Triad Guaranty (TGIC) 8-K Triad Guaranty Inc. Reports 2010 Second Quarter Results

Exhibit 99.1

Press Release

Triad Guaranty Inc. Reports 2010 Second Quarter Results

Sequential and Year-Over-Year Increase in Net Income Attributable to Change in Reserve Factors and Modified Pool Premium Accounting Treatment

WINSTON-SALEM, N.C., August 11, 2010 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported net income of $79.1 million for its second quarter ended June 30, 2010 compared to a net loss of $27.8 million for the first quarter of 2010 and a net loss of $359.4 million for the second quarter of 2009.  The 2010 second quarter diluted income per share was $5.24 compared to a diluted loss per share of $1.84 for the 2010 first quarter and a diluted loss per share of $23.91 for the 2009 second quarter.

The net income for the six months ended June 30, 2010 was $51.3 million compared to a net loss of $414.6 million for the six months ended June 30, 2009.  The diluted income per share was $3.40 for the six months ended June 30, 2010 compared to a diluted loss per share of $27.65 for the six months ended June 30, 2009.

Ken Jones, President and CEO, said, “We continued to see improvement in several key areas during the second quarter of 2010, which allowed us to decrease the reserves held for existing defaults at June 30, 2010.  Higher actual cures experienced during the first two quarters of 2010 caused us to adjust our reserve factors during the second quarter for future cure rates on existing defaults. These adjustments, along with modestly higher rescission expectations, allowed us to reduce our estimated reserve for losses.  The impact of the change in reserve factors on our second quarter financial results, coupled with an additional accrual of earned premiums during the quarter, were the primary drivers of our net income reported for the quarter.  The earned premium accrual reflects the present value of estim ated future premiums on Modified Pool structures where we have already paid out the maximum amount that we are contractually required to pay.  While we are seeing improvements in the performance of our insured portfolio, we remain cautious about the outlook for the remainder of 2010 and continuing into 2011, as many economists are now expecting a slower recovery with lingering high unemployment rates and continued pressure on the residential real estate market and home prices.”

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 pleased by our 2010 results compared to 2008 and 2009, the income reported in the second quarter of 2010 was due to items that we believe are unlikely to occur in the future in similar amounts and it is unlikely that we will report similar levels of income, and may report no income at all, in future periods. Furthermore, our financial position improved only slightly during the second quarter, and our deficit in assets was $648.1 million at June 30, 2010.  To meet all of our existing obligations, we will need to earn at least $649 million during the remaining run-off of our business.  We believe that absent significant, positive changes in the economy and the residential real estate market, our existing assets and future premiums may not be sufficient to meet our current and future policyholder obligations.”

For additional information concerning our results for the second quarter of 2010 and our financial position at June 30, 2010, please see our Quarterly Report on Form 10-Q for the quarter ended June 30, 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 second 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 – Second 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 T riad 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.  F orward-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						Six Months Ended
	June 30,						June 30,
	(Unaudited)						(Unaudited)
	2010			2009			2010			2009
	(Dollars in thousands except per share amounts)
Earned premiums	$	72,330		$	64,833		$	118,218		$	109,191
Net investment income		10,561			10,859			20,434			22,051
Net realized investment (losses) gains		(985	)		2,017			(1,227	)		(2,548	)
Other income (expense)		-			2			(8	)		4
Total revenues		81,906			77,711			137,417			128,698
Net (benefit) losses and loss adjustment expenses		(7,770	)		431,368			64,468			532,945
Interest expense		2,816			1,895			5,285			2,589
Other operating expenses		7,021			8,680			16,353			18,091
Total losses and expenses		2,067			441,943			86,106			553,625
Income (loss) before income taxes		79,839			(364,232	)		51,311			(424,927	)
Income tax expense (benefit)		717			(4,813	)		-			(10,334	)
Net income (loss)	$	79,122		$	(359,419	)	$	51,311		$	(414,593	)
Diluted income (loss) per share	$	5.24		$	(23.91	)	$	3.40		$	(27.65	)
Diluted weighted average common and common
stock equivalents outstanding (in thousands)		15,112			15,031			15,109			14,995

Triad Guaranty Inc.
Consolidated Balance Sheets
	(Unaudited)						(Unaudited)
	June 30,			December 31,			June 30,
	2010			2009			2009
	(Dollars in thousands except per share amounts)
Assets:
Invested assets:
Fixed maturities, available for sale, at market	$	906,992		$	784,830		$	847,809
Equity securities, available for sale, at market		-			-			31
Short-term investments		29,166			26,651			3,800
		936,158			811,481			851,640
Cash and cash equivalents		35,576			21,839			31,600
Reinsurance recoverable		49,829			233,499			234,248
Other assets		64,000			58,007			57,650
Total assets	$	1,085,563		$	1,124,826		$	1,175,138
Liabilities:
Losses and loss adjustment expenses	$	1,307,028		$	1,537,043		$	1,591,207
Unearned premiums		11,346			12,153			14,890
Long-term debt		34,546			34,540			34,535
Deferred payment obligation		292,169			168,386			27,020
Other liabilities		88,619			79,062			37,176
Total liabilities		1,733,708			1,831,184			1,704,828
Stockholders' equity:
Accumulated deficit		(799,830	)		(851,141	)		(670,102	)
Accumulated other comprehensive income		37,516			30,782			27,262
Other equity accounts		114,169			114,001			113,150
Deficit in assets		(648,145	)		(706,358	)		(529,690	)
Total liabilities and stockholders' equity	$	1,085,563		$	1,124,826		$	1,175,138
Stockholders' deficit in assets per share:	$	(42.48	)	$	(46.29	)	$	(34.81	)
Common shares outstanding		15,258,128			15,258,128			15,215,378

Triad Guaranty Inc.
Consolidated Statements of Cash Flow
	Six Months Ended June 30,
	2010			2009
	(Unaudited)
	(Dollars in Thousands)
OPERATING ACTIVITIES
Net income (loss)	$	51,311		$	(414,593	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Increase (decrease) in loss and unearned premium reserves		(230,822	)		402,394
Decrease (increase) in amounts due to/from reinsurer		183,669			(84,004	)
Net realized investment losses		1,227			2,548
Deferred income taxes		-			(11,415	)
Deferred payment obligation		123,783			27,020
Other operating activities		(995	)		6,410
Net cash provided by (used in) operating activities		128,173			(71,640	)
INVESTING ACTIVITIES
Purchases of investment securities		(251,268	)		(128,623	)
Sales and maturities of investment securities		138,918			155,188
(Increase) decrease in short-term investments		(2,516	)		36,769
Other investing activities		430			(34	)
Net cash provided by (used in) investing activities		(114,436	)		63,300
Net increase (decrease) in cash		13,737			(8,340	)
Cash at beginning of period		21,839			39,940
Cash at end of period	$	35,576		$	31,600

TRIAD GUARANTY INC.
Sequential Quarterly Financial Statements
(unaudited)
	Condensed Statements of Operations For The Quarter Ended
	(Dollars in thousands)
	Jun 30,			Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
	2010			2010			2009			2009			2009			2009			2008			2008			2008
Revenue:
Earned premiums	$	72,330		$	45,888		$	34,891		$	35,576		$	64,833		$	44,358		$	49,840		$	65,654		$	69,864
Net investment income		10,561			9,873			9,739			12,342			10,859			11,192			10,509			10,349			9,175
Realized investment gains (losses)		(985	)		(242	)		649			3,253			2,017			(4,565	)		(18,944	)		(6,519	)		(3,799	)
Other income (loss)		-			(8	)		12,536			127			2			2			2			2			2
Total revenues		81,906			55,511			57,815			51,298			77,711			50,987			41,407			69,486			75,242
Losses and expenses:
Net settled claims		145,460			(43,684	)		153,749			157,881			149,863			53,920			69,372			59,357			68,263
Change in reserves		(158,058	)		111,204			(30,195	)		(15,836	)		278,956			39,628			106,080			165,958			218,568
Loss adjustment expenses		4,828			4,718			5,370			3,713			2,549			8,029			2,647			5,879			5,918
Net losses and LAE		(7,770	)		72,238			128,924			145,758			431,368			101,577			178,099			231,194			292,749
Change in premium deficiency reserve		-			-			-			-			-			-			-			-			(15,000	)
Interest expense		2,816			2,469			2,243			1,202			1,895			694			694			691			696
Other operating expenses		7,021			9,332			8,160			9,659			8,680			9,411			8,639			8,726			27,238
Total losses and expenses		2,067			84,039			139,327			156,619			441,943			111,682			187,432			240,611			305,683
Income (loss) before income taxes		79,839			(28,528	)		(81,512	)		(105,321	)		(364,232	)		(60,695	)		(146,025	)		(171,125	)		(230,441	)
Income taxes (benefit)		717			(717	)		(2,368	)		(3,426	)		(4,813	)		(5,521	)		(23,818	)		(11,030	)		(31,630	)
Net income (loss)	$	79,122		$	(27,811	)	$	(79,144	)	$	(101,895	)	$	(359,419	)	$	(55,174	)	$	(122,207	)	$	(160,095	)	$	(198,811	)
	Condensed Balance Sheets As Of
	(Dollars in thousands)
	Jun 30,			Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
		2010			2010			2009			2009			2009			2009			2008			2008			2008
Assets
Invested assets	$	936,158		$	957,115		$	811,481		$	846,905		$	851,640		$	918,531		$	895,422		$	890,720		$	869,022
Cash		35,576			38,662			21,839			7,480			31,600			21,394			39,940			47,818			19,669
Real estate acquired		-			-			-			-			-			526			713			3,661			6,202
Prepaid federal income tax		-			-			-			-			-			15			15			15			63,184
Reinsurance recoverable		49,829			52,963			233,499			245,436			234,248			182,589			150,848			111,827			55,316
Other assets		64,000			54,406			58,007			54,331			57,650			52,307			43,596			47,915			50,405
Total assets	$	1,085,563		$	1,103,146		$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956		$	1,063,798
Liabilities and stockholders' equity
Liabilities:
Losses and loss adjustment expenses	$	1,307,028		$	1,468,719		$	1,537,043		$	1,576,303		$	1,591,207		$	1,262,746		$	1,187,840		$	1,042,053		$	817,262
Deferred payment obligation		292,169			229,953			168,386			97,048			27,020			-			-			-			-
Accrued expenses and other liabilities		134,511			102,677			91,215			71,291			52,066			59,477			44,831			30,887			40,714
Total liabilities		1,733,708			1,835,892			1,831,184			1,779,179			1,704,828			1,356,755			1,267,200			1,130,356			922,889
(Deficit in assets) total stockholders' equity		(648,145	)		(732,746	)		(706,358	)		(625,027	)		(529,690	)		(181,393	)		(136,666	)		(28,400	)		140,909
Total liabilities and stockholders' equity	$	1,085,563		$	1,103,146		$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956		$	1,063,798