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

Exhibit 99.1

Press Release

Triad Guaranty Inc. Reports 2010 Third Quarter Results

Earnings Include Income Attributable to Debt Repurchase and Realized Investment Gains

WINSTON-SALEM, N.C., November 11, 2010 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported net income of $54.0 million, which includes $29.6 million attributable to the repurchase of its long-term debt (reported as an extraordinary item) and $14.7 million attributable to realized investment gains, for the third quarter ended September 30, 2010 compared to net income of $79.1 million for the second quarter of 2010 and a net loss of $101.9 million for the third quarter of 2009.  The 2010 third quarter diluted income per share was $3.56 ($1.61 per share before extraordinary item) compared to diluted income per share of $5.24 for the 2010 second quarter and diluted loss per share of $6.78 for the 2009 third quarter.

The net income for the nine months ended September 30, 2010 was $105.3 million ($75.7 million before extraordinary item) compared to a net loss of $516.5 million for the nine months ended September 30, 2009.  The diluted income per share was $6.96 ($5.00 per share before extraordinary item) for the nine months ended September 30, 2010 compared to a diluted loss per share of $34.44 for the nine months ended September 30, 2009.

Ken Jones, President and CEO, said, “We continued to see improvement on various operating fronts during the third quarter.  Persistency, the key driver of our earned premiums, remained high, while the number of defaults and the corresponding risk in default continued their decline as cure rates and rescission rates remained consistent with the prior quarter.  The decline in our risk in default once again led to a decrease in reserves, making this the fifth consecutive quarter that we have reported a decrease in reserves.  Approximately 35% of the decrease in reserves was the result of a reduction in factors utilized in our reserve assumptions.  During the third quarter, we also saw a slowdown in settled claims as foreclosures slowed.  At this time, we are unsure what impact, if an y, the current documentation issue surrounding foreclosures will have on our future financial results.  While we are encouraged by the performance of our insured portfolio, we remain cautious about the outlook for the remainder of 2010 and continuing into 2011 due to a slower than expected U.S. economic recovery, lingering high unemployment rates and stagnant home prices.

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Mr. Jones continued, “In July we repurchased all of our outstanding long-term debt from our bondholders at less than face value, resulting in a $29.6 million gain that was reported as an extraordinary item in our third quarter financial statements.  This action better positions us, as a company in run-off, to maintain our focus on the efficient and effective servicing of our insured portfolio, particularly with respect to loss management, in order to maximize our claims-paying ability.  We also realized net investment gains of $14.7 million during the third quarter, which were due primarily to the repositioning of our investment portfolio to reflect the delays in claim settlements.  Finally, while our financial position improved during the last two quarters, our deficit in assets remains substantial and was $595.4 million at September 30, 2010.  To meet all of our existing obligations, we will need to earn at least $596 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 third quarter of 2010 and our financial position at September 30, 2010, please see our Quarterly Report on Form 10-Q for the quarter ended September 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 third 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 – Third Quarter 2010”.

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(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; 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 Dece mber 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						Nine Months Ended
	September 30,						September 30,
	(Unaudited)						(Unaudited)
	2010			2009			2010			2009
	(Dollars in thousands except per share amounts)
Revenues:
Earned premiums	$	44,278		$	35,576		$	162,496		$	144,767
Net investment income		9,681			12,342			30,115			34,393
Net realized investment gains		14,694			3,253			13,467			705
Other (expense) income		(29	)		127			(37	)		131
Total revenues		68,624			51,298			206,041			179,996
Losses and Expenses:
Net settled claims		132,139			157,881			233,915			361,664
Change in reserves		(97,229	)		(15,836	)		(144,082	)		302,748
Loss adjustment expenses		491			3,713			10,036			14,291
Net losses and loss adjustment expenses		35,401			145,758			99,869			678,703
Interest expense		2,642			1,202			7,927			3,791
Other operating expenses		6,206			9,659			22,559			27,750
Total losses and expenses		44,249			156,619			130,355			710,244
Income (loss) before taxes and extraordinary item		24,375			(105,321	)		75,686			(530,248	)
Income tax benefit		-			(3,426	)		-			(13,760	)
Income (loss) before extraordinary item		24,375			(101,895	)		75,686			(516,488	)
Extraordinary item - gain from repurchase and retirement    of long-term debt		29,640			-			29,640			-
Net income (loss)	$	54,015		$	(101,895	)	$	105,326		$	(516,488	)
Per Share Information:
Diluted income (loss) per share before extraordinary item	$	1.61		$	(6.78	)	$	5.00		$	(34.44	)
Diluted income per share for extraordinary item		1.95			-			1.96			-
Diluted income (loss) per share	$	3.56		$	(6.78	)	$	6.96		$	(34.44	)
Diluted weighted average common and common
stock equivalents outstanding (in thousands)		15,185			15,033			15,134			14,995

Triad Guaranty Inc.
Consolidated Balance Sheets
	(Unaudited)						(Unaudited)
	September 30,			December 31,			September 30,
	2010			2009			2009
	(Dollars in thousands except per share amounts)
Assets:
Invested assets:
Fixed maturities, available for sale, at market	$	879,050		$	784,830		$	814,821
Equity securities, available for sale, at market		-			-			56
Short-term investments		26,708			26,651			32,028
		905,758			811,481			846,905
Cash and cash equivalents		36,823			21,839			7,480
Reinsurance recoverable		48,155			233,499			245,436
Other assets		65,416			58,007			54,331
Total assets	$	1,056,152		$	1,124,826		$	1,154,152
Liabilities:
Losses and loss adjustment expenses	$	1,200,518		$	1,537,043		$	1,576,303
Unearned premiums		10,197			12,153			13,385
Long-term debt		-			34,540			34,537
Deferred payment obligation		351,720			168,386			97,048
Other liabilities		89,095			79,062			57,906
Total liabilities		1,651,530			1,831,184			1,779,179
Stockholders' deficit:
Accumulated deficit		(745,815	)		(851,141	)		(771,997	)
Accumulated other comprehensive income		36,228			30,782			33,626
Other equity accounts		114,209			114,001			113,344
Deficit in assets		(595,378	)		(706,358	)		(625,027	)
Total liabilities and stockholders' deficit	$	1,056,152		$	1,124,826		$	1,154,152
Stockholders' deficit in assets per share:	$	(39.02	)	$	(46.29	)	$	(40.96	)
Common shares outstanding		15,258,128			15,258,128			15,258,128

Triad Guaranty Inc.
Consolidated Statements of Cash Flow
	Nine Months Ended September 30,
	2010			2009
	(Unaudited)
	(Dollars in Thousands)
OPERATING ACTIVITIES
Net income (loss)	$	105,326		$	(516,488	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Increase (decrease) in loss and unearned premium reserves		(338,481	)		385,985
Decrease (increase) in amounts due to/from reinsurer		185,343			(95,275	)
Net realized investment gains		(13,467	)		(705	)
Extraordinary gain on repurchase of long-term debt		(29,640	)		-
Decrease in deferred income taxes		-			(14,841	)
Increase in deferred payment obligation		183,334			97,048
Other operating activities		(1,562	)		29,207
Net cash provided by (used in) operating activities		90,853			(115,069	)
INVESTING ACTIVITIES
Purchases of investment securities		(453,699	)		(171,049	)
Sales and maturities of investment securities		382,297			245,225
(Increase) decrease in short-term investments		(58	)		8,538
Other investing activities		497			(105	)
Net cash provided by (used in) investing activities		(70,963	)		82,609
FINANCING ACTIVITIES
Repurchase of long-term debt		(4,906	)		-
Net cash provided by (used in) financing activities		(4,906	)		-
Net increase (decrease) in cash		14,984			(32,460	)
Cash at beginning of period		21,839			39,940
Cash at end of period	$	36,823		$	7,480

Triad Guaranty Inc.
Sequential Quarterly Financial Statements
(unaudited)
	Condensed Statements of Operations For The Quarter Ended
(Dollars in thousands)	Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
	2010			2010			2010			2009			2009			2009			2009			2008			2008
Revenue:
Earned premiums	$	44,278		$	72,330		$	45,888		$	34,891		$	35,576		$	64,833		$	44,358		$	49,840		$	65,654
Net investment income		9,681			10,561			9,873			9,739			12,342			10,859			11,192			10,509			10,349
Realized investment gains (losses)		14,694			(985	)		(242	)		649			3,253			2,017			(4,565	)		(18,944	)		(6,519	)
Other (expense) income		(29	)		-			(8	)		12,536			127			2			2			2			2
Total revenues		68,624			81,906			55,511			57,815			51,298			77,711			50,987			41,407			69,486
Losses and Expenses:
Net settled claims		132,139			145,460			144,973			153,749			157,881			149,863			53,920			69,372			59,357
Change in reserves		(97,229	)		(158,058	)		(77,453	)		(30,195	)		(15,836	)		278,956			39,628			106,080			165,958
Loss adjustment expenses		491			4,828			4,718			5,370			3,713			2,549			8,029			2,647			5,879
Net losses and LAE		35,401			(7,770	)		72,238			128,924			145,758			431,368			101,577			178,099			231,194
Interest Expense		2,642			2,816			2,469			2,243			1,202			1,895			694			694			691
Other operating expenses		6,206			7,021			9,332			8,160			9,659			8,680			9,411			8,639			8,726
Total losses and expenses		44,249			2,067			84,039			139,327			156,619			441,943			111,682			187,432			240,611
Income (loss) before taxes and extraordinary item		24,375			79,839			(28,528	)		(81,512	)		(105,321	)		(364,232	)		(60,695	)		(146,025	)		(171,125	)
Income taxes (benefit)		-			717			(717	)		(2,368	)		(3,426	)		(4,813	)		(5,521	)		(23,818	)		(11,030	)
Income (loss) before extraordinary item		24,375			79,122			(27,811	)		(79,144	)		(101,895	)		(359,419	)		(55,174	)		(122,207	)		(160,095	)
Extraordinary item - gain from repurchase and retirement of long-term debt		29,640			-			-			-			-			-			-			-			-
Net income (loss)	$	54,015		$	79,122		$	(27,811	)	$	(79,144	)	$	(101,895	)	$	(359,419	)	$	(55,174	)	$	(122,207	)	$	(160,095	)
	Condensed Balance Sheets As Of
	Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,			Dec 31,			Sep 30,
		2010			2010			2010			2009			2009			2009			2009			2008			2008
Assets
Invested assets	$	905,758		$	936,158		$	957,115		$	811,481		$	846,905		$	851,640		$	918,531		$	895,422		$	890,720
Cash		36,823			35,576			38,662			21,839			7,480			31,600			21,394			39,940			47,818
Real estate acquired		-			-			-			-			-			-			526			713			3,661
Prepaid federal income tax		-			-			-			-			-			-			15			15			15
Reinsurance recoverable		48,155			49,829			52,963			233,499			245,436			234,248			182,589			150,848			111,827
Other assets		65,416			64,000			54,406			58,007			54,331			57,650			52,307			43,596			47,915
Total assets	$	1,056,152		$	1,085,563		$	1,103,146		$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956
Liabilities and stockholders' deficit
Liabilities:
Losses and loss adjustment expenses	$	1,200,518		$	1,307,028		$	1,468,719		$	1,537,043		$	1,576,303		$	1,591,207		$	1,262,746		$	1,187,840		$	1,042,053
Long term debt		-			34,546			34,543			34,540			34,537			34,535			34,532			34,529			34,527
Deferred payment obligation		351,720			292,169			229,953			168,386			97,048			27,020			-			-			-
Accrued expenses and other liabilities		99,292			99,965			102,677			91,215			71,291			52,066			59,477			44,831			30,887
Total liabilities		1,651,530			1,733,708			1,835,892			1,831,184			1,779,179			1,704,828			1,356,755			1,267,200			1,130,356
Deficit in assets		(595,378	)		(648,145	)		(732,746	)		(706,358	)		(625,027	)		(529,690	)		(181,393	)		(136,666	)		(28,400	)
Total liabilities and stockholders' deficit	$	1,056,152		$	1,085,563		$	1,103,146		$	1,124,826		$	1,154,152		$	1,175,138		$	1,175,362		$	1,130,534		$	1,101,956