197 121 66
Without deductibles 1,296 1,342 1,325 1,313
Total delinquency rate 2.04% 1.92% 1.87% 1.89%
- Flow business 1.76% 1.64% 1.59% 1.61%
- Bulk business 3.16% 3.12% 3.13% 3.25%
Risk Inforce by credit score - Flow
Under 575 0.7% 0.7% 0.8% 0.8%
575 - 619 4.7% 4.7% 4.7% 4.6%
620 and above 94.6% 94.6% 94.5% 94.6%
Risk Inforce by credit score - Bulk
Under 575 1.4% 1.8% 2.3% 2.8%
575 - 619 3.9% 4.5% 5.2% 6.5%
620 and above 94.7% 93.7% 92.5% 90.7%
Insurance in force subject to captive
reinsurance arrangements 44.5% 45.1% 44.9% 44.9%
Loss ratio - GAAP 27.0% 25.8% 22.5% 26.3%
Expense ratio - GAAP 27.8% 28.6% 29.7% 29.4%
Combined ratio - GAAP 54.8% 54.4% 52.2% 55.7%
Total insurance written $4,082 $4,013 $4,414 $4,663
- Flow $2,456 $2,665 $2,950 $2,380
- Bulk $1,626 $1,348 $1,464 $2,282
NIW subject to captive reinsurance
arrangements
- Flow business 52.8% 51.3% 58.7% 60.3%
New risk written (gross) $688 $751 $805 $693
Product mix as a % of flow insurance
written:
95% LTV's 46.5% 50.0% 47.2% 45.0%
ARMs 36.7% 37.0% 33.2% 26.9%
Monthly premium 93.5% 93.3% 90.7% 91.1%
Annual premium 6.1% 6.2% 9.0% 8.5%
Refinances 30.1% 22.0% 32.3% 35.4%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't)
(Unaudited)
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
2003 2003 2003 2003 2002
(Dollars in millions unless otherwise indicated)
Total delinquent loans 4,242 3,700 3,351 3,009 2,379
- Flow business 3,053 2,675 2,510 2,280 2,120
- Bulk business 1,189 1,025 841 729 259
With deductibles 17 - - - -
Without deductibles 1,172 1,025 841 729 259
Total delinquency rate 1.80% 1.67% 1.63% 1.54% 1.25%
- Flow business 1.49% 1.35% 1.33% 1.27% 1.23%
- Bulk business 3.81% 4.52% 5.29% 4.27% 1.38%
Risk Inforce by credit score - Flow
Under 575 0.8% 0.8% 0.8% 0.7% 0.7%
575 - 619 4.6% 4.5% 4.6% 4.5% 4.4%
620 and above 94.6% 94.7% 94.6% 94.8% 94.9%
Risk Inforce by credit score - Bulk
Under 575 4.1% 4.4% 3.8% 3.7% 3.2%
575 - 619 8.5% 10.3% 12.5% 12.2% 10.0%
620 and above 87.4% 85.3% 83.7% 84.1% 86.8%
Insurance in force subject to
captive reinsurance arrangements 45.9% 46.8% 48.4% 47.7% 45.7%
Loss ratio - GAAP 21.6% 20.0% 19.0% 18.7% 15.4%
Expense ratio - GAAP 34.0% 32.7% 29.3% 32.9% 35.2%
Combined ratio - GAAP 55.6% 52.7% 48.3% 51.6% 50.6%
Total insurance written $5,224 $6,652 $4,853 $3,766 $3,753
- Flow $3,255 $5,028 $4,667 $3,630 $3,753
- Bulk $1,969 $1,624 $186 $136 $-
NIW subject to captive reinsurance
arrangements
- Flow business 50.3% 44.1% 43.3% 48.5% 46.0%
New risk written (gross) $991 $1,305 $1,094 $869 $881
Product mix as a % of flow
insurance written:
95% LTV's 45.0% 42.3% 39.5% 37.4% 35.9%
ARMs 26.1% 18.3% 14.5% 14.1% 14.5%
Monthly premium 83.1% 75.8% 71.4% 76.3% 78.5%
Annual premium 16.4% 23.7% 28.2% 23.3% 20.9%
Refinances 38.5% 52.3% 55.1% 57.2% 47.0%
SOURCE Triad Guaranty Inc.
 back to top
Related links:
http://www.triadguaranty.com
CONTACT:
Ron Kessinger, Senior Executive Vice
President, Chief Operating Officer of Triad Guaranty Inc.,
+1-800-451-4872, ext.1104, or rkessinger@tgic.com
|
