Triad Guaranty (TGIC) 8-K Triad Guaranty Inc. Reports First Quarter Results

Exhibit 99.1

Press Release

Triad Guaranty Inc. Reports First Quarter Results

WINSTON-SALEM, N.C., May 11, 2010 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss of $27.8 million for its first quarter ended March 31, 2010 compared to a net loss of $79.1 million for the fourth quarter of 2009 and a net loss of $55.2 million for the first quarter of 2009.  The 2010 first quarter diluted loss per share was $1.84 compared to a diluted loss per share of $5.26 for the 2009 fourth quarter and $3.68 for the 2009 first quarter.

Ken Jones, President and CEO, said, “We saw improvement in several key areas during the 2010 first quarter, including the amount of risk in default, the number of loans in default and the number of first-time defaults. Our cure rates increased for the first time since the first quarter of 2009, which we believe was due in part to improved results from the GSE loan modification efforts during the quarter.  The first quarter has traditionally yielded improvements in cure rates and a decline in first-time defaults due to the impact of tax refunds that typically are received during the quarter.  At this time, however, we are unable to determine whether the lower first notices of default and the improved cure rates experienced during the quarter reflect typical seasonality, or whether they mark the beginning of a recovery in the U.S. mortgage and housing markets.”

Mr. Jones continued, “As a company in run-off, our primary focus remains the efficient and effective servicing of our insured portfolio, particularly with respect to loss management, in order to maximize our claims-paying ability.  While we are encouraged by our 2010 first quarter results compared to all of 2008 and 2009, our financial position continued to deteriorate slightly during the first quarter as the deficit in assets increased to $732.7 million at March 31, 2010.  To meet all of our existing obligations, we will need to earn at least $733 million during the remaining run-off of our existing business.  We received $188.7 million in cash and investments during the first quarter following the commutation of our two largest lender captives; however, the receipt of these assets did not impact our net loss as the losses ceded to the captives had previously been recognized as a reinsurance recoverable in our financial statements.”

For additional information concerning our results for the first quarter of 2010 and our financial position at March 31, 2010, please see our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, which will be filed with the Securities and Exchange Commission and will be available at www.sec.govor via our web site at www.triadguaranty.com.  We have updated the quarterly statistical and supplemental information for the 2010 first 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 – First Quarter 2010”.

(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; 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, 2009 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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Triad Guaranty Inc.
Consolidated Statements of Operations
	Three Months Ended
	March 31,
	(Unaudited)
	2010			2009
	(Dollars in thousands except per share amounts)
Earned premiums	$	45,888		$	44,358
Net investment income		9,873			11,192
Net realized investment losses		(242	)		(4,565	)
Other income (expense)		(8	)		2
Total revenues		55,511			50,987
Losses and loss adjustment expenses		72,238			101,577
Interest expense		2,469			694
Other operating expenses - net		9,332			9,411
Total losses and expenses		84,039			111,682
Loss before income taxes		(28,528	)		(60,695	)
Income tax benefit		(717	)		(5,521	)
Net loss	$	(27,811	)	$	(55,174	)
Diluted loss per share	$	(1.84	)	$	(3.68	)
Diluted weighted average common and common
stock equivalents outstanding (in thousands)		15,099			14,994

Triad Guaranty Inc.
Consolidated Balance Sheets
	(Unaudited)						(Unaudited)
	March 31,			December 31,			March 31,
	2010			2009			2009
	(Dollars in thousands except per share amounts)
Assets:
Invested assets:
Fixed maturities, available for sale, at market	$	811,040		$	784,830		$	904,904
Equity securities, available for sale, at market		-			-			491
Short-term investments		146,075			26,651			13,136
		957,115			811,481			918,531
Cash and cash equivalents		38,662			21,839			21,394
Reinsurance recoverable		52,963			233,499			182,589
Other assets		54,406			58,007			52,848
Total assets	$	1,103,146		$	1,124,826		$	1,175,362
Liabilities:
Losses and loss adjustment expenses	$	1,468,719		$	1,537,043		$	1,262,746
Unearned premiums		12,210			12,153			15,958
Long-term debt		34,543			34,540			34,532
Deferred payment obligation		229,953			168,386			-
Other liabilities		90,467			79,062			43,519
Total liabilities		1,835,892			1,831,184			1,356,755
Stockholders' equity:
Accumulated deficit		(878,952	)		(851,141	)		(310,683	)
Accumulated other comprehensive income		32,114			30,782			16,316
Other equity accounts		114,092			114,001			112,974
Deficit in assets		(732,746	)		(706,358	)		(181,393	)
Total liabilities and stockholders' equity	$	1,103,146		$	1,124,826		$	1,175,362
Stockholders' deficit in assets per share:	$	(48.02	)	$	(46.29	)	$	(11.92	)
Common shares outstanding		15,258,128			15,258,128			15,215,378

Triad Guaranty Inc.
Consolidated Statements of Cash Flow
	Three Months Ended March 31,
	2010			2009
	(Unaudited)
	(Dollars in Thousands)
OPERATING ACTIVITIES
Net loss	$	(27,811	)	$	(55,174	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Increase (decrease) in loss and unearned premium reserves		(68,267	)		75,001
Decrease (increase) in amounts due to/from reinsurer		180,536			(31,459	)
Net realized investment losses		242			4,565
Deferred income taxes		(717	)		(5,521	)
Deferred payment obligation		61,567			-
Other operating activities		11,704			15,923
Net cash provided by operating activities		157,254			3,335
INVESTING ACTIVITIES
Purchases of investment securities		(72,318	)		(88,391	)
Sales and maturities of investment securities		50,729			38,942
(Increase) decrease in short-term investments		(119,425	)		27,566
Other investing activities		583			2
Net cash used in investing activities		(140,431	)		(21,881	)
Net increase (decrease) in cash		16,823			(18,546	)
Cash at beginning of period		21,839			39,940
Cash at end of period	$	38,662		$	21,394

TRIAD GUARANTY INC.
Sequential Quarterly Financial Statements
(unaudited)
	Condensed Statements of Operations For The Quarter Ended
	(Dollars in thousands)
	Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,
	2010			2009			2009			2009			2009			2008			2008			2008			2008
Revenue:
Earned premiums	$	45,888		$	34,891		$	35,576		$	64,833		$	44,358		$	49,840		$	65,654		$	69,864		$	72,065
Net investment income		9,873			9,739			12,342			10,859			11,192			10,509			10,349			9,175			9,547
Realized investment gains (losses)		(242	)		649			3,253			2,017			(4,565	)		(18,944	)		(6,519	)		(3,799	)		2,703
Other income (loss)		(8	)		12,536			127			2			2			2			2			2			2
Total revenues		55,511			57,815			51,298			77,711			50,987			41,407			69,486			75,242			84,317
Losses and expenses:
Net settled claims		(43,684	)		153,749			157,881			149,863			53,920			69,372			59,357			68,263			40,471
Change in reserves		111,204			(30,195	)		(15,836	)		278,956			39,628			106,080			165,958			218,568			174,561
Loss adjustment expenses		4,718			5,370			3,713			2,549			8,029			2,647			5,879			5,918			6,227
Net losses and LAE		72,238			128,924			145,758			431,368			101,577			178,099			231,194			292,749			221,259
Change in premium deficiency reserve		-			-			-			-			-			-			-			(15,000	)		15,000
Interest expense		2,469			2,243			1,202			1,895			694			694			691			696			1,476
Amortization of DAC		-			-			-			-			-			-			-			-			39,416
Other operating expenses		9,332			8,160			9,659			8,680			9,411			8,639			8,726			27,238			14,106
Total losses and expenses		84,039			139,327			156,619			441,943			111,682			187,432			240,611			305,683			291,257
Income (loss) before income taxes		(28,528	)		(81,512	)		(105,321	)		(364,232	)		(60,695	)		(146,025	)		(171,125	)		(230,441	)		(206,940	)
Income taxes (benefit)		(717	)		(2,368	)		(3,426	)		(4,813	)		(5,521	)		(23,818	)		(11,030	)		(31,630	)		(56,926	)
Net income (loss)	$	(27,811	)	$	(79,144	)	$	(101,895	)	$	(359,419	)	$	(55,174	)	$	(122,207	)	$	(160,095	)	$	(198,811	)	$	(150,014	)
	Condensed Balance Sheets As Of
	(Dollars in thousands)
	Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,			Mar 31,
	2010			2009			2009			2009			2009			2008			2008			2008			2008
Assets
Invested assets	$	957,115		$	811,481		$	846,905		$	851,640		$	918,531		$	895,422		$	890,720		$	869,022		$	760,073
Cash		38,662			21,839			7,480			31,600			21,394			39,940			47,818			19,669			80,544
Real estate acquired		-			-			-			-			526			713			3,661			6,202			8,993
Prepaid federal income tax		-			-			-			-			15			15			15			63,184			115,598
Reinsurance recoverable		52,963			233,499			245,436			234,248			182,589			150,848			111,827			55,316			93,244
Other assets		54,406			58,007			54,331			57,650			52,307			43,596			47,915			50,405			52,572
Total assets	$	1,103,146		$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956		$	1,063,798		$	1,111,024
Liabilities and stockholders' equity
Liabilities:
Losses and loss adjustment expenses	$	1,468,719		$	1,537,043		$	1,576,303		$	1,591,207		$	1,262,746		$	1,187,840		$	1,042,053		$	817,262		$	547,766
Premium deficiency reserve		-			-			-			-			-			-			-			-			96,073
Deferred payment obligation		229,953			168,386			97,048			27,020			-			-			-			-			-
Accrued expenses and other liabilities		102,677			91,215			71,291			52,066			59,477			44,831			30,887			40,714			32,699
Total liabilities		1,835,892			1,831,184			1,779,179			1,704,828			1,356,755			1,267,200			1,130,356			922,889			772,582
(Deficit in assets) total stockholders' equity		(732,746	)		(706,358	)		(625,027	)		(529,690	)		(181,393	)		(136,666	)		(28,400	)		140,909			338,442
Total liabilities and stockholders' equity	$	1,103,146		$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956		$	1,063,798		$	1,111,024