Illinois Issues Order Against Triad

Triad Guaranty Inc., Winston-Salem, N.C., has received a corrective order from the Illinois Director of Insurance that declares all valid claims under Triad's mortgage guaranty insurance policies will be paid 60% in cash and 40% by the creation of a deferred payment obligation. The order is expected to take effect on June 1. Ken Jones, president and chief executive, said, "While Triad continues to believe that it has sufficient resources to pay all current and future valid claims, there is more uncertainty today than when we entered run-off in July 2008. Because of this uncertainty, the Illinois Director has determined that it is in the best interests of Triad's policyholders to require Triad to settle claims with a combination of cash and deferred payment obligations, and has issued an Order to that effect." Triad has over $2 billion in claims-paying resources, but given the uncertain economy and decline in the company's capital, he said there is an increase in the possibility the mortgage insurer many not be able to meet future claims obligations. The DPO will be represented by a separate entry in Triad's financial statements and will accrue a carrying charge based on the investment yield earned by Triad's investment portfolio. Payments of the carrying charge and the DPO will be subject to Triad's future financial performance and will require approval of the Illinois Director.