Prohibits all stockholder dividends from Triad to TGI without the prior approval of the Department;
Effective June 1, 2009, all valid claims under Triad’s mortgage guaranty insurance policies are settled 60% in cash and 40% by recording a DPO;
The following table provides details on the amount of settled claims and the number of settled claims of both Primary and Modified Pool insurance for the years ended December 31, 2009 and 2008:
On December 1, 2009, we sold our information technology and operating platform to Essent, a new mortgage insurer. Under the terms of the purchase agreement, Essent acquired all of our proprietary mortgage insurance software and substantially all of the supporting hardware, as well as certain other assets, in exchange for up to $30 million in cash and the assumption by Essent of certain contractual obligations. Approximately $15 million of the consideration is fixed and up to an additional $15 million is contingent on Essent writing a certain minimum amount of insurance in the five-year period following closing. During the 2009 fourth quarter, we received the initial $10 million installment of the purchase price. Essent has established its operations and technology center in Winston-Salem, North Carolina and a number of our former information technology and operations employees have joined Essent as contemplated by the agreement. At the closing of the transaction with Essent, we also entered into a services agreement, pursuant to which Essent is providing ongoing information systems maintenance and services, customer service and policy administration support to Triad. Until December 2010, we pay a pre-determined amount for each month of service; after December 2010 the fees will be based on the number of policies in force. During the initial five-year term of the services agreement, the fees we pay to Essent will be at least $150,000 per month.
Included in policyholders’ surplus of the primary insurance subsidiary, TGIC, is a surplus note of $25 million payable to TGI. The Corrective Orders prohibit the accrual of and payment of the interest on the surplus note without prior approval by the Department, which has broad discretion to approve or disapprove any such payment. We do not expect that TGIC will be able to pay any principal or interest on this note for the foreseeable future. In 2009, TGI wrote off the $25 million surplus note and reversed accrued interest of $4.4 million on its financial statements as an other-than-temporary impairment. This other-than-temporary impairment did not affect TGI’s consolidated results of operations.
We lease office facilities and office equipment at our Winston-Salem location under operating leases with minimum lease commitments that are set to expire in 2012. Terms of the Essent agreement provided for the sub-lease of certain office space from Triad (representing approximately 40% of the space for which Triad is committed to) at the same rates for which Triad is paying. We had no capitalized leases or material purchase commitments at December 31, 2009. Our long-term debt has a single maturity date of 2028.
the possibility that there will not be adequate interest in our common stock to ensure efficient pricing on the over the counter markets; and