Triad Guaranty, Inc., a private mortgage insurer, said an increasing pace of mortgage defaults pushed the insurer into the red during the third quarter. The company reported a net loss of $31.8 million compared to $19.4 million in profits during the year-ago period, and "dramatically" increased reserves to account for paid claims and expected losses. From the press release:
Mark K. Tonnesen, President and Chief Executive Officer, said, "The third quarter marked an escalation of the market changes that began earlier this year. Our portfolio experienced significant pressures on the heels of the liquidity issues that affected the availability of mortgage lending and the rapid deterioration of the housing markets in certain areas of the United States. During the third quarter we took action to increase reserves significantly, reflecting both the increase in newly reported defaults as well as the effect of a declining cure rate on existing defaults."
Net losses and loss adjustment expenses of $106.8 million for the third quarter of 2007, compared to $19.3 million for the comparable quarter of 2006, reflect the substantial changes that have occurred in the mortgage and housing markets this year. Net losses and loss adjustment expenses for the third quarter of 2007 include a reserve increase of $78.3 million and paid claims of $28.5 million, compared to a reserve increase of $5.7 million and paid losses of $13.6 million for the third quarter of 2006. Triad also noted that average severity on paid claims had increased dramatically, increasing to $36,900 in the third quarter from $25,700 in the year-ago period. For more information, visit http://www.tgic.com.