Monoline Downgrade: Triad Guaranty

April 3, 2008

Standard & Poor’s Ratings Services has lowered its counterparty credit and financial strength ratings on Triad Guaranty Insurance Corp. (Triad) to ‘BBB’ from ‘AA-‘. S&P also lowered its counterparty credit rating on Triad Guaranty Inc., to ‘BB’ from ‘A-‘. All of the ratings remain on CreditWatch with negative implications. “The possible resolutions of the CreditWatch vary from an affirmation with a negative outlook to a downgrade of multiple notches,” said S&P. Credit analyst James Brender explained that the downgrade reflects S&P’s view that “significant operating losses will deplete a material portion of Triad’s capital base and make it difficult for the company to continue writing new business at some point in 2008. When we placed the ratings on CreditWatch on Feb. 13, 2008, based on our concerns regarding Triad’s operating performance, historical risk management, and capitalization, we stated that the resolution of that CreditWatch could be a downgrade of multiple notches.” S&P added that the ratings are on CreditWatch because it may eventually concluded “that Triad’s claims-paying ability is not consistent with an investment-grade rating.”

Fitch Ratings has downgraded the following ratings on Triad Guaranty Inc. and its mortgage insurance subsidiary Triad Guaranty Insurance Corporation to the following: Triad Guaranty Insurance Corporation -Insurer financial strength (IFS) to ‘BBB-‘ from ‘AA-‘; Triad Guaranty Inc.–Long-term Issuer to ‘BB-‘ from ‘A-‘; $35 million 7.9 percent fixed coupon senior notes due Jan.15, 2028 to ‘BB-‘ from ‘A-‘. The ratings remain on Rating Watch Negative, where they were originally placed on Oct. 25, 2007. Fitch said the action “follows the publication of Triad Guaranty’s yearend 2007 10-K filing in which the company disclosed that it has not been successful in obtaining any new capital commitments to date. The company also disclosed that it is considering placing its operating company Triad into ‘run-off’, and creating a newly formed mortgage insurance subsidiary that would underwrite all future business.”

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