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, 2000

                                       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, SUITE 500
                       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,
2000: 13,322,194 shares.


<PAGE>



                               TRIAD GUARANTY INC.

                                      INDEX
                                                                          Page
                                                                         Number
Part I. Financial Information:

     Item 1. Financial Statements:

     Consolidated Balance Sheets as of June 30, 2000 (Unaudited)
              and December 31, 1999.........................................3

     Consolidated Income Statements for the Three and Six Month
              Periods Ended June 30, 2000 and 1999 (Unaudited)..............4

     Consolidated Statements of Cash Flow for the Six Month
              Periods Ended June 30, 2000 and 1999 (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 4. Submission of Matters to a Vote of Security Holders...........15

     Item 6. Exhibits and Reports on Form 8-K..............................15

     Signatures............................................................16


                                        2

<PAGE>
                               TRIAD GUARANTY INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                          June 30,      December 31,
                                                            2000           1999
                                                       -------------   ------------
                                                         (Unaudited)
<S>                                                     <C>            <C>
Assets
Invested assets:
Fixed maturities, available-for-sale, at fair value ... $184,254,040   $164,579,416
Equity securities, available-for-sale, at fair value...   13,209,334     13,075,648
Short-term investments.................................    6,152,882     13,908,666
                                                        ------------   ------------
                                                         203,616,256    191,563,730

Cash...................................................    1,507,548        215,553
Real estate acquired in settlement of claims...........      150,370        145,515
Accrued investment income..............................    2,718,651      2,591,612
Deferred policy acquisition costs......................   21,232,951     19,906,877
Prepaid federal income taxes ..........................   43,089,666     35,415,666
Property and equipment.................................    7,710,676      5,915,262
Reinsurance recoverable................................        1,972         29,980
Other assets...........................................    7,988,836      7,356,357
                                                        ------------   ------------
Total assets........................................... $288,016,926   $263,140,552
                                                        ============   ============

Liabilities and stockholders' equity
Liabilities:
    Losses and loss adjustment expenses................ $ 14,571,328   $ 14,751,348
    Unearned premiums..................................    6,665,136      6,831,290
    Amounts payable to reinsurer.......................      568,164        319,294
    Current taxes payable..............................       70,272         70,272
    Deferred income taxes..............................   49,559,771     41,750,341
    Unearned ceding commission.........................    1,789,050        400,521
    Long-term debt.....................................   34,464,579     34,461,979
    Accrued interest on debt...........................    1,274,972      1,274,972
    Accrued expenses and other liabilities.............    4,109,456      6,208,079
                                                        ------------   ------------
Total liabilities......................................  113,072,728    106,068,096
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; 13,316,194
     shares issued and outstanding at June 30, 2000
     and 13,303,194 at December 31, 1999...............      133,162        133,032
  Additional paid-in capital...........................   62,198,558     61,972,312
  Accumulated other comprehensive income, net of
     income tax asset of $2,215,161 at June 30, 2000
     and $2,546,666 at December 31, 1999...............   (4,108,123)    (4,723,775)
  Deferred compensation................................     (177,478)       (69,414)
  Retained earnings....................................  116,898,079     99,760,301
                                                        ------------   ------------
Total stockholders' equity.............................  174,944,198    157,072,456
                                                        ------------   ------------
Total liabilities and stockholders' equity............. $288,016,926   $263,140,552
                                                        ============   ============
</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
                                                     -------------------------     --------------------------
                                                        2000            1999          2000           1999
                                                        ----            ----          ----           ----
<S>                                                  <C>            <C>            <C>            <C>
Revenue:
Premiums written:
   Direct........................................... $18,828,514    $15,945,500    $36,836,354    $31,053,137
   Assumed..........................................       1,892          3,677          5,732          9,309
   Ceded............................................  (1,112,400)      (455,834)    (2,060,808)      (722,842)
                                                     -----------    -----------    -----------    -----------
Net premiums written................................  17,718,006     15,493,343     34,781,278     30,339,604
Change in unearned premiums.........................     117,697        (32,982)       198,873        107,157
                                                     -----------    -----------    -----------    -----------
Earned premiums.....................................  17,835,703     15,460,361     34,980,151     30,446,761
Net investment income...............................   3,067,447      2,637,248      5,993,440      5,086,226
Realized investment gains...........................      35,803        175,239        813,684      1,032,240
Other income........................................       5,625          5,135         11,365          9,444
                                                     -----------    -----------    -----------    -----------
                                                      20,944,578     18,277,983     41,798,640     36,574,671
Losses and expenses:
Losses and loss adjustment expenses.................   2,052,470      1,353,935      3,623,251      4,275,940
Reinsurance recoveries..............................       7,230          1,055         32,587         (5,900)
                                                     -----------    -----------    -----------    -----------
Net losses and loss adjustment expenses.............   2,059,700      1,354,990      3,655,838      4,270,040
Interest expense on debt............................     692,563        702,479      1,385,100      1,394,917
Amortization of deferred policy acquisition costs...   2,027,741      1,752,797      4,027,889      3,469,262
Other operating expenses (net)......................   4,002,720      3,726,325      8,113,902      7,278,483
                                                     -----------    -----------    -----------    -----------
                                                       8,782,724      7,536,591     17,182,729     16,412,702
                                                     -----------    -----------    -----------    -----------
Income before income taxes..........................  12,161,854     10,741,392     24,615,911     20,161,969
Income taxes:
   Current..........................................         208          1,746            208         14,430
   Deferred.........................................   3,675,384      3,294,717      7,477,924      6,123,355
                                                     -----------    -----------    -----------    -----------
                                                       3,675,592      3,296,463      7,478,132      6,137,785
                                                     -----------    -----------    -----------    -----------
Net income.......................................... $ 8,486,262    $ 7,444,929    $17,137,779    $14,024,184
                                                     ===========    ===========    ===========    ===========

Earnings per common and
   common equivalent share:
   Basic............................................    $ .64          $ .56         $ 1.29         $ 1.05
                                                     ===========    ===========   ============    ===========
   Diluted..........................................    $ .62          $ .55         $ 1.25         $ 1.03
                                                     ===========    ===========   ============    ===========
Shares used in computing earnings per
   common and common equivalent share:
   Basic............................................  13,313,293     13,292,694     13,311,647     13,325,306
                                                     ===========    ===========   ============    ===========
   Diluted..........................................  13,674,441     13,576,596     13,665,191     13,631,947
                                                     ===========    ===========   ============    ===========
</TABLE>

                             See accompanying notes.

                                       4
<PAGE>
                               TRIAD GUARANTY INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                Six Months Ended
                                                                     June 30
                                                          ---------------------------
                                                               2000            1999
                                                               ----            ----
<S>                                                       <C>              <C>
Operating activities
Net income............................................... $ 17,137,779     $ 14,024,184
Adjustments to reconcile net income to net
 cash provided by operating activities:
   Loss and unearned premium reserves....................     (346,174)       2,416,315
   Accrued expenses and other liabilities................   (2,098,623)        (947,460)
   Current taxes payable.................................          ---           14,224
   Accrued investment income.............................     (127,039)        (197,803)
   Policy acquisition costs deferred.....................   (5,353,963)      (5,668,978)
   Amortization of policy acquisition costs..............    4,027,889        3,469,262
   Net realized investment gains ........................     (813,684)      (1,032,240)
   Provision for depreciation............................      364,009          367,101
   Accretion of discount on investments..................     (583,941)        (540,376)
   Deferred income taxes.................................    7,477,924        6,123,355
   Prepaid federal income tax............................   (7,674,000)      (3,881,000)
   Unearned ceding commission ...........................    1,388,529         (146,112)
   Real estate acquired in claim settlement..............       (4,855)        (145,515)
   Other assets..........................................     (599,759)        (603,743)
   Other operating activities............................      289,196          754,032
                                                          ------------     ------------
Net cash provided by operating activities................   13,083,288       14,005,246

Investing activities
 Securities available-for-sale:
     Purchases - fixed maturities........................  (23,513,548)     (22,712,451)
     Sales - fixed maturitie.s...........................    5,811,889       19,418,026
     Purchases - equities................................   (1,089,501)      (3,845,139)
     Sales - equities....................................    1,327,630        2,629,342
   Purchases of other invested assets....................          ---       (3,000,000)
   Purchase of property and equipment....................   (2,159,423)      (1,384,399)
                                                          ------------     ------------
Net cash used in investing activities....................  (19,622,953)      (8,894,621)

Financing activities
Purchase and subsequent retirement of common stock.......          ---       (2,602,187)
Proceeds from exercise of stock options..................       75,876          137,899
                                                          ------------     ------------
Net cash provided by (used in) financing activities......       75,876       (2,464,288)
                                                          ------------     ------------
Net change in cash and short-term investments............   (6,463,789)       2,646,337
Cash and short-term investments at beginning of period...   14,124,219        6,329,392
                                                          ------------     ------------
Cash and short-term investments at end of period.........  $ 7,660,430      $ 8,975,729
                                                          ============     ============
Supplemental schedule of cash flow information
Cash paid during the period for:
   Income taxes and United States Mortgage Guaranty
     Tax and Loss Bonds..................................  $ 7,674,208      $ 3,881,205
   Interest..............................................  $ 1,382,500      $ 1,382,500
</TABLE>

                             See accompanying notes.

                                        5
<PAGE>

                               TRIAD GUARANTY INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2000
                                   (Unaudited)


NOTE 1 -- THE COMPANY

     Triad Guaranty Inc. (the "Company") 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 to protect the lender  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 generally accepted accounting principles 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 generally  accepted  accounting  principles  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 month periods ended June
30, 2000 are not necessarily  indicative of the results that may be expected for
the year  ending  December  31,  2000.  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, 1999.


NOTE 3 -- CONSOLIDATION

     The consolidated  financial  statements include Triad Guaranty Inc. and its
wholly-owned   subsidiaries.   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-CONTINUED
                                  June 30, 2000
                                   (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 twenty-five  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, 2000 and December 31, 1999, as presented
below, was computed by applying the various percentage settlement options 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,
                                          2000                  1999

Net risk..........................  $ 3,468,931,315      $ 3,218,850,073
                                    ===============      ===============
Statutory capital and surplus.....  $    98,231,806      $    94,602,027
Statutory contingency reserve.....      131,456,247          113,813,344
                                    ---------------      ---------------
Total.............................  $   229,688,053      $   208,415,371
                                   ================      ===============
Risk-to-capital ratio.............      15.1-to-1            15.4-to-1
                                   ================      ===============


     Triad is  required  under  the  Illinois  Insurance  Code (the  "Code")  to
maintain minimum statutory capital and surplus of $5,000,000. In addition, Triad
Guaranty  Assurance  Corporation is required under the Code to maintain  minimum
capital and surplus of  $5,000,000.  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   Triad's   statutory   surplus  as  regards
policyholders,  or (b)  Triad's  statutory  net  income  for the  calendar  year
preceding the date of the dividend.

     Net income as determined in accordance with statutory  accounting practices
was  $23,606,073  for the six months ended June 30, 2000 and $40,019,488 for the
year ended December 31, 1999.

     At June 30, 2000 and December 31, 1999,  the amount of Triad's  equity that
could be paid out in dividends to stockholders  was $14,515,878 and $10,886,099,
respectively,  which was the  earned  surplus of Triad on a  statutory  basis on
those dates.


                                        7

<PAGE>


                               TRIAD GUARANTY INC.
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                  June 30, 2000
                                   (Unaudited)

     LOSS  RESERVES  -  Triad  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 Triad.  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,  and 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 is divided  into 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 month  periods ended June 30, 2000 and 1999,  the Company's  comprehensive
income  was $8.1  million  and $4.9  million,  respectively.  For the six  month
periods  ended June 30, 2000 and 1999,  the Company's  comprehensive  income was
$17.8 million and $10.1 million, respectively.










                                        8
<PAGE>


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

RESULTS OF OPERATIONS

     Net  income  for the first  six  months  of 2000  increased  22.2% to $17.1
million  compared to $14.0 million for the first six months of 1999.  Net income
for the second quarter of 2000 increased 14.0% to $8.5 million  compared to $7.4
million  for the  second  quarter  of 1999.  This  improvement  is  attributable
primarily to a 14.9% (15.4% in the second quarter)  increase in earned premiums,
a 17.8% (16.3% in the second quarter) increase in net investment  income,  and a
14.4% decrease in net loss and loss adjustment expenses.

     Net income per share on a diluted  basis  increased  21.9% to $1.25 for the
first six months of 2000 compared to $1.03 per share for the first six months of
1999. Net income per share for the second quarter of 2000 was $0.62 on a diluted
basis  compared  to $0.55  per  share  for the same  period  of 1999.  Operating
earnings  per share were $1.22 for the first half of 2000  compared to $0.98 for
the first half of 1999,  an increase of 24.1%.  Operating  earnings  exclude net
realized  investment  gains of  approximately  $814,000  and $1.0 million in the
first half of 2000 and 1999, respectively.

     Net new insurance written was $1.9 billion for the first six months of 2000
as  compared  to $2.5  billion  for the first six months of 1999,  a decrease of
24.1%. For the second quarter, net new insurance written totaled $1.1 billion in
both 2000 and 1999. The decrease in new insurance written for the six months was
primarily  the result of declines in the  industry  mortgage  insurance  market,
however  this decline in the industry  market  moderated  somewhat in the second
quarter.  Driven by a higher interest rate  environment,  the total industry net
new mortgage  insurance written market decreased 25.3% in the first half of 2000
as  compared to the first half of 1999.  According  to  industry  data,  Triad's
national  market  share of net new  insurance  written  was 2.7% for the  second
quarter  and 2.5% for the first six months of 2000 as  compared to 2.3% and 2.5%
for the  respective  periods in 1999.  Total direct  insurance in force  reached
$14.0  billion at June 30, 2000,  compared to $12.1 billion at June 30, 1999, an
increase of 15.4%.

     Direct  premiums  written  were $36.8  million  for the first six months of
2000, an increase of 18.6% compared to $31.1 million for the first six months of
1999. Net premiums written  increased by 14.6% to $34.8 million in the first six
months of 2000  compared to $30.3  million  for the same period of 1999.  Earned
premiums  increased 14.9% to $35.0 million for the first six months of 2000 from
$30.4  million  for the first six months of 1999.  This  growth in  written  and
earned premiums  resulted from both new insurance  written and an improvement in
the Company's  persistency.  Approximately 41.1% of new insurance written during
2000  is  subject  to  captive  mortgage   reinsurance  and  other  risk-sharing
arrangements  compared to 22.9% of new insurance  written in all of 1999.  Ceded
premiums  for the first half of 2000,  which  includes  third party  reinsurance

                                        9
<PAGE>


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


arrangements as well as captive reinsurance agreements,  increased 185% over the
same period of 1999.  This increase in ceded  premiums is due to more  insurance
being  written under  risk-sharing  arrangements  and the Company's  purchase of
additional  excess of loss reinsurance to meet rating agency capital  guidelines
for expected levels of insurance growth.  Management  anticipates ceded premiums
will continue to increase as a result of the expected  increase in  risk-sharing
programs.

     Refinance  activity was 12.8% of new insurance written in the first half of
2000  compared  to  34.1%  of  insurance  written  in the  first  half of  1999,
reflecting  the rise in interest  rates since  early 1999.  Persistency,  or the
amount of insurance in force  remaining  from one year prior,  was 83.2% at June
30, 2000,  compared to 66.6% at June 30,  1999,  and 77.1% at December 31, 1999.
Sales  under  the  Company's  monthly  premium  plan  represented  95.2%  of new
insurance written in the first half of 2000 compared to 96.8% in the same period
of 1999.

     Net investment income for the first six months of 2000 was $6.0 million,  a
17.8% increase over $5.1 million in the first six months of 1999. Net investment
income for the second  quarter of 2000 was $3.1 million,  a 16.3%  increase over
the second quarter of 1999. This increase in investment  income is the result of
growth in the average book value of invested  assets by $27.0  million to $203.9
million at June 30, 2000,  from $176.9  million at June 30, 1999.  The growth in
invested  assets is  attributable  to normal  operating  cash flow. The yield on
average  invested assets  increased to 5.9% for the first six months of 2000, as
compared to 5.8% for the first six months of 1999.  This  increase in yield is a
result  of  increased   investments  into  higher  yielding   intermediate  term
securities. The portfolio's tax- equivalent yield was 7.9% for the first half of
2000  versus  7.8%  for the  first  half  of  1999.  Based  on  amortized  cost,
approximately 70% or $134.8 million of the Company's fixed maturity portfolio at
June 30, 2000, was composed of state and municipal  tax-preferred  securities as
compared to 72% or $113.0 million at June 30, 1999.

     The Company's loss ratio (the ratio of incurred losses to earned  premiums)
was 10.5% for the first half of 2000 as  compared to 14.0% for the first half of
1999 and 11.1% for all of 1999.  The loss ratio was 11.5% for the second quarter
of 2000 compared to 8.8% for the second quarter of 1999. The Company's favorable
loss ratio  reflects  the low level of  delinquencies  compared to the number of
insured  loans and the fact that as of June 30, 2000,  approximately  77% 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 new
insurance  written in  previous  years has been  quite  favorable,  the  Company
expects its incurred  losses to increase as a greater amount of its insurance in

                                       10
<PAGE>


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


force reaches its anticipated highest claim frequency years. Due to the inherent
uncertainty of future premium levels,  losses,  economic  conditions,  and other
factors that impact  earnings,  it is  impossible  to predict with any degree of
certainty the impact of such higher claim frequencies on future earnings.

     Net losses and loss  adjustment  expenses (net of  reinsurance  recoveries)
decreased by 14.4% in the first six months of 2000 to $3.7  million  compared to
$4.3  million  for the same  period  of 1999.  Net  losses  and loss  adjustment
expenses  for the  second  quarter of 2000 and 1999 were $2.1  million  and $1.4
million,  respectively.  This year-to-date decrease is reflective of the current
strong economy,  claim mitigation efforts, and fewer severely defaulted policies
as compared to a year ago.

     Amortization  of deferred  policy  acquisition  costs increased by 16.1% to
$4.0  million in the first six months of 2000  compared to $3.5  million for the
first six months of 1999.  These costs were $2.0 million for the second  quarter
of 2000 compared to $1.8 million for the second  quarter of 1999, an increase of
15.7%.  The  increase  in  amortization  reflects a growing  balance of deferred
policy  acquisition  costs to amortize as the Company builds its total insurance
in force.

     Other operating  expenses increased 11.5% to $8.1 million for the first six
months of 2000  compared to $7.3  million  for the same period in 1999.  For the
second quarter of 2000, other operating  expenses increased to $4.0 million from
$3.7  million in the second  quarter  of 1999.  This  increase  in  expenses  is
primarily  attributable  to  advertising,   production,   personnel,  technology
enhancements,   geographic  expansion,  and  the  research,   development,   and
implementation costs associated with risk-sharing structures.  The expense ratio
(ratio of underwriting  expenses to net premiums  written) for the first half of
2000 was 34.9% compared to 35.4% for the first half of 1999 and 34.5% for all of
1999.  The expense  ratio for the second  quarter of 2000 was 34.0%  compared to
35.4% for the second quarter of 1999.

     The effective tax rate was 30.4% for the first six months of 2000 and 1999.
Management expects the Company's  effective tax rate to remain about the same as
long as yields  from new  funds  invested  in  tax-preferred  securities  remain
favorable in relation to fully taxable securities.

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, expenses, and taxes.


                                       11
<PAGE>


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


     The Company generated positive cash flow from operating  activities for the
first six months of 2000 of $13.1 million compared to $14.0 million for the same
period of 1999. The decrease in Triad's  operating cash flow reflects  increases
in  shared  premiums  and  fee  payments  due to  reinsurance  and  risk-sharing
agreements,  paid losses, taxes, and underwriting expenses that more than offset
the growth in new and renewal premiums.

     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 cash  dividends,  management  fees, and interest  payments
under surplus notes.  The insurance laws of the State of Illinois impose certain
restrictions  on dividends from Triad.  These  restrictions,  based on statutory
accounting  practices,  include requirements that dividends may be paid only out
of statutory earned surplus as of the end of the preceding fiscal year and limit
the amount of dividends  that may be paid without prior approval of the Illinois
Insurance Department.  The Illinois Insurance Department permits expenses of the
parent company to be reimbursed by Triad in the form of management fees.

     Consolidated invested assets were $203.6 million at June 30, 2000, compared
to $191.6  million at December 31, 1999.  Fixed  maturity  securities and equity
securities classified as  available-for-sale  totaled $197.5 million at June 30,
2000. Net unrealized  investment  gains were $1.4 million on equity  securities,
and net  unrealized  investment  losses  were  $7.8  million  on fixed  maturity
securities  at  June  30,  2000.  The  fixed  maturity  portfolio  consisted  of
approximately  70%  municipal  securities,  22%  corporate  securities,  7% U.S.
government obligations, and 1% mortgage-backed bonds at June 30, 2000.

     The Company's  loss reserves were $14.6 million at June 30, 2000,  compared
to $14.8  million at December  31,  1999.  The loss  reserves at June 30,  2000,
reflect a slight decrease in severity of the Company's delinquent loans from the
levels reported at December 31, 1999.  Consistent with industry  practices,  the
Company does not  establish  loss  reserves for future  claims on insured  loans
which are not currently in default.  The Company's  reserves per delinquent loan
were  $21,000 at June 30, 2000,  compared to $21,400 at December  31, 1999.  The
Company's  delinquency  ratio,  the ratio of  delinquent  insured loans to total
insured  loans,  was 0.60% at June 30,  2000,  compared to 0.64% at December 31,
1999.

     Total  stockholders'  equity  increased to $174.9 million at June 30, 2000,
from $157.1 million at December 31, 1999. This increase resulted  primarily from
net income of $17.1  million for the first half of 2000 and by the change in net
unrealized gains and losses on invested assets classified as  available-for-sale
of $616,000 (net of income tax).

                                       12
<PAGE>


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


     Triad's total statutory  policyholders'  surplus increased to $98.2 million
at June 30,  2000,  from $94.6  million at  December  31,  1999.  This  increase
resulted  primarily  from  statutory  net income of $23.6  million  offset by an
increase  in  the  statutory  contingency  reserve  of  $17.6  million.  Triad's
statutory  earned surplus was $14.5 million at June 30, 2000,  compared to $10.9
million at December 31, 1999,  reflecting,  primarily,  growth in statutory  net
income  greater  than  the  increase  in  the  statutory   contingency  reserve.
Approximately $288,000 and $1.0 million of the statutory earned surplus for June
30, 2000, and December 31, 1999,  respectively,  was  attributable to unrealized
gains.  The balance in the statutory  contingency  reserve was $131.5 million at
June 30, 2000, compared to $113.8 million at December 31, 1999.

     Triad's  ability  to write  insurance  depends  on the  maintenance  of its
claims-paying  ability  ratings  and the  adequacy of its capital in relation to
risk in force. 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, 2000, Triad's  risk-to-capital ratio was 15.1-to-1, as compared to 15.4-to-1
at December 31, 1999,  and 14.8-to-1 for the industry as a whole at December 31,
1999, the latest industry data available.

     The  Company is  undertaking  modifications  and  upgrades  to enhance  its
computer systems and  technological  capabilities.  The Company expects to incur
approximately $7.2 million for this system conversion and upgrade (approximately
$6.2 million in  capitalized  costs have been  incurred for the project  through
June 30, 2000) and is funding the project through cash flow from operations.

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  issuance  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 new  insurance  written could be 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 be
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  claims-paying  ability 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

                                       13
<PAGE>


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


rates,  may have an adverse  effect on  earnings;  the  amount of new  insurance
written  and the  growth of  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;  the  Company's  performance  may be  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.
Accordingly,  actual  results  may differ  from those set forth in the  forward-
looking  statements.  Attention is also directed to other risk factors set forth
in documents filed by the Company with the Securities and Exchange Commission.























                                       14

<PAGE>



PART II

ITEM 1.  LEGAL PROCEEDINGS - NONE

ITEM 2.  CHANGES IN SECURITIES - 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 18,  2000.  Shares
entitled to vote at the Annual Meeting  totaled  13,313,194 of which  12,266,848
shares were represented at the meeting.

     At the Annual Meeting, the following five director were elected. 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                 12,208,626                 58,222
      Raymond H. Elliott              12,208,626                 58,222
      William T. Ratliff, III         12,201,126                 65,722
      Darryl W. Thompson              12,100,617                166,231
      David W. Whitehurst             12,201,126                 65,722


     No other  matters  came  before  the  Annual  Meeting  or any  adjournments
thereof.

ITEM 5.  OTHER INFORMATION - NONE

ITEM 6.    A.  EXHIBITS

                      Exhibit No.                     Description
                      -----------                     -----------
                          27                     Financial Data Schedule










                                       15

<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, 2000
                                          /s/ Michael R. Oswalt
                                          ------------------------
                                          Michael R. Oswalt
                                          Senior Vice President and Controller,
                                          Principal Accounting Officer














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