Summary of Illinois Director of Insurance’s Corrective Order

Triad Guaranty Insurance Corporation ("Triad"), has received a Corrective Order ("Order") from our regulator, the Illinois Director of Insurance ("Illinois Director").

Continuing volatility in the housing and mortgage markets, as well as worsening conditions in the overall economy, make it very difficult to forecast Triad’s future financial position and claims. While Triad continues to believe that it has sufficient resources to pay all current and future valid claims, there is more uncertainty today than when we entered run-off in July 2008. Because of this uncertainty, the Illinois Director has determined that it is in the best interests of Triad’s policyholders to require Triad to settle claims with a combination of cash and deferred payment obligations, and has issued an Order to that effect.

Triad’s claims-paying resources, represented by our invested assets, capital supporting our reinsurance contracts and expected future premiums are substantial, totaling over $2 billion. Despite these resources, the uncertainty in the future direction of the economy and the decline in our capital have increased the possibility that Triad may not be able to meet all future obligations under its policies.

In order to serve the best interests of all Triad policyholders, and treat all current and future claims equitably, the Order changes the way Triad will pay claims. Under the Order, effective June 1, 2009, all valid claims under Triad’s mortgage guaranty insurance policies will be paid 60% in cash and 40% by the creation of a deferred payment obligation ("DPO"). The DPO will be represented by a separate entry in Triad’s financial statements and will accrue a carrying charge based on the investment yield earned by Triad’s investment portfolio. When, and if, our financial position permits, the Illinois Director will allow Triad to increase the amount of cash we pay on each claim.

On the menu to the left we have provided additional details on the Order.

Additionally, we have set up a direct call in number if you wish to speak with a Triad associate about specific questions - (800) 233-3056.