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 14, 2012 -- Triad Guaranty Inc. (OTCBB: TGIC) today reported a net loss for the quarter ended June 30, 2012 of $31.3 million compared to a net loss of $37.7 million for the first quarter of 2012 and a net loss of $4.4 million during the second quarter of 2011.  The 2012 second quarter diluted loss per share was $2.05 compared to a diluted loss per share of $2.47 for the 2012 first quarter and $0.29 for the second quarter of 2011.

The net loss for the six months ended June 30, 2012 was $69.0 million compared to a net loss of $9.3 million for the six months ended June 30, 2011.  The diluted loss per share was $4.52 for the six months ended June 30, 2012 compared to a diluted loss per share of $0.61 for the six months ended June 30, 2011.

Ken Jones, President and CEO, said, "During the second quarter, we continued to see a drop in the number of new defaults as well as the total risk in default.  Primary risk in default declined by 8.2% during the second quarter of 2012 compared to a sequential decline of 7.4% in the first quarter of 2012 and 6.9% in the second quarter of 2011. Net losses and loss adjustment expenses for the second quarter amounted to $68.2 million compared to $67.9 million in the first quarter of 2012, and up substantially from the $41.3 million reported in the second quarter of 2011.  Comparisons to the second quarter of 2011 is difficult due to the positive impact of reserve adjustments during that period.  Settled claims were $108.1 million in the second quarter of 2012 compared to $97.1 million during the 2012 first quarter and $111.6 million in the second quarter of 2011. Persistency, the key driver of our earned premiums, remained at elevated levels compared to historical norms as many borrowers are finding it difficult to sell or refinance 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 $771.4 million at June 30, 2012.  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 2012 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 2012".

(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, or for other reasons, 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, 2011 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
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Dollars in thousands except per share amounts)	2012			2011			2012			2011
Revenues:
Earned premiums	$	36,760		$	35,394		$	71,297		$	72,522
Net investment income		5,874			8,126			11,983			16,617
Net realized investment gains		807			3,000			980			2,564
Other income		2,513			29			2,516			56
Total revenues		45,954			46,549			86,776			91,759
Losses and Expenses:
Net settled claims		108,134			111,583			205,266			218,492
Decrease in reserves		(41,024	)		(70,752	)		(71,556	)		(137,446	)
Loss adjustment expenses		1,074			469			2,456			1,959
Net losses and loss adjustment expenses		68,184			41,300			136,166			83,005
Interest expense		4,938			4,469			9,919			8,447
Other operating expenses		4,136			5,178			9,720			9,615
Total losses and expenses		77,258			50,947			155,805			101,067
Loss before income taxes		(31,304	)		(4,398	)		(69,029	)		(9,308	)
Income tax expense		-			-			-			-
Net loss	$	(31,304	)	$	(4,398	)	$	(69,029	)	$	(9,308	)
Per Share Information:
Diluted loss per share	$	(2.05	)	$	(0.29	)	$	(4.52	)	$	(0.61	)
Diluted weighted average common stock and common stock equivalents outstanding (in thousands of shares)		15,293			15,258			15,275			15,241

Triad Guaranty Inc.
Consolidated Balance Sheets
	(Unaudited)						(Unaudited)
	June 30,			December 31,			June 30,
(Dollars in thousands)	2012			2011			2011
Assets:
Invested assets:
Fixed maturities, available for sale, at market	$	705,250		$	746,238		$	757,124
Short-term investments		34,014			30,102			65,894
		739,264			776,340			823,018
Cash and cash equivalents		36,037			40,590			40,277
Reinsurance recoverable		19,372			22,988			31,230
Other Assets		53,351			56,309			46,141
Total assets	$	848,024		$	896,227		$	940,666
Liabilities:
Losses and loss adjustment expenses	$	779,179		$	854,188		$	910,530
Unearned premiums		7,116			6,871			8,642
Deferred payment obligation		723,551			629,700			517,193
Other liabilities		109,576			109,042			97,629
Total liabilities		1,619,422			1,599,801			1,533,994
Stockholders' deficit:
Accumulated deficit		(895,844	)		(826,815	)		(728,354	)
Accumulated other comprehensive income		10,175			8,977			20,769
Other equity accounts		114,271			114,264			114,257
Deficit in assets		(771,398	)		(703,574	)		(593,328	)
Total liabilities and stockholders' deficit	$	848,024		$	896,227		$	940,666
Common shares outstanding (in thousands)		15,368			15,328			15,328

Triad Guaranty Inc.
Consolidated Statements of Cash Flow
(Unaudited)
	Six Months Ended
	June 30,
(Dollars in thousands)	2012			2011
OPERATING ACTIVITIES
Net loss	$	(69,029	)	$	(9,308	)
Adjustments to reconcile net loss to net cash  used in operating activities:
Decrease in loss and unearned premium reserves		(74,764	)		(149,921	)
Decrease in amounts due to/from reinsurer		3,616			9,576
Net realized investment gains		(980	)		(2,564	)
Increase in deferred payment obligation		93,851			101,536
Collection of income taxes recoverable		-			11,707
Other operating activities		5,269			7,881
Net cash used in operating activities		(42,037	)		(31,093	)
INVESTING ACTIVITIES
Purchases of investment securities		(30,782	)		(35,338	)
Sales and maturities of investment securities		71,757			94,372
Purchases of short-term investments		(3,909	)		(26,333	)
Other investing activities		418			(94	)
Net cash provided by investing activities		37,484			32,607
Net (decrease) increase in cash		(4,553	)		1,514
Cash at beginning of year		40,590			38,762
Cash at end of period	$	36,037		$	40,276

Triad Guaranty Inc.
Sequential Quarterly Financial Statements
(unaudited)
	Condensed Statements of Operations For The Quarter Ended
	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
(Dollars in thousands)	2012			2012			2011			2011			2011
Revenue:
Earned premiums	$	36,760		$	34,537		$	39,111		$	49,719		$	35,394
Net investment income		5,874			6,109			6,779			7,364			8,126
Realized investment gains		807			173			11,296			1,349			3,000
Other income		2,513			3			1			10			29
Total revenues		45,954			40,822			57,187			58,442			46,549
Losses and Expenses:
Net settled claims		108,134			97,131			113,936			132,545			111,583
Change in reserves		(41,024	)		(30,531	)		(5,885	)		(44,192	)		(70,752	)
Loss adjustment expenses (benefit)		1,074			1,382			(633	)		(511	)		469
Net losses and LAE expense		68,184			67,982			107,418			87,842			41,300
Interest expense		4,938			4,981			4,984			4,813			4,469
Other operating expenses		4,136			5,584			4,583			4,450			5,178
Total losses and expenses		77,258			78,547			116,985			97,105			50,947
Loss before taxes		(31,304	)		(37,725	)		(59,798	)		(38,663	)		(4,398	)
Income tax expense (benefit)		-			-			1,134			(1,134	)		-
Net loss	$	(31,304	)	$	(37,725	)	$	(60,932	)	$	(37,529	)	$	(4,398	)
	Condensed Balance Sheets As Of
	Jun. 30,			Mar. 31,			Dec. 31,			Sept. 30,			Jun. 30,
	2012			2012			2011			2011			2011
Assets
Invested assets	$	739,264		$	784,896		$	776,340		$	773,078		$	823,018
Cash		36,037			17,355			40,590			65,051			40,277
Reinsurance recoverable		19,372			19,712			22,988			23,719			31,230
Other assets		53,351			53,732			56,309			56,897			46,141
Total assets	$	848,024		$	875,695		$	896,227		$	918,745		$	940,666
Liabilities and stockholders' deficit
Liabilities:
Losses and loss adjustment expenses	$	779,179		$	821,512		$	854,188		$	864,049		$	910,530
Deferred payment obligation		723,551			674,191			629,700			576,510			517,193
Accrued expenses and other liabilities		116,692			117,771			115,913			109,095			106,271
Total liabilities		1,619,422			1,613,474			1,599,801			1,549,654			1,533,994
Deficit in assets		(771,398	)		(737,779	)		(703,574	)		(630,909	)		(593,328	)
Total liabilities and stockholders' deficit	$	848,024		$	875,695		$	896,227		$	918,745		$	940,666