Fitch Affirms Triad's IFS & Debt Ratings; Outlook Remains Stable

Business Wire, May 19, 2005

CHICAGO -- Fitch Ratings has affirmed the long-term issuer and senior debt ratings of Triad Guaranty Incorporated (TGIC). Additionally, Fitch has affirmed the 'AA' insurer financial strength rating on TGIC's insurance subsidiary, Triad Guaranty Insurance Corporation (Triad). The Rating Outlook is Stable.

The rating action follows the announcement that TGIC is issuing 2,528,514 of new common shares in exchange for 2,573,551 of common shares previously held by Collateral Investment Corporation (CIC) as part of a tax-free reorganization for CIC shareholders. CIC, an insurance holding company, previously held approximately 17.8% of TGIC's outstanding common stock. The exchange will not affect the company's capitalization or debt servicing capabilities nor will TGIC incur any transaction costs.

Triad is one of seven major U.S. private mortgage insurers and is headquartered in Winston-Salem, NC. The company's conservative underwriting approach and risk management processes have resulted in delinquency and claims rates that are consistently among the lowest in the industry. However, Triad's relatively small size in a mature mortgage insurance industry could be a restraining operating factor during periods of intensifying competition, which is reflected in the rating. To its credit, the company has generally refrained from sacrificing its underwriting standards to accelerate its market share gains.

As of March 31, 2005, TGIC had total capital of $485 million, including $35 million of debt. The corporation's debt-to-total capital ratio was 7.1% and earnings based interest coverage was 32.8 times for the period. Fitch anticipates the corporation will maintain adequate interest coverage levels going forward to support debt servicing requirements.

TGIC reported $16 million of net income on net earned premium of $39 million in the first quarter of 2005. The company's total assets as of March 31, 2005 were $686 million with $451 million of shareholders' equity. Triad's GAAP combined ratio was 55.5% for the first quarter of 2005.

The following ratings are affirmed with a Stable Rating Outlook by Fitch:

Triad Guaranty Inc.

-- Long-term issuer at 'A ';

-- $35 million 7.9% fixed coupon senior notes due 1/15/2028 at 'A '.

Triad Guaranty Insurance Corporation

-- Insurer financial strength at 'AA'.