911631--3/16/2007--TRIAD_GUARANTY

related topics

{loss, insurance, financial}

{loan, real, estate}

{regulation, government, change}

{capital, credit, financial}

{product, market, service}

{stock, price, share}

{customer, product, revenue}

Since, consistent with industry practice, we generally provide reserves only for loans in default that have been reported to us and an estimate of loans in default not yet reported to us, any increase in the level of delinquent loans reported would require an increase to reserves and a charge to earnings. Because our business is concentrated among relatively few major lenders, our revenues and net income could decline if we lose a significant customer. If housing values fail to appreciate or decline on a more significant and larger geographic basis, we may incur a higher level of losses from paid claims and also be required to increase reserves. Because a growing portion our business is sensitive to interest rates, a large increase in rates would cause higher monthly mortgage payments for borrowers that could potentially lead to a greater number of defaults, which would adversely impact our business. The premiums we charge for mortgage insurance on non-prime loans, ARMs and Alt-A loans may not be adequate to compensate for future losses from these products. A growing portion of our insurance in force consists of loans with high loan-to-value ratios or loans that are non-prime or both, which could result in more and larger claims than loans with lower loan-to-value ratios or prime loans. A downgrade or potential downgrade of the financial strength ratings assigned to our primary insurance subsidiary could weaken our competitive position. Changes in the business practices or legislation relating to Fannie Mae and Freddie Mac could significantly impact our business. Legislation and regulatory changes, including changes impacting the GSEs, could significantly affect our business and could reduce demand for private mortgage insurance. Our revenues and profits could decline if we lose market share as a result of industry competition or if our competitive position suffers as a result of our inability to introduce and successfully market new products and programs. If mortgage lenders and investors select alternatives to private mortgage insurance, the amount of insurance that we write could decline, which could reduce our revenues and profits. Changes in regulatory requirements could impact captive mortgage insurance arrangements for all industry participants. Since we generally cannot cancel mortgage insurance policies or adjust renewal premiums, unanticipated claims could cause our financial performance to suffer. Our loss experience is likely to increase as our policies continue to age. Our revenues and DAC amortization depend on the renewal of policies that may terminate or fail to renew. Our delegated underwriting program may subject our mortgage insurance business to unanticipated claims. Geographic concentration of our risk in force could increase claims and losses and harm our financial performance.

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911631--3/16/2007--TRIAD_GUARANTY_INC