Exhibit 99.1
| | |
The PMI Group, Inc. |
| |
| | NEWS RELEASE |
| | Investor and media contacts: |
| |
| | | Glen Corso / Matt Nichols |
| |
| | | 925.658.6429 / 925.658.6618 |
FOR IMMEDIATE RELEASE:
THE PMI GROUP, INC. REPORTS NET INCOME PER SHARE
FOR 2003 of $3.26
Walnut Creek, CA, January 27, 2004, —The PMI Group, Inc. (NYSE:PMI) (the Company) today announced thatnet income per share totaled $0.82 for the fourth quarter 2003 and $3.26 for 2003, as compared to $0.92 and $3.79 for the same periods in 2002.Net income was $77.2 million for the fourth quarter of 2003 and $296.4 million for 2003, compared to $84.3 million and $346.2 million for the same periods a year ago. Net income for the fourth quarter of 2003 includes $8.9 million of income from discontinued operations of American Pioneer Title Insurance Company (APTIC) and a $2.4 million extraordinary gain related to the write-off of negative goodwill from our recently completed investment in Financial Guaranty Insurance Company (FGIC).
Combined1 new insurance written was $19.2 billion for the fourth quarter of 2003 and $86.6 billion for 2003, as compared to $18.0 billion and $67.7 billion for the same periods a year ago.Combined insurance in force at December 31, 2003 was $195.5 billion, compared to $191.2 billion at September 30, 2003 and $172.6 billion at December 31, 2002.
Consolidated net premiums written totaled $350.9 million for the fourth quarter of 2003 and $876.0 million for 2003, compared to $168.3 million and $691.6 million for the same periods a year ago. The increase for the quarter and year was the result of increases in net premiums written in the fourth quarter of 2003 for U.S. Mortgage Insurance Operations and International Mortgage Insurance Operations.
Consolidated premiums earned totaled $182.4 million for the fourth quarter of 2003 and $696.9 million for 2003, compared to $177.2 million and $676.9 million for the same periods a year ago. The increase was largely the result of the increase in premiums earned for the International Mortgage Insurance Operations.
| 1 | “Combined” includes results from U.S. Mortgage Insurance Operations (“U.S.MIO”), CMG Mortgage Insurance Company and PMI Australia. |
Consolidatedlosses and loss adjustment expenses totaled $59.4 million for the fourth quarter of 2003 compared to $41.2 million for the same period a year ago and $209.1 million for 2003, versus $157.6 million for 2002. The 2003 increase in losses and loss adjustment expenses for the quarter and year was largely the result of an increase in claims paid by the U.S. Mortgage Insurance Operations.
Consolidatedgross loss reserves grew to $346.9 million at December 31, 2003, a 4 percent increase over 2002, led by a $9.5 million increase for U.S. Mortgage Insurance Operations.
Consolidatedother underwriting and operating expenses totaled $46.3 million for the fourth quarter of 2003 and $175.7 million for 2003, compared to $41.1 million and $144.9 million for the same periods in 2002. In addition, litigation settlement expense totaled $12.2 million for the fourth quarter of 2002 and for 2002. Lease abandonment and relocation expenses totaled $12.2 million for 2002. The increases for 2003 compared to 2002 were primarily due to an increase in other underwriting and operating expenses for the Company’s U.S. and international mortgage insurance businesses as well as an increase in contract underwriting remedies for the Company’s contract underwriting unit.
2
BUSINESS SEGMENTS
The following business segment financial results and discussion conform to the reclassification of business segments as set forth in Appendix A to the financial tables. Prior periods have been reclassified to make current results directly comparable to previous results.
| | | | | | | | | | | | | | | | |
| FOURTH QUARTER SEGMENT HIGHLIGHTS |
| | | | | |
| (Dollars in millions) | | U.S. Mortgage
Insurance
Operations2
| | International
Mortgage
Insurance
Operations3
| | Financial Guaranty4
| | Other5
| | | Total
|
Net premiums written | | $ | 252.9 | | $ | 98.0 | | | — | | | — | | | $ | 350.9 |
Premiums earned | | | 145.2 | | | 37.2 | | | — | | | — | | | | 182.4 |
Equity in earnings | | | 3.8 | | | — | | $ | 3.8 | | $ | (4.0 | ) | | | 3.6 |
Total revenues | | | 180.8 | | | 45.3 | | | 3.8 | | | 2.8 | | | | 232.7 |
Losses, expenses and interest | | | 98.1 | | | 10.8 | | | — | | | 27.9 | | | | 136.7 |
Net income from discontinued operations | | | — | | | — | | | — | | | 8.9 | | | | 8.9 |
Extraordinary gain related to the write-off of negative goodwill from FGIC | | | — | | | — | | | 2.4 | | | — | | | | 2.4 |
Net Income | | $ | 59.4 | | $ | 24.2 | | $ | 5.6 | | $ | (11.9 | ) | | $ | 77.2 |
| 2 | “US Mortgage Insurance Operations” includes the results of PMI Mortgage Insurance Co. and affiliated U.S. reinsurance companies and equity in earnings from CMG Mortgage Insurance Company. |
| 3 | “International Mortgage Insurance Operations” includes the results of PMI Australia, PMI Europe and the results of operations in Hong Kong. |
| 4 | “Financial Guaranty” includes the equity in earnings from FGIC and RAM Re. The Company acquired a 42 percent common equity ownership in FGIC on December 18, 2003. |
| 5 | “Other” includes the results from the holding company, equity in earnings/losses from Fairbanks Capital, limited partnerships, PMI Mortgage Services Co., dormant insurance companies and discontinued operations consisting of APTIC. |
U.S. Mortgage Insurance Operations
U.S. Mortgage Insurance Operations, which includes PMI Mortgage Insurance Co., affiliated U.S. reinsurance companies and equity in the earnings from CMG Mortgage Insurance Company (CMG), hadnet income for the fourth quarter of 2003 of $59.4 million, compared to $63.6 million for the same period in 2002.Net income for 2003 was $245.5 million, compared to $280.8 million in 2002. The decline in net income for the quarter and year was largely the result of an increase in losses and loss adjustment expenses, a decline in premiums earned and an increase in other underwriting and operating expenses.
3
U.S. Mortgage Insurance Operations reportednet premiums written of $252.9 million for the fourth quarter of 2003 and $685.1 million for 2003, as compared to $147.4 million and $609.0 million for the same periods a year ago. The increase in premiums written in the fourth quarter of 2003 and for 2003 was largely the result of a single transaction in which certain existing primary insurance policies with an aggregate unpaid principal balance of $2.9 billion were restructured in exchange for a single premium of approximately $114 million. Approximately $5 million of this premium was earned in the fourth quarter of 2003, with the balance to be earned over the next ten years.
Premiums earned totaled $145.2 million for the fourth quarter of 2003 and $592.8 million for 2003, as compared to $153.4 million and $611.1 million for the same periods a year ago. The decrease in premiums earned reflects the combined impact of lower persistency, an increase in premiums ceded under captive reinsurance agreements as well as a pre-tax $8.4 million cumulative adjustment to ceded premiums recognized in the fourth quarter of 2003. The adjustment, which decreases 2003 net income, was made to reflect a more appropriate accounting treatment of captive reinsurance premium cessions related to the periods 1998 through 2003.
Interest and dividend income totaled $35.6 million for the fourth quarter of 2003 and $103.1 million for 2003 compared to $21.8 million and $86.5 million, respectively, for the same periods a year ago. The increase in interest and dividend income was largely the result of adjustments made in the fourth quarter of 2003 to reflect the appropriate accounting treatment related to the amortization of discounts and call premiums on bonds that have been called for early redemption. The adjustments related to the periods 2000 through 2003 and included a reclassification of $5.2 million pre-tax of net realized gains to interest income as well as a yield adjustment of $5.1 million pre-tax related to the amortization of the purchase discounts. The net result was a 2003 pre-tax increase in interest and dividend income of $10.3 million and a pre-tax decrease in net realized investment gains of $5.2 million.
Other underwriting and operating expenses totaled $19.5 million for the fourth quarter 2003 and $72.2 million for 2003, compared to $12.0 million and $56.1 million for the same periods a year ago. In addition, litigation settlement expense totaled $12.2 million for the fourth quarter of 2002 and for 2002. Lease abandonment and relocation expense totaled $9.3 million for 2002. The increase for the quarter was primarily the result of a reduction in the allocation of underwriting expenses to the Company’s contract underwriting unit as a result of lower contract underwriting revenues and an increase in operating expenses. The decrease for the year was the result of the absence of the one-time charges in 2003.
Over the course of 2004, the Company will consolidate certain field underwriting and sales offices and reduce the number of field personnel. The impact from consolidation is presently
4
expected to result in annual pre-tax savings of approximately $2 million to $3 million beginning in 2005. Charges for the present value of the remaining lease obligations and severance expense to be incurred throughout 2004 are expected to total $3 million to $4 million.
NEW INSURANCE WRITTEN
| | | | | | | | | | | | |
(Dollars in billions)
| | Q4 2003
| | 2003
| | Q4 2002
| | 2002
|
Domestic6 new primary mortgage insurance written | | $ | 13.3 | | $ | 64.3 | | $ | 14.8 | | $ | 53.2 |
Excluding CMG | | | 11.9 | | | 57.3 | | | 13.2 | | | 47.8 |
Bulk transactions | | | 1.4 | | | 7.1 | | | 0.7 | | | 3.2 |
Domestic mortgage pool insurance written | | | 8.4 | | | 16.0 | | | 5.0 | | | 18.7 |
| 6 | “Domestic” includes results from U.S. mortgage insurance operations and CMG. |
PRIMARY MORTGAGE INSURANCE IN FORCE
| | | | | | | | | | | | |
(Dollars in billions)
| | as of 12/31/03
| | | as of 9/30/03
| | | as of 12/31/02
| |
Domestic primary insurance in force | | $ | 117.8 | | | $ | 116.7 | | | $ | 118.5 | |
Excluding CMG | | | 105.2 | | | | 104.6 | | | | 107.6 | |
Domestic primary risk in force | | | 27.4 | | | | 27.1 | | | | 27.7 | |
Excluding CMG | | | 24.7 | | | | 24.5 | | | | 25.2 | |
Domestic primary persistency rate | | | 45.1 | % | | | 42.4 | % | | | 56.6 | % |
Excluding CMG | | | 44.6 | % | | | 41.9 | % | | | 56.2 | % |
At year-end 2003,domestic primary insurance in force totaled $117.8 billion, a decrease of 0.6 percent from a year ago. The decline in primary insurance in force for the year was a result of policy cancellations outpacing new insurance written. The increase in insurance in force from the third quarter of 2003 was the result of a decline in policy cancellations.
PRIMARY MORTGAGE INSURANCEAND POOL INSURANCE DEFAULT RATE
| | | | | | | | | |
| | | as of 12/31/03
| | | as of
9/30/03
| | | as of 12/31/02
| |
Domestic primary mortgage insurance | | 4.10 | % | | 3.96 | % | | 3.84 | % |
Excluding CMG | | 4.53 | % | | 4.36 | % | | 4.18 | % |
Excluding CMG and bulk transactions | | 3.89 | % | | 3.77 | % | | 3.52 | % |
Bulk transactions only | | 9.45 | % | | 8.95 | % | | 10.37 | % |
Pool insurance | | 4.36 | % | | 4.18 | % | | 2.28 | % |
5
At December 31, 2003, PMI’s primary insurancedelinquent loan inventory excluding CMG, was 37,445 compared to 36,171 at September 30, 2003 and 36,537 at December 31, 2002. The year-over-year increase in primary delinquencies was due to higher levels of unemployment in the economy and the seasoning of the primary portfolio.
At December 31, 2003, thedefault rate of PMI’s pool insurance portfolio increased to 4.36 percent compared to 4.18 percent at September 30, 2003 and 2.28 percent at December 31, 2002. The increase in the default rate from the prior quarter and the prior year was a result of the increase in the inventory of delinquent loans. Delinquent inventory was 16,763 policies at December 31, 2003 compared to 15,929 at September 30, 2003. Pool risk in force as of December 31, 2003 was $2.9 billion, as compared to $3.1 billion at December 31, 2002. Approximately one-third of PMI’s pool risk in force is subject to a first-loss deductible.
CLAIMS PAID – EXCLUDING CMG
| | | | | | | | | | | | |
(Dollars in millions)
| | Q4 2003
| | 2003
| | Q4 2002
| | 2002
|
Claims paid | | | | | | | | | | | | |
Primary – traditional flow | | $ | 32.9 | | $ | 113.5 | | $ | 20.5 | | $ | 72.4 |
Primary – bulk | | | 16.9 | | | 61.5 | | | 9.2 | | | 27.4 |
| | |
|
| |
|
| |
|
| |
|
|
Total primary | | | 49.8 | | | 175.0 | | | 29.7 | | | 99.8 |
Total pool | | | 4.8 | | | 17.3 | | | 2.6 | | | 10.6 |
| | |
|
| |
|
| |
|
| |
|
|
Total claims paid | | $ | 54.6 | | $ | 192.3 | | $ | 32.3 | | $ | 110.4 |
Primary claims paid totaled $49.8 million for the fourth quarter of 2003, compared to $29.7 million for the same period a year ago and $175.0 million for 2003 versus $99.8 million in 2002. We believe the increase in primary claims paid was influenced by the seasoning of our insurance portfolio, higher levels of unemployment in the economy and the higher delinquency rate we experienced in the portion of the portfolio that is below “A” credit quality.
Theequity in earnings in PMI Mortgage Insurance Co.’s investment in CMG Mortgage Insurance Company increased to $3.8 million for the fourth quarter of 2003, compared to $3.6 million for the same period a year ago, and $13.6 million for 2003 versus $12.4 million in 2002.
Additional portfolio information for 2002 and 2003 for U.S. Mortgage Insurance Operations by quarter is presented on page 12 of Appendix A.
6
International Mortgage Insurance Operations
International Mortgage Insurance Operations reportednet income of $24.2 million for the fourth quarter of 2003 and $78.6 million for 2003, as compared to $12.9 million and $48.4 million for the same periods a year ago. Net income for both PMI Australia and PMI Europe increased over 2002. The impact of the change in foreign exchange rates on net income was an increase of $3.8 million for the fourth quarter of 2003 and $8.7 million for 2003 based on the exchange rates at December 31, 2002.
Interest and dividend income for International Mortgage Insurance Operations totaled $9.0 million for the fourth quarter of 2003 and $31.3 million for 2003, as compared to ($2.7) million and $15.0 million for the same periods a year ago. The increase for the quarter and year was attributable to cumulative adjustments recorded by PMI Australia in the fourth quarter of 2002 which resulted in a pre-tax $11.2 million decrease to interest income and the increase in the investment portfolio of PMI Europe as a result of the pending acquisition of the UK lenders’ mortgage insurance portfolio from Royal and Sun Alliance Insurance Group plc. (R&SA).
Net income from PMI Australia increased to $15.5 million for the fourth quarter of 2003 and $62.4 million for 2003, compared to $11.0 million and $43.3 million for the same periods a year ago, largely as a result of a decrease in losses and loss adjustment expenses, the strengthening of the Australian dollar and an increase in premiums earned.
PMI Australia’s fourth quarter of 2002 net income included several cumulative adjustments, covering the periods September 1999 through September 2002, which were made to conform to U.S. generally accepted accounting principles (GAAP). The net effect of these adjustments was an increase in net income for the fourth quarter of 2002 of $1.3 million.
For PMI Australia,losses and loss adjustment expenses totaled $0.4 million for the fourth quarter of 2003 and ($8.2) million for 2003, compared to $1.3 million and $7.1 million for the same periods a year ago. The improvement was largely the result of declines in delinquent loan inventory and claims paid.Premiums earned increased to $26.3 million for the fourth quarter of 2003 and $85.1 million for 2003, compared to $22.1 million and $59.9 million for the same periods a year ago, largely as a result of an increase in new insurance written.
Primaryinsurance in force at PMI Australia was $77.7 billion at December 31, 2003 compared to $54.1 billion at December 31, 2002. The increase was attributable to the $22.3 billion of new insurance written for 2003.
Net income for PMI Europe totaled $7.1 million for the fourth quarter of 2003 and $11.0 million for 2003, as compared to $1.1 million and $1.5 million for the same periods a year ago. The
7
2003 increase for the quarter and year was largely attributable to the increase in premiums earned and net investment income as a result of the reinsurance arrangement that was part of the pending acquisition of the UK lenders’ mortgage insurance portfolio from R&SA and a related reinvestment arrangement.
Net premiums written for PMI Europe totaled $51.1 million for the fourth quarter of 2003 and $55.4 million for 2003, as compared to $0.8 million and $2.3 million for the same periods a year ago. The increase in net premiums written was largely the result of the reinsurance arrangement that was part of the pending acquisition of the UK lenders’ mortgage insurance portfolio from R&SA.
Premiums earned for PMI Europe increased to $9.2 million for the fourth quarter of 2003 and $13.7 million for 2003, as compared to $0.8 million and $2.1 million for the same periods a year ago, largely the result of the pending acquisition of the UK lenders’ mortgage insurance portfolio from R&SA.
Insurance in force atPMI Europe totaled $31.6 billion at December 31, 2003, compared to $6.5 billion at December 31, 2002.Risk in force at PMI Europe was $3.1 billion at December 31, 2003 and $0.5 billion at December 31, 2002.
Beginning July 1, 2003, Statement of Financial Accounting Standards No. 149,Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities, requires certain credit default swaps entered into by PMI Europe to be accounted for as derivatives. Those derivative financial instruments are reported on the balance sheet at fair value, and subsequent changes in fair value are recognized in net income. Mark-to-market loss on derivative instruments was $0.5 million for the fourth quarter and year ended 2003 is included in other income.
Financial Guaranty
Financial Guaranty, which includes our investments in FGIC and RAM Re, reported net income of $5.6 million for the fourth quarter of 2003 and $7.4 million for 2003, compared to $0.7 million and $2.8 million for the same periods a year ago. The increase was largely the result of our investment in FGIC, which closed on December 18, 2003. Our share of net income from FGIC was $4.6 million for the fourth quarter of 2003, which included an extraordinary item related to the write-off of negative goodwill of $2.4 million.
The Company’s equity in earnings fromRAM Re totaled $1.5 million for the fourth quarter of 2003 and $4.2 million for 2003, as compared to $1.1 million and $4.2 million for the same periods a year ago. The 2003 increase in the fourth quarter was largely the result of the increase in the Company’s investment in RAM Re as well as an increase in premiums earned. The equity in
8
earnings for 2003 were largely unchanged as a result of RAM Re’s $4.1 million increase to its provisions for losses in the first quarter of 2003 and a $1.9 million of other than temporary impairments to its investment portfolio recorded in the first quarter of 2003, offset by the increase in PMI’s investment in RAM Re and the increase in RAM Re’s premiums earned for the year 2003. PMI reports equity in earning from RAM Re on a one-quarter lag.
Other
PMI’s Other business segment, which consists of revenue and expenses of the holding company, PMI Mortgage Services Co., equity in earnings/losses from Fairbanks Capital, other limited partnerships and discontinued operations of APTIC, had anet loss of $11.9 million for the fourth quarter of 2003 and $35.1 million for 2003 compared to net income of $7.1 million and $14.3 million for the same periods a year ago. The results were caused primarily by our share of the loss of Fairbanks Capital, an increase in holding company expenses and an increase in contract underwriting remedies paid.
Equity in the loss of Fairbanks Capitalwas $3.5 million for the fourth quarter of 2003 compared to equity in earnings of $7.5 million for the fourth quarter 2002. Equity in the loss for 2003 totaled $17.7 million compared to equity in earnings of $22.4 million for 2002. The loss for the fourth quarter of 2003 was largely the result of the decrease in servicing fee income and legal expenses related to state regulatory actions and litigation. The loss for the year 2003 was largely the result of the expenses recorded by Fairbanks Capital in the third quarter of 2003 in connection with the one-time charge for the FTC and HUD settlement, the related estimated costs of such settlement, estimated costs of preliminary settlement of the putative class actions and the estimated costs and fines relating to certain pending state regulatory actions. PMI’s proportionate share of such aggregate expenses was $17.8 million after tax, and was recorded in the third quarter of 2003.
PMI evaluated its total investment in Fairbanks Capital of approximately $141.8 million, consisting of $115.8 million book value of equity investment and $26.0 million of related party receivables as of December 31, 2003, and determined that there was no other than temporary decline in the carrying value and, accordingly, PMI has not recognized an impairment charge with respect to its total investment. PMI will continue to evaluate its investment balance for potential impairment in accordance with GAAP. PMI reports equity in earnings from Fairbanks Capital on a one-month lag.
Equity in the earnings of Truman, included in the 2003 equity in earnings from unconsolidated subsidiaries, totaled $4.5 million for 2003, compared to $6.0 million for 2002. Effective September 30, 2003, PMI sold its ownership interest in Truman, and the resulting loss on the sale was recognized in realized investment losses.
9
Other income totaled $3.9 million for the fourth quarter of 2003 and $40.1 million for 2003, compared to $13.3 million and $38.5 million for the same periods a year ago. The decline in other income for the fourth quarter of 2003 was largely the result of a decline in contract underwriting volume.
Other underwriting and operating expenses were $20.1 million for the quarter of 2003 and $83.2 million for the year 2003 compared to $25.0 million and $75.6 million for the same periods a year ago. The decrease was primarily a result of a reduction in the allocation of underwriting expenses as a result of lower contract underwriting revenues, which was partially offset by an increase in contract underwriting remedies.
In October, PMI announced it had reached a definitive agreement to sell APTIC, the Company’s wholly-owned title insurance subsidiary, for $115 million, subject to post-closing adjustments. The transaction is subject to regulatory approval and other closing conditions and is expected to close in the first half of 2004. The results of APTIC are reported as discontinued operations beginning in the fourth quarter 2003. Prior period financial information has been adjusted accordingly.Net income from APTIC was $8.9 million for the fourth quarter of 2003 and $19.7 million for 2003, as compared to $3.7 million and $13.4 million for the same periods a year ago.
ABOUT THE PMI GROUP, INC.
The PMI Group, Inc. (NYSE:PMI) headquartered in Walnut Creek, California is an international provider of credit enhancement products that promotes homeownership and facilitates mortgage transactions in the capital markets. Through its wholly owned subsidiaries and unconsolidated strategic investments, the Company offers residential mortgage insurance and credit enhancement products domestically and internationally as well as financial guaranty insurance and reinsurance.
PMI is an advocate of affordable housing and supports a number of organizations that foster greater access to affordable housing. PMI’s approach to affordable housing lending is to develop products and services that assist responsible borrowers who may not qualify for mortgage loans under traditional underwriting practices.
Cautionary Statement: Statements in this press release that are not historical facts, and that relate to future plans, events or performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to PMI’s field and underwriting office consolidation. Readers are cautioned that these forward-looking statements by their nature involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including, among others, refinements of our estimates of savings and charges as we implement the office consolidation, conditions affecting PMI’s mortgage insurance operations, the mortgage insurance industry, and general economic conditions. Risks and uncertainties that could affect us are discussed in our various Securities and Exchange Commission filings, including our Form 10-Q for the quarter ended September 30, 2003.
# # #
10
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR PERIOD ENDING DECEMBER 31, 2003
Contents
| | |
Consolidated Statements of Operations and Balance Sheets | | 2 |
| |
Business Segments Results of Operations | | 3-4 |
| |
Business Segments Balance Sheets | | 5 |
| |
U.S. Mortgage Insurance Operations Analysis of Loss Reserves and Statistical Information | | 6 |
| |
U.S. Mortgage Insurance Operations and CMG Statistical Information | | 7 |
| |
International Operations | | 8 |
| |
Appendix A | | 9-12 |
Please refer to the following when noted:
| (1) | The Company’s investments and equity earnings in unconsolidated subsidiaries as of December 31, 2003 included CMG, RAM Reinsurance, Fairbanks Capital, FGIC, and other limited partnership interests. In December 2003, the Company completed its investment in FGIC, and the investment is accounted for using the equity method of accounting. |
| (2) | Company obligated mandatory redeemable preferred capital securities of subsidiary trust holding solely junior subordinated deferrable interest debentures of the Company. Upon adoption of Financial Interpretation Number (“FIN”) 46 in December 2003, the Company deconsolidated the trust subsidiary that issued the preferred securities. The underlying debentures issued by the holding company to the trust have been included in long term debt. |
| (3) | The operating results of APTIC were reflected as discontinued operations in the fourth quarter of 2003 with prior period financial information adjusted accordingly. No gain related to the sale was included in APTIC results for the period ended. |
| (4) | During the fourth quarter of 2003, the Company changed its reportable segments to reflect the purchase of FGIC, sale of APTIC, and to re-align its segments reporting to reflect the current business activities. |
| (5) | U.S. Mortgage Insurance Operations include the operating results of PMI Mortgage Insurance Co. and affiliated U.S. mortgage and reinsurance companies. CMG and its affiliates are included under the equity method of accounting in equity earnings of unconsolidated subsidiaries. |
| (6) | International Operations include PMI Australia, PMI Europe and PMI’s Hong Kong reinsurance operations. Financial results of International Operations are subject to currency rate risk. |
| (7) | Financial Guaranty segment represents equity investments of FGIC and RAM Reinsurance. |
| (8) | The “Other” segment includes the activity of the holding company, equity investments in Fairbanks Capital and other unconsolidated subsidiaries, dormant insurance companies, and PMI Mortgage Services Co. |
| (9) | The expense ratio is the ratio (expressed as a percentage) of (i) underwriting expenses to (ii) net premiums written. |
| (10) | Pool insurance includes modified pool, GSE pool, old pool and all other pool insurance products for U.S. mortgage insurance operations. |
| (11) | Statutory risk to capital ratio for PMI Mortgage Insurance Co. |
| (12) | The interim financial and statistical information contained in this material are unaudited. Certain prior year information has been reclassified to conform to the current year’s presentation. |
1
THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | |
| | | Three Months Ended December 31,
| | Year Ended December 31,
|
| | | 2003
| | | 2002
| | 2003
| | 2002
|
| | | (Dollars in thousands,
except per share data) | | (Dollars in thousands,
except per share data) |
Net premiums written | | $ | 350,850 | | | $ | 168,340 | | $ | 876,001 | | $ | 691,607 |
| | |
|
|
| |
|
| |
|
| |
|
|
Revenues | | | | | | | | | | | | | |
Premiums earned | | $ | 182,398 | | | $ | 177,219 | | $ | 696,928 | | $ | 676,857 |
Interest and dividend income | | | 47,183 | | | | 23,384 | | | 149,779 | | | 120,581 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,671 | | | | 12,495 | | | 4,597 | | | 44,225 |
Net realized investment gains (losses) | | | (4,213 | ) | | | 2,141 | | | 84 | | | 1,329 |
Other income | | | 3,710 | | | | 13,437 | | | 40,333 | | | 39,126 |
| | |
|
|
| |
|
| |
|
| |
|
|
Total revenues | | | 232,749 | | | | 228,676 | | | 891,721 | | | 882,118 |
| | |
|
|
| |
|
| |
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 59,371 | | | | 41,213 | | | 209,088 | | | 157,575 |
Amortization of policy acquisition costs | | | 23,236 | | | | 22,860 | | | 89,327 | | | 83,416 |
Other underwriting and operating expenses | | | 46,272 | | | | 41,149 | | | 175,693 | | | 144,877 |
Lease abandonment and relocation costs | | | — | | | | — | | | — | | | 12,183 |
Litigation settlement charge | | | — | | | | 12,222 | | | — | | | 12,222 |
Interest expense | | | 6,839 | | | | 4,263 | | | 20,815 | | | 17,654 |
Distributions on mandatorily redeemable preferred securities(2) | | | 1,007 | | | | 1,007 | | | 3,676 | | | 4,030 |
| | |
|
|
| |
|
| |
|
| |
|
|
Total losses and expenses | | | 136,725 | | | | 122,714 | | | 498,599 | | | 431,957 |
| | |
|
|
| |
|
| |
|
| |
|
|
Income from continuing operations before income taxes | | | 96,024 | | | | 105,962 | | | 393,122 | | | 450,161 |
Income taxes | | | 30,086 | | | | 25,361 | | | 118,814 | | | 124,545 |
| | |
|
|
| |
|
| |
|
| |
|
|
Income from continuing operations | | | 65,938 | | | | 80,601 | | | 274,308 | | | 325,616 |
Income from discontinued operations before income taxes(3) | | | 10,277 | | | | 5,406 | | | 26,893 | | | 20,628 |
Income taxes | | | 1,396 | | | | 1,675 | | | 7,186 | | | 7,199 |
| | |
|
|
| |
|
| |
|
| |
|
|
Income from discontinued operations | | | 8,881 | | | | 3,731 | | | 19,707 | | | 13,429 |
Income before extraordinary item and cumulative effect of accounting change | | | 74,819 | | | | 84,332 | | | 294,015 | | | 339,045 |
Extraordinary gain - write-off of negative goodwill at FGIC, net | | | 2,425 | | | | — | | | 2,425 | | | — |
Cumulative effect of accounting change | | | — | | | | — | | | — | | | 7,172 |
| | |
|
|
| |
|
| |
|
| |
|
|
Net income | | $ | 77,244 | | | $ | 84,332 | | $ | 296,440 | | $ | 346,217 |
| | |
|
|
| |
|
| |
|
| |
|
|
Diluted weighted average common shares outstanding (shares in thousands) | | | 94,457 | | | | 91,260 | | | 91,045 | | | 91,380 |
| | |
|
|
| |
|
| |
|
| |
|
|
Diluted net income per share | | $ | 0.82 | | | $ | 0.92 | | $ | 3.26 | | $ | 3.79 |
| | |
|
|
| |
|
| |
|
| |
|
|
CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | | December 31, 2003
| | December 31, 2002
|
| | | (Dollars in thousands, except per share data) |
Assets | | | | | | |
Cash and investments, at fair value | | $ | 3,202,881 | | $ | 2,668,754 |
Investments in unconsolidated subsidiaries(1) | | | 934,628 | | | 289,795 |
Reinsurance recoverable and prepaid premiums | | | 56,799 | | | 63,923 |
Deferred policy acquisition costs | | | 102,074 | | | 85,210 |
Related party receivables | | | 27,840 | | | 2,322 |
Other assets | | | 348,987 | | | 321,989 |
Assets - discontinued operations | | | 117,862 | | | 85,056 |
| | |
|
| |
|
|
Total assets | | $ | 4,791,071 | | $ | 3,517,049 |
| | |
|
| |
|
|
Liabilities | | | | | | |
Reserve for losses and loss adjustment expenses | | $ | 346,939 | | $ | 333,569 |
Unearned premiums | | | 469,001 | | | 232,877 |
Long-term debt | | | 819,543 | | | 422,950 |
Other liabilities | | | 330,335 | | | 253,098 |
Liabilities - discontinued operations | | | 44,217 | | | 32,222 |
| | |
|
| |
|
|
Total liabilities | | | 2,010,035 | | | 1,274,716 |
Mandatorily redeemable preferred securities (2) | | | — | | | 48,500 |
| | |
Shareholders’ equity | | | 2,781,036 | | | 2,193,833 |
| | |
|
| |
|
|
Total liabilities, mandatorily redeemable preferred securities and shareholders’ equity | | $ | 4,791,071 | | $ | 3,517,049 |
| | |
|
| |
|
|
Book value per share | | $ | 29.22 | | $ | 24.39 |
| | |
|
| |
|
|
2
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS(4)
| | | | | | | | | | | | | | | | | | | |
| | | U.S. Mortgage Insurance
Operations (5)
| | | International
Operations (6)
| | | Financial
Guaranty (7)
| | Other(8)
| | | Consolidated
Total
| |
| | | Three Months Ended December 31, 2003
| |
| | | (Dollars in thousands) | |
Net premiums written | | $ | 252,857 | | | $ | 97,962 | | | $ | — | | $ | 31 | | | $ | 350,850 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Revenues | | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 145,209 | | | $ | 37,168 | | | $ | — | | $ | 21 | | | $ | 182,398 | |
Interest and dividend income | | | 35,611 | | | | 9,042 | | | | — | | | 2,530 | | | | 47,183 | |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,770 | | | | — | | | | 3,862 | | | (3,961 | ) | | | 3,671 | |
Net realized investment gains (losses) | | | (3,860 | ) | | | (675 | ) | | | — | | | 322 | | | | (4,213 | ) |
Other income | | | 60 | | | | (260 | ) | | | — | | | 3,910 | | | | 3,710 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Total revenues | | | 180,790 | | | | 45,275 | | | | 3,862 | | | 2,822 | | | | 232,749 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 58,220 | | | | 1,151 | | | | — | | | — | | | | 59,371 | |
Amortization of policy acquisition costs | | | 20,274 | | | | 2,962 | | | | — | | | — | | | | 23,236 | |
Other underwriting and operating expenses | | | 19,529 | | | | 6,653 | | | | — | | | 20,090 | | | | 46,272 | |
Interest expense | | | 29 | | | | 5 | | | | — | | | 6,805 | | | | 6,839 | |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 1,007 | | | | 1,007 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Total losses and expenses | | | 98,052 | | | | 10,771 | | | | — | | | 27,902 | | | | 136,725 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from continuing operations before income taxes | | | 82,738 | | | | 34,504 | | | | 3,862 | | | (25,080 | ) | | | 96,024 | |
Income tax (benefit) | | | 23,351 | | | | 10,316 | | | | 691 | | | (4,272 | ) | | | 30,086 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income from continuing operations | | | 59,387 | | | | 24,188 | | | | 3,171 | | | (20,808 | ) | | | 65,938 | |
| | | | | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 10,277 | | | | 10,277 | |
Income taxes | | | — | | | | — | | | | — | | | 1,396 | | | | 1,396 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 8,881 | | | | 8,881 | |
Income before extraordinary item | | | 59,387 | | | | 24,188 | | | | 3,171 | | | (11,927 | ) | | | 74,819 | |
Extraordinary gain - write-off of negative goodwill at FGIC, net | | | — | | | | — | | | | 2,425 | | | — | | | | 2,425 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Net income (loss) | | $ | 59,387 | | | $ | 24,188 | | | $ | 5,596 | | $ | (11,927 | ) | | $ | 77,244 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Expense ratio(9) | | | 15.7 | % | | | 9.8 | % | | | | | | | | | | | |
Loss ratio | | | 40.1 | % | | | 3.1 | % | | | | | | | | | | | |
Combined ratio | | | 55.8 | % | | | 12.9 | % | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, 2002
|
| | | (Dollars in thousands) |
Net premiums written | | $ | 147,381 | | | $ | 20,922 | | | $ | — | | $ | 37 | | | $ | 168,340 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 153,395 | | | $ | 23,801 | | | $ | — | | $ | 23 | | | $ | 177,219 |
Interest and dividend income | | | 21,750 | | | | (2,680 | ) | | | — | | | 4,314 | | | | 23,384 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,617 | | | | — | | | | 1,078 | | | 7,800 | | | | 12,495 |
Net realized investment gains (losses) | | | (5,095 | ) | | | 5,883 | | | | — | | | 1,353 | | | | 2,141 |
Other income | | | 143 | | | | — | | | | — | | | 13,294 | | | | 13,437 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total revenues | | | 173,810 | | | | 27,004 | | | | 1,078 | | | 26,784 | | | | 228,676 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 39,517 | | | | 1,563 | | | | — | | | 133 | | | | 41,213 |
Amortization of policy acquisition costs | | | 19,430 | | | | 3,430 | | | | — | | | — | | | | 22,860 |
Other underwriting and operating expenses | | | 11,991 | | | | 4,173 | | | | — | | | 24,985 | | | | 41,149 |
Litigation settlement charge | | | 12,222 | | | | — | | | | — | | | — | | | | 12,222 |
Interest expense | | | 44 | | | | — | | | | — | | | 4,219 | | | | 4,263 |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 1,007 | | | | 1,007 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total losses and expenses | | | 83,204 | | | | 9,166 | | | | — | | | 30,344 | | | | 122,714 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from continuing operations before income taxes | | | 90,606 | | | | 17,838 | | | | 1,078 | | | (3,560 | ) | | | 105,962 |
Income tax (benefit) | | | 27,038 | | | | 4,907 | | | | 377 | | | (6,961 | ) | | | 25,361 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from continuing operations | | | 63,568 | | | | 12,931 | | | | 701 | | | 3,401 | | | | 80,601 |
| | | | | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 5,406 | | | | 5,406 |
Income taxes | | | — | | | | — | | | | — | | | 1,675 | | | | 1,675 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 3,731 | | | | 3,731 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Net income | | $ | 63,568 | | | $ | 12,931 | | | $ | 701 | | $ | 7,132 | | | $ | 84,332 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Expense ratio(9) | | | 29.6 | % | | | 36.3 | % | | | | | | | | | | |
Loss ratio | | | 25.8 | % | | | 6.6 | % | | | | | | | | | | |
Combined ratio | | | 55.4 | % | | | 42.9 | % | | | | | | | | | | |
3
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS(4)
| | | | | | | | | | | | | | | | | | |
| | | U.S. Mortgage Insurance
Operations(5)
| | | International
Operations (6)
| | | Financial
Guaranty (7)
| | Other (8)
| | | Consolidated
Total
|
| | | Year Ended December 31, 2003
|
| | | (Dollars in thousands) |
Net premiums written | | $ | 685,053 | | | $ | 190,869 | | | $ | — | | $ | 79 | | | $ | 876,001 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 592,814 | | | $ | 104,028 | | | $ | — | | $ | 86 | | | $ | 696,928 |
Interest and dividend income | | | 103,083 | | | | 31,314 | | | | — | | | 15,382 | | | | 149,779 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 13,574 | | | | — | | | | 6,587 | | | (15,564 | ) | | | 4,597 |
Net realized investment gains (losses) | | | 1,688 | | | | 268 | | | | — | | | (1,872 | ) | | | 84 |
Other income | | | 138 | | | | 130 | | | | — | | | 40,065 | | | | 40,333 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total revenues | | | 711,297 | | | | 135,740 | | | | 6,587 | | | 38,097 | | | | 891,721 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 214,684 | | | | (5,596 | ) | | | — | | | — | | | | 209,088 |
Amortization of policy acquisition costs | | | 78,877 | | | | 10,450 | | | | — | | | — | | | | 89,327 |
Other underwriting and operating expenses | | | 72,173 | | | | 20,322 | | | | — �� | | | 83,198 | | | | 175,693 |
Interest expense | | | 167 | | | | 5 | | | | — | | | 20,643 | | | | 20,815 |
Distributions on preferred capital securities(2) | | | — | | | | — | | | | — | | | 3,676 | | | | 3,676 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total losses and expenses | | | 365,901 | | | | 25,181 | | | | — | | | 107,517 | | | | 498,599 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income (loss) from continuing operations before income taxes | | | 345,396 | | | | 110,559 | | | | 6,587 | | | (69,420 | ) | | | 393,122 |
Income tax (benefit) | | | 99,903 | | | | 31,912 | | | | 1,645 | | | (14,646 | ) | | | 118,814 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from continuing operations | | | 245,493 | | | | 78,647 | | | | 4,942 | | | (54,774 | ) | | | 274,308 |
Income from discontinued operations before income taxes (3) | | | — | | | | — | | | | — | | | 26,893 | | | | 26,893 |
Income taxes | | | — | | | | — | | | | — | | | 7,186 | | | | 7,186 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 19,707 | | | | 19,707 |
| | | | | |
Income before extraordinary item | | | 245,493 | | | | 78,647 | | | | 4,942 | | | (35,067 | ) | | | 294,015 |
Extraordinary gain - write-off of negative goodwill at FGIC, net | | | — | | | | — | | | | 2,425 | | | — | | | | 2,425 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Net income (loss) | | $ | 245,493 | | | $ | 78,647 | | | $ | 7,367 | | $ | (35,067 | ) | | $ | 296,440 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Expense ratio(9) | | | 22.0 | % | | | 16.1 | % | | | | | | | | | | |
Loss ratio | | | 36.2 | % | | | -5.4 | % | | | | | | | | | | |
Combined ratio | | | 58.2 | % | | | 10.7 | % | | | | | | | | | | |
| |
| | | Year Ended December 31, 2002
|
| | | (Dollars in thousands) |
Net premiums written | | $ | 608,992 | | | $ | 82,524 | | | $ | — | | $ | 91 | | | $ | 691,607 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 611,112 | | | $ | 65,650 | | | $ | — | | $ | 95 | | | $ | 676,857 |
Interest and dividend income | | | 86,525 | | | | 14,994 | | | | — | | | 19,062 | | | | 120,581 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 12,433 | | | | — | | | | 4,235 | | | 27,557 | | | | 44,225 |
Net realized investment gains (losses) | | | (2,859 | ) | | | 4,176 | | | | — | | | 12 | | | | 1,329 |
Other income | | | 618 | | | | 3 | | | | — | | | 38,505 | | | | 39,126 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total revenues | | | 707,829 | | | | 84,823 | | | | 4,235 | | | 85,231 | | | | 882,118 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 149,856 | | | | 7,586 | | | | — | | | 133 | | | | 157,575 |
Amortization of policy acquisition costs | | | 76,525 | | | | 6,891 | | | | — | | | — | | | | 83,416 |
Other underwriting and operating expenses | | | 56,087 | | | | 13,169 | | | | — | | | 75,621 | | | | 144,877 |
Lease abandonment and relocation costs | | | 9,280 | | | | — | | | | — | | | 2,903 | | | | 12,183 |
Litigation settlement charge | | | 12,222 | | | | — | | | | — | | | — | | | | 12,222 |
Interest expense | | | 162 | | | | 6 | | | | — | | | 17,486 | | | | 17,654 |
Distributions on preferred capital securities(2) | | | — | | | | — | | | | — | | | 4,030 | | | | 4,030 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total losses and expenses | | | 304,132 | | | | 27,652 | | | | — | | | 100,173 | | | | 431,957 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from continuing operations before income taxes | | | 403,697 | | | | 57,171 | | | | 4,235 | | | (14,942 | ) | | | 450,161 |
Income tax (benefit) | | | 122,896 | | | | 15,974 | | | | 1,482 | | | (15,807 | ) | | | 124,545 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from continuing operations | | | 280,801 | | | | 41,197 | | | | 2,753 | | | 865 | | | | 325,616 |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 20,628 | | | | 20,628 |
Income taxes | | | — | | | | — | | | | — | | | 7,199 | | | | 7,199 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 13,429 | | | | 13,429 |
Income before cumulative effect of accounting change | | | 280,801 | | | | 41,197 | | | | 2,753 | | | 14,294 | | | | 339,045 |
Cumulative effect of a change in accounting principle | | | — | | | | 7,172 | | | | — | | | — | | | | 7,172 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Net income | | $ | 280,801 | | | $ | 48,369 | | | $ | 2,753 | | $ | 14,294 | | | $ | 346,217 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Expense ratio(9) | | | 25.3 | % | | | 24.3 | % | | | | | | | | | | |
Loss ratio | | | 24.5 | % | | | 11.6 | % | | | | | | | | | | |
Combined ratio | | | 49.8 | % | | | 35.9 | % | | | | | | | | | | |
4
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS BALANCE SHEETS(4)
| | | | | | | | | | | | | | | | |
| | | U.S. Mortgage
Insurance
Operations(5)
| | International
Operations (6)
| | Financial
Guaranty (7)
| | Other(8)
| | | Consolidated
Total
|
| | | December 31, 2003
|
| | | (Dollars in thousands) |
Assets | | | | | | | | | | | | | | | | |
Cash and investments, at fair value | | $ | 2,042,152 | | $ | 836,570 | | $ | — | | $ | 324,159 | | | $ | 3,202,881 |
Investments in unconsolidated subsidiaries(1) | | | 97,389 | | | — | | | 697,610 | | | 139,629 | | | | 934,628 |
Reinsurance recoverable and prepaid premiums | | | 39,774 | | | 17,025 | | | — | | | — | | | | 56,799 |
Deferred policy acquisition costs | | | 69,656 | | | 32,418 | | | — | | | — | | | | 102,074 |
Related party receivables | | | 1,698 | | | — | | | — | | | 26,142 | | | | 27,840 |
Other assets | | | 217,063 | | | 19,792 | | | — | | | 112,132 | | | | 348,987 |
Assets - discontinued operations(3) | | | — | | | — | | | — | | | 117,862 | | | | 117,862 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Total assets | | $ | 2,467,732 | | $ | 905,805 | | $ | 697,610 | | $ | 719,924 | | | $ | 4,791,071 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Liabilities | | | | | | | | | | | | | | | | |
Reserve for losses and loss adjustment expenses | | $ | 325,262 | | $ | 21,675 | | $ | — | | $ | 2 | | | $ | 346,939 |
Unearned premiums | | | 181,854 | | | 287,099 | | | — | | | 48 | | | | 469,001 |
Long-term debt | | | — | | | — | | | — | | | 819,543 | | | | 819,543 |
Other liabilities | | | 160,959 | | | 52,066 | | | 5,857 | | | 111,453 | | | | 330,335 |
Liabilities - discontinued operations(3) | | | — | | | — | | | — | | | 44,217 | | | | 44,217 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Total liabilities | | | 668,075 | | | 360,840 | | | 5,857 | | | 975,263 | | | | 2,010,035 |
| | | | | |
Shareholders’ equity | | | 1,799,657 | | | 544,965 | | | 691,753 | | | (255,339 | ) | | | 2,781,036 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Total liabilities and shareholders’ equity | | $ | 2,467,732 | | $ | 905,805 | | $ | 697,610 | | $ | 719,924 | | | $ | 4,791,071 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
| |
| | | December 31, 2002
|
| | | (Dollars in thousands) |
Assets | | | | | | | | | | | | | | | | |
Cash and investments, at fair value | | $ | 1,801,417 | | $ | 495,777 | | $ | — | | $ | 371,560 | | | $ | 2,668,754 |
Investments in unconsolidated subsidiaries(1) | | | 83,235 | | | — | | | 45,633 | | | 160,927 | | | | 289,795 |
Reinsurance recoverable and prepaid premiums | | | 53,625 | | | 10,298 | | | — | | | — | | | | 63,923 |
Deferred policy acquisition costs | | | 64,380 | | | 20,830 | | | — | | | — | | | | 85,210 |
Related party receivables | | | 2,312 | | | — | | | — | | | 10 | | | | 2,322 |
Other assets | | | 197,385 | | | 13,480 | | | — | | | 111,124 | | | | 321,989 |
Assets - discontinued operations(3) | | | — | | | — | | | — | | | 85,056 | | | | 85,056 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Total assets | | $ | 2,202,354 | | $ | 540,385 | | $ | 45,633 | | $ | 728,677 | | | $ | 3,517,049 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Liabilities | | | | | | | | | | | | | | | | |
Reserve for losses and loss adjustment expenses | | $ | 315,718 | | $ | 17,848 | | $ | — | | $ | 3 | | | $ | 333,569 |
Unearned premiums | | | 87,064 | | | 145,759 | | | — | | | 54 | | | | 232,877 |
Long-term debt | | | — | | | — | | | — | | | 422,950 | | | | 422,950 |
Other liabilities | | | 158,971 | | | 17,386 | | | 4,032 | | | 72,709 | | | | 253,098 |
Liabilities - discontinued operations(3) | | | — | | | — | | | — | | | 32,222 | | | | 32,222 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Total liabilities | | | 561,753 | | | 180,993 | | | 4,032 | | | 527,938 | | | | 1,274,716 |
Mandatorily redeemable preferred securities | | | — | | | — | | | — | | | 48,500 | | | | 48,500 |
Shareholders’ equity | | | 1,640,601 | | | 359,392 | | | 41,601 | | | 152,239 | | | | 2,193,833 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
Total liabilities, mandatorily redeemable preferred securities and shareholders’ equity | | $ | 2,202,354 | | $ | 540,385 | | $ | 45,633 | | $ | 728,677 | | | $ | 3,517,049 |
| | |
|
| |
|
| |
|
| |
|
|
| |
|
|
5
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS ANALYSIS OF LOSS RESERVE(5)
| | | | | | | | | | | | | | | | |
| | | December 31, 2003
| | | December 31, 2002
| |
| | | Loans in
Default
| | | Reserve for
Losses
| | | Loans in
Default
| | | Reserve for
Losses
| |
| | | (Dollars in thousands) | | | | | | | |
Primary insurance | | | 37,445 | | | $ | 292,740 | | | | 36,537 | | | $ | 277,605 | |
Pool insurance | | | 16,763 | | | | 32,522 | | | | 16,374 | | | | 38,113 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total | | | 54,208 | | | | 325,262 | | | | 52,911 | | | | 315,718 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
| Reconciliation of Reserve for Losses | |
| | | | |
| | | | | | December 31,
2003
| | | December 31,
2002
| | | Reserve
Change
| |
| | | | | | (Dollars in thousands) | |
Gross reserves: | | | | | | | | | | | | | | | | |
Primary insurance | | | | | | $ | 292,740 | | | $ | 277,605 | | | $ | 15,135 | |
Pool insurance | | | | | | | 32,522 | | | | 38,113 | | | | (5,591 | ) |
| | | | | | |
|
|
| |
|
|
| |
|
|
|
U.S. Mortgage Insurance operations gross loss reserves | | | | | | | 325,262 | | | | 315,718 | | | | 9,544 | |
| | | | |
Ceded Reserves: | | | | | | | | | | | | | | | | |
Primary insurance | | | | | | | (3,152 | ) | | | (3,536 | ) | | $ | 384 | |
Pool insurance | | | | | | | (123 | ) | | | (310 | ) | | | 187 | |
| | | | | | |
|
|
| |
|
|
| |
|
|
|
Total ceded loss reserves | | | | | | | (3,275 | ) | | | (3,846 | ) | | | 571 | |
| | | | | | |
|
|
| |
|
|
| |
|
|
|
U.S. Mortgage Insurance operations net loss reserves | | | | | | $ | 321,987 | | | $ | 311,872 | | | $ | 8,973 | |
| | | | | | |
|
|
| |
|
|
| |
|
|
|
|
| U.S. MORTGAGE INSURANCE OPERATIONS STATISTICAL INFORMATION(5) | |
| | |
| | | Three Months Ended
December 31,
| | | Year Ended
December 31,
| |
| | | 2003
| | | 2002
| | | 2003
| | | 2002
| |
Primary new insurance written(in millions) | | $ | 11,873 | | | $ | 13,217 | | | $ | 57,301 | | | $ | 47,803 | |
| | | | |
Primary new risk written(in millions) | | $ | 2,890 | | | $ | 3,130 | | | $ | 13,532 | | | $ | 11,488 | |
| | | | |
Pool insurance written(in millions)(10) | �� | $ | 8,429 | | | $ | 5,048 | | | $ | 15,962 | | | $ | 18,670 | |
| | | | |
Pool risk written(in millions)(10) | | $ | 163 | | | $ | 221 | | | $ | 394 | | | $ | 891 | |
| | | | |
Product mix as a % of new insurance written: | | | | | | | | | | | | | | | | |
95% LTV’s | | | 30 | % | | | 30 | % | | | 28 | % | | | 32 | % |
90% LTV’s | | | 37 | % | | | 41 | % | | | 39 | % | | | 42 | % |
95% LTV’s with³ 30% coverage | | | 23 | % | | | 22 | % | | | 21 | % | | | 24 | % |
90% LTV’s with³ 25% coverage | | | 29 | % | | | 30 | % | | | 29 | % | | | 31 | % |
ARMs | | | 11 | % | | | 7 | % | | | 9 | % | | | 7 | % |
Monthlies | | | 89 | % | | | 97 | % | | | 91 | % | | | 95 | % |
Refinances | | | 34 | % | | | 49 | % | | | 45 | % | | | 43 | % |
Bulk transactions | | | 40 | % | | | 5 | % | | | 18 | % | | | 7 | % |
| | | | |
Premiums Written(in thousands): | | | | | | | | | | | | | | | | |
Gross premiums written | | $ | 303,945 | | | $ | 179,547 | | | $ | 847,195 | | | $ | 722,334 | |
Ceded premiums, net of assumed premiums | | | (33,489 | ) | | | (26,516 | ) | | | (128,087 | ) | | | (97,212 | ) |
Cumulative adjustment of ceded premiums | | | (8,355 | ) | | | — | | | | (8,355 | ) | | | — | |
Refunded premiums | | | (9,244 | ) | | | (5,650 | ) | | | (25,700 | ) | | | (16,129 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net premiums written | | | 252,857 | | | | 147,381 | | | | 685,053 | | | | 608,992 | |
Change in unearned premiums | | | (107,648 | ) | | | 6,014 | | | | (92,239 | ) | | | 2,120 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net premiums earned | | $ | 145,209 | | | $ | 153,395 | | | $ | 592,814 | | | $ | 611,112 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
6
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS STATISTICAL INFORMATION(5)
| | | | | | | | | | | | |
| | | December 31,
2003
| | | September 30,
2003
| | | December 31,
2002
| |
Primary insurance in force(in millions) | | $ | 105,241 | | | $ | 104,574 | | | $ | 107,579 | |
Primary risk in force(in millions) | | $ | 24,668 | | | $ | 24,472 | | | $ | 25,188 | |
Pool risk in force(in millions)(10) | | $ | 2,858 | | | $ | 2,849 | | | $ | 3,129 | |
Risk-to-capital ratio(11) | | | 9.2 to 1 | | | | 10.1 to 1 | | | | 11.3 to 1 | |
Insured primary loans | | | 827,225 | | | | 829,064 | | | | 874,202 | |
Persistency | | | 44.6 | % | | | 41.9 | % | | | 56.2 | % |
Primary loans in default | | | 37,445 | | | | 36,171 | | | | 36,537 | |
Primary default rate | | | 4.53 | % | | | 4.36 | % | | | 4.18 | % |
Primary claims paid (year-to-date in thousands) | | $ | 173,513 | | | $ | 124,247 | | | $ | 98,524 | |
Number of primary claims paid(year-to-date) | | | 7,501 | | | | 5,363 | | | | 4,860 | |
Average primary claim size(year-to-date in thousands) | | $ | 23.1 | | | $ | 23.2 | | | $ | 20.3 | |
Percentage of NIW subject to captive reinsurance arrangements(year-to-date) | | | 54.1 | % | | | 55.7 | % | | | 55.5 | % |
Percentage of IIF subject to captive reinsurance arrangements(year-to-date) | | | 50.0 | % | | | 48.6 | % | | | 43.1 | % |
|
| CMG MORTGAGE INSURANCE COMPANY STATISTICAL INFORMATION | |
| | | |
| | | December 31,
2003
| | | September 30,
2003
| | | December 31,
2002
| |
Primary new insurance written(year-to-date in millions) | | $ | 7,015 | | | $ | 5,575 | | | $ | 5,403 | |
Primary insurance in force(in millions) | | $ | 12,560 | | | $ | 12,095 | | | $ | 10,916 | |
Primary risk in force(in millions) | | $ | 2,772 | | | $ | 2,664 | | | $ | 2,470 | |
Insured primary loans | | | 98,412 | | | | 96,098 | | | | 88,977 | |
Persistency | | | 50.8 | % | | | 47.8 | % | | | 62.0 | % |
Primary loans in default | | | 516 | | | | 506 | | | | 407 | |
Primary default rate(year-to-date) | | | 0.52 | % | | | 0.53 | % | | | 0.46 | % |
Primary claims paid(year-to-date in thousands) | | $ | 3,026 | | | $ | 1,819 | | | $ | 1,663 | |
Number of primary claims paid(year-to-date) | | | 148 | | | | 86 | | | | 92 | |
Average primary claims size(year-to-date in thousands) | | $ | 20.4 | | | $ | 21.1 | | | $ | 18.1 | |
7
THE PMI GROUP, INC. AND SUBSIDIARIES
INTERNATIONAL OPERATIONS STATISTICAL INFORMATION(6)
| | | | | | | | | |
| | | December 31,
2003
| | September 30,
2003
| | December 31,
2002
|
PMI Australia | | | | | | | | | |
Net premium written(year-to-date in thousands) | | $ | 127,750 | | $ | 83,870 | | $ | 74,352 |
Premium earned(year-to-date in thousands) | | $ | 85,050 | | $ | 58,704 | | $ | 59,929 |
New insurance written(year-to-date in millions) | | $ | 22,330 | | $ | 16,474 | | $ | 14,523 |
Insurance in force(in millions) | | $ | 77,744 | | $ | 74,547 | | $ | 54,117 |
Risk in force(in millions) | | $ | 71,220 | | $ | 68,207 | | $ | 48,747 |
Loans in default | | | 1,207 | | | 1,403 | | | 2,176 |
Claims paid(year-to-date in thousands) | | $ | 2,663 | | $ | 2,260 | | $ | 5,912 |
Number claims paid(year-to-date) | | | 223 | | | 189 | | | 508 |
PMI Europe | | | | | | | | | |
Net premium written(year-to-date in thousands) | | $ | 55,418 | | $ | 4,349 | | $ | 2,307 |
Premium earned(year-to-date in thousands) | | $ | 13,685 | | $ | 4,453 | | $ | 2,127 |
New credit default swap written(year-to-date in millions) | | $ | 6,440 | | $ | 6,440 | | $ | 3,692 |
New reinsurance written(year-to-date in millions) | | $ | 17,035 | | $ | — | | $ | — |
Insurance in force(in millions) | | $ | 31,558 | | $ | 12,777 | | $ | 6,507 |
Risk in force(in millions) | | $ | 3,096 | | $ | 745 | | $ | 538 |
Loans in default | | | — | | | — | | | — |
Claims paid(year-to-date in thousands) | | $ | 834 | | $ | — | | $ | — |
Number claims paid(year-to-date) | | | 67 | | | — | | | — |
8
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS (Unaudited)(4)
| | | | | | | | | | | | | | | | | | |
| | | U.S. Mortgage
Insurance
Operations(5)
| | | International
Operations (6)
| | | Financial
Guaranty (7)
| | Other(8)
| | | Consolidated
Total
|
| | | Three Months Ended March 31, 2003
|
| | | (Dollars in thousands) |
Net premiums written | | $ | 151,689 | | | $ | 22,975 | | | $ | — | | $ | 13 | | | $ | 174,677 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 156,581 | | | $ | 19,365 | | | $ | — | | $ | 21 | | | $ | 175,967 |
Interest and dividend income | | | 23,152 | | | | 5,863 | | | | — | | | 4,041 | | | | 33,056 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 2,864 | | | | — | | | | 261 | | | 5,690 | | | | 8,815 |
Net realized investment gains (losses) | | | (479 | ) | | | 341 | | | | — | | | 1,430 | | | | 1,292 |
Other income | | | 169 | | | | — | | | | — | | | 10,548 | | | | 10,717 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total revenues | | | 182,287 | | | | 25,569 | | | | 261 | | | 21,730 | | | | 229,847 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 47,453 | | | | (661 | ) | | | — | | | — | | | | 46,792 |
Amortization of policy acquisition costs | | | 19,475 | | | | 2,370 | | | | — | | | — | | | | 21,845 |
Other underwriting and operating expenses | | | 14,785 | | | | 4,004 | | | | — | | | 17,483 | | | | 36,272 |
Interest expense | | | 24 | | | | — | | | | — | | | 4,356 | | | | 4,380 |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 655 | | | | 655 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total losses and expenses | | | 81,737 | | | | 5,713 | | | | — | | | 22,494 | | | | 109,944 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income (loss) from continuing operations before income taxes | | | 100,550 | | | | 19,856 | | | | 261 | | | (764 | ) | | | 119,903 |
Income tax (benefit) | | | 28,642 | | | | 5,671 | | | | 91 | | | (1,118 | ) | | | 33,286 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from continuing operations | | | 71,908 | | | | 14,185 | | | | 170 | | | 354 | | | | 86,617 |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 4,552 | | | | 4,552 |
Income taxes | | | — | | | | — | | | | — | | | 1,560 | | | | 1,560 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 2,992 | | | | 2,992 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Net income | | $ | 71,908 | | | $ | 14,185 | | | $ | 170 | | $ | 3,346 | | | $ | 89,609 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, 2002
| |
| | | (Dollars in thousands) | |
Net premiums written | | $ | 156,341 | | | $ | 18,885 | | $ | — | | $ | 19 | | | $ | 175,245 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 152,707 | | | $ | 12,197 | | $ | — | | $ | (78 | ) | | $ | 164,826 | |
Interest and dividend income | | | 21,292 | | | | 5,763 | | | — | | | 5,213 | | | | 32,268 | |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,118 | | | | — | | | 948 | | | 6,615 | | | | 10,681 | |
Net realized investment gains (losses) | | | (2,477 | ) | | | 280 | | | — | | | (234 | ) | | | (2,431 | ) |
Other income | | | 122 | | | | 184 | | | — | | | 7,049 | | | | 7,355 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Total revenues | | | 174,762 | | | | 18,424 | | | 948 | | | 18,565 | | | | 212,699 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 36,163 | | | | 593 | | | — | | | (102 | ) | | | 36,654 | |
Amortization of policy acquisition costs | | | (32 | ) | | | 1,172 | | | — | | | — | | | | 1,140 | |
Other underwriting and operating expenses | | | 34,266 | | | | 2,397 | | | — | | | 15,123 | | | | 51,786 | |
Interest expense | | | 18 | | | | — | | | — | | | 4,292 | | | | 4,310 | |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | — | | | 1,008 | | | | 1,008 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Total losses and expenses | | | 70,415 | | | | 4,162 | | | — | | | 20,321 | | | | 94,898 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from continuing operations before income taxes | | | 104,347 | | | | 14,262 | | | 948 | | | (1,756 | ) | | | 117,801 | |
Income tax (benefit) | | | 33,114 | | | | 4,211 | | | 331 | | | (1,670 | ) | | | 35,986 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from continuing operations | | | 71,233 | | | | 10,051 | | | 617 | | | (86 | ) | | | 81,815 | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | — | | | 3,889 | | | | 3,889 | |
Income taxes | | | — | | | | — | | | — | | | 1,382 | | | | 1,382 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Income from discontinued operations | | | — | | | | — | | | — | | | 2,507 | | | | 2,507 | |
Cumulative effect of a change in accounting principle | | | | | | | 7,172 | | | | | | | | | | 7,172 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
Net income | | $ | 71,233 | | | $ | 17,223 | | $ | 617 | | $ | 2,421 | | | $ | 91,494 | |
| | |
|
|
| |
|
| |
|
| |
|
|
| |
|
|
|
9
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS (Unaudited)(4)
| | | | | | | | | | | | | | | | | | |
| | | U.S.
Mortgage
Insurance
Operations (5)
| | | International
Operations (6)
| | | Financial
Guaranty (7)
| | Other(8)
| | | Consolidated
Total
|
| | | Three Months Ended June 30, 2003
|
| | | (Dollars in thousands) |
Net premiums written | | $ | 142,238 | | | $ | 32,877 | | | $ | — | | $ | 19 | | | $ | 175,134 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 144,956 | | | $ | 23,237 | | | $ | — | | $ | 21 | | | $ | 168,214 |
Interest and dividend income | | | 22,323 | | | | 7,316 | | | | — | | | 4,486 | | | | 34,125 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,846 | | | | — | | | | 1,162 | | | 679 | | | | 5,687 |
Net realized investment gains (losses) | | | 2,016 | | | | (91 | ) | | | — | | | 140 | | | | 2,065 |
Other income | | | 4 | | | | 310 | | | | — | | | 14,038 | | | | 14,352 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total revenues | | | 173,145 | | | | 30,772 | | | | 1,162 | | | 19,364 | | | | 224,443 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 55,653 | | | | 526 | | | | — | | | — | | | | 56,179 |
Amortization of policy acquisition costs | | | 19,537 | | | | 2,507 | | | | — | | | — | | | | 22,044 |
Other underwriting and operating expenses | | | 18,931 | | | | 4,529 | | | | — | | | 23,864 | | | | 47,324 |
Interest expense | | | 49 | | | | — | | | | — | | | 4,597 | | | | 4,646 |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 1,007 | | | | 1,007 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total losses and expenses | | | 94,170 | | | | 7,562 | | | | — | | | 29,468 | | | | 131,200 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income (loss) from continuing operations before income taxes | | | 78,975 | | | | 23,210 | | | | 1,162 | | | (10,104 | ) | | | 93,243 |
Income tax (benefit) | | | 23,118 | | | | 6,648 | | | | 407 | | | (3,262 | ) | | | 26,911 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income (loss) from continuing operations | | | 55,857 | | | | 16,562 | | | | 755 | | | (6,842 | ) | | | 66,332 |
| | | | | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 4,770 | | | | 4,770 |
Income taxes | | | — | | | | — | | | | — | | | 1,646 | | | | 1,646 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 3,124 | | | | 3,124 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Net income (loss) | | $ | 55,857 | | | $ | 16,562 | | | $ | 755 | | $ | (3,718 | ) | | $ | 69,456 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
| | | Three Months Ended June 30, 2002
|
| | | (Dollars in thousands) |
Net premiums written | | $ | 164,270 | | | $ | 21,934 | | | $ | — | | $ | 10 | | | $ | 186,214 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Revenues | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 154,285 | | | $ | 14,900 | | | $ | — | | $ | 125 | | | $ | 169,310 |
Interest and dividend income | | | 22,147 | | | | 4,397 | | | | — | | | 4,801 | | | | 31,345 |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,271 | | | | — | | | | 1,022 | | | 4,802 | | | | 9,095 |
Net realized investment gains (losses) | | | 2,697 | | | | (1,606 | ) | | | — | | | (698 | ) | | | 393 |
Other income | | | 324 | | | | (182 | ) | | | — | | | 8,176 | | | | 8,318 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total revenues | | | 182,724 | | | | 17,509 | | | | 1,022 | | | 17,206 | | | | 218,461 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 34,410 | | | | 2,728 | | | | — | | | 102 | | | | 37,240 |
Amortization of policy acquisition costs | | | 38,094 | | | | 1,207 | | | | — | | | — | | | | 39,301 |
Other underwriting and operating expenses | | | (1,676 | ) | | | 2,241 | | | | — | | | 15,972 | | | | 16,537 |
Litigation settlement charge | | | 9,280 | | | | — | | | | — | | | 2,903 | | | | 12,183 |
Interest expense | | | 52 | | | | 6 | | | | — | | | 4,379 | | | | 4,437 |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 1,008 | | | | 1,008 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Total losses and expenses | | | 80,160 | | | | 6,182 | | | | — | | | 24,364 | | | | 110,706 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income (loss) from continuing operations before income taxes | | | 102,564 | | | | 11,327 | | | | 1,022 | | | (7,158 | ) | | | 107,755 |
Income (benefit) | | | 30,078 | | | | 3,432 | | | | 358 | | | (4,095 | ) | | | 29,773 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income (loss) from continuing operations | | | 72,486 | | | | 7,895 | | | | 664 | | | (3,063 | ) | | | 77,982 |
| | | | | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 4,819 | | | | 4,819 |
Income taxes | | | — | | | | — | | | | — | | | 1,748 | | | | 1,748 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 3,071 | | | | 3,071 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
Net income | | $ | 72,486 | | | $ | 7,895 | | | $ | 664 | | $ | 8 | | | $ | 81,053 |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
10
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS (Unaudited)(4)
| | | | | | | | | | | | | | | | | | | |
| | | U.S.
Mortgage
Insurance
Operations (5)
| | | International
Operations (6)
| | | Financial
Guaranty (7)
| | Other(8)
| | | Consolidated
Total
| |
| | | Three Months Ended September 30, 2003
| |
| | | (Dollars in thousands) | |
Net premiums written | | $ | 138,269 | | | $ | 37,055 | | | $ | — | | $ | 16 | | | $ | 175,340 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Revenues | | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 146,068 | | | $ | 24,258 | | | $ | — | | $ | 23 | | | $ | 170,349 | |
Interest and dividend income | | | 21,997 | | | | 9,093 | | | | — | | | 4,325 | | | | 35,415 | |
Equity in earnings of unconsolidated subsidiaries(1) | | | 3,094 | | | | — | | | | 1,302 | | | (17,972 | ) | | | (13,576 | ) |
Net realized investment gains (losses) | | | 4,011 | | | | 693 | | | | — | | | (3,764 | ) | | | 940 | |
Other income | | | (95 | ) | | | 80 | | | | — | | | 11,569 | | | | 11,554 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Total revenues | | | 175,075 | | | | 34,124 | | | | 1,302 | | | (5,819 | ) | | | 204,682 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 53,358 | | | | (6,612 | ) | | | — | | | — | | | | 46,746 | |
Amortization of policy acquisition costs | | | 19,591 | | | | 2,611 | | | | — | | | — | | | | 22,202 | |
Other underwriting and operating expenses | | | 18,928 | | | | 5,136 | �� | | | — | | | 21,761 | | | | 45,825 | |
Interest expense | | | 65 | | | | — | | | | — | | | 4,885 | | | | 4,950 | |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 1,007 | | | | 1,007 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Total losses and expenses | | | 91,942 | | | | 1,135 | | | | — | | | 27,653 | | | | 120,730 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from continuing operations before income taxes | | | 83,133 | | | | 32,989 | | | | 1,302 | | | (33,472 | ) | | | 83,952 | |
Income tax (benefit) | | | 24,792 | | | | 9,277 | | | | 456 | | | (5,994 | ) | | | 28,531 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from continuing operations | | | 58,341 | | | | 23,712 | | | | 846 | | | (27,478 | ) | | | 55,421 | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 7,294 | | | | 7,294 | |
Income taxes | | | — | | | | — | | | | — | | | 2,584 | | | | 2,584 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 4,710 | | | | 4,710 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Net income (loss) | | $ | 58,341 | | | $ | 23,712 | | | $ | 846 | | $ | (22,768 | ) | | $ | 60,131 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
| |
| | | Three Months Ended September 30, 2002
| |
| | | (Dollars in thousands) | |
Net premiums written | | $ | 141,000 | | | $ | 20,783 | | | $ | — | | $ | 25 | | | $ | 161,808 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Revenues | | | | | | | | | | | | | | | | | | | |
Premiums earned | | $ | 150,725 | | | $ | 14,752 | | | $ | — | | $ | 25 | | | $ | 165,502 | |
Interest and dividend income | | | 21,336 | | | | 7,514 | | | | — | | | 4,734 | | | | 33,584 | |
Equity in earnings of unconsolidated subsidiaries(1) | | | 2,427 | | | | — | | | | 1,187 | | | 8,340 | | | | 11,954 | |
Net realized investment gains (losses) | | | 2,016 | | | | (381 | ) | | | — | | | (409 | ) | | | 1,226 | |
Other income | | | 29 | | | | 1 | | | | — | | | 9,986 | | | | 10,016 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Total revenues | | | 176,533 | | | | 21,886 | | | | 1,187 | | | 22,676 | | | | 222,282 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Losses and expenses | | | | | | | | | | | | | | | | | | | |
Losses and loss adjustment expenses | | | 39,766 | | | | 2,702 | | | | — | | | — | | | | 42,468 | |
Amortization of policy acquisition costs | | | 19,033 | | | | 1,082 | | | | — | | | — | | | | 20,115 | |
Other underwriting and operating expenses | | | 11,506 | | | | 4,358 | | | | — | | | 19,541 | | | | 35,405 | |
Interest expense | | | 48 | | | | — | | | | — | | | 4,596 | | | | 4,644 | |
Distributions on redeemable preferred securities(2) | | | — | | | | — | | | | — | | | 1,007 | | | | 1,007 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Total losses and expenses | | | 70,353 | | | | 8,142 | | | | — | | | 25,144 | | | | 103,639 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income (loss) from continuing operations before income taxes | | | 106,180 | | | | 13,744 | | | | 1,187 | | | (2,468 | ) | | | 118,643 | |
Income tax (benefit) | | | 32,666 | | | | 3,424 | | | | 416 | | | (3,081 | ) | | | 33,425 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income from continuing operations | | | 73,514 | | | | 10,320 | | | | 771 | | | 613 | | | | 85,218 | |
Income from discontinued operations before income taxes(3) | | | — | | | | — | | | | — | | | 6,514 | | | | 6,514 | |
Income taxes | | | — | | | | — | | | | — | | | 2,394 | | | | 2,394 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Income from discontinued operations | | | — | | | | — | | | | — | | | 4,120 | | | | 4,120 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
Net income | | $ | 73,514 | | | $ | 10,320 | | | $ | 771 | | $ | 4,733 | | | $ | 89,338 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
|
11
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS STATISTICAL INFORMATION(5)
| | | | | | | | | | | | | | | | |
| | | 3/31/2003
| | | 6/30/2003
| | | 9/30/2003
| | | 12/31/2003
| |
Primary insurance in force(in millions) | | | | | | | | | | | | | | | | |
Flow | | $ | 96,039 | | | $ | 92,433 | | | $ | 92,650 | | | $ | 93,279 | |
Bulk | | $ | 9,479 | | | $ | 11,073 | | | $ | 11,924 | | | $ | 11,962 | |
Total | | $ | 105,518 | | | $ | 103,506 | | | $ | 104,574 | | | $ | 105,241 | |
| | | | |
Primary policies in force | | | 854,506 | | | | 834,207 | | | | 829,064 | | | | 827,225 | |
| | | | |
Primary risk in force - credit score distribution | | | | | | | | | | | | | | | | |
Flow 619-575 | | | 7.6 | % | | | 7.6 | % | | | 7.3 | % | | | 7.1 | % |
574 or below | | | 2.4 | % | | | 2.4 | % | | | 2.3 | % | | | 2.2 | % |
| | | | |
Bulk 619-575 | | | 19.2 | % | | | 22.0 | % | | | 22.2 | % | | | 21.6 | % |
574 or below | | | 11.7 | % | | | 12.5 | % | | | 12.8 | % | | | 12.8 | % |
| | | | |
Total 619-575 | | | 8.6 | % | | | 9.0 | % | | | 8.9 | % | | | 8.6 | % |
574 or below | | | 3.2 | % | | | 3.4 | % | | | 3.4 | % | | | 3.3 | % |
| | | | |
Primary average loan size(in thousands) | | | | | | | | | | | | | | | | |
Flow | | $ | 124.2 | | | $ | 124.6 | | | $ | 126.2 | | | $ | 127.4 | |
Bulk | | $ | 116.4 | | | $ | 120.2 | | | $ | 125.8 | | | $ | 126.1 | |
Total | | $ | 123.5 | | | $ | 124.1 | | | $ | 126.1 | | | $ | 127.2 | |
| | | | |
Loss severity - primary | | | | | | | | | | | | | | | | |
Flow | | | 78.1 | % | | | 79.3 | % | | | 79.0 | % | | | 79.7 | % |
Bulk | | | 76.3 | % | | | 83.2 | % | | | 83.1 | % | | | 83.2 | % |
Total | | | 80.0 | % | | | 80.6 | % | | | 80.4 | % | | | 80.9 | % |
| | | | | | | | | | | | | | | | |
| | | 3/31/2002
| | | 6/30/2002
| | | 9/30/2002
| | | 12/31/2002
| |
Primary insurance in force(in millions) | | | | | | | | | | | | | | | | |
Flow | | $ | 96,718 | | | $ | 98,418 | | | $ | 99,022 | | | $ | 97,716 | |
Bulk | | $ | 11,389 | | | $ | 10,892 | | | $ | 10,607 | | | $ | 9,863 | |
Total | | $ | 108,107 | | | $ | 109,310 | | | $ | 109,629 | | | $ | 107,579 | |
| | | | |
Primary policies in force | | | 892,353 | | | | 897,407 | | | | 893,875 | | | | 874,202 | |
| | | | |
Primary risk in force - credit score distribution | | | | | | | | | | | | | | | | |
Flow 619-575 | | | 6.7 | % | | | 7.1 | % | | | 7.4 | % | | | 7.6 | % |
574 or below | | | 2.2 | % | | | 2.3 | % | | | 2.3 | % | | | 2.4 | % |
| | | | |
Bulk 619-575 | | | 21.8 | % | | | 20.5 | % | | | 19.4 | % | | | 19.6 | % |
574 or below | | | 13.5 | % | | | 12.6 | % | | | 11.8 | % | | | 11.7 | % |
| | | | |
Total 619-575 | | | 8.3 | % | | | 8.4 | % | | | 8.6 | % | | | 8.6 | % |
574 or below | | | 3.3 | % | | | 3.3 | % | | | 3.2 | % | | | 3.2 | % |
| | | | |
Primary average loan size(in thousands) | | | | | | | | | | | | | | | | |
Flow | | $ | 121.4 | | | $ | 122.3 | | | $ | 123.2 | | | $ | 123.7 | |
Bulk | | $ | 119.2 | | | $ | 117.7 | | | $ | 117.8 | | | $ | 117.3 | |
Total | | $ | 121.1 | | | $ | 121.8 | | | $ | 122.6 | | | $ | 123.1 | |
| | | | |
Loss severity - primary | | | | | | | | | | | | | | | | |
Flow | | | n/a | | | | n/a | | | | 75.5 | % | | | 76.5 | % |
Bulk | | | n/a | | | | n/a | | | | 72.4 | % | | | 75.7 | % |
Total | | | 80.1 | % | | | 75.3 | % | | | 74.7 | % | | | 76.6 | % |
12
