Attached files
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| 8-K - FORM 8-K FOR 4Q2011 EARNINGS - TRIAD GUARANTY INC | form8k-4q2011earnings.htm |
Exhibit 99.1
Press Release
Triad Guaranty Inc. Reports Fourth Quarter and Year End Results
WINSTON-SALEM, N.C., February 17, 2012 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the quarter ended December 31, 2011 of $60.9 million compared to a net loss of $37.5 million for the third quarter of 2011 and net income of $26.8 million for the fourth quarter of 2010. The 2011 fourth quarter diluted loss per share was $3.99 compared to a diluted loss per share of $2.46 for the 2011 third quarter and diluted income per share of $1.76 for the fourth quarter of 2010.
The net loss for the year ended December 31, 2011 was $107.8 million compared to net income of $132.1 million for the year ended December 31, 2010. The diluted loss per share was $7.07 for the year ended December 31, 2011 compared to diluted income per share of $8.72 for the year ended December 31, 2010.
Ken Jones, President and CEO, said, “Stubbornly high unemployment, tight credit and depressed home prices have prevented any meaningful recovery in the housing market, which continues to negatively impact our financial results. During the fourth quarter of 2011, we increased the frequency factors utilized in our reserve calculation, which added approximately $30 million to the loss for the quarter. As necessary, we make refinements to our reserve estimate each quarter to reflect actual experience. Risk in default continued to decline during the fourth quarter, but at a slower rate than we experienced during the previous five quarters. Settled claims declined 14% from the third quarter while cures and newly reported defaults remained essentially flat during the 2011 fourth quarter. Persistency, the key driver of our earned premiums, remained at elevated levels compared to historical norms as many borrowers are finding it very difficult to sell their homes.”
Mr. Jones continued, “As a company in run-off, our primary focus remains on the efficient and effective servicing of our insured portfolio, particularly with respect to loss management, in order to maximize our claims-paying ability. Our deficit in assets remains substantial and was $703.6 million at December 31, 2011. We believe that, absent significant positive changes in the economy and the residential real estate market, our existing assets and future premiums likely will not be sufficient to meet our current and future policyholder obligations.”
We have updated the quarterly statistical and supplemental information for the 2011 fourth quarter results on our web site at www.triadguaranty.com. The supplemental information can be found under “Investors” and then under “Webcasts and Presentations” by the title “Supplemental Information – Fourth Quarter 2011”.
(Relevant Triad Guaranty Inc. financial and statistical information follows)
Triad Guaranty Inc.'s wholly owned subsidiary, Triad Guaranty Insurance Corporation, is a nationwide mortgage insurer pursuing a run-off of its existing in-force book of business. For more information, please visit the Company's web site at www.triadguaranty.com.
Certain of the statements contained in this release are "forward-looking statements" and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include estimates and assumptions related to economic, competitive, regulatory, operational and legislative developments. These forward-looking statements are subject to change, uncertainty and circumstances that are, in many instances, beyond our control and they have been made based upon our current expectations and beliefs concerning future developments and their potential effect on us. Actual developments and their results could differ materially from those expected by us, depending on the outcome of a number of factors, including: the possibility that the Illinois Department of Insurance may take various actions regarding Triad if it does not operate its business in accordance with its revised financial and operating plan and the corrective orders, including seeking receivership proceedings; our ability to operate our business in run-off and maintain a solvent run-off; our ability to continue as a going concern; the possibility of general economic and business conditions that are different than anticipated; legislative, regulatory, and other similar developments; changes in interest rates, employment rates, the housing market, the mortgage industry and the stock market; legal and other proceedings regarding modifications and refinancing of mortgages and/or foreclosure proceedings; the possibility that there will not be adequate interest in our common stock on the over the counter markets to ensure efficient pricing; and various factors described under "Risk Factors" and in the “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” in our Annual Report on Form 10-K for the year ended December 31, 2010 and in other reports and statements filed with the Securities and Exchange Commission. Forward-looking statements are based upon our current expectations and beliefs concerning future events and we undertake no obligation to update or revise any forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made, except as otherwise required by law.
SOURCE: Triad Guaranty Inc.
CONTACT: Bob Ogburn, Vice President and Treasurer, at 336.723.1282 ext. 1167 or bogburn@tgic.com
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Consolidated Statements of Operations
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(Unaudited)
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2011
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2010
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2011
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2010
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(Dollars in thousands except per share amounts)
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Revenues:
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Earned premiums
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$ | 39,111 | $ | 40,920 | $ | 161,352 | $ | 203,416 | ||||||||
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Net investment income
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6,779 | 8,658 | 30,760 | 38,774 | ||||||||||||
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Net realized investment gains (losses)
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11,296 | (950 | ) | 15,209 | 12,516 | |||||||||||
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Other income
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1 | 60 | 67 | 23 | ||||||||||||
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Total revenues
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57,187 | 48,688 | 207,388 | 254,729 | ||||||||||||
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Losses and Expenses:
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Net settled claims
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113,936 | 139,435 | 464,974 | 562,007 | ||||||||||||
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Decrease in reserves
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(5,885 | ) | (129,993 | ) | (187,524 | ) | (462,732 | ) | ||||||||
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Loss adjustment (benefit) expenses
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(633 | ) | 322 | 815 | 10,358 | |||||||||||
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Net losses and loss adjustment expenses
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107,418 | 9,764 | 278,265 | 109,633 | ||||||||||||
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Interest expense
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4,984 | 3,836 | 18,244 | 11,763 | ||||||||||||
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Other operating expenses
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4,583 | 8,319 | 18,648 | 30,878 | ||||||||||||
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Total losses and expenses
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116,985 | 21,919 | 315,157 | 152,274 | ||||||||||||
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Income (loss) before income taxes and extraordinary item
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(59,798 | ) | 26,769 | (107,769 | ) | 102,455 | ||||||||||
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Income tax expense
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1,134 | - | - | - | ||||||||||||
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Income (loss) before extraordinary item
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(60,932 | ) | 26,769 | (107,769 | ) | 102,455 | ||||||||||
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Extraordinary item - gain from repurchase and retirement of long-term debt
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- | - | - | 29,640 | ||||||||||||
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Net (loss) income
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$ | (60,932 | ) | $ | 26,769 | $ | (107,769 | ) | $ | 132,095 | ||||||
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Per Share Information:
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Diluted (loss) income per share before extraordinary item
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$ | (3.99 | ) | $ | 1.76 | $ | (7.07 | ) | $ | 6.76 | ||||||
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Diluted income per share for extraordinary item
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- | - | - | 1.96 | ||||||||||||
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Diluted (loss) income per share
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$ | (3.99 | ) | $ | 1.76 | $ | (7.07 | ) | $ | 8.72 | ||||||
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Diluted weighted average common stock and common stock equivalents outstanding (in thousands of shares)
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15,258 | 15,204 | 15,250 | 15,151 | ||||||||||||
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Consolidated Balance Sheets
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December 31,
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December 31,
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2011
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2010
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(Dollars in thousands)
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Assets:
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Invested assets:
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Fixed maturities, available for sale, at market
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$ | 746,238 | $ | 812,335 | ||||
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Short-term investments
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30,102 | 39,561 | ||||||
| 776,340 | 851,896 | |||||||
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Cash and cash equivalents
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40,590 | 38,762 | ||||||
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Reinsurance recoverable
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22,988 | 40,806 | ||||||
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Other Assets
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56,309 | 60,161 | ||||||
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Total assets
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$ | 896,227 | $ | 991,625 | ||||
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Liabilities:
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Losses and loss adjustment expenses
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$ | 854,188 | $ | 1,060,036 | ||||
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Unearned premiums
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6,871 | 9,057 | ||||||
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Deferred payment obligation
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629,700 | 415,657 | ||||||
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Other liabilities
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109,042 | 93,075 | ||||||
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Total liabilities
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1,599,801 | 1,577,825 | ||||||
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Stockholders' deficit:
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Accumulated deficit
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(826,815 | ) | (719,046 | ) | ||||
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Accumulated other comprehensive income
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8,977 | 18,609 | ||||||
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Other equity accounts
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114,264 | 114,237 | ||||||
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Deficit in assets
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(703,574 | ) | (586,200 | ) | ||||
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Total liabilities and stockholders' deficit
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$ | 896,227 | $ | 991,625 | ||||
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Common shares outstanding
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15,328,128 | 15,258,128 | ||||||
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Triad Guaranty Inc.
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Consolidated Statements of Cash Flow
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(Unaudited)
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Twelve Months Ended
December 31,
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2011
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2010
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(Dollars in thousands)
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OPERATING ACTIVITIES
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Net (loss) income
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$ | (107,769 | ) | $ | 132,095 | |||
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Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
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Decrease in loss and unearned premium reserves
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(208,034 | ) | (480,103 | ) | ||||
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Decrease in amounts due to/from reinsurer
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17,818 | 192,693 | ||||||
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Net realized investment gains
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(15,209 | ) | (12,516 | ) | ||||
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Extraordinary gain on repurchase of long-term debt
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- | (29,640 | ) | |||||
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Increase in deferred payment obligation
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214,043 | 247,271 | ||||||
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Collection of income tax recoverable
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11,707 | - | ||||||
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Other operating activities
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10,830 | 8,058 | ||||||
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Net cash (used in) provided by operating activities
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(76,614 | ) | 57,858 | |||||
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INVESTING ACTIVITIES
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Purchases of investment securities
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(277,829 | ) | (469,283 | ) | ||||
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Sales and maturities of investment securities
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347,150 | 445,545 | ||||||
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Decrease (increase) in short-term investments
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9,459 | (12,911 | ) | |||||
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Other investing activities
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(338 | ) | 620 | |||||
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Net cash provided by (used in) investing activities
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78,442 | (36,029 | ) | |||||
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FINANCING ACTIVITIES
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Repurchase of long-term debt
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- | (4,906 | ) | |||||
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Net cash used in financing activities
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- | (4,906 | ) | |||||
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Net increase in cash
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1,828 | 16,923 | ||||||
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Cash at beginning of year
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38,762 | 21,839 | ||||||
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Cash at end of period
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$ | 40,590 | $ | 38,762 | ||||
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Sequential Quarterly Financial Statements
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(unaudited)
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Condensed Statements of Operations For The Quarter Ended
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(Dollars in thousands)
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Dec. 31,
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Sept. 30,
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Jun. 30,
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Mar. 31,
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Dec. 31,
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2011
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2011
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2011
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2011
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2010
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Revenue:
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Earned premiums
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$ | 39,111 | $ | 49,719 | $ | 35,394 | $ | 37,128 | $ | 40,920 | ||||||||||
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Net investment income
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6,779 | 7,364 | 8,126 | 8,491 | 8,658 | |||||||||||||||
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Net realized investment gains (losses)
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11,296 | 1,349 | 3,000 | (436 | ) | (950 | ) | |||||||||||||
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Other income
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1 | 10 | 29 | 27 | 60 | |||||||||||||||
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Total revenues
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57,187 | 58,442 | 46,549 | 45,210 | 48,688 | |||||||||||||||
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Losses and Expenses:
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Net settled claims
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113,936 | 132,545 | 111,583 | 106,909 | 139,435 | |||||||||||||||
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Decrease in reserves
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(5,885 | ) | (44,192 | ) | (70,752 | ) | (66,694 | ) | (129,993 | ) | ||||||||||
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Loss adjustment (benefit) expenses
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(633 | ) | (511 | ) | 469 | 1,490 | 322 | |||||||||||||
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Net losses and LAE expense
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107,418 | 87,842 | 41,300 | 41,705 | 9,764 | |||||||||||||||
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Interest expense
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4,984 | 4,813 | 4,469 | 3,978 | 3,836 | |||||||||||||||
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Other operating expenses
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4,583 | 4,450 | 5,178 | 4,437 | 8,319 | |||||||||||||||
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Total losses and expenses
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116,985 | 97,105 | 50,947 | 50,120 | 21,919 | |||||||||||||||
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Income (loss) before taxes
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(59,798 | ) | (38,663 | ) | (4,398 | ) | (4,910 | ) | 26,769 | |||||||||||
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Income tax expense (benefit)
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1,134 | (1,134 | ) | - | - | - | ||||||||||||||
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Net (loss) income
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$ | (60,932 | ) | $ | (37,529 | ) | $ | (4,398 | ) | $ | (4,910 | ) | $ | 26,769 | ||||||
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Condensed Balance Sheets As Of
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Dec. 31,
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Sept. 30,
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Jun. 30,
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Mar. 31,
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Dec. 31,
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| 2011 | 2011 | 2011 | 2011 | 2010 | ||||||||||||||||
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Assets
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Invested assets
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$ | 776,340 | $ | 773,078 | $ | 823,018 | $ | 842,908 | $ | 851,896 | ||||||||||
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Cash and cash equivalents
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40,590 | 65,051 | 40,277 | 39,073 | 38,762 | |||||||||||||||
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Reinsurance recoverable
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22,988 | 23,719 | 31,230 | 33,499 | 40,806 | |||||||||||||||
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Other assets
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56,309 | 56,897 | 46,141 | 48,528 | 60,161 | |||||||||||||||
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Total assets
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$ | 896,227 | $ | 918,745 | $ | 940,666 | $ | 964,008 | $ | 991,625 | ||||||||||
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Liabilities and stockholders' deficit
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Liabilities:
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Losses and loss adjustment expenses
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$ | 854,188 | $ | 864,049 | $ | 910,530 | $ | 990,494 | $ | 1,060,036 | ||||||||||
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Deferred payment obligation
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629,700 | 576,510 | 517,193 | 464,342 | 415,657 | |||||||||||||||
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Accrued expenses and other liabilities
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115,913 | 109,095 | 106,271 | 102,911 | 102,132 | |||||||||||||||
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Total liabilities
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1,599,801 | 1,549,654 | 1,533,994 | 1,557,747 | 1,577,825 | |||||||||||||||
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Deficit in assets
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(703,574 | ) | (630,909 | ) | (593,328 | ) | (593,739 | ) | (586,200 | ) | ||||||||||
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Total liabilities and stockholders' deficit
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$ | 896,227 | $ | 918,745 | $ | 940,666 | $ | 964,008 | $ | 991,625 | ||||||||||