Triad Guaranty Loses $360m for Q209

Triad Guaranty (TGIC), the mortgage insurer, reported a $359.4m net loss for Q209, compared to a net loss of $55.2m for Q109. Ken Jones, CEO of Triad, points to a decline in cure rates on default loans and severe settled losses that swelled Triad’s loss reserves for the second quarter, according to the report. The total insurance in force, or the dollar amount Triad issued, shrank to $57.5bn at the end of Q209, a 4.9% dip from the end of Q109 and a 13.3% drop from this quarter a year ago. But total revenues grew to $77.7m for the second quarter of 2009, a jump $50.9m from the first quarter and an uptick from $75.2m from a year ago. Despite a drop in total dollar amount insured by Triad for 2009, earned premiums stayed above last quarter’s levels. Net losses for Triad totaled $431.4m for the quarter, swelling from $101.6m in losses for the first quarter of 2009. Net settled losses increased to $149.9m from $53.9m in the previous quarter. The jump stems from the lifting of various foreclosure moratoriums and a higher number of defaults from the 2006 and 2007 vintages progressing through the foreclosure process. Triad holds $1.18bn in total assets but $1.70bn in liabilities. As of June 1, 2009, Triad settles all claims under mortgage insurance policies with 60% cash and 40% with the creation of a deferred payment obligation (DPO), which accrues a carrying charge from the investment yield of Triad’s portfolio. Payment from the carrying charge depends on future performance and requires approval from the director of the Illinois Department of Insurance. Write to Jon Prior.

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