WINSTON-SALEM, N.C., July 27 /PRNewswire-FirstCall/ -- Triad Guaranty
Inc. (Nasdaq: TGIC) today reported record net income for the quarter ended
June 30, 2006 of $19.6 million compared with $13.2 million for the same
quarter a year ago, an increase of 48%. Diluted earnings per share were
$1.31 for the second quarter of 2006 compared with $0.89 for the second
quarter of 2005, an increase of 47%. Realized investment gains, net of
taxes, increased diluted earnings per share by $0.03 in the second quarter
of 2006 while not impacting diluted earnings per share in the same quarter
of 2005.
Net income for the six months ended June 30, 2006 was $38.1 million
compared to $29.0 million for the same period in 2005. Diluted earnings per
share were $2.56 for the first six months of 2006 compared to $1.96 for the
same period last year. Realized investment gains contributed $0.07 per
share for the first six months of 2006 but had no impact on the six months
ended June 30, 2005.
Mark K. Tonnesen, President and Chief Executive Officer, said, "Our
strong results for the quarter confirm that we continue to execute very
well against our plan. Our success in the Modified Pool channel, combined
with improving long-term persistency in the Primary flow channel, generated
a 23% increase in earned premiums for both the quarter and year-to-date
periods when compared with the prior year. Our loss ratio for the quarter
at 34.1% was in line with our expectations and included a $2.3 million
increase in reserves from the preceding quarter. This compared with a loss
ratio of 42.0% for last year's second quarter. The expense ratio at 25.6%
declined from the prior year's second quarter even as we are making
significant investments to grow our business."
Mr. Tonnesen continued, "We are particularly encouraged by the
increasing strength of Triad's capital position and the foundation it
provides for us to expand our operations into Canada. However, in light of
the capital required to support this growth opportunity, the Board of
Directors has authorized the cancellation of the share repurchase program
that was put in place earlier this year. No shares were repurchased under
the program."
Total insurance in force reached $50.8 billion at June 30, 2006
compared with $39.5 billion a year ago. Insurance in force included Primary
of $30.8 billion and Modified Pool of $20.0 billion at June 30, 2006,
compared with $29.5 billion and $10.0 billion, respectively, a year
earlier. New insurance written during the second quarter of 2006 totaled
$5.9 billion compared with $4.7 billion written in the second quarter of
2005. Primary new insurance written for the second quarter of 2006 was $2.9
billion, level with the second quarter of 2005. New insurance written from
Modified Pool transactions totaled $3.0 billion in the second quarter of
2006 compared with $1.8 billion for the same period of 2005. The underlying
volume of Modified Pool transactions that generates the new insurance
written may fluctuate significantly from quarter to quarter.
Earned premiums for the second quarter of 2006 were $50.7 million, an
increase of 23% over the same period a year ago and up 6% from the first
quarter of 2006. The increase in earned premiums was due to growth in both
Primary and Modified Pool insurance in force. Annual persistency on the
Primary business was 73% at June 30, 2006 compared with 71% for June 30,
2005.
Incurred losses for the second quarter were $17.3 million, up 6% from
the first quarter and level with the second quarter of 2005. Total paid
claims for the second quarter of 2006 were $14.4 million, level with $14.4
million in the first quarter of 2006, and up from $13.3 million in the
second quarter of 2005. Severity on Primary paid claims was $25,800 in the
second quarter of 2006, down from $26,300 in the first quarter of 2006 and
$28,900 in the second quarter of 2005. Total defaults at June 30, 2006 were
6,485, down from 6,892 at March 31, 2006 and up from 5,325 reported at June
30, 2005. The increase from the prior year reflects the continued seasoning
of the portfolio and, to a lesser degree, the impact of defaults related to
last fall's hurricanes. Of the June 30, 2006 defaults, 612 are in the
Katrina/Rita FEMA designated areas compared with 791 at March 31, 2006. The
Primary delinquency rate was 2.21% at June 30, 2006 compared with 2.37% at
March 31, 2006 and 1.83% at June 30, 2005. The Modified Pool delinquency
rate was 1.58% at June 30, 2006 compared with 1.74% and 2.20% at March 31,
2006 and June 30, 2005, respectively. The decline in the Modified Pool
delinquency rate reflects the strong growth of unseasoned insurance in
force during the last twelve months.
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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(Dollars in thousands except per
share amounts)
Premiums written:
Direct $60,961 $50,559 $120,273 $98,886
Ceded (11,603) (9,948) (22,573) (19,564)
Net premiums written $49,358 $40,611 $97,700 $79,322
Earned premiums $50,667 $41,121 $98,557 $79,898
Net investment income 6,535 5,743 12,757 11,158
Net realized investment gains 772 39 1,672 46
Other income 5 2 3 11
Total revenues 57,979 46,905 112,989 91,113
Net losses and loss adjustment
expenses 17,271 17,288 33,622 27,918
Interest expense on debt 694 693 1,387 1,386
Amortization of deferred policy
acquisition costs 4,118 3,695 7,980 7,352
Other operating expenses - net 8,496 7,017 17,009 14,234
Income before income taxes 27,400 18,212 52,991 40,223
Income taxes 7,813 5,013 14,851 11,264
Net income $19,587 $13,199 $38,140 $28,959
Basic earnings per share $1.33 $0.90 $2.58 $1.98
Diluted earnings per share $1.31 $0.89 $2.56 $1.96
Weighted average common and common
stock equivalents outstanding
(in thousands)
Basic 14,769 14,668 14,764 14,643
Diluted 14,914 14,813 14,888 14,795
NON-GAAP INFORMATION:
Diluted realized investment gains
per share, net of taxes $0.03 $- $0.07 $-
Triad Guaranty Inc.
Consolidated Balance Sheet
(Unaudited) (Unaudited)
June 30, December 31, June 30,
2006 2005 2005
(Dollars in thousands except per
share amounts)
Assets:
Invested assets:
Fixed maturities, available for
sale, at market $556,378 $534,064 $499,871
Equity securities, available for
sale, at market 9,660 8,159 9,698
Other investments 5,000 - -
Short-term investments 4,277 4,796 14,323
575,315 547,019 523,892
Cash and cash equivalents 5,191 8,934 3,528
Deferred policy acquisition costs 34,203 33,684 33,082
Prepaid federal income tax 151,908 139,465 128,682
Other assets 42,406 38,401 34,325
Total assets $809,023 $767,503 $723,509
Liabilities:
Losses and loss adjustment expenses $54,905 $51,074 $38,576
Unearned premiums 12,630 13,494 15,327
Deferred income tax 163,436 155,189 149,533
Long-term debt 34,505 34,501 34,497
Other liabilities 12,394 14,054 10,220
Total liabilities 277,870 268,312 248,153
Stockholders' equity:
Retained earnings 425,581 387,441 359,588
Accumulated other comprehensive
income 2,367 11,106 16,458
Other equity accounts 103,205 100,644 99,310
Total stockholders' equity 531,153 499,191 475,356
Total liabilities and stockholders'
equity $809,023 $767,503 $723,509
Stockholders' equity per share:
Including unrealized investment
gains $35.68 $33.79 $32.08
Excluding unrealized investment
gains $35.52 $33.04 $30.97
Common shares outstanding 14,887,984 14,774,153 14,818,546
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2006 2006 2005 2005 2005 2005
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance
in force $30,783 $29,891 $29,792 $29,820 $29,489 $29,001
Modified Pool
insurance in
force $20,022 $18,309 $14,615 $13,406 $10,018 $9,217
Credit quality of
primary
insurance in
force(1)
Prime 82.9% 84.6% 84.9% 85.5% 86.2% 87.2%
Alt-A 12.3% 10.4% 9.9% 9.2% 8.4% 7.6%
A Minus 3.9% 4.1% 4.2% 4.3% 4.4% 4.3%
Sub Prime 0.9% 0.9% 1.0% 1.0% 1.0% 1.0%
Alt A insurance
in force -
primary
FICO between
620 and 659 14.4% 17.9% 19.2% 20.0% 21.6% 22.7%
FICO between
660 and 699 34.4% 34.0% 33.9% 34.4% 36.6% 38.0%
FICO between
700 and 739 28.2% 27.1% 26.4% 26.0% 23.8% 22.7%
FICO greater
than 739 22.9% 21.0% 20.5% 19.6% 18.0% 16.5%
Primary flow
insurance in
force subject to
captive
reinsurance
arrangements 62.7% 59.7% 59.0% 58.3% 57.2% 56.7%
Risk In Force
Primary net risk
in force $6,966 $6,779 $6,767 $6,806 $6,700 $6,574
Total primary
risk in force by
credit score
FICO less than
575 0.7% 0.8% 0.8% 0.9% 1.0% 1.0%
FICO between
575 and 619 3.9% 4.1% 4.3% 4.4% 4.6% 4.6%
FICO between
620 and 659 17.3% 17.8% 17.9% 18.2% 18.3% 18.1%
FICO between
660 and 699 24.5% 24.5% 24.4% 24.4% 24.6% 24.7%
FICO between
700 and 739 24.2% 23.9% 23.9% 23.8% 23.7% 23.8%
FICO greater
than 739 29.3% 28.9% 28.7% 28.3% 27.9% 27.8%
Modified Pool
gross risk in
force $764 $751 $616 $579 $489 $462
Deductibles on
gross risk $90 $83 $71 $68 $59 $53
Modified pool
risk in force by
credit score(2)
FICO less than
575 0.2% 0.2% 0.2% 0.2% 0.3% 0.3%
FICO between
575 and 619 1.0% 1.0% 1.1% 1.2% 1.6% 1.8%
FICO between
620 and 659 12.0% 12.2% 14.2% 14.8% 17.4% 18.3%
FICO between
660 and 699 30.2% 29.9% 31.1% 31.5% 33.2% 33.1%
FICO between
700 and 739 29.5% 29.7% 28.4% 28.1% 27.2% 26.7%
FICO greater
than 739 27.1% 27.1% 25.0% 24.1% 20.2% 19.7%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Dec 31, Sep 30, Jun 30,
2004 2004 2004
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance in force $28,964 $28,811 $28,367
Modified Pool insurance in
force $7,863 $7,010 $6,390
Credit quality of primary
insurance in force(1)
Prime 87.7% 88.2% 88.9%
Alt-A 7.3% 6.7% 5.8%
A Minus 4.2% 4.2% 4.2%
Sub Prime 0.9% 1.0% 1.1%
Alt A insurance in force -
primary
FICO between 620 and 659 22.9% 21.4% 20.0%
FICO between 660 and 699 38.4% 39.4% 41.1%
FICO between 700 and 739 22.4% 23.0% 23.1%
FICO greater than 739 16.3% 16.1% 15.8%
Primary flow insurance in
force subject to captive
reinsurance arrangements 56.6% 56.1% 55.0%
Risk In Force
Primary net risk in force $6,587 $6,540 $6,409
Total primary risk in force by
credit score
FICO less than 575 1.1% 1.1% 1.3%
FICO between 575 and 619 4.6% 4.7% 4.9%
FICO between 620 and 659 17.9% 17.6% 17.2%
FICO between 660 and 699 24.7% 24.6% 24.5%
FICO between 700 and 739 23.8% 24.1% 24.2%
FICO greater than 739 27.8% 28.0% 28.0%
Modified Pool gross risk in
force $416 $388 $374
Deductibles on gross risk $42 $35 $31
Modified pool risk in force by
credit score(2)
FICO less than 575 0.4% 0.5% 0.6%
FICO between 575 and 619 2.2% 2.3% 2.5%
FICO between 620 and 659 20.5% 21.2% 22.6%
FICO between 660 and 699 32.9% 33.7% 33.8%
FICO between 700 and 739 25.1% 24.2% 23.2%
FICO greater than 739 18.9% 18.1% 17.3%
(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)
Jun 30, Mar 31, Dec 31, Sep 30,
2006 2006 2005 2005
(Dollars in millions unless otherwise indicated)
Production
Primary new insurance written (NIW) $2,944 $1,948 $2,263 $3,093
- Flow business $2,559 $1,947 $2,263 $3,091
- Bulk business $385 $1 $- $2
Modified Pool NIW $2,980 $4,606 $2,255 $4,526
Product mix as a % of primary flow
NIW:
- Greater than 95% LTV's 14.1% 10.1% 11.2% 13.8%
- ARMs 37.7% 32.4% 30.4% 35.9%
- Monthly premium 99.3% 99.6% 99.5% 96.8%
- Annual premium 0.1% 0.1% 0.2% 3.0%
- Refinances 28.7% 33.6% 28.6% 26.5%
Primary new risk written (gross) $730 $490 $583 $822
Modified Pool new risk written $92 $142 $55 $97
NIW subject to captive reinsurance
arrangements
- Primary flow business 61.2% 55.1% 55.1% 58.1%
Loan Statistics
Primary number of insured loans 216,458 215,736 217,397 219,159
Primary average loan size
($ thousands) $142.2 $138.6 $137.0 $136.1
Primary risk in force by policy year
2001 and prior 5.7% 6.4% 6.9% 7.6%
2002 7.1% 8.0% 8.6% 9.5%
2003 22.0% 24.6% 26.6% 29.3%
2004 21.9% 24.4% 26.1% 28.2%
2005 29.1% 31.3% 31.8% 25.4%
2006 14.2% 5.3% - -
Modified Pool number of insured loans 107,653 101,934 85,091 78,241
Modified Pool average loan size
($ thousands) $186.0 $179.6 $171.8 $171.3
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2005 2005 2004 2004 2004
(Dollars in millions unless otherwise indicated)
Production
Primary new insurance written
(NIW) $2,941 $2,191 $2,476 $2,716 $3,019
- Flow business $2,941 $2,161 $2,456 $2,665 $2,950
- Bulk business $- $30 $20 $51 $69
Modified Pool NIW $1,798 $2,103 $1,606 $1,297 $1,394
Product mix as a % of primary
flow NIW:
- Greater than 95% LTV's 11.6% 12.8% 13.7% 13.9% 11.8%
- ARMs 43.7% 38.1% 36.7% 37.0% 33.2%
- Monthly premium 94.3% 93.1% 93.5% 93.3% 90.7%
- Annual premium 5.4% 5.7% 6.1% 6.2% 9.0%
- Refinances 33.6% 35.0% 30.1% 22.0% 32.3%
Primary new risk written
(gross) $723 $540 $642 $724 $775
Modified Pool new risk written $46 $62 $46 $27 $30
NIW subject to captive
reinsurance arrangements
- Primary flow business 54.6% 47.4% 52.8% 51.3% 58.7%
Loan Statistics
Primary number of insured
loans 219,256 217,657 218,011 217,305 214,991
Primary average loan size
($ thousands) $134.5 $133.2 $132.9 $132.6 $131.9
Primary risk in force by
policy year
2001 and prior 8.6% 9.7% 10.7% 12.1% 14.1%
2002 11.1% 12.6% 14.0% 15.9% 18.4%
2003 33.4% 37.3% 40.5% 44.5% 49.0%
2004 31.4% 34.2% 34.8% 27.5% 18.5%
2005 15.5% 6.2% - - -
2006 - - - - -
Modified Pool number of
insured loans 59,581 55,182 48,563 43,286 39,519
Modified Pool average loan
size ($ thousands) $168.1 $167.0 $161.9 $161.9 $161.7
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 June 30, 2006, the Company had approximately $363 million
of structured transactions with effective dates within the second quarter
for which loan level detail had not been received.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
2006 2006 2005 2005 2005
(Dollars in millions unless otherwise indicated)
Delinquencies and Claim Information
Total primary delinquent
loans 4,787 5,116 5,336 4,312 4,013
Total modified pool
delinquent loans 1,698 1,776 1,827 1,341 1,312
- With deductibles 1,099 1,127 1,090 709 612
- Without deductibles 599 649 737 632 700
Total primary delinquency
rate 2.21% 2.37% 2.45% 1.97% 1.83%
Modified Pool delinquency
rate 1.58% 1.74% 2.15% 1.71% 2.20%
Primary average severity
($ thousands) $25.8 $26.3 $26.2 $26.2 $28.9
Primary net paid claims
($ thousands) $13,501 $13,284 $11,562 $11,982 $12,147
Modified Pool average
severity ($ thousands) $19.4 $16.4 $18.0 $22.0 $24.5
Modified Pool net paid claims
($ thousands) $930 $1,100 $862 $1,475 $1,150
Financial Information
Loss ratio - GAAP 34.1% 34.1% 48.9% 38.4% 42.0%
Expense ratio - GAAP 25.6% 25.6% 26.4% 26.1% 26.4%
Combined ratio - GAAP 59.7% 59.7% 75.3% 64.5% 68.4%
Risk-to-capital ratio 11.8:1 12.3:1 12.6:1 13.0:1 13.1:1
Annual persistency - primary 72.7% 71.1% 70.0% 69.7% 70.9%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Mar 31, Dec 31, Sep 30, Jun 30,
2005 2004 2004 2004
(Dollars in millions unless otherwise indicated)
Delinquencies and Claim Information
Total primary delinquent loans 4,134 4,203 3,902 3,709
Total modified pool delinquent loans 1,329 1,242 1,106 1,056
- With deductibles 538 410 197 121
- Without deductibles 791 832 909 935
Total primary delinquency rate 1.90% 1.93% 1.80% 1.73%
Modified Pool delinquency rate 2.41% 2.56% 2.56% 2.67%
Primary average severity
($ thousands) $24.7 $24.1 $19.3 $24.2
Primary net paid claims ($ thousands) $8,681 $7,138 $6,547 $6,310
Modified Pool average severity
($ thousands) $17.6 $14.7 $12.4 $14.0
Modified Pool net paid claims
($ thousands) $970 $1,193 $733 $406
Financial Information
Loss ratio - GAAP 27.4% 27.0% 25.8% 22.5%
Expense ratio - GAAP 28.1% 27.8% 28.6% 29.7%
Combined ratio - GAAP 55.5% 54.8% 54.4% 52.2%
Risk-to-capital ratio 13.7:1 14.0:1 14.4:1 14.6:1
Annual persistency - primary 69.0% 68.5% 67.8% 60.9%
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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