FORM 10-Q
                               ------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934

                  For the quarterly period ended June 30, 2002

                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

                 For the transition period from ______ to _____


                         Commission File Number 0-22342

                               TRIAD GUARANTY INC.
             (Exact name of registrant as specified in its charter)

       Delaware                                           56-1838519
(State of Incorporation)                        (I.R.S. Employer Identification
                                                            Number)


                            101 SOUTH STRATFORD ROAD
                       WINSTON-SALEM, NORTH CAROLINA 27104
                    (Address of principal executive offices)

                                 (336) 723-1282
              (Registrant's telephone number, including area code)
                         ------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /

Number of shares of Common Stock,  $.01 par value,  outstanding  as of August 1,
2002: 14,134,449 shares.


<PAGE>

                               TRIAD GUARANTY INC.

                                      INDEX
                                                                           Page
                                                                         Number
                                                                         ------
Part I. Financial Information:

    Item 1. Financial Statements:

    Consolidated Balance Sheets as of June 30, 2002 (Unaudited)
       and December 31, 2001................................................  3

    Consolidated Income Statements for the Three and Six Months
       Ended June 30, 2002 and 2001 (Unaudited)............................   4

    Consolidated Statements of Cash Flow for the Six Months
       Ended June 30, 2002 and 2001 (Unaudited)............................   5

    Notes to Consolidated Financial Statements.............................   6

    Item 2. Management's Discussion and Analysis of Financial Condition and
       Results of Operations...............................................   9

Part II. Other Information:

    Item 1. Legal Proceedings.............................................   17

    Item 2. Changes in Securities and Use of Proceeds......................  17

    Item 3. Defaults Upon Senior Securities................................  17

    Item 4. Submission of Matters to a Vote of Security Holders............  17

    Item 5. Other Information..............................................  17

    Item 6. Exhibits and Reports on Form 8-K...............................  17

    Signatures.............................................................  18


                                       2
<PAGE>
                               TRIAD GUARANTY INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                     June 30,     December 31,
                                                                       2002           2001
                                                                   -----------    ------------
                                                                   (Unaudited)
(Dollars in thousands except per share information)

Assets
Invested assets:
<S>                                                                  <C>             <C>
    Fixed maturities, available-for-sale, at fair value..........    $275,148        $245,986
    Equity securities, available-for-sale, at fair value.........      12,332          12,476
    Short-term investments.......................................      17,029          18,739
                                                                     --------        --------
                                                                      304,509         277,201

Cash ............................................................          72             854
Real estate......................................................         506             162
Accrued investment income........................................       3,161           3,196
Deferred policy acquisition costs................................      28,669          25,944
Prepaid federal income taxes.....................................      69,425          62,619
Property and equipment...........................................      10,796          11,169
Reinsurance recoverable..........................................         630               5
Other assets.....................................................      15,597          15,305
                                                                     --------        --------
Total assets.....................................................    $433,365        $396,455
                                                                     ========        ========

Liabilities and stockholders' equity
Liabilities:
    Losses and loss adjustment expenses..........................    $ 18,739        $ 17,991
    Unearned premiums............................................       7,478           7,650
    Amounts payable to reinsurer.................................       2,444           2,445
    Current taxes payable........................................         519              40
    Deferred income taxes........................................      81,342          74,773
    Unearned ceding commission...................................       1,861           2,324
    Long-term debt...............................................      34,476          34,473
    Accrued interest on debt.....................................       1,275           1,275
    Accrued expenses and other liabilities.......................       5,108           9,415
                                                                     --------        --------
Total liabilities................................................     153,242         150,386
Commitments and contingent liabilities - Note 4
Stockholders' equity:
    Preferred stock, par value $.01 per share --- authorized
       1,000,000 shares; no shares issued and outstanding........         ---             ---
    Common stock, par value $.01 per share --- authorized
       32,000,000 shares; issued and outstanding
       14,134,149 shares at June 30, 2002 and 13,691,672
       at December 31, 2001......................................         141             137
    Additional paid-in capital...................................      79,536          69,057
    Accumulated other comprehensive income, net of income
       tax liability of $2,127 at June 30, 2002 and $522 at
       December 31, 2001.........................................       3,955             975
    Deferred compensation........................................        (855)           (118)
    Retained earnings............................................     197,346         176,018
                                                                     --------        --------
Total stockholders' equity.......................................     280,123         246,069
                                                                     --------        --------
Total liabilities and stockholders' equity.......................    $433,365        $396,455
                                                                     ========        ========
</TABLE>
                             See accompanying notes.

                                       3
<PAGE>
                               TRIAD GUARANTY INC.
                         CONSOLIDATED INCOME STATEMENTS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                              Three Months Ended            Six Months Ended
                                                                    June 30                        June 30
                                                           -----------------------        ---------------------
                                                             2002             2001            2002        2001
                                                             ----             ----            ----        ----
(Dollars in thousands except per share information)

Revenue:
<S>                                                      <C>             <C>             <C>          <C>
Premiums written:
   Direct...........................................        $29,784         $21,998         $57,622      $43,791
   Assumed..........................................              1               1               2            3
   Ceded............................................         (4,494)         (2,222)         (7,842)      (4,205)
                                                         ----------      ----------      ----------   ----------
Net premiums written................................         25,291          19,777          49,782       39,589
Change in unearned premiums.........................            208             366             252          237
                                                         ----------      ----------      ----------   ----------
Earned premiums.....................................         25,499          20,143          50,034       39,826
Net investment income...............................          3,953           3,657           7,717        7,134
Realized investment gains (losses)..................           (729)            162          (2,228)         614
Other income........................................             15              15              42        1,882
                                                         ----------      ----------      ----------   ----------
                                                             28,738          23,977          55,565       49,456

Losses and expenses:
Losses and loss adjustment expenses.................          2,875           2,135           5,396        4,334
Reinsurance recoveries..............................              4              (1)             (1)           3
                                                         ----------      ----------      ----------   ----------
Net losses and loss adjustment expenses.............          2,879           2,134           5,395        4,337
Interest expense on debt............................            693             693           1,386        1,385
Amortization of deferred policy acquisition costs...          3,059           2,674           6,045        5,009
Other operating expenses (net)......................          5,764           4,293          11,833        8,645
                                                         ----------      ----------      ----------   ----------
                                                             12,395           9,794          24,659       19,376
                                                         ----------      ----------      ----------   ----------
Income before income taxes .........................         16,343          14,183          30,906       30,080
Income taxes:
   Current..........................................            172              92             332           93
   Deferred.........................................          4,881           4,261           9,246        9,237
                                                         ----------      ----------      ----------   ----------
                                                              5,053           4,353           9,578        9,330
                                                         ----------      ----------      ----------   ----------
Net income..........................................        $11,290         $ 9,830         $21,328      $20,750
                                                         ==========      ==========      ==========   ==========


Earnings per common and
   common equivalent share:
   Basic............................................        $.80            $.73            $1.53         $1.55
                                                         ==========      ==========     ===========     ========
   Diluted..........................................        $.78            $.71            $1.49         $1.49
                                                         ==========      ==========     ===========     ========

Shares used in computing earnings
   per common and common equivalent share:
   Basic............................................     14,115,220      13,444,388      13,976,165   13,399,891
                                                         ==========      ==========      ==========   ==========
   Diluted..........................................     14,390,101      13,939,338      14,295,372   13,885,145
                                                         ==========      ==========      ==========   ==========
</TABLE>
                             See accompanying notes.

                                       4
<PAGE>

                               TRIAD GUARANTY INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                        June 30
                                                                 ---------------------
                                                                   2002         2001
                                                                   ----         ----
(Dollars in thousands)

Operating activities
<S>                                                               <C>          <C>
Net income..................................................      $21,328      $20,750
Adjustments to reconcile net income to net cash
  provided by operating activities:
   Loss and unearned premium reserves.......................          577        1,311
   Accrued expenses and other liabilities...................       (5,397)      (3,578)
   Current taxes payable....................................          478           93
   Amounts due to/from reinsurer............................         (706)        (955)
   Accrued investment income................................           35         (240)
   Policy acquisition costs deferred........................       (8,771)      (7,073)
   Amortization of policy acquisition costs.................        6,045        5,008
   Net realized investment losses (gains)...................        2,228         (614)
   Provision for depreciation...............................        1,424        1,079
   Accretion of discount on investments.....................       (2,137)      (1,305)
   Deferred income taxes....................................        9,246        9,237
   Prepaid federal income tax...............................       (6,806)      (7,047)
   Unearned ceding commission...............................         (463)       1,415
   Real estate acquired in claim settlement.................         (343)           1
   Other assets.............................................         (144)      (1,029)
   Other operating activities...............................          198          127
                                                                  -------      -------
Net cash provided by operating activities...................       16,792       17,180

Investing activities
Securities available-for-sale:
      Purchases - fixed maturities..........................      (46,879)     (42,927)
      Sales - fixed maturities..............................       24,382       15,843
      Purchases - equities..................................       (2,040)      (1,896)
      Sales - equities......................................        1,035        2,255
   Purchase of property and equipment.......................       (1,050)      (2,593)
                                                                  -------      -------
Net cash used in investing activities.......................      (24,552)     (29,318)

Financing activities
Proceeds from exercise of stock options.....................        5,268        2,797
                                                                  -------      -------
Net cash provided by financing activities...................        5,268        2,797
                                                                  -------      -------
Net change in cash and short-term investments...............       (2,492)      (9,341)
Cash and short-term investments at beginning of period......       19,593       18,525
                                                                  -------      -------
Cash and short-term investments at end of period............      $17,101      $ 9,184
                                                                  =======      =======

Supplemental schedule of cash flow information
Cash paid during the period for:
   Income taxes and United States Mortgage Guaranty
      Tax and Loss Bonds....................................      $ 7,306      $ 7,032

   Interest.................................................      $ 1,383      $ 1,383
</TABLE>

                             See accompanying notes.

                                       5
<PAGE>


                               TRIAD GUARANTY INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2002
                                   (Unaudited)


NOTE 1 -- THE COMPANY

     Triad Guaranty Inc. is a holding  company which,  through its  wholly-owned
subsidiary,  Triad Guaranty Insurance  Corporation  ("Triad"),  provides private
mortgage  insurance  coverage  in the  United  States to  mortgage  lenders  and
investors to protect the lender or investor  against  loss from  defaults on low
down payment residential mortgage loans.


NOTE  2 -- BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information  and footnotes  required by accounting  principles  generally
accepted in the United States for complete financial statements.  In the opinion
of  management,  all  adjustments  (consisting  of  normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results  for the three and six months  ended June 30,  2002 are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2002. For further  information,  refer to the consolidated  financial statements
and footnotes  thereto included in the Triad Guaranty Inc. annual report on Form
10-K for the year ended December 31, 2001.


NOTE 3 -- CONSOLIDATION

     The consolidated  financial  statements include Triad Guaranty Inc. and its
wholly-owned  subsidiary,  Triad Guaranty Insurance Corporation  ("Triad"),  and
Triad's  wholly-owned  subsidiaries,  Triad Guaranty  Assurance  Corporation and
Triad Re Insurance Corporation  (collectively referred to as "the Company"). All
significant intercompany accounts and transactions have been eliminated.


NOTE 4 -- COMMITMENTS AND CONTINGENT LIABILITIES

     REINSURANCE - Triad assumes and cedes certain  premiums and losses  from/to
reinsurers under various reinsurance  agreements.  Reinsurance  contracts do not
relieve Triad from its obligations to policyholders. Failure of the reinsurer to
honor its obligation could result in losses to Triad;  consequently,  allowances
are established for amounts when deemed uncollectible.


                                       6
<PAGE>

                               TRIAD GUARANTY INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2002
                                   (Unaudited)


INSURANCE IN FORCE, DIVIDEND RESTRICTIONS, AND STATUTORY RESULTS - Insurance
regulations limit the writing of mortgage guaranty insurance to an aggregate
amount of insured risk no greater than 25 times the total of statutory capital
and surplus and the statutory contingency reserve. The amount of net risk for
insurance in force at June 30, 2002 and December 31, 2001, as presented below,
was computed by applying the various percentage settlement options and
applicable stop-loss parameters to the insurance in force amounts based on the
original insured amount of the loan. Triad's ratio is as follows:


                                          June 30,        December 31,
                                            2002              2001

(Dollars in thousands)
Net risk..............................   $ 5,039,445      $ 4,471,705
                                         ===========      ===========
Statutory capital and surplus.........   $   104,261      $   105,306
Statutory contingency reserve.........       218,243          193,747
                                         -----------      -----------
Total.................................   $   322,504      $   299,053
                                         ===========      ===========
Risk-to-capital ratio.................     15.6-to-1        15.0-to-1
                                         ===========      ===========

     Triad  and  its  wholly-owned   subsidiaries,   Triad  Guaranty   Assurance
Corporation  and Triad Re Insurance  Corporation,  are each required under their
respective  domiciliary  states'  insurance  code to maintain a minimum level of
statutory capital and surplus. Triad, an Illinois domiciled insurer, is required
under the Illinois  Insurance  Code (the "Code") to maintain  minimum  statutory
capital and surplus of $5 million.  The Code  permits  dividends to be paid only
out of  earned  surplus  and  also  requires  prior  approval  of  extraordinary
dividends.  An extraordinary dividend is any dividend or distribution of cash or
other property,  the fair value of which,  together with that of other dividends
or distributions made within a period of twelve consecutive months,  exceeds the
greater of (a) ten percent of statutory surplus as regards policyholders, or (b)
statutory net income for the calendar year preceding the date of the dividend.

     Net income as determined in accordance with statutory  accounting practices
was $27.8  million for the six months ended June 30, 2002 and $55.4  million for
the year ended December 31, 2001.

     At June 30, 2002 and December 31, 2001,  the amount of Triad's  equity that
could be paid out in  dividends  to  stockholders  was $20.5  million  and $21.6
million,  respectively,  which was the earned  surplus  of Triad on a  statutory
basis on those dates.

     LOSS  RESERVES - The Company  establishes  loss reserves to provide for the
estimated  costs of  settling  claims  with  respect to loans  reported to be in
default  and loans in  default  which  have not been  reported  to the  Company.


                                       7
<PAGE>

                               TRIAD GUARANTY INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2002
                                   (Unaudited)


Reserves are established by management  using estimated claim rates  (frequency)
and claim amounts  (severity) to estimate ultimate losses. The reserving process
gives effect to current economic  conditions and profiles  delinquencies by such
factors as policy year, geography, chronic late payment characteristics and age.
Due to the  inherent  uncertainty  in  estimating  reserves  for losses and loss
adjustment  expenses,  there can be no assurance that the reserves will prove to
be adequate to cover ultimate loss development.


NOTE 5 - - EARNINGS PER SHARE

     Basic and  diluted  earnings  per  share are based on the  weighted-average
daily  number of  shares  outstanding.  For  diluted  earnings  per  share,  the
denominator   includes   the   dilutive   effect   of  stock   options   on  the
weighted-average  shares  outstanding.  There  are no  other  reconciling  items
between the  denominator  used in basic earnings per share and diluted  earnings
per share.  The numerator used in basic earnings per share and diluted  earnings
per share is the same for all periods presented.


NOTE 6 - - COMPREHENSIVE INCOME

     Comprehensive income consists of net income and other comprehensive income.
For the Company,  other comprehensive  income is composed of unrealized gains or
losses on available-for-sale securities, net of income tax. For the three months
ended  June 30,  2002 and 2001,  the  Company's  comprehensive  income was $15.1
million and $8.7 million,  respectively.  For the six months ended June 30, 2002
and  2001,  the  Company's  comprehensive  income  was $24.3  million  and $20.4
million, respectively.



















                                       8
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

     Net income for the first six months of 2002 increased 2.8% to $21.3 million
or $1.49 per diluted share  compared to $20.8 million or $1.49 per diluted share
for the first six  months of 2001.  Net  income for the first six months of 2001
included the receipt of a nonrecurring  incentive payment of approximately  $1.9
million or $0.09 per diluted share  relating to the  cancellation  of one of the
Company's  excess of loss  reinsurance  contracts.  The payment was  reported as
other income in the first quarter of 2001.  Net income for the second quarter of
2002  increased  14.9% to $11.3  million  or $0.78 per  diluted  share from $9.8
million or $0.71 per diluted share in the second  quarter of 2001.  Earnings per
share for the first six months of 2002 includes  $0.10 per share of net realized
investment  losses compared to $0.02 per share of net realized  investment gains
in the  first six  months  of 2001.  For the  second  quarter  of 2002 and 2001,
earnings per share  includes $0.04 per share of net realized  investment  losses
and $0.01 per share of net realized investment gains, respectively.

     Operating  earnings  for the first six  months of 2002  increased  11.9% to
$22.8  million  from $20.4  million  for the first six  months of 2001.  For the
second quarter of 2002, operating earnings increased 21.0% to $11.8 million from
$9.7 million in the second quarter of 2001.  Operating earnings exclude realized
investment  losses of $2.2  million in the first six months of 2002 and realized
investment  gains of  $614,000  in the first six months of 2001.  For the second
quarter of 2002 and 2001,  operating earnings exclude realized investment losses
of $729,000 and realized investment gains of $162,000,  respectively.  Operating
earnings  per share on a diluted  basis  were  $1.59 for the first six months of
2002  compared  to $1.47 per share for the same  period of 2001.  For the second
quarter  of 2002,  operating  earnings  per share on a diluted  basis were $0.82
compared  to $0.70 per share  for the  second  quarter  of 2001.  Excluding  the
effects of the  nonrecurring  incentive  payment from operating  results for the
first six  months of 2001,  operating  earnings  increased  19.0% and  operating
earnings  per  diluted  share  increased  15.2% for the first six months of 2002
compared to the first six months of 2001. The improvement in operating  earnings
is attributable  primarily to a 25.6% (26.6% in the second quarter)  increase in
earned  premiums  and an 8.2%  (8.1%  in the  second  quarter)  increase  in net
investment income.

     Insurance  written  was $6.2  billion  for the first six  months of 2002 as
compared to $4.7 billion for the first six months of 2001, an increase of 32.8%.
For the second quarter of 2002,  insurance  written was $3.5 billion compared to
$1.9 billion for the second  quarter of 2001, an increase of 77.9%.  Traditional
flow production for the first six months of 2002 increased 62.6% to $5.5 billion
from $3.4  billion  in the first six months of 2001.  For the second  quarter of
2002,  traditional  flow production was $2.7 billion compared to $1.9 billion in
the second quarter of 2001, an increase of 38.4%.  The increase in new insurance
written from  traditional  flow production was primarily the result of expanding
relationships   with   national   lenders,   strong   demand  for   risk-sharing
arrangements,  and a lower interest rate  environment.  Insurance written in the
first six months of 2002 attributable to bulk transactions  totaled $766 million
(all in the second  quarter of 2002)  compared to $1.3  billion in the first six
months of 2001 (all in the first quarter of 2001).


                                       9
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED

     Consolidation   within  the  mortgage   origination  industry  and  Triad's
continued  focus on national  lenders has  resulted in a greater  percentage  of
production volume being  concentrated among a smaller customer base. The loss of
one or more of these  significant  customers  could have a  significant  adverse
effect on the Company's  business.  According to industry data, Triad's national
market  share of net new primary  insurance  written  increased  to 3.2% for the
second  quarter and 3.4% for the first six months of 2002 from 2.6% and 2.7% for
the  respective  periods in 2001.  Net new primary  insurance  written  excludes
insurance placed on loans more than 12 months after loan origination,  insurance
placed on loans already  covered by primary  mortgage  insurance,  and insurance
placed on loans where  lender  exposure is  effectively  reduced  below  defined
minimums.  This treatment is consistent with the new definitions  adopted by the
Company and the industry in the third quarter of 2001 regarding the  computation
of new insurance  written for market share purposes.  Total direct  insurance in
force reached $23.8 billion at June 30, 2002,  compared to $17.3 billion at June
30, 2001, an increase of 37.3%.

     Total direct  premiums  written were $57.6 million for the first six months
of 2002,  an  increase  of 31.6% from $43.8  million for the first six months of
2001.  Direct premiums written for the second quarter of 2002 increased 35.4% to
$29.8  million  compared  to $22.0  million  for the same  period  of 2001.  Net
premiums written were $49.8 million in the first six months of 2002, an increase
of 25.7% from $39.6  million for the same period of 2001.  Net premiums  written
for the second quarter of 2002  increased by 27.9% to $25.3 million  compared to
$19.8 million for the same period of 2001.  Earned  premiums  increased 25.6% to
$50.0  million for the first six months of 2002 from $39.8 million for the first
six months of 2001.  Earned  premiums for the second  quarter of 2002 were $25.5
million  compared to $20.1  million for the same period of 2001,  an increase of
26.6%. This growth in written and earned premiums resulted from strong levels of
new insurance written offset by the impact of a low persistency rate.

     Growth in direct premiums  written was partially  offset by the increase in
ceded premiums written. Driven by increases in risk-sharing arrangements,  ceded
premium written increased 86.5% to $7.8 million for the first six months of 2002
from $4.2 million for the first six months of 2001.  Ceded  premiums  written in
the second  quarter of 2002 were $4.5  million  compared to $2.2  million in the
same period of 2001,  an increase of 102.2%.  The  Company's  premium ceded rate
(the ratio of ceded premiums  written to direct  premiums  written) was 13.6% in
the first six months of 2002 (15.1% in the second  quarter)  compared to 9.6% in
the first six months of 2001 (10.1% in the second quarter). Approximately 50% of
flow insurance  written (44% including bulk  transactions)  during the first six
months  of 2002 is  subject  to  risk-sharing  arrangements  compared  to 57% of
insurance  written (41% including bulk  transactions) in the first six months of
2001.  Management  anticipates  ceded  premiums  will  continue to increase as a
result of the expected increase in risk-sharing programs.


     Refinance activity was 39.9% of insurance written in the first half of 2002
compared  to 29.9% of  insurance  written in the first  half of 2001.  Refinance
activity was 33.0% of insurance  written in the second  quarter of 2002 compared

                                       10
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED


to 40.1% of insurance  written in the same period of 2001.  Persistency,  or the
percentage of insurance in force  remaining  from one-year  prior,  was 62.4% at
June 30,  2002  compared to 67.6% at December  31,  2001,  and 75.8% at June 30,
2001.  The  decrease in  persistency  is  reflective  of the low  interest  rate
environment  that  has  been in  place  over the  previous  12  months,  and the
resulting high level of refinance activity. The annualized quarterly persistency
run rate for the second  quarter of 2002 was 65.5%,  up from 60.7% in the second
quarter of 2001.

     Net investment income for the first six months of 2002 was $7.7 million, an
8.2% increase over $7.1 million in the first six months of 2001.  Net investment
income for the second quarter of 2002 was $4.0 million  compared to $3.7 million
in the same period of 2001,  an increase of 8.1%.  This  increase in  investment
income is the result of growth in the average  book value of invested  assets by
$46.7 million to $286.8 million at June 30, 2002 from $240.1 million at June 30,
2001. The growth in invested  assets is  attributable  to normal  operating cash
flow.  The pre-tax yield on average  invested  assets  decreased to 5.4% for the
first six  months  of 2002  compared  to 5.9% for the first six  months of 2001,
reflecting the current low interest rate  environment for new money  investments
and the disposal of a number of higher yielding, lower quality securities during
the past  twelve  months to enhance the overall  quality of the  portfolio.  The
portfolio's tax-equivalent yield-to-maturity was 7.9% for the first half of 2002
versus 8.0% for the first half of 2001. Based on fair value,  approximately  77%
and 71% of the  Company's  fixed  maturity  portfolio at June 30, 2002 and 2001,
respectively,  was composed of state and municipal tax-preferred  securities. At
June 30, 2002,  based on fair value,  approximately  95% of the Company's  fixed
maturity portfolio was either a U.S. government or U.S. agency obligation or was
rated investment grade by at least one nationally  recognized  securities rating
organization  compared to  approximately  92% of the  Company's  fixed  maturity
portfolio at June 30, 2001.

     The Company actively  monitors  investment  securities  considered to be at
risk for  impairment.  When the Company  determines  that it is probable that it
will be unable to collect all amounts due according to the contractual  terms of
a security, an  other-than-temporary  impairment loss has occurred. In the event
of permanent impairment,  the Company writes down the cost basis of the security
to its  fair  value  and  recognizes  a  realized  loss  for the  amount  of the
writedown.  Realized losses in the first six months of 2002 included  impairment
writedowns  of  approximately  $1.3  million  on  bonds  held  in the  Company's
portfolio, with approximately $600,000 of impairment writedowns occurring in the
second quarter. The writedowns involved securities in the telecommunications and
technology sectors.

     Net losses and loss  adjustment  expenses (net of  reinsurance  recoveries)
increased  by 24.4% in the first six  months of 2002 to $5.4  million  from $4.3
million for the same  period of 2001.  Net losses and loss  adjustment  expenses
were $2.9 million in the second  quarter of 2002 compared to $2.1 million in the
second quarter of 2001, an increase of 34.9%.  This rise reflects an increase in
paid losses and  delinquent  loans as the Company's  insurance in force matures.
Net paid losses and loss adjustment  expenses were $4.6 million in the first six
months of 2002,  up from $2.8 million in the first six months of 2001.  Net paid
losses and loss  adjustment  expenses were $2.4 million in the second quarter of
2002 compared to $1.7 million in the second quarter of 2001. Reported delinquent
loans totaled 1,684 at June 30, 2002, compared to 1,420 at December 31, 2002 and
928 at June 30, 2001.  The  delinquency  inventory  count  includes all reported
delinquencies  that are three or more payments in arrears at the reporting  date

                                       11
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED


and all reported  delinquencies  that were previously  three or more payments in
arrears  and have not made  payments  to the  current  due  date.  Reserves  are
established  for all insured loans  reported as delinquent to the Company by the
loan servicer.  The Company's loss ratio (the ratio of incurred losses to earned
premiums)  was 10.8% for the first half of 2002  compared to 10.9% for the first
half of 2001 and 10.7% for all of 2001.  The loss ratio was 11.3% for the second
quarter of 2002 and 10.6% for the second quarter of 2001.

     As of June 30, 2002,  approximately 78% of the Company's insurance in force
was  originated  in the last 36  months.  Management  believes,  based  upon its
experience  and industry  data,  that claims  incidence for it and other private
mortgage  insurers is generally  highest in the third  through sixth years after
loan  origination.  Although  the  claims  experience  on  insurance  written in
previous years has been quite  favorable,  management  does not expect losses to
remain at the low levels  currently  reported.  The Company expects its incurred
losses to increase as a greater  amount of its  insurance  in force  reaches its
anticipated highest claim frequency years. Furthermore,  changes in the economic
environment  could  accelerate  paid and incurred loss  development.  Due to the
inherent uncertainty of future premium levels, losses, economic conditions,  and
other factors that affect earnings,  it is impossible to predict with any degree
of certainty the impact of such higher claim frequencies on future earnings.

     Amortization  of deferred  policy  acquisition  costs increased by 20.7% to
$6.0 million in the first six months of 2002 from $5.0 million for the first six
months of 2001.  These  costs were $3.1  million  in the second  quarter of 2002
compared to $2.7  million in the second  quarter of 2001,  an increase of 14.4%.
The increase in  amortization  reflects  growth in deferred  policy  acquisition
costs  related  to the  expansion  of  the  Company's  insurance  in  force  and
accelerated  amortization due to higher cancellations from refinance activity in
the first half of 2002, although this trend abated in the second quarter.

     Other  operating  expenses  increased  36.9% to $11.8 million for the first
half of 2002 from $8.6  million  for the same  period  of 2001.  For the  second
quarter of 2002,  other  operating  expenses were $5.8 million  compared to $4.3
million in the second  quarter of 2001,  an increase of 34.3%.  This increase in
expenses is primarily attributable to personnel,  technology  amortization,  and
equipment  costs  required  to  support  the  Company's   increased   levels  of
production, product development,  system enhancements, and geographic expansion.
The expense ratio (ratio of underwriting  expenses to net premiums  written) for
the first  six  months  of 2002 was  35.9%  compared  to 34.5% for the first six
months of 2001 and  35.1%  for all of 2001.  The  expense  ratio for the  second
quarter of 2002 was 34.9% compared to 35.2% for the second quarter of 2001.

     The  effective  tax rate for both the first six months of 2002 and 2001 was
31.0%.  The effective tax rate was 30.9% for the second quarter of 2002 compared
to 30.7% for the  second  quarter  of 2001.  Management  expects  the  Company's
effective  tax rate to remain  near  current  levels as long as yields  from new
funds invested in tax-preferred securities remain favorable in relation to fully
taxable securities.

                                       12
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED


LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  sources of operating  funds  consist  primarily of premiums
written and investment  income.  Operating cash flow is applied primarily to the
payment of claims, interest, operating expenses, and taxes.

     The Company generated positive cash flow from operating  activities for the
first six months of 2002 of $16.8 million compared to $17.2 million for the same
period of 2001.  Triad's positive  operating cash flow in the first half of 2002
reflects premiums and investment income received that were greater than expenses
and losses paid. The decrease in operating  cash flow from the prior-year  level
reflects  primarily the receipt of a $1.9 million cash payment in the prior-year
period from the cancellation of an excess of loss reinsurance contract.

     The  Company's  business  does not routinely  require  significant  capital
expenditures   other  than  for   enhancements  to  its  computer   systems  and
technological  capabilities.  Positive  cash flows are invested  pending  future
payments of claims and expenses.  Cash flow shortfalls,  if any, could be funded
through  sales  of  short-term   investments  and  other  investment   portfolio
securities.

     The parent company's cash flow is dependent on interest income and payments
from Triad including  management fees and interest payments under surplus notes.
The Illinois  Insurance  Department permits expenses of the parent company to be
reimbursed by Triad in the form of management fees. Payment of dividends also is
permitted although none have been paid.

     The insurance laws of the State of Illinois impose certain  restrictions on
dividends that Triad can pay the parent company.  These  restrictions,  based on
statutory accounting practices,  include requirements that dividends may be paid
only out of statutory  earned surplus and limit the amount of dividends that may
be paid without prior approval of the Illinois Insurance Department.

     Consolidated  invested assets were $304.5 million at June 30, 2002 compared
to $277.2  million at December 31, 2001.  Fixed  maturity  securities and equity
securities classified as  available-for-sale  totaled $287.5 million at June 30,
2002.  Net  unrealized  investment  gains were $6.2  million  on fixed  maturity
securities  and  net  unrealized  investment  losses  were  $119,000  on  equity
securities at June 30, 2002. Based on fair value,  the fixed maturity  portfolio
consisted of approximately 77% municipal  securities,  18% corporate securities,
and 5% U.S. government obligations at June 30, 2002.

     The Company's loss reserves were $18.7 million at June 30, 2002 compared to
$18.0  million at December  31,  2001.  Reserves  are  established  for reported
insurance  losses and loss adjustment  expenses based on when notices of default
on insured  mortgage  loans are  received.  Reserves  also are  established  for
estimated  losses incurred on notices of default not yet reported by the lender.


                                       13
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED


Consistent with industry practices, the Company does not establish loss reserves
for future claims on insured loans that are not currently in default. The growth
in loss  reserves is the result of the  increase in  reported  defaults  and the
maturing of the Company's  risk in force.  The Company  expects loss reserves to
continue to grow,  reflecting  the growth and aging of its  insurance  in force.
Including bulk loans, the Company's  delinquency  ratio (the ratio of delinquent
insured  loans to total  insured  loans) was 0.95% at June 30, 2002  compared to
0.89% at December 31, 2001. The Company's  delinquency  ratio for bulk loans was
0.88% at June 30, 2002. There were no reported  delinquencies  for bulk loans at
December 31, 2001.

     Reserves  are  established  by  management   using  estimated  claim  rates
(frequency)  and claim  amounts  (severity)  to estimate  ultimate  losses.  The
reserving process  incorporates a  multi-dimensional  analytical form that gives
effect to current economic conditions and profiles delinquencies by such factors
as policy year, geography,  and chronic late payment characteristics in addition
to profiling them by age. Because the estimate for loss reserves is sensitive to
the estimates of claims frequency and severity,  management performs sensitivity
analyses to test the  reasonableness of the best estimate  generated by the loss
reserve process.  These sensitivity analyses allow management to use alternative
assumptions  related to claims  frequency and claims severity to develop a range
of reasonably  possible loss reserve  outcomes that can be used to challenge the
best estimate.  The loss reserve estimation process and the sensitivity analyses
support the  reasonableness  of the best estimate of loss reserves recorded as a
liability in the financial statements.  Management periodically reviews the loss
reserve  process in order to improve its  estimate  of ultimate  losses on loans
currently in default.  Adjustments  to reserve  estimates  are  reflected in the
financial statements in the periods in which the adjustments are made.

     Total  stockholders'  equity  increased to $280.1  million at June 30, 2002
from $246.1 million at December 31, 2001. This increase resulted  primarily from
net  income  of  $21.3   million   for  the  first  half  of  2002,   additional
paid-in-capital  of $10.5 million  resulting from the exercise of employee stock
options and the related tax benefit,  and from net unrealized  gains on invested
assets classified as available-for-sale of $3.0 million (net of income tax).

     Triad's total statutory  policyholders' surplus decreased to $104.3 million
at June 30, 2002 from $105.3  million at December  31, 2001.  Triad's  statutory
earned surplus decreased to $20.5 million at June 30, 2002 from $21.6 million at
December 31, 2001. The decrease in Triad's statutory  policyholders' surplus and
statutory earned surplus resulted from the increase in the statutory contingency
reserve and the  increase in  non-admitted  assets  which offset the increase in
statutory  net income.  The  balance in the  statutory  contingency  reserve was
$218.2 million at June 30, 2002 compared to $193.7 million at December 31, 2001.

     Triad's  ability  to write  insurance  depends  on the  maintenance  of its
financial  strength  ratings and the adequacy of its capital in relation to risk
in force.  A lowered  financial  strength  rating,  a  significant  reduction of
capital,  or a significant  increase in risk may impair Triad's ability to write
additional   insurance.   A  number  of  states  also  generally  limit  Triad's
risk-to-capital  ratio to 25-to-1. As of June 30, 2002, Triad's  risk-to-capital
ratio was 15.6-to-1 compared to 15.0-to-1 at December 31, 2001, and to 11.1-to-1
for the  industry as a whole at December  31,  2001,  the latest  industry  data
available.


                                       14
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED


     Triad is rated "AA" by both  Standard & Poor's  Ratings  Services and Fitch
Ratings and "Aa3" by Moody's Investors Service.

     The Office of  Federal  Housing  Enterprise  Oversight  (OFHEO)  issued its
risk-based  capital rules for Fannie Mae and Freddie Mac in the first quarter of
2002. The regulation  provides a more preferential  capital credit for insurance
from a "AAA" rated private mortgage insurer than for insurance from a "AA" rated
private  mortgage  insurer.  The phase-in period for the new rules is ten years.
The presence of a capital charge  differential  in the new rules could adversely
affect  Triad.  Triad is  evaluating  various  business  approaches  and options
available  to address  the  capital  differential  contained  in the rule.  What
response, if any, Triad makes and the ultimate impact of the regulation on Triad
is unknown at this time,  and will not be known until Fannie Mae and Freddie Mac
determine their requirements under the rules. Based on information  available at
this  time,  the  Company  does not  believe  that  the new  rules  will  have a
significant adverse impact on the Company.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     Management's    Discussion   and   Analysis   and   this   Report   contain
forward-looking   statements  relating  to  future  plans,   expectations,   and
performance  which involve  various risks and  uncertainties,  including but not
limited to the following: interest rates may increase from their current levels;
housing  transactions  and  mortgage  insurance  may  decrease  for many reasons
including changes in interest rates or economic conditions; the Company's market
share may change as a result of changes in underwriting  criteria or competitive
products or rates; the amount of insurance  written could be adversely  affected
by changes in federal  housing  legislation,  including  changes in the  Federal
Housing  Administration loan limits and coverage requirements of Freddie Mac and
Fannie Mae; the Company's financial condition and competitive  position could by
affected by legislation  impacting the mortgage guaranty  industry  specifically
and the  financial  services  industry in general;  rating  agencies  may revise
methodologies for determining the Company's  financial  strength ratings and may
revise or withdraw the assigned  ratings at any time;  decreases in persistency,
which are affected by loan  refinancings in periods of low interest  rates,  may
have an adverse  effect on  earnings;  the amount of  insurance  written and the
growth in insurance in force or risk in force as well as the  performance of the
Company may be adversely impacted by the competitive  environment in the private
mortgage  insurance  industry,  including  the type,  structure,  and pricing of
products and services offered by the Company and its competitors; if the Company
fails to properly underwrite mortgage loans under contract  underwriting service
agreements, the Company may be required to assume the cost of repurchasing those
loans;  with  consolidation  occurring among mortgage  lenders and the Company's
concentration  of  insurance  in  force  generated  through  relationships  with
significant  lender  customers,  the loss of a significant  customer may have an
adverse effect on earnings; the Company's performance may by impacted by changes
in the  performance of the financial  markets and general  economic  conditions.
Economic downturns in regions where Triad's risk is more concentrated could have
a  particularly   adverse  effect  on  Triad's  financial   condition  and  loss
development.

     New OFHEO  risk-based  capital  rules for Fannie Mae and  Freddie Mac could
severely limit the ability of Triad to compete with "AAA" rated private mortgage


                                       15
<PAGE>

 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED


insurers.  The  ultimate  effect  of the new  rules  on Triad  and the  mortgage
insurance  industry  in  general is not known at this time and will not be known
until Fannie Mae and Freddie Mac determine their requirements under the rules.

     Accordingly,  actual  results  may  differ  from  those  set  forth  in the
forward-looking statements. Attention also is directed to other risk factors set
forth  in  documents  filed by the  Company  with the  Securities  and  Exchange
Commission.













                                       16
<PAGE>



PART II

ITEM 1. LEGAL PROCEEDINGS - None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The  Annual  Meeting  of  Stockholders  was  held on May 16,  2002.  Shares
entitled to vote at the Annual Meeting  totaled  14,079,538 of which  13,185,267
shares were represented at the meeting.

     The following five directors were elected at the Annual Meeting. Also shown
are the number of shares cast for and authorization withheld for each nominee.

      Name of Nominee           Number of Votes for    Authorization withheld
      ---------------           -------------------    ----------------------
      Robert T. David                13,059,786               125,481

      Michael A. F. Roberts          13,059,676               125,591

      William T. Ratliff, III        13,062,970               122,297

      Darryl W. Thompson             12,212,738               972,529

      David W. Whitehurst            13,059,917               125,350


ITEM 5. OTHER INFORMATION - None

ITEM 6.

     a.   EXHIBITS

             10.23 Employment Agreement between Registrant and Earl F. Wall
                   (Exhibit 10.23)

             10.24 Employment Agreement between Registrant and Michael R. Oswalt
                   (Exhibit 10.24)

     b.   REPORTS ON FORM 8-K - None



                                       17
<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                             TRIAD GUARANTY INC.

Date: August 14, 2002
                                             /s/ Michael E. Crow
                                             ------------------------------
                                             Michael E. Crow
                                             Vice President and Controller,
                                             Principal Accounting Officer











                                       18