Exhibit 10.1



March 30, 2006

Ken Jones
5240 Wilson Hill Court
Winston-Salem, NC 27104

Dear Ken,

Please accept this letter as our formal offer of employment  with Triad Guaranty
Insurance  Corporation.  I look forward to working with you in your  position as
Senior Vice President and Chief Financial Officer reporting to directly to me.

I am  suggesting a start date as early as April 3, 2006,  but we can be flexible
on this date.  Your salary will be $175,000 per year and you will be recommended
for 2,500 shares of  restricted  stock  vesting  equally over  three-years.  The
equity  request  is  subject  to  approval  by the  Compensation  Committee.  In
addition,  for calendar year 2006,  you are  guaranteed a minimum bonus equal to
125% of your paid  salary with a minimum of fifty  percent  (500/0) of the bonus
payable in equity vesting over three years.

In addition to the salary and benefits noted above,  you will be entitled to all
other  Company  benefits  and subject to all Company  policies  and  procedures,
including  a  three-month  probationary  period,  applicable  to  all  similarly
situated employees.  The Company may amend the Company's benefits,  policies and
procedures  from time to time.  As you know,  Triad is currently  reviewing  our
executive  compensation  plan and any  amendments  approved by the board will be
applicable to you and other senior  executives.  Feel free to call Tammie Bowman
(ext 1107) with any  questions  regarding  benefits,  policies  and  procedures.
Tammie advises me that you may complete any necessary forms on your first day of
work.

We look  forward to having  you on board.  I am excited  about the  prospect  of
working with you again. In the meantime, if you have any questions,  please feel
free to give me a call.


/s/ Mark Tonnesen
President and CEO


cc: Kathleen Fairall
Tammie Bowman