Triad Guaranty Insurance and Triad Guaranty Assurance agree to being placed into rehabilitation

Dept. of Insurance will present a plan to address future payment of claims

[December 13, 2012]  CHICAGO -- Illinois Department of Insurance Director Andrew Boron announced Tuesday that a rehabilitation order has been entered by the Cook County Circuit Court against Triad Guaranty Insurance Corp., known as Triad, and its subsidiary Triad Guaranty Assurance Corp., known as TGAC, with the consent of their respective boards of directors. The court also entered a finding of insolvency against Triad.

Both companies, located at 101 S. Stratford Road, Winston-Salem, N.C., were formerly authorized to transact the business of mortgage guaranty insurance, which insures banking institutions for financial loss associated with residential mortgage defaults. The companies ceased issuing new commitments for mortgage guaranty insurance in 2008 and have been operating their business under two corrective orders issued by the Department of Insurance.

Under Illinois law, the director of the Department of Insurance is appointed as statutory rehabilitator of both companies involved. Generally, a rehabilitation order allows the department director to restructure an insurance company's business. The restructuring or "run-off" involves taking over the affairs of a company but not taking on new obligations or issuing new or renewing policies. The director is vested with title to the company's property, assets, rights of action or lawsuits, books, records, and premises.

In accordance with the Illinois Insurance Code, the director is charged with preparing and presenting a rehabilitation plan to address future payment of the claims of creditors, including mortgage lenders Fannie Mae, Freddie Mac and other mortgage banking institutions. Boron expects to file a rehabilitation plan with the supervising court in approximately 45 days.

"I want to commend the Triads' boards and management for their commitment and cooperation during this transition," said Boron. "The department will have oversight and management authority over Triads' business and affairs. And we are committed to working in the best interest of Triads' creditors."

A copy of the rehabilitation order is available at www.osdchi.com or can be obtained by calling the Office of the Special Deputy Receiver at 312-836-9500. The address of that office is 222 Merchandise Mart Plaza, Suite 960, Chicago, IL 60654. The office is assisting Boron with the rehabilitation of Triad and TGAC.

[Text from Illinois Department of Insurance file received from the Illinois Office of Communication and Information]