Pmi (PMI) 8-K The Pmi Group, Inc. Reports Second Quarter

Exhibit 99.1

	NEWS RELEASE
	Investor and Media Contacts:
	Bill Horning / Beth Haiken
	925.658.6193 / 925.658.6192

THE PMI GROUP, INC. REPORTS SECOND QUARTER

2005 NET INCOME OF $104.6 MILLION; NET INCOME

PER DILUTED SHARE OF $1.04

QUARTERLYAND YEARTO DATE NET INCOME FROM CONTINUING

OPERATIONS THE HIGHESTINTHE COMPANY’S HISTORY

Walnut Creek, CA, August 4, 2005- The PMI Group, Inc. (NYSE: PMI) (the “Company”) today reported record net income from continuing operations for the second quarter and first half of 2005. These results were driven by the Company’s success in executing its diversification strategy and the resulting financial performance from its U.S. Mortgage Insurance Operations, International Operations and Financial Guaranty segment.

The Company announced thatconsolidated net income for the second quarter totaled $104.6 million compared to $96.7 million for the same period a year ago.Consolidated net income per diluted share was $1.04 in the second quarter of 2005, compared to net income of $0.93 per diluted share for the same period a year ago, an increase of approximately 12 percent. The net income results combined with the common share repurchase activity for the second quarter of 2005 resulted in a book value per share of $35.29 at June 30, 2005, compared to a book value per share of $33.37 at December 31, 2004 and $30.28 at June 30, 2004, representing increases of 5.8 percent and 16.5 percent, respectively.

Consolidated net income from continuing operations for the first half of 2005 totaled $205.7 million compared to $182.2 million for the same period a year ago, representing a 12.9 percent increase. Consolidated net income from continuing operations for the first half of 2004 does not include the financial results of American Pioneer Title

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Insurance Company, which was designated as a discontinued operation in the fourth quarter of 2003 and sold in the first quarter of 2004.

Second Quarter 2005 Highlights

• Combined¹ insurance in force grew to $269.2 billion at June 30, 2005 from $242.4 billion at June 30, 2004;

• Net income for U.S. Mortgage Insurance Operations² grew by 10 percent to $69.7 million in the second quarter of 2005, compared to $63.3 million in the second quarter of 2004;

• U.S. Mortgage Insurance Operations realized a 9 percent increase in earned premiums in the second quarter of 2005 to $168.2 million compared to $154.4 million in the same period for 2004. Additionally, the U.S. Mortgage Insurance Operations realized reduced expenditures for the amortization of policy acquisition costs and other underwriting and operating expenses for the quarter and year to date of $2.7 million and $8.7 million, respectively, compared to the same periods a year ago;

• U.S. Mortgage Insurance Operations continued to experience positive credit trends that resulted in a 2 percent decrease in the delinquent loan inventory from March 31, 2005; the primary default rate declined to 4.51 percent at June 30, 2005 compared to 4.53 percent at March 31, 2005;

• The Company’s investment in FGIC Corporation (“FGIC”) yielded equity in earnings for the quarter and year to date of $20.5 million (after tax) and $38.6 million (after tax), respectively, compared to $16.3 million (after tax) and $29.0 million (after tax) for the same periods a year ago. These increases represent quarterly and year to date growth rates of 26% and 33%, respectively, compared to the corresponding periods a year ago;

• The Company repurchased approximately 1.8 million common shares in the second quarter of 2005 at an average price per share of $37.54. Purchases of common shares in the quarter totaled approximately $67 million, thereby completing the $100 million common share repurchase program authorized February 17, 2005. On July 27, 2005, the Company’s

¹ “Combined” includes the results from U.S. Mortgage Insurance Operations (“PMI”), CMG Mortgage Insurance Company and its affiliates (“CMG”), PMI Australia and PMI Europe’s primary insurance and credit default swap transactions.

² “U.S. Mortgage Insurance Operations” includes the results of PMI Mortgage Insurance Co. and affiliated U.S. reinsurance companies (“PMI”) and equity in earnings from CMG.

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Board of Directors authorized a new $150 million common share repurchase program and an increase in its annual common share dividend to $0.21 per share.

Consolidated Operating Results

Consolidated net premiums written for the quarter and year to date totaled $199.8 million and $393.5 million, respectively, compared to $190.9 million and $384.3 million for the same periods a year ago. The increases were due primarily to an increase in average premium rates in U.S. Mortgage Insurance Operations and favorable foreign currency exchange rates in International Operations³.

Consolidated premiums earned for the quarter and year to date were $206.4 million and $406.0 million, respectively, compared to $187.7 million and $373.0 million for the same periods a year ago. The increases were due primarily to increases in premiums earned by U.S. Mortgage Insurance Operations and, to a lesser extent, International Operations.

Consolidated losses and loss adjustment expenses for the quarter and year to date totaled $67.2 million and $131.7 million, respectively, compared to $56.5 million and $116.4 million for the same periods a year ago. The increases, when compared to the same periods in 2004, were primarily due to higher primary claims paid in U.S. Mortgage Insurance Operations.

Consolidated other underwriting and operating expensesfor the quarter and year to date totaled $54.4 million and $100.1 million, respectively, compared to $49.6 million and $99.9 million for the same periods a year ago. The increase in the second quarter of 2005 was primarily due to an increase in expenses in International Operations.

Consolidated reserve for losses and loss adjustment expenses totaled $364.4 million as of June 30, 2005, relatively unchanged from March 31, 2005 and December 31, 2004.

U.S. Mortgage Insurance Operations

Net income for U.S. Mortgage Insurance Operations for the quarter and year to date totaled $69.7 million and $136.0 million, respectively, compared to $63.3 million and $116.9 million for the same periods a year ago. The increases were due primarily to higher

³ “International Operations” includes the results of PMI Australia, PMI Europe and the results of operations from the Hong Kong branch operations.

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premiums earned and reduced underwriting and operating expenses, partially offset by higher losses and loss adjustment expenses.

Net premiums writtenfor the quarter and year to date totaled $152.6 million and $307.1 million, respectively, compared to $147.4 million and $300.5 million for the same periods a year ago. The increases were due primarily to an increase in average premium rates and to higher primary risk in force.

Premiums earned for the quarter and year to date totaled $168.2 million and $332.4 million, respectively, compared to $154.4 million and $303.4 million for the same periods a year ago. The increases were due primarily to the recognition of premiums associated with loan cancellations under non-refundable single and annual premium policies, increases in average premium rates and, to a lesser extent, higher primary risk in force.

Equity in earnings from CMG for the quarter and year to date totaled $4.9 million (pre-tax) and $9.0 million (pre-tax), respectively, compared to $3.7 million (pre-tax) and $7.0 million (pre-tax) for the same periods a year ago. The increases compared to the corresponding periods in 2004 were primarily a result of increases in CMG’s primary insurance in force and risk in force.

Losses and loss adjustment expenses for the quarter and year to date totaled $65.5 million and $128.6 million, respectively, compared to $55.8 million and $114.7 million for the same periods a year ago. The increases were primarily a result of increases in the number of primary claims paid. The increases in the number of primary claims paid were due to a number of factors, including seasoning of PMI’s primary insurance portfolio’s largest book years, an increased number of claims paid that had previously been late stage delinquencies whose foreclosure had been delayed by bankruptcy protection and higher claims associated with the portion of PMI’s portfolio that contains ARMs, high LTV, Alt-A and less-than-A quality loans.

Amortization of deferred policy acquisition costs for the quarter and year to date totaled $15.0 million and $31.1 million, respectively, compared to $18.1 million and $37.5 million for the same periods a year ago. The decreases were primarily the result of lower levels of new insurance written, increases in policies issued through electronic delivery, and the expense savings from the 2004 field restructuring.

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Other underwriting and operating expenses for the quarter and year to date totaled $25.3 million and $48.8 million, respectively, compared to $24.9 million and $51.1 million for the same periods a year ago. The decrease for the first half of 2005 was due primarily to costs accrued in the first quarter of 2004 related to compensation and related benefits costs, as well as field restructuring charges recorded in the first half of 2004.

DOMESTIC⁴ NEW INSURANCE WRITTEN

(Dollars in billions)	Q2 2005		YTD 2005		Q2 2004		YTD 2004
Domestic primary new insurance written	$	11.1	$	20.3	$	12.9	$	22.7
Excluding CMG	$	9.7	$	17.8	$	11.4	$	20.2
Bulk new insurance written	$	2.2	$	4.1	$	1.0	$	1.3
Domestic pool new insurance written	$	3.2	$	4.5	$	2.6	$	6.5

Domestic primary new insurance written for the quarter and year to date totaled $11.1 billion and $20.3 billion, respectively, compared to $12.9 billion and $22.7 billion for the same periods a year ago. The decreases were driven by lower volumes in the residential mortgage origination and mortgage insurance markets, partially offset by increased opportunities for bulk insurance writings. Lenders’ use of alternative mortgage products which do not require mortgage insurance has continued to negatively impact the size of the mortgage insurance market and PMI’s primary flow new insurance written.

PRIMARY INSURANCEAND RISK IN FORCE

(Dollars in billions)	As of 6/30/05			As of 3/31/05			As of 6/30/04
Domestic primary insurance in force	$	118.1		$	118.2		$	117.6
Excluding CMG	$	103.4		$	104.0		$	104.2
Domestic primary risk in force	$	29.0		$	28.8		$	27.8
Excluding CMG	$	25.6		$	25.5		$	24.8
Domestic annual primary persistency rate		62.9	%		61.7	%		53.6	%
Excluding CMG		62.0	%		60.8	%		52.8	%

Domestic primary insurance in forcetotaled $118.1 billion at June 30, 2005, compared to $117.6 billion a year ago.Domestic primary risk in forcetotaled $29.0 billion at June 30, 2005, compared to $27.8 billion at the end of the second quarter of 2004 and was driven primarily by a greater number of high LTV loans with deeper coverage and higher average loan balances. The domestic annual persistency rate increased to 62.9% as of June 30, 2005 from 53.6% as of June 30, 2004.

⁴ “Domestic” includes results from U.S. Mortgage Insurance Operations and CMG.

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PRIMARY DEFAULT RATES

	As of 6/30/05		As of 3/31/05		As of 6/30/04
Domestic primary mortgage insurance	4.03	%	4.07	%	3.94	%
Excluding bulk	3.48	%	3.59	%	3.39	%
Excluding CMG	4.51	%	4.53	%	4.36	%
Excluding CMG and bulk transactions	3.94	%	4.04	%	3.79	%

At June 30, 2005, the Company’sdomestic primary insurance default rate, excluding CMG, was 4.51 percent compared to 4.53 percent at March 31, 2005. The decrease was primarily due to a decrease in primary loans in default from 35,716 at March 31, 2005 to 35,030 at June 30, 2005 and a decline in the number of primary insurance policies in force.

CLAIMS PAID

(Dollars in millions)	Q2 2005		YTD 2005		Q2 2004		YTD 2004
Primary – flow	$	46.1	$	87.8	$	36.0	$	67.1
Primary – bulk		11.6		25.4		13.8		26.3
Total primary		57.7		113.2		49.8		93.4
Total pool and other		4.9		9.6		3.4		7.4
Total claims paid	$	62.6	$	122.8	$	53.2	$	100.8

Primary claims paid for the quarter and year to date totaled $57.7 million and $113.2 million, respectively, compared to $49.8 million and $93.4 million for the same periods a year ago. The increases in claims paid in the second quarter and first half of 2005 were influenced by the seasoning of our primary insurance portfolio’s largest book years, an increased number of claims that had previously been late stage delinquencies whose foreclosure had been delayed by bankruptcy protection and higher claim rates associated with the portion of the portfolio that contain ARMs, high LTV, Alt-A and less-than-A quality loans.

International Operations

Net incomefrom International Operations for the quarter and year to date totaled $25.3 million and $50.4 million, respectively, compared to $25.0 million and $52.0 million for the same periods a year ago. The decrease in net income for the first half of 2005 was due primarily to a decrease in PMI Europe’s premiums earned and increases in PMI Australia’s and PMI Europe’s underwriting and operating expenses. The change in the average foreign currency exchange rates from the second quarter and the first half of 2005 to the corresponding periods in 2004 favorably impacted International Operations’ net income by $1.5 million and $2.0 million, respectively, primarily due to the appreciation of the Australian

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dollar, offset by the amortization and decline in value of the Company’s Australian dollar and Euro put options.

PMI Australia

Net incomefrom PMI Australia for the quarter and year to date totaled $20.5 million and $41.1 million, respectively, compared to $19.2 million and $39.5 million for the same periods a year ago. The increases were due primarily to an appreciation of the Australian dollar relative to the U.S. dollar. In local currency, net income from PMI Australia for the quarter and year to date totaled AU$26.7 million and AU$53.2 million, respectively, compared to AU$26.8 million and AU$53.4 million for the same periods a year ago.

Losses and loss adjustment expensesfor PMI Australia continued to experience favorable levels of claim payments and default rates. PMI Australia’s default rate at June 30, 2005 was 0.14% compared to 0.15% at June 30, 2004. Claims paid in the second quarter and year to date totaled $0.7 million and $1.1 million, respectively, compared to $0.2 million and $0.4 million for the same periods a year ago.

Premiums earnedfor PMI Australia for the quarter and year to date totaled $29.9 million and $59.3 million, respectively, compared to $26.7 million and $55.6 million for the same periods a year ago.

Primary insurance in forcefor PMI Australia was $119.8 billion at June 30, 2005, compared to $91.5 billion at June 30, 2004.

Primary risk in forcefor PMI Australia was $109.0 billion at June 30, 2005, compared to $82.8 billion at June 30, 2004.

Primary new insurance writtenfor PMI Australia for the quarter and year to date totaled $7.4 billion and $15.2 billion, respectively, compared to $8.7 billion and $16.9 billion for the same periods a year ago. The decreases in new insurance written were primarily driven by decreases in mortgage origination activity combined with increasingly competitive pricing.

Unearned premiumsfor PMI Australia were $301.3 million at June 30, 2005, compared to $242.4 million at June 30, 2004. The increase in unearned premiums was due to the higher level of insurance in force, combined with the strengthening of the Australian dollar relative to the U.S. dollar.

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PMI Europe

Net incomefor PMI Europe for the quarter and year to date totaled $2.3 million and $5.4 million, respectively, compared to $4.3 million and $9.0 million for the same periods a year ago. The decreases in the second quarter and first half of 2005 were due primarily to decreases in premiums earned and increases in underwriting and operating expenses. In local currency, net income from PMI Europe for the quarter and year to date totaled €1.9 million and €4.2 million, respectively, compared to €3.5 million €7.3, respectively, for the same periods a year ago.

Net premiums writtenfor PMI Europe for the quarter and year to date totaled $1.5 million and $3.0 million, respectively, compared to $2.4 million and $5.2 million for the same periods a year ago. The decreases in net premiums written were due to a reduced number of transactions closed in the second quarter and first half of 2005 in the European markets which can exhibit considerable variance in volume from quarter to quarter.

Premiums earnedfor PMI Europe for the quarter and year to date totaled $4.2 and $8.5 million, respectively, compared to $5.0 million and $10.4 million for the same periods a year ago. The decreases for the quarter and the year to date were due primarily to decreases in premiums earned associated with the Royal & Sun Alliance (“R&SA”) mortgage insurance portfolio acquired by PMI Europe in 2004. As this portfolio continues to season, we expect premiums earned and risk in force associated with this portfolio to decline.

Underwriting and operating expensesfor PMI Europe for the quarter and year to date totaled $2.9 million and $4.5 million, respectively, compared to $1.1 million and $2.7 million for the same periods a year ago. The increases in the second quarter and the first half of 2005 were due to additional provisions for the R&SA performance related obligations and increases in costs associated with expansion efforts. Under the terms of its agreement with R&SA, PMI Europe shares certain economic benefits with R&SA if loss performance of the acquired portfolio reaches agreed-upon levels. Based upon the favorable loss performance to date, PMI Europe has continued to accrue commissions related to this agreement and most likely will continue to do so in the future.

PMI Hong Kong

PMI’sHong Kong reinsurance premiums writtenfor the quarter and year to date totaled $6.3 million and $11.6 million, respectively, compared to $2.6 and $4.4 million for the same periods a year ago. The increases were due primarily to increases in

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mortgage origination activity in Hong Kong and product expansion into residential mortgages with LTVs between 90.01% and 95.00%.

PMI’sHong Kong reinsurance premiums earnedfor the quarter and year to date totaled $4.1 million and $5.8 million, respectively, compared to $1.5 and $3.5 million for the same periods a year ago. The increase in the second quarter of 2005 was due to increases in mortgage origination activity and policy cancellations during the quarter.

Financial Guaranty

Financial Guaranty, which includes equity in earnings from the Company’s investments inFGIC andRAM Re, reportednet income for the quarter and year to date of $21.5 million and $40.4 million, respectively, compared to $17.5 million and $31.0 million for the same periods a year ago.Equity in earnings from FGIC in the second quarter and year to date totaled $22.2 million (pre-tax) and $41.8 million (pre-tax), respectively, compared to $17.9 million (pre-tax) and $31.5 million (pre-tax) in the same periods a year ago. The increase in the second quarter of 2005 was primarily due to increases in premiums earned and, to a lesser extent, higher investment income due to growth in its investment portfolio. The increase in the first half of 2005 was primarily due to increases in premiums earned, refundings and, to a lesser extent, higher investment income due to growth in its investment portfolio.

Equity in earnings from RAM Re for the quarter and year to date were $1.6 million (pre-tax) and $2.8 million (pre-tax), respectively, compared to $1.8 million (pre-tax) and $3.1 million (pre-tax) for the same periods a year ago. The Company reports equity in earnings from RAM Re on a one-quarter lag.

Other

The Other segment consists of revenues and expenses of the holding company, PMI Mortgage Services Co. and SPS Holding Corp. (“SPS”).

The Net loss in the Other segment for the quarter and year to date totaled $11.9 million and $21.1 million, respectively, compared to a net loss of $9.0 million and a net gain of $16.3 million for the same periods a year ago. The increases in the net loss in the second quarter and year to date were primarily driven by increases in contract underwriting remedy expenses and by a decline in contract underwriting revenues related to lower mortgage origination and refinance volumes. In January 2005, the Company signed a Summary of

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Terms granting Credit Suisse First Boston (USA) an option to buy 100 percent of the outstanding stock of SPS. As of June 30, 2005, our total investment in SPS was $119.3 million, consisting of $110.4 million carrying value of our equity investment held for sale and $8.9 million in related party receivables, which are current. As a result of reclassifying our investment in SPS as held for sale, effective January 1, 2005, we have recorded equity in earnings from SPS in other income. On July 28, 2005, the Company agreed to extend CSFB’s option to acquire the outstanding stock of SPS until August 5, 2005 from the previous expiration date of July 31, 2005.

Equity in earnings from SPS was nominal for the second quarter of 2005 and 2004 and was $0.9 million for the first half of 2005 compared to $0.4 million for the corresponding period in 2004.

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 promote homeownership and facilitate 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.

The Company is an advocate of affordable housing and supports a number of organizations that foster greater access to affordable housing. The Company’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 earnings 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. Readers are cautioned that 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. Risks and uncertainties that could affect the Company are discussed in our Form 10-K for the year ended December 31, 2004 and include changes in economic conditions such as interest rates, home values, employment rates and refinance activity. We undertake no obligation to update forward-looking statements.

# # #

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THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED JUNE 30, 2005

Contents

Consolidated Statements of Operations and Balance Sheets	Page 2
Business Segments Results of Operations - Three Months Ended June 30, 2005 and 2004	Page 3
Business Segments Results of Operations - Six Months Ended June 30, 2005 and 2004	Page 4
Business Segments Balance Sheets	Page 5
U.S. Mortgage Insurance Operations Analysis of Reserve for Losses and LAE and Statistical Information	Page 6
U.S. Mortgage Insurance Operations and CMG Mortgage Insurance Company Statistical Information	Page 7
PMI Australia and PMI Europe Statistical Information	Page 8
Appendix A - U.S. Mortgage Insurance Operations Supplemental Statistical Information	Page 9
Appendix B - PMI Australia and PMI Europe Quarterly Financial Information	Page 10
Appendix C - Business Segments Results of Operations by Quarter	Page 11

Please refer to the following when noted:

⁽¹⁾ For the quarter and six months ended June 30, 2005, the Company’s equity earnings in unconsolidated subsidiaries include FGIC Corporation, CMG Mortgage Insurance Company (“CMG”), RAM Reinsurance Company, Ltd. (“RAM Re”), other limited partnership interests and the trust subsidiary that issued the Company’s preferred securities. As of December 31, 2004, the equity investment in SPS Holding Corp. (“SPS”) was reclassified from investments in unconsolidated subsidiaries to equity investment held for sale. Effective January 1, 2005, SPS's equity earnings are reported in other income.

⁽²⁾ The operating results, assets and liabilities of American Pioneer Title Insurance Company (“APTIC”) were reflected as discontinued operations in the fourth quarter of 2003 with prior period financial information reclassified accordingly. The Company completed its sale of APTIC in March 2004 and recorded a gain on sale of discontinued operations of $30.1 million, net of $17.1 million of income tax expense.

⁽³⁾ In January 2005, the Company signed a Summary of Terms with Credit Suisse First Boston (USA), Inc. (“CSFB”) pursuant to which CSFB has an option to acquire 100% of the Company’s outstanding stock of SPS. In the fourth quarter of 2004, the Company recorded a write-down of its equity investment in SPS for $20.4 million (pre-tax). The write-down was recorded as a realized loss of discontinued operations of equity investment due to the Company’s decision to sell SPS. According to Statement of Financial Accounting Standards No. 144, Accounting for the Impairment and Disposal of Long-Lived Assets, we are not permitted to present the disposal of equity method investments as discontinued operations.

⁽⁴⁾ U.S. Mortgage Insurance Operations include the operating results of PMI Mortgage Insurance Co. and affiliated U.S. mortgage insurance and reinsurance companies (“PMI”). CMG and its affiliates are included under the equity method of accounting in equity in earnings from unconsolidated subsidiaries.

⁽⁵⁾ International Operations include PMI Australia, PMI Europe and the Company’s Hong Kong branch’s results of operations.

⁽⁶⁾ Financial Guaranty represents our equity investments in FGIC Corporation and RAM Re.

⁽⁷⁾ The “Other” segment includes other income and related operating expenses of PMI Mortgage Services Co.; investment income, interest expense and corporate overhead of The PMI Group, Inc.; the results of Commercial Loans Insurance Co. and WMAC Credit Insurance Corporation; equity in earnings from SPS and certain limited partnerships; and the results from discontinued operations of APTIC.

⁽⁸⁾ The expense ratio is the ratio, expressed as a percentage, of the sum of amortization of deferred policy acquisition costs and other underwriting expenses to net premiums written. The loss ratio is the ratio, expressed as a percentage, of the sum of losses and loss adjustment expenses to premiums earned.

⁽⁹⁾ Pool insurance includes modified pool, GSE pool, old pool and all other pool insurance products for U.S. Mortgage Insurance Operations.

⁽¹⁰⁾ Statutory risk-to-capital ratio is for PMI Mortgage Insurance Co.

Note: The interim financial and statistical information contained in this material is unaudited. Certain prior year information has been reclassified to conform to the current periods’ presentation.

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
	(Dollars and shares, except per share data, in thousands)
Net premiums written	$	199,762	$	190,876	$	393,507	$	384,280
Revenues
Premiums earned	$	206,408	$	187,663	$	405,975	$	372,965
Net investment income		45,747		43,622		89,537		83,663
Equity in earnings from unconsolidated subsidiaries(1)		28,282		23,585		53,494		42,683
Net realized investment gains		1,503		68		2,224		1,343
Other income		6,251		9,798		11,787		18,649
Total revenues		288,191		264,736		563,017		519,303
Losses and expenses
Losses and loss adjustment expenses		67,235		56,532		131,717		116,352
Amortization of deferred policy acquisition costs		18,809		21,244		39,252		44,339
Other underwriting and operating expenses		54,417		49,618		100,062		99,938
Interest expense		8,472		8,822		18,025		17,337
Total losses and expenses		148,933		136,216		289,056		277,966
Income from continuing operations before income taxes		139,258		128,520		273,961		241,337
Income taxes from continuing operations		34,673		31,845		68,218		59,099
Income from continuing operations after income taxes		104,585		96,675		205,743		182,238
Income from discontinued operations before income taxes(2)		—		—		—		5,756
Income taxes from discontinued operations(2)		—		—		—		1,958
Income from discontinued operations after income taxes(2)		—		—		—		3,798
Gain on sale of discontinued operations, net of income taxes of $17,131 (2)		—		—		—		30,108
Net income	$	104,585	$	96,675	$	205,743	$	216,144
Diluted weighted average common shares outstanding		102,592		105,599		103,246		105,304
Diluted net income per share	$	1.04	$	0.93	$	2.03	$	2.09
Reconciliation of earnings per share:
Net income	$	104,585	$	96,675	$	205,743	$	216,144
Plus: Interest expense on contingently convertible debt, net of income taxes		1,912		1,942		3,824		3,854
Net income adjusted for diluted earnings per share calculation	$	106,497	$	98,617	$	209,567	$	219,998
Share data:
Basic weighted average common shares outstanding		92,838		95,754		93,370		95,571
Stock options and other dilutive components		1,601		1,692		1,723		1,580
Common stock equivalent shares related to contingently convertible debt		8,153		8,153		8,153		8,153
Diluted weighted average common shares outstanding		102,592		105,599		103,246		105,304
Per share data:
Diluted net income from continuing operations per share	$	1.04	$	0.93	$	2.03	$	1.76
Income from discontinued operations after income taxes		—		—		—		0.04
Gain on sale of discontinued operations, net of income taxes		—		—		—		0.29
Diluted net income per share	$	1.04	$	0.93	$	2.03	$	2.09

CONSOLIDATED BALANCE SHEETS

	June 30, 2005		December 31, 2004		June 30, 2004
	(Unaudited)				(Unaudited)
	(Dollars in thousands, except per share data)
Assets
Cash and investments, at fair value	$	3,675,496	$	3,621,550	$	3,365,964
Investments in unconsolidated subsidiaries(1)		965,600		911,604		955,577
Equity investment held for sale(3)		110,383		109,519		—
Related party receivables		10,562		18,439		47,831
Reinsurance receivables, reinsurance recoverables and prepaid premiums		45,875		49,657		45,743
Deferred policy acquisition costs		87,892		92,438		91,816
Other assets		345,499		342,760		347,647
Total assets	$	5,241,307	$	5,145,967	$	4,854,578
Liabilities
Reserve for losses and loss adjustment expenses	$	364,412	$	364,847	$	357,028
Unearned premiums		461,461		484,815		460,998
Long-term debt		819,529		819,529		819,543
Other liabilities		357,951		339,021		310,661
Total liabilities		2,003,353		2,008,212		1,948,230
Shareholders’ equity		3,237,954		3,137,755		2,906,348
Total liabilities and shareholders’ equity	$	5,241,307	$	5,145,967	$	4,854,578
Basic shares issued and outstanding(shares in thousands)		91,761		94,025		95,987
Book value per share	$	35.29	$	33.37	$	30.28

Page 2

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS

	U.S. Mortgage Insurance Operations (4)			International Operations (5)			Financial Guaranty (6)		Other (7)			Consolidated Total
	Three Months Ended June 30, 2005 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	152,564		$	47,185		$	—	$	13		$	199,762
Revenues
Premiums earned	$	168,248		$	38,141		$	—	$	19		$	206,408
Net investment income		27,546			14,058			—		4,143			45,747
Equity in earnings (losses) from unconsolidated subsidiaries (1)		4,937			—			23,761		(416	)		28,282
Net realized investment gains (losses)		1,167			(18	)		—		354			1,503
Other income (loss)		(5	)		873			—		5,383			6,251
Total revenues		201,893			53,054			23,761		9,483			288,191
Losses and expenses
Losses and loss adjustment expenses		65,496			1,739			—		—			67,235
Amortization of deferred policy acquisition costs		15,030			3,779			—		—			18,809
Other underwriting and operating expenses		25,278			10,539			—		18,600			54,417
Interest expense		—			—			—		8,472			8,472
Total losses and expenses		105,804			16,057			—		27,072			148,933
Income (loss) before income taxes		96,089			36,997			23,761		(17,589	)		139,258
Income tax (benefit)		26,400			11,747			2,254		(5,728	)		34,673
Net income (loss)	$	69,689		$	25,250		$	21,507	$	(11,861	)	$	104,585
Expense ratio(8)		26.4	%		30.3	%
Loss ratio(8)		38.9	%		4.6	%
Combined ratio		65.3	%		34.9	%
	Three Months Ended June 30, 2004 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	147,407		$	43,460		$	—	$	9		$	190,876
Revenues
Premiums earned	$	154,392		$	33,255		$	—	$	16		$	187,663
Net investment income		27,944			10,646			—		5,032			43,622
Equity in earnings from unconsolidated subsidiaries(1)		3,676			—			19,699		210			23,585
Net realized investment gains (losses)		(166	)		377			—		(143	)		68
Other income (loss)		(25	)		2,399			—		7,424			9,798
Total revenues		185,821			46,677			19,699		12,539			264,736
Losses and expenses
Losses and loss adjustment expenses		55,755			777			—		—			56,532
Amortization of deferred policy acquisition costs		18,109			3,135			—		—			21,244
Other underwriting and operating expenses		24,888			6,940			—		17,790			49,618
Interest expense		17			60			—		8,745			8,822
Total losses and expenses		98,769			10,912			—		26,535			136,216
Income (loss) before income taxes		87,052			35,765			19,699		(13,996	)		128,520
Income tax (benefit)		23,790			10,799			2,220		(4,964	)		31,845
Net Income (loss)	$	63,262		$	24,966		$	17,479	$	(9,032	)	$	96,675
Expense ratio(8)		29.2	%		23.2	%
Loss ratio(8)		36.1	%		2.3	%
Combined ratio		65.3	%		25.5	%

Page 3

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS

	U.S. Mortgage Insurance Operations(4)			International Operations (5)			Financial Guaranty (6)		Other(7)			Consolidated Total
	Six Months Ended June 30, 2005 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	307,103		$	86,370		$	—	$	34		$	393,507
Revenues
Premiums earned	$	332,360		$	73,576		$	—	$	39		$	405,975
Net investment income		53,125			27,813			—		8,599			89,537
Equity in earnings (losses) from unconsolidated subsidiaries(1)		9,011			—			44,608		(125	)		53,494
Net realized investment gains		1,587			322			—		315			2,224
Other income (loss)		(1	)		760			—		11,028			11,787
Total revenues		396,082			102,471			44,608		19,856			563,017
Losses and expenses
Losses and loss adjustment expenses		128,614			3,103			—		—			131,717
Amortization of deferred policy acquisition costs		31,056			8,196			—		—			39,252
Other underwriting and operating expenses		48,832			17,543			—		33,687			100,062
Interest expense		1			—			—		18,024			18,025
Total losses and expenses		208,503			28,842			—		51,711			289,056
Income (loss) before income taxes		187,579			73,629			44,608		(31,855	)		273,961
Income tax (benefit)		51,548			23,232			4,211		(10,773	)		68,218
Net income (loss)	$	136,031		$	50,397		$	40,397	$	(21,082	)	$	205,743
Expense ratio(8)		26.0	%		29.8	%
Loss ratio (8)		38.7	%		4.2	%
Combined ratio		64.7	%		34.0	%
	Six Months Ended June 30, 2004 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	300,471		$	83,783		$	—	$	26		$	384,280
Revenues
Premiums earned	$	303,415		$	69,514		$	—	$	36		$	372,965
Net investment income		52,402			22,453			—		8,808			83,663
Equity in earnings from unconsolidated subsidiaries (1)		7,004			—			34,627		1,052			42,683
Net realized investment gains (losses)		921			602			—		(180	)		1,343
Other income		57			4,001			—		14,591			18,649
Total revenues		363,799			96,570			34,627		24,307			519,303
Losses and expenses
Losses and loss adjustment expenses		114,710			1,642			—		—			116,352
Amortization of deferred policy acquisition costs		37,542			6,797			—		—			44,339
Other underwriting and operating expenses		51,028			13,807			—		35,103			99,938
Interest expense		37			61			—		17,239			17,337
Total losses and expenses		203,317			22,307			—		52,342			277,966
Income (loss) from continuing operations before income taxes		160,482			74,263			34,627		(28,035	)		241,337
Income tax (benefit) from continuing operations		43,612			22,269			3,633		(10,415	)		59,099
Income (loss) from continuing operations after income taxes		116,870			51,994			30,994		(17,620	)		182,238
Income from discontinued operations before taxes(2)		—			—			—		5,756			5,756
Income taxes from discontinued operations(2)		—			—			—		1,958			1,958
Income from discontinued operations after income taxes(2)		—			—			—		3,798			3,798
Gain on sale of discontinued operations, net of income taxes(2)		—			—			—		30,108			30,108
Net income	$	116,870		$	51,994		$	30,994	$	16,286		$	216,144
Expense ratio(8)		29.5	%		24.6	%
Loss ratio(8)		37.8	%		2.4	%
Combined ratio		67.3	%		27.0	%

Page 4

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS BALANCE SHEETS

	U.S. Mortgage Insurance Operations(4)		International Operations (5)		Financial Guaranty (6)		Other(7)			Consolidated Total
	June 30, 2005
	(Dollars in thousands)
Assets
Cash and investments, at fair value	$	2,140,727	$	1,048,992	$	—	$	485,777		$	3,675,496
Investment in unconsolidated subsidiaries(1)		121,558		—		821,308		22,734			965,600
Equity investment held for sale (3)		—		—		—		110,383			110,383
Related party receivables		1,507		—		—		9,055			10,562
Reinsurance receivables, recoverables and prepaid premiums		23,903		21,972		—		—			45,875
Deferred policy acquisition costs		48,738		39,154		—		—			87,892
Other assets		208,219		24,800		—		112,480			345,499
Total assets	$	2,544,652	$	1,134,918	$	821,308	$	740,429		$	5,241,307
Liabilities
Reserve for losses and loss adjustment expenses	$	338,628	$	25,781	$	—	$	3		$	364,412
Unearned premiums		132,809		328,618		—		34			461,461
Long-term debt		—		—		—		819,529			819,529
Other liabilities		245,481		71,727		16,248		24,495			357,951
Total liabilities		716,918		426,126		16,248		844,061			2,003,353
Shareholders’ equity		1,827,734		708,792		805,060		(103,632	)		3,237,954
Total liabilities and shareholders’ equity	$	2,544,652	$	1,134,918	$	821,308	$	740,429		$	5,241,307
	December 31, 2004
	(Dollars in thousands)
Assets
Cash and investments, at fair value	$	2,132,300	$	1,030,751	$	—	$	458,499		$	3,621,550
Investments in unconsolidated subsidiaries(1)		112,456		—		774,880		24,268			911,604
Equity investment held for sale(3)		—		—		—		109,519			109,519
Related party receivables		1,633		—		—		16,806			18,439
Reinsurance receivables, recoverables and prepaid premiums		31,110		18,547		—		—			49,657
Deferred policy acquisition costs		53,998		38,440		—		—			92,438
Other assets		208,806		26,460		—		107,494			342,760
Total assets	$	2,540,303	$	1,114,198	$	774,880	$	716,586		$	5,145,967
Liabilities
Reserve for losses and loss adjustment expenses	$	338,620	$	26,224	$	—	$	3		$	364,847
Unearned premiums		152,685		332,091		—		39			484,815
Long-term debt		—		—		—		819,529			819,529
Other liabilities		237,431		71,740		12,424		17,426			339,021
Total liabilities		728,736		430,055		12,424		836,997			2,008,212
Shareholders’ equity		1,811,567		684,143		762,456		(120,411	)		3,137,755
Total liabilities and shareholders’ equity	$	2,540,303	$	1,114,198	$	774,880	$	716,586		$	5,145,967
	June 30, 2004
	(Dollars in thousands)
Assets
Cash and investments, at fair value	$	2,120,337	$	842,675	$	—	$	402,952		$	3,365,964
Investments in unconsolidated subsidiaries(1)		102,346		—		716,858		136,373			955,577
Related party receivables		2,011		—		—		45,820			47,831
Reinsurance receivables, recoverables and prepaid premiums		30,007		15,736		—		—			45,743
Deferred policy acquisition costs		59,866		31,950		—		—			91,816
Other assets		206,500		28,118		—		113,029			347,647
Total assets	$	2,521,067	$	918,479	$	716,858	$	698,174		$	4,854,578
Liabilities
Reserve for losses and loss adjustment expenses	$	334,744	$	22,281	$	—	$	3		$	357,028
Unearned premiums		179,851		281,109		—		38			460,998
Long-term debt		—		—		—		819,543			819,543
Other liabilities		123,526		57,034		9,301		120,800			310,661
Total liabilities		638,121		360,424		9,301		940,384			1,948,230
Shareholders’ equity		1,882,946		558,055		707,557		(242,210	)		2,906,348
Total liabilities and shareholders’ equity	$	2,521,067	$	918,479	$	716,858	$	698,174		$	4,854,578

Page 5

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS⁽⁴⁾ ANALYSIS OF RESERVE FOR LOSSES AND LAE

	June 30, 2005			March 31, 2005			June 30, 2004
	Loans in Default	Reserve for Losses and LAE		Loans in Default	Reserve for Losses and LAE		Loans in Default	Reserve for Losses and LAE
	(Dollars in thousands)
Primary insurance	35,030	$	299,379	35,716	$	303,792	35,232	$	302,099
Pool insurance	16,623		39,249	16,992		34,685	16,804		32,645
Total	51,653	$	338,628	52,708	$	338,477	52,036	$	334,744

Reconciliation of Reserve for Losses and LAE

	June 30, 2005			March 31, 2005			Reserve Change
	(Dollars in thousands)
Gross reserve for losses and LAE:
Primary insurance	$	299,379		$	303,792		$	(4,413	)
Pool insurance		39,249			34,685			4,564
Total gross reserve for losses and LAE		338,628			338,477			151
Ceded reserve for losses:
Primary insurance		(2,299	)		(2,158	)		(141	)
Pool insurance		(89	)		(89	)		—
Total ceded reserve for losses		(2,388	)		(2,247	)		(141	)
Net reserve for losses and LAE	$	336,240		$	336,230		$	10

U.S. MORTGAGE INSURANCE OPERATIONS⁽⁴⁾ STATISTICAL INFORMATION

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Flow insurance written(in millions)	$	7,442		$	10,409		$	13,745		$	18,863
Bulk insurance written(in millions)		2,216			998			4,081			1,342
Primary new insurance written(in millions)	$	9,658		$	11,407		$	17,826		$	20,205
Primary new risk written (in millions)	$	2,551		$	2,950		$	4,621		$	5,157
Pool new insurance written(in millions)(9)	$	3,228		$	2,550		$	4,534		$	6,453
Pool new risk written(in millions)(9)	$	60		$	64		$	101		$	139
Product mix as a % of new insurance written:
Above 97% LTV’s		14	%		9	%		14	%		10	%
90.01% to 95% LTV’s		25	%		31	%		25	%		32	%
85.01% to 90% LTV’s		43	%		40	%		41	%		40	%
90.01% to 95% LTV’s with >= 30% coverage		21	%		26	%		21	%		26	%
85.01% to 90% LTV’s with >= 25% coverage		38	%		33	%		35	%		33	%
ARMs		35	%		21	%		34	%		19	%
Monthlies		97	%		98	%		98	%		97	%
Refinances		34	%		34	%		36	%		34	%
Bulk transactions		23	%		9	%		23	%		7	%
Premiums written(in thousands):
Gross premiums written	$	197,850		$	188,745		$	398,980		$	381,587
Ceded premiums, net of assumed premiums		(41,455	)		(37,824	)		(84,742	)		(74,011	)
Refunded premiums		(3,831	)		(3,514	)		(7,135	)		(7,105	)
Net premiums written		152,564			147,407			307,103			300,471
Change in unearned premiums		15,684			6,985			25,257			2,944
Net premiums earned	$	168,248		$	154,392		$	332,360		$	303,415

Page 6

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS⁽⁴⁾STATISTICAL INFORMATION

	June 30, 2005			March 31, 2005			June 30, 2004
Primary insurance in force(in millions)	$	103,434		$	103,997		$	104,206
Primary risk in force(in millions)	$	25,592		$	25,507		$	24,802
Pool risk in force(in millions)(9)	$	2,445		$	2,417		$	2,535
Risk-to-capital ratio(10)		8.4 to 1			8.1 to 1			8.6 to 1
Insured primary loans		776,721			788,847			807,822
Persistency		62.0	%		60.8	%		52.8	%
Primary loans in default		35,030			35,716			35,232
Primary default rate		4.51	%		4.53	%		4.36	%
Bulk transactions only default rate		8.54	%		8.17	%		9.01	%
Pool default rate		5.65	%		5.65	%		4.45	%
Primary claims paid(year-to-date in thousands)	$	113,180		$	55,510		$	93,364
Number of primary claims paid(year-to-date)		4,934			2,413			4,029
Average primary claim size(year-to-date in thousands)	$	22.9		$	23.0		$	23.2
Percentage of flow NIW subject to captive reinsurance arrangements(year-to-date)		65.7	%		61.1	%		60.2	%
Percentage of primary NIW subject to captive reinsurance arrangements(year-to-date)		50.7	%		47.1	%		56.2	%
Percentage of primary IIF subject to captive reinsurance arrangements(year-to-date)		53.7	%		53.7	%		52.2	%
Percentage of primary RIF subject to captive reinsurance arrangements(year-to-date)		54.6	%		53.6	%		53.9	%

CMG MORTGAGE INSURANCE COMPANY STATISTICAL INFORMATION

	June 30, 2005			March 31, 2005			June 30, 2004
Primary new insurance written(year-to-date in millions)	$	2,495		$	1,071		$	2,544
Primary insurance in force(in millions)	$	14,694		$	14,213		$	13,358
Primary risk in force(in millions)	$	3,428		$	3,286		$	2,991
Insured primary loans		108,066			105,928			102,044
Persistency		70.3	%		69.1	%		61.0	%
Primary loans in default		622			713			587
Primary default rate(year-to-date)		0.58	%		0.67	%		0.58	%
Primary claims paid(year-to-date in thousands)	$	1,981		$	892		$	2,665
Number of primary claims paid(year-to-date)		100			41			111
Average primary claim size(year-to-date in thousands)	$	19.8		$	21.8		$	24.0

Page 7

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI AUSTRALIA STATISTICAL INFORMATION

	June 30, 2005			March 31, 2005			June 30, 2004
Net premiums written(year-to-date in thousands)	$	71,775		$	32,388		$	74,169
Premiums earned(year-to-date in thousands)	$	59,319		$	29,399		$	55,590
Flow insurance written(year-to-date in millions)	$	8,685		$	3,922		$	10,268
RMBS insurance written(year-to-date in millions)		6,478			3,816			6,648
New insurance written(year-to-date in millions)	$	15,163		$	7,738		$	16,916
Insurance in force(in millions)	$	119,811		$	117,439		$	91,467
Risk in force(in millions)	$	109,025		$	106,724		$	82,764
Policies in force		973,820			955,922			861,470
Loans in default		1,322			1,276			1,276
Delinquency rate		0.14	%		0.13	%		0.15	%
Claims paid(year-to-date in thousands)	$	1,090		$	355		$	371
Number of claims paid(year-to-date)		42			18			26
Average claim size(year-to-date in thousands)	$	26.0		$	19.7		$	14.3
PMI EUROPE STATISTICAL INFORMATION
	June 30, 2005			March 31, 2005			June 30, 2004
Net premiums written(year-to-date in thousands)	$	3,027		$	1,547		$	5,167
Premiums earned(year-to-date in thousands)	$	8,507		$	4,353		$	10,399
New credit default swaps written(year-to-date in millions)	$	—		$	—		$	2,603
Insurance in force(in millions)	$	31,213		$	31,365		$	33,346
Risk in force(in millions)	$	2,450		$	2,405		$	3,251
Claims paid including credit default swaps(year-to-date in thousands)	$	1,379		$	825		$	651
Number of claims paid including credit default swaps(year-to-date)		26			20			51

Page 8

THE PMI GROUP, INC. AND SUBSIDIARIES

APPENDIX A - U.S. MORTGAGE INSURANCE OPERATIONS⁽⁴⁾ SUPPLEMENTAL STATISTICAL INFORMATION

		6/30/2005			3/31/2005			12/31/2004			9/30/2004			6/30/2004
Primary insurance in force(in millions)
Flow		$	89,965		$	91,399		$	93,263		$	93,601		$	92,968
Bulk			13,469			12,598			12,058			11,181			11,238
Total		$	103,434		$	103,997		$	105,321		$	104,782		$	104,206
Primary risk in force(in millions)
Flow		$	22,296		$	22,541		$	22,885		$	22,741		$	22,342
Bulk			3,296			2,966			2,773			2,518			2,460
Total		$	25,592		$	25,507		$	25,658		$	25,259		$	24,802
Primary policies in force			776,721			788,847			803,236			805,859			807,822
Primary risk in force - credit score distribution
Flow	619-575		5.9	%		6.1	%		6.2	%		6.4	%		6.6	%
	574 or below		1.7	%		1.7	%		1.8	%		1.9	%		2.0	%
Bulk	619-575		17.4	%		20.2	%		21.1	%		21.6	%		21.0	%
	574 or below		10.9	%		12.9	%		13.0	%		12.7	%		12.2	%
Total	619-575		7.4	%		7.7	%		7.8	%		7.9	%		8.0	%
	574 or below		2.9	%		3.0	%		3.0	%		3.0	%		3.0	%
Primary average loan size(in thousands)
Flow		$	132.2		$	131.5		$	131.3		$	130.5		$	129.3
Bulk		$	139.8		$	134.1		$	129.8		$	127.1		$	126.9
Total		$	133.2		$	131.8		$	131.1		$	130.1		$	129.0
Loss severity - primary(quarterly)
Flow			83.8	%		85.6	%		84.9	%		77.4	%		83.0	%
Bulk			87.7	%		90.9	%		84.6	%		78.8	%		83.5	%
Total			84.6	%		86.8	%		84.8	%		77.8	%		83.1	%
Alt-A primary insurance in force(in millions)
With FICO scores of 660 and above		$	11,800		$	10,892		$	10,250		$	9,421		$	8,590
With FICO scores below 660 and above 619			2,326			2,136			2,029			1,836			1,648
Total Alt-A primary insurance in force		$	14,126		$	13,028		$	12,279		$	11,257		$	10,238

NEW INSURANCE WRITTEN AND INSURANCE IN FORCE ANALYSIS

	6/30/2005			3/31/2005			12/31/2004			9/30/2004			6/30/2004
FICO > 700 and LTV > 80(in millions)
Primary new insurance written(year-to-date)	$	6,981		$	3,049		$	16,643		$	12,788		$	8,633
Primary insurance in force	$	42,829		$	42,974		$	43,801		$	43,862		$	43,640
Total portfolio(in millions)
Primary new insurance written(year-to-date)	$	17,826		$	8,168		$	41,213		$	30,695		$	20,205
Primary insurance in force	$	103,434		$	103,997		$	105,321		$	104,782		$	104,206
FICO > 700 and LTV > 80 as a percentage of total portfolio
Primary new insurance written(year-to-date)		39.2	%		37.3	%		40.4	%		41.7	%		42.7	%
Primary insurance in force		41.4	%		41.3	%		41.6	%		41.9	%		41.9	%

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THE PMI GROUP, INC. AND SUBSIDIARIES

APPENDIX B - PMI AUSTRALIA AND PMI EUROPE QUARTERLY FINANCIAL INFORMATION

PMI AUSTRALIA

	6/30/05			3/31/05			12/31/04			9/30/04			6/30/04			3/31/04		12/31/03		9/30/03
	(Australian $ in thousands, unless otherwise noted)
Income Statement Components - Quarter Ended
Premiums earned	$	38,929		$	37,840		$	35,819		$	37,109		$	37,308		$	37,790	$	36,766	$	32,855
Net investment income	$	14,966		$	14,705		$	14,087		$	13,098		$	12,677		$	12,139	$	9,235	$	12,309
Change in fair value of put options	$	(422	)	$	(1,338	)	$	(228	)	$	(1,890	)	$	1,311		$	—	$	—	$	—
Total expenses	$	15,104		$	13,788		$	13,624		$	13,413		$	12,799		$	12,030	$	12,160	$	(216	)
Net income	$	26,725		$	26,487		$	25,447		$	24,725		$	26,832		$	26,518	$	21,441	$	31,993
Net income(US$ in thousands)	$	20,541		$	20,584		$	19,272		$	17,554		$	19,219		$	20,265	$	15,511	$	21,073
Balance Sheet Components
Assets
Cash and investments, at fair value	$	1,090,399		$	1,037,704		$	1,027,236		$	973,479		$	924,330		$	892,864	$	853,920	$	816,143
Total assets	$	1,188,574		$	1,132,961		$	1,116,874		$	1,068,080		$	1,013,102		$	976,723	$	935,904	$	891,787
Liabilities and Shareholders’ Equity
Loss reserves	$	12,541		$	12,549		$	12,547		$	13,692		$	13,556		$	13,537	$	13,536	$	13,698
Unearned premiums	$	395,113		$	382,781		$	378,981		$	364,120		$	346,748		$	330,477	$	321,441	$	297,042
Shareholders’ equity	$	730,113		$	689,927		$	673,124		$	642,585		$	607,781		$	586,842	$	556,329	$	539,141
PMI EUROPE
	6/30/05			3/31/05			12/31/04			9/30/04			6/30/04			3/31/04		12/31/03		9/30/03
	(Euro € in thousands, unless otherwise noted)
Income Statement Components - Quarter Ended
Premiums earned	€	3,298		€	3,321		€	4,140		€	4,233		€	4,172		€	4,295	€	7,765	€	1,283
Net investment income	€	1,951		€	2,002		€	1,435		€	2,294		€	1,642		€	2,198	€	1,199	€	1,491
Change in fair value of put options	€	342		€	(33	)	€	(6	)	€	(96	)	€	(18	)	€	—	€	—	€	—
Total expenses	€	3,168		€	2,031		€	3,679		€	1,476		€	1,462		€	1,768	€	1,723	€	1,144
Net income	€	1,851		€	2,326		€	2,703		€	3,942		€	3,535		€	3,781	€	5,955	€	1,299
Net income(US$ in thousands)	$	2,330		$	3,049		$	3,489		$	4,822		$	4,260		$	4,726	$	7,089	$	1,469
Balance Sheet Components
Assets
Cash and investments, at fair value	€	179,698		€	172,707		€	169,165		€	164,558		€	161,129		€	162,621	€	154,369	€	98,847
Total assets	€	188,840		€	182,857		€	179,134		€	175,731		€	172,402		€	170,600	€	160,891	€	100,878
Liabilities and Shareholders’ Equity
Loss reserves	€	13,395		€	12,807		€	12,126		€	10,656		€	10,497		€	10,031	€	9,624	€	2,109
Unearned premiums	€	22,589		€	24,719		€	26,859		€	29,363		€	31,748		€	33,903	€	36,029	€	183
Shareholders’ equity	€	131,452		€	125,395		€	121,494		€	117,142		€	111,691		€	109,386	€	100,524	€	95,289

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THE PMI GROUP, INC. AND SUBSIDIARIES

APPENDIX C - BUSINESS SEGMENTS RESULTS OF OPERATIONS BY QUARTER

	2005						2004
	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	(Dollars in thousands)
U.S. Mortgage Insurance Operations(4)
Net premiums written	$	152,564		$	154,538		$	153,916		$	143,732		$	147,407		$	153,064
Revenues
Premiums earned	$	168,248		$	164,112		$	168,313		$	162,276		$	154,392		$	149,023
Net investment income		27,546			25,579			25,496			24,332			27,944			24,458
Equity in earnings from unconsolidated subsidiaries (1)		4,937			4,074			4,569			3,707			3,676			3,328
Net realized investment gains (losses)		1,167			420			(12	)		1,672			(166	)		1,087
Other income (loss)		(5	)		4			15			(24	)		(25	)		81
Total revenues		201,893			194,189			198,381			191,963			185,821			177,977
Losses and expenses
Losses and loss adjustment expenses		65,496			63,118			58,355			60,092			55,755			58,956
Amortization of deferred policy acquisition costs		15,030			16,026			16,585			18,003			18,109			19,433
Other underwriting and operating expenses		25,278			23,554			27,258			22,785			23,445			24,981
Field operations restructuring charge		—			—			—			315			1,443			1,156
Legal settlement refund		—			—			—			(2,574	)		—			—
Interest expense		—			1			12			13			17			21
Total losses and expenses		105,804			102,699			102,210			98,634			98,769			104,547
Income before income taxes		96,089			91,490			96,171			93,329			87,052			73,430
Income taxes		26,400			25,149			26,328			25,528			23,790			19,822
Net income	$	69,689		$	66,341		$	69,843		$	67,801		$	63,262		$	53,608
International Operations(5)
Net premiums written	$	47,185		$	39,185		$	46,156		$	43,238		$	43,460		$	40,323
Revenues
Premiums earned	$	38,141		$	35,435		$	33,979		$	32,829		$	33,255		$	36,259
Net investment income		14,058			13,756			12,789			11,848			10,646			11,807
Net realized investment gains (losses)		(18	)		340			(263	)		256			377			225
Other income (loss)		873			(113	)		3,044			296			2,399			1,602
Total revenues		53,054			49,418			49,549			45,229			46,677			49,893
Losses and expenses
Losses and loss adjustment expenses		1,739			1,363			1,737			746			777			864
Amortization of deferred policy acquisition costs		3,779			4,417			3,065			3,225			3,135			3,662
Other underwriting and operating expenses		10,539			7,005			10,235			7,346			6,940			6,867
Interest expense		—			—			—			12			60			1
Total losses and expenses		16,057			12,785			15,037			11,329			10,912			11,394
Income before income taxes		36,997			36,633			34,512			33,900			35,765			38,499
Income taxes		11,747			11,485			10,274			10,218			10,799			11,470
Net income	$	25,250		$	25,148		$	24,238		$	23,682		$	24,966		$	27,029
Financial Guaranty(6)
Equity in earnings from unconsolidated subsidiaries (1)	$	23,761		$	20,846		$	16,156		$	17,061		$	19,699		$	14,928
Income taxes		2,254			1,956			1,689			1,820			2,220			1,413
Net income	$	21,507		$	18,890		$	14,467		$	15,241		$	17,479		$	13,515
Other(7)
Net premiums written	$	13		$	23		$	31		$	9		$	9		$	17
Revenues
Premiums earned	$	19		$	20		$	20		$	18		$	16		$	20
Net investment income		4,143			4,455			4,706			5,775			5,032			3,776
Equity in earnings (losses) from unconsolidated subsidiaries (1)		(416	)		292			(975	)		353			210			842
Net realized investment gains (losses)		354			(39	)		—			(374	)		(143	)		(37	)
Realized loss from discontinued operations of equity investment(3)		—			—			(20,420	)		—			—			—
Other income		5,383			5,644			5,345			6,146			7,424			7,168
Total revenues		9,483			10,372			(11,324	)		11,918			12,539			11,769
Losses and expenses
Other underwriting and operating expenses		18,600			15,086			20,272			16,545			17,790			17,316
Interest expense		8,472			9,552			8,640			8,612			8,745			8,493
Total losses and expenses		27,072			24,638			28,912			25,157			26,535			25,809
Loss from continuing operations before income tax benefit		(17,589	)		(14,266	)		(40,236	)		(13,239	)		(13,996	)		(14,040	)
Income tax benefit from continuing operations		(5,728	)		(5,045	)		(13,339	)		(9,158	)		(4,964	)		(5,451	)
Loss from continuing operations after income tax benefit		(11,861	)		(9,221	)		(26,897	)		(4,081	)		(9,032	)		(8,589	)
Income from discontinued operations before income taxes(2)		—			—			—			—			—			5,756
Income taxes from discontinued operations(2)		—			—			—			—			—			1,958
Income from discontinued operations after income taxes(2)		—			—			—			—			—			3,798
Gain on sale of discontinued operations, net of income taxes(2)		—			—			(1,105	)		—			—			30,108
Net income (loss)	$	(11,861	)	$	(9,221	)	$	(28,002	)	$	(4,081	)	$	(9,032	)	$	25,317

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