Triad Takes Loss as Defaults/Foreclosures Increase

Triad Guaranty Inc., Winston-Salem, N.C., lost $160.1 million ($10.69 per share) in the third quarter 2008 as the amount of risk in default or in foreclosure continues to increase and as a result, loss reserves at the company increased significantly. In the second quarter this year, it lost $198.8 million ($13.36 per share). Paid losses for the quarter were $59.8 million, down from $68.2 million in the second quarter 2008. The company said the improvement was due to increased loss mitigation efforts, servicer delays in filing claims and foreclosure moratoriums. Ken Jones, president and chief executive, said because of the increase in defaults and the related provision for expected future paid losses, Triad has a deficiency in assets (negative stockholder equity) of $28.4 million as of Sept. 30, 2008. "Our underlying performance during the quarter was generally consistent with our run-off plan, as the plan projected significant losses in the early stages of the run-off period. Additionally, we have not realized a significant portion of the structured benefits on the modified pool stop losses and captive reinsurance benefits that we anticipate in the subsequent years of the run-off. Finally, it should be noted that no benefit has been recognized in these financial statements from our $95 million excess of loss reinsurance policy that is presently in arbitration," said Mr. Jones.