WINSTON-SALEM, N.C., April 27 /PRNewswire-FirstCall/ -- Triad Guaranty
Inc. (Nasdaq: TGIC) today reported record net income for the quarter ended
March 31, 2006 of $18.6 million compared with $15.8 million for the same
quarter a year ago, an increase of 18%. Diluted earnings per share were
$1.25 for the first quarter of 2006 compared with $1.07 for the first
quarter of 2005, an increase of 17%. Realized investment gains, net of
taxes, increased diluted earnings per share by $0.04 in the first quarter
of 2006 while not impacting diluted earnings per share in the same quarter
of 2005. The impact of adopting FAS 123R requiring the expensing of stock
options was $0.01 per share, net of taxes, in the first quarter of 2006.
Mark K. Tonnesen, President and Chief Executive Officer, said, "Our
earnings for the quarter were slightly better than we had anticipated. We
experienced strong top line growth, the result of increased persistency and
particularly robust production in the Modified Pool arena. These factors
combined to generate a 24% increase in earned premiums from the same period
a year ago. While the number of defaults in inventory declined by 271 from
year-end levels due to seasonal influences, our year over year increase
reflects the general seasoning of the portfolio. Defaults from the
Katrina/Rita FEMA designated areas, which are included in these results,
declined from 891 at December 31, 2005 to 791 at March 31, 2006. While paid
claims were higher than we anticipated, new claims filed during the quarter
were lower than expected. We added reserves during the quarter as we remain
cautious about the impact of slowing house price appreciation and the
impact of rising interest rates."
Mr. Tonnesen continued, "The strong first quarter production and
premium growth has led us to increase our earnings estimate for 2006 and,
assuming no economic downturn or broad-based decline in the housing market,
we now estimate 2006 earnings, excluding realized gains or losses, to be in
the range of $4.90 to $5.20 per share on a diluted basis. In addition to
the premium growth we are encouraged with many of the first quarter trends
and look forward to the remainder of 2006."
Total insurance in force reached $48.2 billion at March 31, 2006,
compared with $38.2 billion a year ago. Insurance in force included Primary
of $29.9 billion and Modified Pool of $18.3 billion at March 31, 2006
compared with $29.0 billion and $9.2 billion, respectively, a year earlier.
New insurance written during the first quarter of 2006 totaled $6.5 billion
compared with $4.3 billion in the first quarter of 2005. Primary new
insurance written for the first quarter of 2006 was $1.9 billion, down from
$2.2 billion in the first quarter of 2005. New insurance written
attributable to Modified Pool transactions totaled $4.6 billion in the
first quarter of 2006, up from $2.1 billion for the same period of 2005.
Earned premiums for the first quarter of 2006 were $47.9 million, an
increase of 24% over the same period a year ago. The increase in earned
premiums was due primarily to the growth in Modified Pool insurance in
force. The underlying volume of Modified Pool transactions that produce the
insurance in force growth will fluctuate from quarter to quarter.
Persistency was 71.1% at March 31, 2006 compared with 69.0% at March 31,
2005.
Incurred claims for the first quarter were $16.4 million, down from
$22.0 million in the fourth quarter of 2005 and significantly up from $10.6
million in the first quarter of 2005. Total paid claims for the first
quarter of 2006 were $14.4 million, up $2 million from the fourth quarter
of 2005 and up significantly from $9.7 million in the first quarter of
2005. Primary severity on paid claims was $26,300 in the first quarter of
2006, slightly greater than the $26,200 experienced in the fourth quarter
of 2005 and up from $24,700 in the first quarter of 2005. The Primary
delinquency rate was 2.37% at March 31, 2006 compared with 2.45% at
December 31, 2005 and 1.90% at March 31, 2005. Conversely, the Modified
Pool delinquency rates dropped to 1.74% at March 31, 2006 compared with
2.15% and 2.41% at December 31, 2005 and March 31, 2005, respectively,
reflecting the strong growth of unseasoned insurance in force during the
last twelve months.
The Company's loss ratio was 34.1% for the first quarter of 2006
compared with 48.9% in the fourth quarter of 2005 and 27.4% for the first
quarter of 2005. The Company's expense ratio continued to decline and was
25.6% for the first quarter of 2006 compared to 26.4% in the fourth quarter
of 2005 and 28.1% in the first quarter of 2005.
Triad Guaranty Inc.'s wholly owned subsidiary, Triad Guaranty Insurance
Corporation, is a nationwide mortgage insurer providing credit enhancement
solutions to its lender customers and the capital markets. This allows
buyers to achieve homeownership sooner, facilitates the sale of mortgage
loans in the secondary market and protects lenders from credit
default-related expenses. For more information, please visit the Company's
web site at http://www.triadguaranty.com
Diluted realized investment 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 sale of investments had on
earnings.
This document may contain forward-looking statements that 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 risk 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.
(Relevant Triad Guaranty Inc. financial statistics follow this news
release.)
Triad Guaranty Inc.
Consolidated Income Statement
(Unaudited)
Three Months Ended
March 31,
2006 2005
(Dollars in thousands except
per share amounts)
Premiums written:
Direct $59,312 $48,327
Ceded (10,970) (9,616)
Net premiums written $48,342 $38,711
Earned premiums $47,890 $38,777
Net investment income 6,222 5,415
Net realized investment gains 900 7
Other income (2) 9
Total revenues 55,010 44,208
Net losses and loss adjustment
expenses 16,351 10,630
Interest expense on debt 693 693
Amortization of deferred policy
acquisition costs 3,862 3,657
Other operating expenses - net 8,513 7,217
Income before income taxes 25,591 22,011
Income taxes 7,038 6,251
Net income $18,553 $15,760
Basic earnings per share $1.26 $1.08
Diluted earnings per share $1.25 $1.07
Weighted average common and common
stock equivalents outstanding
(in thousands)
Basic 14,758 14,618
Diluted 14,862 14,778
NON-GAAP INFORMATION:
Diluted realized investment gains
per share, net of taxes $0.04 $-
Triad Guaranty Inc.
Consolidated Balance Sheet
(Unaudited) (Unaudited)
March 31, December 31, March 31,
2006 2005 2005
(Dollars in thousands except per
share amounts)
Assets:
Invested assets:
Fixed maturities, available for
sale, at market $541,393 $534,064 $472,990
Equity securities, available for
sale, at market 9,987 8,159 10,118
Short-term investments 5,053 4,796 15,354
556,433 547,019 498,462
Cash and cash equivalents 13,743 8,934 4,123
Deferred policy acquisition costs 33,904 33,684 33,023
Prepaid federal income tax 139,465 139,465 118,777
Other assets 42,433 38,401 32,222
Total assets $785,978 $767,503 $686,607
Liabilities:
Losses and loss adjustment expenses $52,614 $51,074 $34,825
Unearned premiums 13,944 13,494 15,843
Deferred income tax 159,180 155,189 141,702
Long-term debt 34,503 34,501 34,495
Other liabilities 10,530 14,054 8,937
Total liabilities 270,771 268,312 235,802
Stockholders' equity:
Retained earnings 405,995 387,441 346,388
Accumulated other comprehensive
income 7,211 11,106 9,912
Other equity accounts 102,001 100,644 94,505
Total stockholders' equity 515,207 499,191 450,805
Total liabilities and stockholders'
equity $785,978 $767,503 $686,607
Stockholders' equity per share:
Including unrealized investment
gains $34.74 $33.79 $30.70
Excluding unrealized investment
gains $34.25 $33.04 $30.02
Common shares outstanding 14,831,560 14,774,153 14,684,648
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2006 2005 2005 2005 2005
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance in force $29,891 $29,792 $29,820 $29,489 $29,001
Modified Pool insurance in
force $18,309 $14,615 $13,406 $10,018 $9,217
Credit quality of primary
insurance in force(1)
Prime 84.6% 84.9% 85.5% 85.3% 86.1%
Alt-A 10.4% 9.9% 9.2% 9.3% 8.5%
A Minus 4.1% 4.2% 4.3% 4.5% 4.5%
Sub Prime 0.9% 1.0% 1.0% 0.9% 0.9%
Alt A insurance in force -
primary
FICO between 620 and 659 17.9% 19.2% 20.0% 21.6% 22.7%
FICO between 660 and 699 34.0% 33.9% 34.4% 36.6% 38.0%
FICO between 700 and 739 27.1% 26.4% 26.0% 23.8% 22.7%
FICO greater than 739 21.0% 20.5% 19.6% 18.0% 16.5%
Primary flow insurance in
force subject to captive
reinsurance arrangements 59.7% 59.0% 58.3% 57.2% 56.7%
Risk In Force
Primary net risk in force $6,779 $6,767 $6,806 $6,700 $6,574
Total primary risk in force
by credit score
FICO less than 575 0.8% 0.8% 0.9% 1.0% 1.0%
FICO between 575 and 619 4.1% 4.3% 4.4% 4.6% 4.6%
FICO between 620 and 659 17.8% 17.9% 18.2% 18.3% 18.1%
FICO between 660 and 699 24.5% 24.4% 24.4% 24.6% 24.7%
FICO between 700 and 739 23.9% 23.9% 23.8% 23.7% 23.8%
FICO greater than 739 28.9% 28.7% 28.3% 27.9% 27.8%
Modified Pool gross risk in
force $751 $616 $579 $489 $462
Deductibles on gross risk $83 $71 $68 $59 $53
Modified pool risk in force
by credit score(2)
FICO less than 575 0.2% 0.2% 0.2% 0.3% 0.3%
FICO between 575 and 619 1.0% 1.1% 1.2% 1.6% 1.8%
FICO between 620 and 659 12.2% 14.2% 14.8% 17.4% 18.3%
FICO between 660 and 699 29.9% 31.1% 31.5% 33.2% 33.1%
FICO between 700 and 739 29.7% 28.4% 28.1% 27.2% 26.7%
FICO greater than 739 27.1% 25.0% 24.1% 20.2% 19.7%
(1) The Credit Quality of loans notated above are defined as followed:
Prime - All business that is not Alt A, A-, or subprime; Alt A - Loans
with credit scores >= 620 and that were underwritten with low or no
documentation; A minus - Loans with credit scores >= 575 and <= 619;
Subprime - Loans with credit scores less than 575
(2) Percentages represent distribution of direct risk in force (RIF) on a
per policy basis and do not account for applicable stop loss amounts.
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)
Insurance In Force
Primary insurance in force $28,964 $28,811 $28,367 $28,272
Modified Pool insurance in force $7,863 $7,010 $6,390 $5,614
Credit quality of primary insurance in
force(1)
Prime 86.4% 86.9% 87.6% 87.8%
Alt-A 8.1% 7.5% 6.6% 6.2%
A Minus 4.5% 4.6% 4.7% 4.7%
Sub Prime 1.0% 1.0% 1.1% 1.2%
Alt A insurance in force - primary
FICO between 620 and 659 22.9% 21.4% 20.0% 21.1%
FICO between 660 and 699 38.4% 39.4% 41.1% 41.1%
FICO between 700 and 739 22.4% 23.0% 23.1% 22.6%
FICO greater than 739 16.3% 16.1% 15.8% 15.2%
Primary flow insurance in force
subject to captive reinsurance
arrangements 56.6% 56.1% 55.0% 53.5%
Risk In Force
Primary net risk in force $6,587 $6,540 $6,409 $6,378
Total primary risk in force by credit
score
FICO less than 575 1.1% 1.1% 1.3% 1.4%
FICO between 575 and 619 4.6% 4.7% 4.9% 4.9%
FICO between 620 and 659 17.9% 17.6% 17.2% 16.9%
FICO between 660 and 699 24.7% 24.6% 24.5% 24.3%
FICO between 700 and 739 23.8% 24.1% 24.2% 24.2%
FICO greater than 739 27.8% 28.0% 28.0% 28.2%
Modified Pool gross risk in force $416 $388 $374 $350
Deductibles on gross risk $42 $35 $31 $25
Modified pool risk in force by credit
score(2)
FICO less than 575 0.4% 0.5% 0.6% 0.7%
FICO between 575 and 619 2.2% 2.3% 2.5% 3.1%
FICO between 620 and 659 20.5% 21.2% 22.6% 25.0%
FICO between 660 and 699 32.9% 33.7% 33.8% 32.8%
FICO between 700 and 739 25.1% 24.2% 23.2% 22.0%
FICO greater than 739 18.9% 18.1% 17.3% 16.4%
(1) The Credit Quality of loans notated above are defined as followed:
Prime - All business that is not Alt A, A-, or subprime; Alt A - Loans
with credit scores >= 620 and that were underwritten with low or no
documentation; A minus - Loans with credit scores >= 575 and <= 619;
Subprime - Loans with credit scores less than 575
(2) Percentages represent distribution of direct risk in force (RIF) on a
per policy basis and do not account for applicable stop loss amounts.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2006 2005 2005 2005 2005
(Dollars in millions unless otherwise indicated)
Production
Primary new insurance written
(NIW) $1,948 $2,263 $3,093 $2,941 $2,191
Modified Pool NIW $4,606 $2,255 $4,526 $1,798 $2,103
Product mix as a % of primary
flow NIW:
- Greater than 95% LTV's 10.1% 11.2% 13.8% 11.6% 12.8%
- ARMs 32.4% 30.4% 35.9% 43.7% 38.1%
- Monthly premium 99.6% 99.5% 96.8% 94.3% 93.1%
- Annual premium 0.1% 0.2% 3.0% 5.4% 5.7%
- Refinances 33.6% 28.6% 26.5% 33.6% 35.0%
Primary new risk written
(gross) $490 $583 $822 $723 $540
Modified Pool new risk
written $142 $55 $97 $46 $62
NIW subject to captive
reinsurance arrangements
- Primary flow business 55.1% 55.1% 58.1% 54.6% 47.4%
Loan Statistics
Primary number of insured
loans 215,736 217,397 219,159 219,256 217,657
Primary average loan size
($ thousands) $138.6 $137.0 $136.1 $134.5 $133.2
Primary risk in force by
policy year
2001 and prior 6.4% 6.9% 7.6% 8.6% 9.7%
2002 8.0% 8.6% 9.5% 11.1% 12.6%
2003 24.6% 26.6% 29.3% 33.4% 37.3%
2004 24.4% 26.1% 28.2% 31.4% 34.2%
2005 31.3% 31.8% 25.4% 15.5% 6.2%
2006 5.3% - - - -
Modified Pool number of
insured loans 101,934 85,091 78,241 59,581 55,182
Modified Pool average loan
size ($ thousands) $179.6 $171.8 $171.3 $168.1 $167.0
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 in
force and related data totals until the loan level detail is reported to
the Company. At March 31, 2006, the Company had approximately $1.5 billion
of structured transactions with effective dates within the first 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)
Production
Primary new insurance written (NIW) $2,476 $2,716 $3,019 $2,497
Modified Pool NIW $1,606 $1,297 $1,394 $2,165
Product mix as a % of primary flow
NIW:
- Greater than 95% LTV's 13.7% 13.9% 11.8% 10.0%
- 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%
Primary new risk written (gross) $642 $724 $775 $634
Modified Pool new risk written $46 $27 $30 $59
NIW subject to captive reinsurance
arrangements
- Primary flow business 52.8% 51.3% 58.7% 60.3%
Loan Statistics
Primary number of insured loans 218,011 217,305 214,991 214,273
Primary average loan size ($ thousands) $132.9 $132.6 $131.9 $131.9
Primary risk in force by policy year
2001 and prior 10.7% 12.1% 14.1% 16.8%
2002 14.0% 15.9% 18.4% 21.8%
2003 40.5% 44.5% 49.0% 53.6%
2004 34.8% 27.5% 18.5% 7.9%
2005 - - - -
2006 - - - -
Modified Pool number of insured loans 48,563 43,286 39,519 35,410
Modified Pool average loan size
($ thousands) $161.9 $161.9 $161.7 $158.5
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 in
force and related data totals until the loan level detail is reported to
the Company. At March 31, 2006, the Company had approximately $1.5 billion
of structured transactions with effective dates within the first quarter
for which loan level detail had not been received.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2006 2005 2005 2005 2005
(Dollars in millions unless
otherwise indicated)
Delinquencies and Claim
Information
Total primary delinquent loans 5,116 5,336 4,312 4,013 4,134
Total modified pool delinquent
loans 1,776 1,827 1,341 1,312 1,329
- With deductibles 1,127 1,090 709 612 538
- Without deductibles 649 737 632 700 791
Total primary delinquency rate 2.37% 2.45% 1.97% 1.83% 1.90%
Modified Pool delinquency rate 1.74% 2.15% 1.71% 2.20% 2.41%
Primary average severity
($ thousands) $26.3 $26.2 $26.2 $28.9 $24.7
Primary net paid claims
($ thousands) $13,284 $11,562 $11,982 $12,147 $8,681
Modified Pool average severity
($ thousands) $16.4 $18.0 $22.0 $24.5 $17.6
Modified Pool net paid claims
($ thousands) $1,100 $862 $1,475 $1,150 $970
Financial Information
Loss ratio - GAAP 34.1% 48.9% 38.4% 42.0% 27.4%
Expense ratio - GAAP 25.6% 26.4% 26.1% 26.4% 28.1%
Combined ratio - GAAP 59.7% 75.3% 64.5% 68.4% 55.5%
Risk-to-capital ratio 12.3:1 12.6:1 13.0:1 13.1:1 13.7:1
Annual persistency - primary 71.1% 70.0% 69.7% 70.9% 69.0%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Dec 31, Sep 30, Jun 30, Mar 31,
2004 2004 2004 2004
(Dollars in millions unless
otherwise indicated)
Delinquencies and Claim Information
Total primary delinquent loans 4,203 3,902 3,709 3,728
Total modified pool delinquent loans 1,242 1,106 1,056 994
- With deductibles 410 197 121 66
- Without deductibles 832 909 935 928
Total primary delinquency rate 1.93% 1.80% 1.73% 1.74%
Modified Pool delinquency rate 2.56% 2.56% 2.67% 2.81%
Primary average severity
($ thousands) $24.1 $19.3 $24.2 $27.4
Primary net paid claims ($ thousands) $7,138 $6,547 $6,310 $5,702
Modified Pool average severity
($ thousands) $14.7 $12.4 $14.0 $18.1
Modified Pool net paid claims
($ thousands) $1,193 $733 $406 $308
Financial Information
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%
Risk-to-capital ratio 14.0:1 14.4:1 14.6:1 15.2:1
Annual persistency - primary 68.5% 67.8% 60.9% 56.2%
SOURCE Triad Guaranty Inc.
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Related links:
http://www.triadguaranty.com
CONTACT:
Ken Jones, Senior Vice President, Chief
Financial Officer of Triad Guaranty Inc., +1-800-451-4872, ext.
1105, or kjones@tgic.com
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