WINSTON-SALEM, N.C., May 2 /PRNewswire-FirstCall/ -- Triad Guaranty
Inc. (Nasdaq: TGIC) announced today that it has entered into an exclusive
arrangement with Lightyear Capital LLC, a New York-based private equity
firm focused on financial services, to negotiate definitive agreements that
would result in the creation of a new monoline mortgage insurance company.
In addition, the new company would provide various forms of administrative
and financial support to Triad Guaranty. Lightyear would be the lead
investor and Triad Guaranty initially would not have any ownership in the
new company.
Triad Guaranty said that it currently expects to complete negotiations
and execute the definitive agreements in four to six weeks. Execution of
the agreements is subject to a number of conditions, including the approval
of Lightyear's investment committee and Triad Guaranty's board of
directors. Assuming execution of the definitive agreements occurs in May,
the transaction is currently expected to close in the third quarter of 2008
and be subject to customary closing conditions, including receipt of all
necessary approvals.
The Illinois Department of Insurance, the regulator of Triad Guaranty
Insurance Corporation, and the GSEs have been made aware of these
negotiations through separate conversations with each by Triad and certain
executives at Lightyear responsible for the transaction and each is
currently evaluating the information it has received.
Pending completion of the negotiations with Lightyear, Triad Guaranty
is continuing to write new mortgage insurance business and working on a
remediation plan for presentation to Fannie Mae and Freddie Mac,
respectively.
Although final details of the transactions are still being negotiated,
it is currently expected that Lightyear and its investor group would
provide up to $400 million in the new Illinois-domiciled private mortgage
insurance company with Lightyear expected to commit up to $200 million of
this amount. At closing, it is currently expected that certain key members
of Triad's current management and many of its employees would join the new
company, which would also purchase certain assets and the right to use
certain systems and technologies of Triad. Triad Guaranty Insurance
Corporation would enter into voluntary run-off, with the new company
providing various forms of administrative and financial support to
facilitate the run-off plan. Triad Guaranty has approximately $1 billion in
claims paying resources at its disposal and its claims paying activities
continue today as usual.
Mark K. Tonnesen, President and CEO, Triad Guaranty Inc. said, "We
believe the transactions that we are now actively negotiating with
Lightyear offer the best outcome for our customers, policyholders,
stockholders and employees given the current industry conditions and
capital-raising environment. If completed, we believe these transactions
would create a well-capitalized new mortgage insurer and would support our
customers, save jobs and continue to help American homebuyers.
"In addition to the benefits to the industry from fresh capital, we
believe the new company and our clients will benefit from Lightyear's deep
understanding of the financial services market and its extensive network of
relationships in the worlds of mortgage finance and insurance."
About Triad Guaranty Insurance Corporation
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
About Lightyear Capital
Lightyear Capital is a private equity investment firm providing buyout
and growth capital to companies in the financial services industry. Based
in New York, Lightyear, through its affiliated funds, has managed
approximately $3 billion of committed capital with investments across the
financial services spectrum, including asset management, banking,
brokerage, financial technology, insurance, leasing, and related business
services and other sectors within financial services. Lightyear brings
unique strengths and discipline to its investment process, as well as
operating, transaction, and strategic management experience, along with
significant contacts and resources beyond capital. To date, Lightyear has
made several investments in the specialty insurance industry including: NAU
Country Insurance Group, an insurance company that specializes in the
marketing, sale and underwriting of crop insurance; Delos Insurance Group,
a Delaware-domiciled primary underwriter of program specialty insurance;
and Antares Holdings Limited, a Bermuda-based specialty insurance
underwriter operating through a Lloyd's of London syndicate, Antares
Syndicate 1274. For more information, please visit the company's web site
at http://www.lycap.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 our ability to enhance our
capital resources, the possibility of general economic and business
conditions that are different than anticipated, legislative, regulatory,
rating agency and other similar developments, changes in interest rates,
the housing market, the mortgage industry and the stock market, stronger
than anticipated competitive activity, as well as the factors described
under "Risk Factors" and under "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, 2007 and in future filings by us in other
reports and statements that we file 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.
SOURCE Triad Guaranty Inc.
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Related links:
http://www.triadguaranty.com
http://www.lycap.com
CONTACT:
Jerrold C. Schwartz, Vice President,
Marketing, Triad Guaranty Insurance Corporation, +1-336-723-1282,
ext. 1122, jschwartz@tgic.com, or Elliot Sloane or Amanda Kiely,
both of Sloane & Company for Lightyear Capital LLC,
+1-212-486-9500
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