WINSTON-SALEM, N.C., Oct. 27 /PRNewswire-FirstCall/ -- Triad Guaranty Inc.
(Nasdaq: TGIC) today reported net income for the quarter ended September 30,
2005 of $15.3 million compared to $14.8 million for the same quarter a year
ago, an increase of 3%. Diluted earnings per share were $1.03 for the third
quarter of 2005 compared to $1.00 for the third quarter of 2004, an increase
of 3%. Realized investment losses, net of taxes, reduced diluted earnings per
share by $0.01 in the third quarter of both 2005 and 2004.
Net income for the first nine months of 2005 was $44.3 million compared
with $43.2 million for the same period in 2004. For the first nine months of
2005, diluted earnings per share were $2.99 compared to $2.94 for the same
period last year. Realized investment gains and losses had no meaningful
impact on earnings per share during the first nine months of 2005 compared to
a contribution of $0.02 per share during the first nine months of 2004.
Mark K. Tonnesen, newly appointed President and Chief Executive Officer,
said, "During the third quarter, we fully addressed the claim processing
issues that we discussed last quarter. That, combined with our continued
success in the marketplace, places Triad in a strong competitive position for
the future. We are pleased with the third quarter top line results reflecting
continued strong growth in revenues, new insurance written and insurance in
force. Total new insurance written reached a record high this quarter.
Incurred losses were up sharply from a year ago. The increase in incurred
losses is primarily due to the continued seasoning and growth of our insurance
in force. We continue to make steady progress on reducing our expense ratio."
In an effort to increase the transparency of our business, beginning with
this quarter, we have presented the statistical data attached to this release
based upon the risk characteristics of the underlying coverage, Primary and
Modified Pool, rather than just the distribution channels of flow and bulk.
Primary typically provides first level default protection on loans with a loan
to value greater than 80%. Modified Pool refers to loans that are typically
delivered through a bulk channel having structures that provide credit
enhancements that are subject to stop losses and/or deductibles and,
therefore, present a different risk exposure than Primary.
Primary insurance in force reached $29.8 billion at September 30, 2005
compared to $28.8 billion a year ago. Modified Pool insurance in force was
$13.4 billion at September 30, 2005, an increase of 91% over September 30,
2004. Total Primary insurance written for the third quarter of 2005 was
$3.1 billion, up from $2.7 billion in the third quarter of 2004. New
insurance written attributable to Modified Pool transactions reached a record
$4.6 billion in the third quarter of 2005, up from $1.3 billion for the same
period of 2004.
Earned premiums for the third quarter of 2005 were $44.1 million, an
increase of 23% over the same period a year ago. The increase in earned
premiums resulted from the growth of insurance in force, reflecting continued
solid production coupled with higher persistency during the first nine months
of 2005 compared to the same period in 2004. Persistency, or the percentage of
primary insurance remaining in force compared to one year prior, was 69.7% at
September 30, 2005 compared to 67.8% at September 30, 2004.
Incurred losses were $17.0 million in the third quarter of 2005, up from
$9.2 million in the third quarter of 2004. Total paid claims for the third
quarter of 2005 were $13.5 million, up slightly from the $13.3 million in the
second quarter of 2005 and up significantly from the $7.3 million from the
third quarter of 2004. Primary severity was $26,200 in the third quarter of
2005, down from the $28,900 in the second quarter of 2005 and up from the
$19,300 in the third quarter of 2004. Total reserves were increased during
the quarter, primarily reflecting the growth of reported defaults. The
Primary delinquency rate was 1.97% at September 30, 2005 compared to 1.83% at
June 30, 2005 and 1.80% at September 30, 2004. The Modified Pool delinquency
rate at September 30, 2005 dropped to 1.71% from 2.20% last quarter and 2.56%
a year ago. The loss ratio was 38.4% for the third quarter of 2005 compared
to 42.0% in the second quarter of 2005 and 25.8% for the third quarter of
2004. The Company's expense ratio was 26.1% for the third quarter of 2005
compared to 26.4% in the second quarter of 2005 and 28.6% in the third quarter
of 2004.
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 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 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
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(Dollars in thousands except per share amounts)
Premiums written:
Direct $53,272 $45,452 $152,158 $128,799
Ceded (10,299) (9,137) (29,863) (25,860)
Net premiums written $42,973 $36,315 $122,295 $102,939
Earned premiums $44,128 $35,819 $124,026 $103,814
Net investment income 5,896 5,255 17,054 14,439
Net realized investment gains
(losses) (170) (142) (124) 416
Other income 2 5 13 10
Total revenues 49,856 40,937 140,969 118,679
Net losses and loss adjustment
expenses 16,958 9,234 44,876 25,818
Interest expense on debt 694 693 2,080 2,079
Amortization of deferred policy
acquisition costs 3,714 3,670 11,066 10,305
Other operating expenses - net 7,494 6,700 21,728 19,768
Income before income taxes 20,996 20,640 61,219 60,709
Income taxes 5,702 5,844 16,966 17,494
Net income $15,294 $14,796 $44,253 $43,215
Basic earnings per share $1.04 $1.02 $3.01 $2.98
Diluted earnings per share $1.03 $1.00 $2.99 $2.94
Weighted average common and common
stock equivalents outstanding
(in thousands)
Basic 14,754 14,547 14,680 14,503
Diluted 14,837 14,748 14,810 14,713
NON-GAAP INFORMATION:
Diluted realized investment gains
per share, net of taxes $(0.01) $(0.01) $- $0.02
Triad Guaranty Inc.
Consolidated Balance Sheet
(Unaudited) (Unaudited)
Sept. 30, Dec. 31, Sept. 30,
2005 2004 2004
(Dollars in thousands except per share amounts)
Assets:
Invested assets:
Fixed maturities, available for
sale, at market $512,555 $454,121 $439,529
Equity securities, available for
sale, at market 9,715 10,272 11,844
Short-term investments 16,027 16,095 13,581
538,297 480,488 464,954
Cash 1,391 6,865 6,579
Deferred policy acquisition costs 33,332 32,453 32,177
Prepaid federal income tax 132,947 119,132 112,405
Other assets 36,246 33,097 30,850
Total assets $742,213 $672,035 $646,965
Liabilities:
Losses and loss adjustment expenses $41,823 $34,042 $32,547
Unearned premiums 14,148 15,942 14,724
Deferred income tax 152,444 137,925 132,003
Long-term debt 34,499 34,493 34,491
Other liabilities 12,368 12,290 14,966
Total liabilities 255,282 234,692 228,731
Stockholders' equity:
Retained earnings 374,882 330,628 315,426
Accumulated other comprehensive
income 12,301 13,218 12,626
Other equity accounts 99,748 93,497 90,182
Total stockholders' equity 486,931 437,343 418,234
Total liabilities and stockholders'
equity $742,213 $672,035 $646,965
Stockholders' equity per share:
Including unrealized investment
gains $32.86 $29.89 $28.75
Excluding unrealized investment
gains $32.03 $28.99 $27.88
Common shares outstanding 14,818,506 14,631,678 14,547,502
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
2005 2005 2005 2004 2004
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance in force $29,820 $29,489 $29,001 $28,964 $28,811
- Flow business $29,327 $28,904 $28,314 $28,191 $27,936
- Bulk business $492 $585 $687 $773 $875
Alt-A insurance in force -
primary $2,751 $2,479 $2,190 $2,100 $1,916
Alt A insurance in force -
primary
FICO between 620 and 660 20.8% 22.5% 23.9% 23.9% 22.4%
FICO greater than 660 79.2% 77.5% 76.1% 76.1% 77.6%
Primary flow insurance in
force subject to captive
reinsurance arrangements 58.3% 57.2% 56.7% 56.6% 56.1%
Modified Pool insurance in
force $13,406 $10,018 $9,217 $7,863 $7,010
Risk In Force
Primary net risk in force $6,806 $6,700 $6,574 $6,587 $6,540
- Flow business $6,647 $6,509 $6,351 $6,337 $6,257
- Bulk business $159 $191 $223 $250 $283
Total primary risk in force
by credit score
FICO less than 575 0.9% 1.0% 1.0% 1.1% 1.1%
FICO between 575 and 619 4.4% 4.6% 4.6% 4.6% 4.7%
FICO greater than 619 94.7% 94.4% 94.4% 94.3% 94.2%
Flow primary risk in force
by credit score
FICO less than 575 0.7% 0.7% 0.7% 0.7% 0.7%
FICO between 575 and 619 4.2% 4.3% 4.3% 4.2% 4.2%
FICO greater than 619 95.1% 94.9% 95.0% 95.1% 95.1%
Primary flow risk in force
subject to captive
reinsurance arrangements 58.3% 56.7% 55.8% 55.6% 54.8%
Modified Pool gross risk in
force $579 $489 $462 $416 $388
Deductibles on gross risk $68 $59 $53 $42 $35
Modified pool risk in force
by credit score
FICO less than 575 0.2% 0.3% 0.3% 0.4% 0.5%
FICO between 575 and 619 1.2% 1.6% 1.8% 2.2% 2.3%
FICO greater than 619 98.6% 98.1% 97.9% 97.4% 97.2%
Note: Effective with the third quarter of 2005, Triad will report all
statistical data as either Primary or Modified Pool. Primary
insurance can be delivered in both the flow and structured bulk
channels and provides first level mortgage default protection.
Modified Pool insurance is typically delivered through the
structured bulk channel and provides a credit enhancement to
investors that may be in addition to the protection of existing
primary insurance. These structured transactions usually have a
stop loss and/or a deductible associated with the transaction. All
prior quarter amounts have been restated to conform with these
definitions.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30,
2004 2004 2003 2003
(Dollars in millions unless otherwise indicated)
Insurance In Force
Primary insurance in force $28,367 $28,272 $27,929 $26,594
- Flow business $27,385 $27,224 $26,901 $25,918
- Bulk business $982 $1,048 $1,028 $676
Alt-A insurance in force - primary $1,646 $1,557 $1,451 $1,179
Alt A insurance in force - primary
FICO between 620 and 660 21.1% 22.2% 24.1% 28.0%
FICO greater than 660 78.9% 77.8% 75.9% 72.0%
Primary flow insurance in force
subject to captive reinsurance
arrangements 55.0% 53.5% 51.5% 49.6%
Modified Pool insurance in force $6,390 $5,614 $3,819 $2,697
Risk In Force
Primary net risk in force $6,409 $6,378 $6,295 $5,958
- Flow business $6,095 $6,047 $5,977 $5,763
- Bulk business $314 $331 $318 $195
Total primary risk in force by credit
score
FICO less than 575 1.3% 1.4% 1.5% 1.3%
FICO between 575 and 619 4.9% 4.9% 5.1% 4.9%
FICO greater than 619 93.9% 93.7% 93.5% 93.8%
Flow primary risk in force by credit
score
FICO less than 575 0.7% 0.8% 0.8% 0.8%
FICO between 575 and 619 4.2% 4.1% 4.1% 4.1%
FICO greater than 619 95.1% 95.1% 95.1% 95.1%
Primary flow risk in force subject to
captive reinsurance arrangements 52.9% 51.9% 49.8% 48.8%
Modified Pool gross risk in force $374 $350 $293 $251
Deductibles on gross risk $31 $25 $13 $10
Modified pool risk in force by credit
score
FICO less than 575 0.6% 0.7% 0.9% 1.3%
FICO between 575 and 619 2.5% 3.1% 3.8% 5.2%
FICO greater than 619 96.9% 96.2% 95.3% 93.5%
Note: Effective with the third quarter of 2005, Triad will report all
statistical data as either Primary or Modified Pool. Primary
insurance can be delivered in both the flow and structured bulk
channels and provides first level mortgage default protection.
Modified Pool insurance is typically delivered through the
structured bulk channel and provides a credit enhancement to
investors that may be in addition to the protection of existing
primary insurance. These structured transactions usually have a
stop loss and/or a deductible associated with the transaction. All
prior quarter amounts have been restated to conform with these
definitions.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
2005 2005 2005 2004 2004
(Dollars in millions unless otherwise indicated)
Production
Primary new insurance written
(NIW) $3,093 $2,941 $2,191 $2,476 $2,716
- Flow business $3,091 $2,941 $2,161 $2,456 $2,665
- Bulk business $2 $- $30 $20 $51
NIW subject to captive
reinsurance arrangements
- Primary flow business 58.1% 54.6% 47.4% 52.8% 51.3%
Product mix as a % of primary
flow NIW:
- Greater than 95% LTV's 13.8% 11.6% 12.8% 13.7% 13.9%
- ARMs 35.9% 43.7% 38.1% 36.7% 37.0%
- Monthly premium 96.8% 94.3% 93.1% 93.5% 93.3%
- Annual premium 3.0% 5.4% 5.7% 6.1% 6.2%
- Refinances 26.5% 33.6% 35.0% 30.1% 22.0%
Primary new risk written
(gross) $822 $723 $540 $642 $724
- Flow business $821 $723 $530 $635 $706
- Bulk business $1 $- $10 $7 $18
Modified Pool NIW $4,526 $1,798 $2,103 $1,606 $1,297
Modified Pool new risk
written $97 $46 $62 $46 $27
Loan Statistics
Primary number of insured
loans 219,159 219,256 217,657 218,011 217,305
- Flow business 215,481 214,964 212,754 212,596 211,300
- Bulk business 3,678 4,292 4,903 5,415 6,005
Primary average loan size
($ thousands)
- Flow business $136.1 $134.5 $133.1 $132.6 $132.2
- Bulk business $133.8 $136.3 $140.1 $142.8 $145.7
Modified Pool number of
insured loans 78,241 59,581 55,182 48,563 43,286
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 September
30, 2005, the Company had approximately $608 million of structured
transactions with effective dates within the third 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,
2004 2004 2003 2003
(Dollars in millions unless otherwise indicated)
Production
Primary new insurance written (NIW) $3,019 $2,497 $3,669 $5,326
- Flow business $2,950 $2,380 $3,255 $5,028
- Bulk business $69 $117 $414 $298
NIW subject to captive reinsurance
arrangements
- Primary flow business 58.7% 60.3% 50.3% 44.2%
Product mix as a % of primary flow
NIW:
- Greater than 95% LTV's 11.8% 10.0% 7.2% 7.9%
- ARMs 33.2% 26.9% 26.1% 18.3%
- Monthly premium 90.7% 91.1% 83.1% 75.8%
- Annual premium 9.0% 8.5% 16.4% 23.7%
- Refinances 32.3% 35.4% 38.5% 52.3%
Primary new risk written (gross) $775 $634 $937 $1,255
- Flow business $751 $594 $797 $1,175
- Bulk business $24 $40 $140 $80
Modified Pool NIW $1,394 $2,165 $1,555 $1,326
Modified Pool new risk written $30 $59 $54 $50
Loan Statistics
Primary number of insured loans 214,991 214,273 211,805 202,967
- Flow business 208,384 207,314 205,033 198,366
- Bulk business 6,607 6,959 6,772 4,601
Primary average loan size ($
thousands)
- Flow business $131.4 $131.3 $131.2 $130.7
- Bulk business $148.6 $150.6 $151.8 $146.9
Modified Pool number of insured loans 39,519 35,410 24,429 18,086
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 September
30, 2005, the Company had approximately $608 million of structured
transactions with effective dates within the third quarter for which
loan level detail had not been received.
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
2005 2005 2005 2004 2004
(Dollars in millions unless otherwise indicated)
Delinquencies and Claim
Information
Total primary delinquent loans 4,312 4,013 4,134 4,203 3,902
- Flow business 3,892 3,593 3,694 3,739 3,469
- Bulk business 420 420 440 464 433
Total modified pool delinquent
loans 1,341 1,312 1,329 1,242 1,106
- With deductibles 709 612 538 410 197
- Without deductibles 632 700 791 832 909
Total primary delinquency rate 1.97% 1.83% 1.90% 1.93% 1.80%
Modified Pool delinquency rate 1.71% 2.20% 2.41% 2.56% 2.56%
Primary average severity
($ thousands) $26.2 $28.9 $24.7 $24.1 $19.3
- Flow business $26.1 $29.0 $24.9 $23.6 $19.7
- Bulk business $27.4 $27.6 $21.0 $28.4 $14.1
Primary net paid claims
($ thousands)
- Flow business $10,555 $10,931 $8,283 $6,172 $6,224
- Bulk business $1,427 $1,216 $398 $966 $324
Modified Pool net paid claims
($ thousands) $1,475 $1,150 $970 $1,193 $733
Financial Information
Loss ratio - GAAP 38.4% 42.0% 27.4% 27.0% 25.8%
Expense ratio - GAAP 26.1% 26.4% 28.1% 27.8% 28.6%
Combined ratio - GAAP 64.5% 68.4% 55.5% 54.8% 54.4%
Risk-to-capital ratio 13.0:1 13.1:1 13.7:1 14.0:1 14.4:1
Annual persistency - primary 69.7% 70.9% 69.0% 68.5% 67.8%
Triad Guaranty Inc.
Sequential Quarterly Statistical Information (con't.)
(Unaudited)
Jun 30, Mar 31, Dec 31, Sep 30,
2004 2004 2003 2003
(Dollars in millions unless otherwise indicated)
Delinquencies and Claim Information
Total primary delinquent loans 3,709 3,728 3,397 2,988
- Flow business 3,319 3,343 3,053 2,675
- Bulk business 390 385 344 313
Total modified pool delinquent loans 1,056 994 845 712
- With deductibles 121 66 17 -
- Without deductibles 935 928 828 712
Total primary delinquency rate 1.73% 1.74% 1.60% 1.47%
Modified Pool delinquency rate 2.67% 2.81% 3.46% 3.94%
Primary average severity
($ thousands) $24.2 $27.4 $28.3 $24.4
- Flow business $24.6 $26.9 $28.2 $24.9
- Bulk business $19.4 $34.4 $29.3 $17.6
Primary net paid claims ($ thousands)
- Flow business $5,883 $5,254 $4,511 $3,983
- Bulk business $426 $447 $381 $194
Modified Pool net paid claims
($ thousands) $406 $308 $454 $647
Financial Information
Loss ratio - GAAP 22.5% 26.3% 21.6% 20.0%
Expense ratio - GAAP 29.7% 29.4% 34.0% 32.7%
Combined ratio - GAAP 52.2% 55.7% 55.6% 52.7%
Risk-to-capital ratio 14.6:1 15.2:1 15.3:1 15.1:1
Annual persistency - primary 60.9% 56.2% 52.2% 49.0%
SOURCE Triad Guaranty Inc.
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Related links:
http://www.triadguaranty.com
CONTACT:
Eric B. Dana, Senior Vice President, Chief
Financial Officer of Triad Guaranty Inc., +1-800-451-4872 ext.
1105, or edana@tgic.com
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