(Source: By Richard Craver, Winston-Salem Journal, N.C. (MCT) The need to set aside more money for loan defaults contributed to another major loss for Triad Guaranty Inc. during the second quarter.
The mortgage insurance provider, based in Winston-Salem, reported Tuesday a $31.3 million loss in the second quarter, compared with a $37.7 million loss in the first quarter and a $4.4 million loss a year ago.
Triad, one of the first victims of the financial crisis, said in June 2008 it would discontinue writing new mortgage insurance policies and would conduct “an orderly transition of its business to runoff.” That means the company’s revenue would come from existing policies that eventually will expire.
Triad expects to exist for three to five more years. Since the company entered runoff status, at least 200 of its 250 local jobs have been eliminated.
The company also experienced another wave of financial institutions sending more unsalvageable residential mortgages through their foreclosure pipelines. Financial institutions have been accelerating that process for about 18 months because provisions for loan losses directly affect their bottom lines.
As a result, Triad put $29.7 million more into its reserves during the second quarter than it did a year ago.
The company had a per-share earnings loss of $2.05 in the second quarter, compared with a loss of $2.47 in the first quarter and a loss of 29 cents a year ago.
Excluding that financial necessity, Triad performed slightly better than a year ago.
Triad spent $108.1 million on settled claims in the second quarter, compared with $99.4 million in the first quarter and $111.6 million a year ago.
It earned premiums of $36.8 million in the second quarter, compared with $34.5 million in the first quarter and $35.4 million a year ago.
“We continued to see a drop in the number of new defaults, as well as the total risk in default,” said Ken Jones, the company’s chief executive and president.
“Some of the foreclosure inventory appears to be working through, and there may be fewer foreclosure starts than previously.
“Still, the economy remains uneven. Many borrowers are finding it difficult to sell or refinance their homes, and the level of new loan defaults remains at a level too high for us to be profitable,” Jones said.
Jones said the company’s deficit in assets was at $771.4 million June 30 compared with $737.8 million March 31.
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©2012 Winston-Salem Journal (Winston Salem, N.C.)
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