Triad Sees Q4 Income Drop 35 Percent; Losses More than Double
Triad Guaranty Inc. said late Wednesday that net income at the guarantor and mortgage insurance specialist dropped 35 percent during the fourth quarter, reporting net income of $8.1 million for the quarter versus $12.6 million in the fourth quarter of 2005. In spite of lagging fourth quarter performance, Triad reported annual net income for 2006 of $65.6 million, compared with $56.8 million for 2005. "Despite many positive developments in the fourth quarter, our earnings are disappointing," said Mark Tonnesen, president and CEO. "While the increase in defaults and the number of paid claims was virtually on target, our average cost per paid claim increased significantly. The fundamental cause of the higher loss per claim was the impact of the slowing housing market on our claims mitigation efforts." Tonneson said a larger percentage of the company's claims paid in the fourth quarter were full option settlements, leading to the increase in loss severity. As a result, the company increased loss reserves by $24.2 million during the quarter, he said. Triad said incurred losses for the fourth quarter of 2006 were $41.3 million, up 114 percent from the third quarter 2006 and up 88 percent from the fourth quarter of 2005. Total paid claims for the fourth quarter of 2006 were $16.6 million, up from $13.6 million in the third quarter of 2006, and up 34 percent compared with the fourth quarter of 2005. Total defaults at December 31, 2006 were reported at 8,566, up 13 percent from 7,588 from the third quarter and up from 7,753 reported at the end of 2005; Triad said continued seasoning of its Modified Pool portfolio accounted for the majority of the increase. In spite of the downward pull of increasing losses and loss severity, the company continued to grow its insurance in force during 2006. Total insurance in force was up 28 percent from the end of 2005, reaching $56.8 billion at the end of 2006. Primary new insurance written for the fourth quarter of 2006 was $3.9 billion, up from $2.3 billion in the fourth quarter of 2005. 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. For more information, visit http://www.triadguaranty.com.