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

Exhibit 99.1

Press Release

Triad Guaranty Inc. Reports Second Quarter Results

WINSTON-SALEM, N.C., August 12, 2011 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the quarter ended June 30, 2011 of $4.4 million compared to a net loss of $4.9 million for the first quarter of 2011 and net income of $79.1 million for the second quarter of 2010.  The 2011 second quarter diluted loss per share was $0.29 compared to diluted loss per share of $0.32 for the 2011 first quarter and diluted income per share of $5.24 for the second quarter of 2010.

The net loss for the six months ended June 30, 2011 was $9.3 million compared to net income of $51.3 million for the six months ended June 30, 2010.  The diluted loss per share was $0.61 for the six months ended June 30, 2011 compared to diluted income per share of $3.40 for the six months ended June 30, 2010.

Ken Jones, President and CEO, said, “We continue to see the impact of the troubled economy on employment and housing.  Unemployment remained elevated and housing prices were either stagnant or dropped even further during the second quarter.  These economic trends continued to impact our financial results during the second quarter.  While total risk in default decreased again in the second quarter, the rate of decline slowed from that experienced for the past several quarters.  While the level of newly reported defaults remained elevated, new defaults declined slightly in the second quarter.  However, the benefit from the decline in new defaults was offset by lower cures and lower rescissions during the quarter.  The average age of our default inventory continued to increase as the volume of settled claims for the second quarter remained low when compared to settled claims during 2010.  We believe the drop in net settled claims is primarily related to widely reported loan servicers’ issues surrounding foreclosure policies and practices, including foreclosure moratoriums.  The second quarter of 2010 included the positive impact of a significant change in reserve factors coupled with an additional accrual of earned premiums related to modified pool structures.  These were the primary drivers of the increase in reported income for that quarter and make comparisons to the 2011 second quarter difficult.”

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 $593 million at June 30, 2011.  We continue to 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.”

We have updated the quarterly statistical and supplemental information for the 2011 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 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

Triad Guaranty Inc.
Consolidated Statements of Operations
(Unaudited)
	��
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(Dollars in thousands except per share amounts)
Revenues:
Earned premiums	$	35,394		$	72,330		$	72,522		$	118,218
Net investment income		8,126			10,560			16,617			20,434
Net realized investment gains (losses)		3,000			(985	)		2,564			(1,227	)
Other income (loss)		29			-			56			(8	)
Total revenues		46,549			81,905			91,759			137,417
Losses and Expenses:
Net settled claims		111,583			145,460			218,492			290,433
Decrease in reserves		(70,752	)		(158,058	)		(137,446	)		(235,511	)
Loss adjustment expenses		469			4,828			1,959			9,546
Net losses (benefit) and loss adjustment expenses		41,300			(7,770	)		83,005			64,468
Interest expense		4,469			2,816			8,447			5,285
Other operating expenses		5,178			7,021			9,615			16,353
Total losses and expenses		50,947			2,067			101,067			86,106
Income (loss) before income taxes		(4,398	)		79,838			(9,308	)		51,311
Income tax expense		-			717			-			-
Net (loss) income	$	(4,398	)	$	79,121		$	(9,308	)	$	51,311
Per Share Information:
Diluted (loss) income per share	$	(0.29	)	$	5.24		$	(0.61	)	$	3.40
Diluted weighted average common stock and common stock equivalents outstanding (in thousands of shares)		15,258			15,112			15,241			15,109

Triad Guaranty Inc.
Consolidated Balance Sheets
	(Unaudited)						(Unaudited)
	June 30,			December 31,			June 30,
	2011			2010			2010
	(Dollars in thousands)
Assets:
Invested assets:
Fixed maturities, available for sale, at market	$	757,124		$	812,335		$	906,992
Short-term investments		65,894			39,561			29,166
		823,018			851,896			936,158
Cash and cash equivalents		40,277			38,762			35,576
Reinsurance recoverable		31,230			40,806			49,829
Other assets		46,141			60,161			64,000
Total assets	$	940,666		$	991,625		$	1,085,563
Liabilities:
Losses and loss adjustment expenses	$	910,530		$	1,060,036		$	1,307,028
Unearned premiums		8,642			9,057			11,346
Long-term debt		-			-			34,546
Deferred payment obligation		517,193			415,657			292,169
Other liabilities		97,629			93,075			88,619
Total liabilities		1,533,994			1,577,825			1,733,708
Stockholders' deficit:
Accumulated deficit		(728,354	)		(719,046	)		(799,830	)
Accumulated other comprehensive income		20,769			18,609			37,516
Other equity accounts		114,257			114,237			114,169
Deficit in assets		(593,328	)		(586,200	)		(648,145	)
Total liabilities and stockholders' deficit	$	940,666		$	991,625		$	1,085,563
Common shares outstanding		15,328,128			15,258,128			15,258,128

Triad Guaranty Inc.
Consolidated Statements of Cash Flow
(Unaudited)
	Six Months Ended
	June 30,
	2011			2010
	(Dollars in thousands)
OPERATING ACTIVITIES
Net (loss) income	$	(9,308	)	$	51,311
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Decrease in loss and unearned premium reserves		(149,921	)		(230,822	)
Decrease in amounts due to/from reinsurer		9,576			183,670
Net realized investment (gains) losses		(2,564	)		1,227
Increase in deferred payment obligation		101,536			123,783
Other operating activities		19,589			(996	)
Net cash (used in) provided by operating activities		(31,092	)		128,173
INVESTING ACTIVITIES
Purchases of investment securities		(35,338	)		(251,268	)
Sales and maturities of investment securities		94,372			138,918
Increase in short-term investments		(26,333	)		(2,516	)
Other investing activities		(94	)		430
Net cash provided by (used in) investing activities		32,607			(114,436	)
Net increase in cash		1,515			13,737
Cash at beginning of year		38,762			21,839
Cash at end of period	$	40,277		$	35,576

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,
	2011			2011			2010			2010			2010
Revenue:
Earned premiums	$	35,394		$	37,128		$	40,920		$	44,278		$	72,330
Net investment income		8,126			8,491			8,658			9,681			10,560
Realized investment (losses) gains		3,000			(436	)		(950	)		14,694			(985	)
Other income (expense)		29			27			60			(29	)		-
Total revenues		46,549			45,210			48,688			68,624			81,905
Losses and Expenses:
Net settled claims		111,583			106,909			139,435			132,139			145,460
Change in reserves		(70,752	)		(66,694	)		(129,993	)		(97,229	)		(158,058	)
Loss adjustment expenses		469			1,490			322			491			4,828
Net losses and LAE expense (benefit)		41,300			41,705			9,764			35,401			(7,770	)
Interest expense		4,469			3,978			3,836			2,642			2,816
Other operating expenses		5,178			4,437			8,319			6,206			7,021
Total losses and expenses		50,947			50,120			21,919			44,249			2,067
Income (loss) before taxes and extraordinary item		(4,398	)		(4,910	)		26,769			24,375			79,838
Income taxes		-			-			-			-			717
Income (loss) before extraordinary item		(4,398	)		(4,910	)		26,769			24,375			79,121
Extraordinary item - gain from repurchase and retirement of long-term debt		-			-			-			29,640			-
Net (loss) income	$	(4,398	)	$	(4,910	)	$	26,769		$	54,015		$	79,121
	Condensed Balance Sheets As Of
	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
		2011			2011			2010			2010			2010
Assets
Invested assets	$	823,018		$	842,908		$	851,896		$	905,758		$	936,158
Cash		40,277			39,073			38,762			36,823			35,576
Reinsurance recoverable		31,230			33,499			40,806			48,155			49,829
Other assets		46,141			48,528			60,161			65,416			64,000
Total assets	$	940,666		$	964,008		$	991,625		$	1,056,152		$	1,085,563
Liabilities and stockholders' deficit
Liabilities:
Losses and loss adjustment expenses	$	910,530		$	990,494		$	1,060,036		$	1,200,518		$	1,307,028
Long-term debt		-			-			-			-			34,546
Deferred payment obligation		517,193			464,342			415,657			351,720			292,169
Accrued expenses and other liabilities		106,271			102,911			102,132			99,292			99,965
Total liabilities		1,533,994			1,557,747			1,577,825			1,651,530			1,733,708
Deficit in assets		(593,328	)		(593,739	)		(586,200	)		(595,378	)		(648,145	)
Total liabilities and stockholders' deficit	$	940,666		$	964,008		$	991,625		$	1,056,152		$	1,085,563