Triad Ends Talks; Sub Headed for Runoff

Triad Guaranty Inc., Winston-Salem, N.C., has ended discussions with Lightyear Capital LLC on the formation of a new mortgage insurance company and has announced that Triad Guaranty Insurance Co. will be transitioned into runoff. The subsidiary will cease issuing commitments for mortgage insurance as of July 15, Triad said. The parent company also reported that Freddie Mac had denied the appeal of its suspension as an approved mortgage insurer. Mark Tonnesen, president and chief executive of Triad, said New York-based Lightyear Capital "worked very hard with us to develop a transaction that we believe would have ultimately served the interests of Triad's stakeholders, but certain hurdles arose that prevented the transaction from being feasible. We are continuing to work with our financial adviser, Goldman Sachs, to explore whether other strategic alternatives are available, but we are not optimistic that any opportunities will surface." Fitch Ratings said it would "monitor Triad's ability to execute an orderly runoff as well as loss developments within the insured portfolio and the extent to which captive reinsurance and rescission activity offset these losses." Fitch said it believes shareholder interests are likely to be a higher priority of management than the interests of policyholders. Triad can be found online at http://www.triadguaranty.com.