Triad, Lightyear Mull Creation of New MI

Triad Guaranty Inc., Winston-Salem, N.C., is negotiating exclusively with Lightyear Capital LLC, New York, on the creation of a new monoline mortgage insurer. In its most recent 10-K filing, Triad said this was one of the options it was exploring for the future of the company. If the negotiations are successful, after the creation of the new company Triad Guaranty Insurance Corp. will be placed into run-off. Triad's regulator, the Illinois Department of Insurance, has been informed by both parties of the negotiations. It is expected that Lightyear and its investor group will provide up to $400 million ($200 million from Lightyear itself) in capital to the new Illinois-domiciled mortgage insurer. "Certain key members of Triad's current management and many of its employees" will join the new company, which will also purchase certain assets and the right to use certain systems and technologies of Triad, the company said. TGIC is continuing to write new mortgage insurance business and is working on a remediation plan for presentation to Fannie Mae and Freddie Mac. If a definitive agreement is signed this month, the deal could close in the third quarter.