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Triad Guaranty Inc. Message Board

  • paidbasher38291 paidbasher38291 Mar 4, 2010 7:39 PM Flag

    illinois department has it just about right

    i just updated my analysis on this pos, just for kciks, the illinois department has it just about right on paying claims at 60 cents on the dollar, just roughly, i am projecting just over 2b in total sources of funds, the biggest worry is the dramatic dropoff in premiums, i have no idea what happened, but they are running at much lower levels than earlier this year, i have them at just about 50m a quarter, or 200m a year, with maybe 4.5 years of life left, for 900m, add in 830m of assets, and 270m or so of captive tursts, and you get 2b in sources, on the uses side, on flow they easily have 2.1b of losses, plus another 900m in bulk plus mod pool, for around 3b in uses, figuring investment income and expenses will just about offset, one thing the illinois department should force them to do right away though is to stop paying interest on their debt, no way should they be paying out 6m a year to a debtholder when their policyholders won't get paid back, that hsould be a no brainer, as for equity value, well, there is none.

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    • The question is can TGIC reduce the settled claim in
      Q1 2010 by 10% from 153 to 138
      Q2 2010 by 10% from 138 to 124
      Q3 2010 by 10% from 124 to 112
      Q4 2010 by 10% from 112 to 100

      In case the company can reduce the settled claim because of fraud etc than we are on track for the shareholder

    • they are denying 20% of claims now, and are still paying 3x than revenue, that isn't going to change this quarter.

    • The operational costs of the company are annually about 32 milj. The moment when the revenues minus the operational costs are below the settled claims is the point where the company can keep going on indefinitely . 230-32 = 198 milj. We need a reduction in the settled claims from annual 530 to 192 milj that is about a reduction of 60%.

      2009 settled claim 430 milj 515-198= 317
      2010 settled claim 430 milj 430-198= 232
      2011 settled claim 330 milj 330-198= 132
      2012 settled claims 220 milj 220-198= 22
      2013 settled claims 150 milj 150-198= -48 provid

      The company had by the start of the runoff 1000 milj in assets 1000-(317+232+132+22-48)= 345 milj left over for the stock holders 345/15000000= $23 a share

      In this simplified model we ignore the reduction in revenues and the profit on capital etc. But what we see is that the quick reduction in settled claims is the most important factor

      The end result will all depending on the speed of the recovery and reduction of settled claims

      • 1 Reply to jnivard
      • settled claims are going up, not down, they had a slight decline in net settled claims from q3 to q4 as they are ceding more claims to captives, but those captive trusts will be exhausted before long, at which point the growing claims paid will revert back to tgic, you also seem to forget that revenues are declining as the insurance in force declines, gross written premiums are down below 70m this quarter vs 91m in q1 08, for example, but yet your simple example assumes revenues are flat, look at even reported revenues, even though they had a huge improvement in net realized investment gains yoy, revenues dropped from 270m in 2008 to 237m in 2009, they will probably drop below 200m in 2010 given that the one time boost from realized investment gains will drop, granted it will take years for this company to run out of money, somewhere along the line you might catch a break and get a pump and dump to bail you out of your position, but it is a long shot.

    • btw, my analysis shows them being able to pay 65 cents onteh dolalr or so, thus is makes sense to hold back a few pennies just in case.

 
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