Mr. Kessinger: Triad Guaranty Insurance Corporation is a wholly owned subsidiary of Triad Guaranty Inc. Triad Guaranty Inc. was formed in 1987 in Winston-Salem, North Carolina and went public in 1993 on the NASDAQ stock market under the symbol TGIC. We are a nationwide mortgage insurer providing mortgage insurance, or MI, to residential mortgage lenders. Private MI makes homeownership available to buyers with down payments of less than 20%, facilitates the sale of mortgage loans in the secondary market and protects lenders from default-related expenses. Triad Guaranty has a national sales organization supported by 12 underwriting offices throughout the United States. This year we are on track to generate about 100 million in revenue and are the fastest growing MI company in the industry. We started out with 7 million in capital, raised about 35 million of capital when we went public and now have a market cap of about 500 million.
TWST: What are the trends or the issues in the mortgage industry today
that you are focusing on primarily as you look to your own goals and
strategies?
Mr. Kessinger: The decade of the 1990s was very good to Triad and the
mortgage industry as a whole. The economy was very strong, housing
affordability was high, unemployment was low and the industry enjoyed
its best decade, as did many other industries and companies. As we start
out this decade and a new millennium, we still see good growth
opportunities. Although the economy is not quite as strong, interest
rates are at historic lows, affordability remains high, and the housing
market remains strong. Triad's opportunities will continue in this
market because of several market trends within the mortgage industry,
our historic mix of business and our strategic thrust. The mortgage
origination market is rapidly consolidating. Today the top 30 lenders
account for approximately 60% of total originations. Within 10 years the
top lenders could account for 90% of originations. Additionally, there
is increasing pressure on lender margins as the market consolidates.
Triad's business has traditionally come from the smaller to middle sized
originators ' as much as 70% of our business has come from them ' and
only 30% of our business has come from the top 30 lenders. This
represents a tremendous opportunity for Triad. We align ourselves with
our customer's needs, the lender, as we look for growth opportunities.
As more and more top lenders look for ways to grow their revenues and
profit opportunities, they are looking to their partners for help.
Triad's answer is captive reinsurance. This insurance structure allows
Triad and the lender to share and manage the risk of their origination
business through a third party captive reinsurance company. By
partnering with the lender and 'sharing' more of our risk, Triad can
help the lender make strides toward their risk management and financial
objectives. Triad is unique in that it cedes, or shares, more of its
risk and revenue than the other MI companies. And one of Triad's core
strengths is risk management. We have had, and continue to have, the
lowest loss ratio in the MI industry. By sharing our risk management
expertise with our lender partners it becomes a 'win-win' situation for
us both. It generates higher revenues and profit opportunities while
managing the risk. It is a strategy that has proved to be very
successful for us and is a major contributing factor to our growth.
Tickers included in this excerpt: TGIC
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