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.
1-In 2010 TGIC has extra income from the sale of the IT platform. This will have a positive effect
2-The number of claims containing fraud is ricing we see number up to 25% specialty in the states TGIC was active calf, Florida, Nevada, this will have a positive effect
3-Revenues in premiums will go down, negative effect
4-Investment income will rice as the ecomeny improve a little and at the end it will probraly go down but not fast, because the capital position is not going down very fast 60% out off pocket 40% delayed
how is investment income going to rise as the economy improves, first of all, they are in a lot of fixed income which will have to be converted into cash, which will earn nothing for the forseeable future, their invested assets has decreased from 912m at 3.31 to 811m at 12.31, a decrease of 12%, that should start decreasing at an increasing rate as paid claims increases, as for rescissions, they are projecting a rescission rate in line with their peers, even with those rescissions, they won't have enough cash to make it, they are rescinding like crazy already today, look at what they are disclosing, but yet paid claims are already exceeding income by a 3:1 margin, and besides, increased rescissions actually hurt revenue, not help, but yet your simpel math implies that revenue will still stay constant, and then you say rescissions will increase, which is it, bottom line is you have done a very poor job of analyzing this company, i just hope no one reads your garbage and gets suckered into bailing you out of your position.