Pmi (PMI) 8-K Results of Operations and Financial Condition

Exhibit 99.2

The PMI Group, Inc.

Third Quarter 2007

Financial Supplement

THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2007

Table of Contents		Page
	Notes to Financial Results and Statistical Information	3
Consolidated Results
	Consolidated Statements of Operations	4
	Consolidated Balance Sheets	5
	Business Segments Results of Operations—Three Months Ended September 30, 2007 and 2006	6
	Business Segments Results of Operations—Nine Months Ended September 30, 2007 and 2006	7
	Business Segments Balance Sheets	8
U.S. Mortgage Insurance Operations Segment Results
	U.S. Mortgage Insurance Operations Segment Results of Operations and Balance Sheets	9
	U.S. Mortgage Insurance Operations Portfolio Characteristics	10-12
	U.S. Mortgage Insurance Operations Default Information and Analysis of Loss Reserves	13
	CMG Mortgage Insurance Company Statistical Information	14
International Mortgage Insurance Operations Segment Results
	International Operations Segment Results of Operations and Balance Sheets	15
	PMI Australia Quarterly Financial Information	16
	PMI Australia Statistical Information	17
	PMI Europe Quarterly Financial Information	18
	PMI Asia Quarterly Financial Information	19
	PMI Europe and PMI Asia Statistical Information	20
Financial Guaranty Segment Results
	Financial Guaranty Segment Results of Operation and Balance Sheets	21
Corporate and Other Segment Results
	Corporate and Other Segment Results of Operations and Balance Sheets	22

Page 2

THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2007

Notes to Financial Results and Statistical Information:

⁽¹⁾ U.S. Mortgage Insurance Operations include the operating results of PMI Mortgage Insurance Co. and affiliated U.S. mortgage insurance and reinsurance companies (collectively, “PMI”). CMG Mortgage Insurance Company and its affiliates are included under the equity method of accounting in equity in earnings from unconsolidated subsidiaries.

⁽²⁾ International Operations include PMI Australia, PMI Europe, PMI Asia and PMI Canada. PMI Canada began offering residential mortgage insurance products to Canadian lenders and mortgage originators in the second quarter of 2007.

⁽³⁾ Financial Guaranty represents PMI Guaranty Co. (“PMI Guaranty”) and our equity investments in FGIC Corporation and RAM Reinsurance Company, Ltd. (“RAM Re”).

⁽⁴⁾ The “Corporate and Other” segment includes other income and related operating expenses of PMI Mortgage Services Co.; investment income, interest expense, intercompany eliminations and corporate expenses of The PMI Group, Inc. (the “Company”); the results of Commercial Loan Insurance Corporation, WMAC Credit Insurance Corporation and equity in earnings from certain limited partnerships.

⁽⁵⁾ For the quarter and nine months ended September 30, 2007, the Company’s equity in earnings (losses) from unconsolidated subsidiaries include FGIC Corporation, CMG Mortgage Insurance Company, CMG Mortgage Reinsurance Company and CMG Mortgage Assurance Company (collectively, “CMG MI”), RAM Re, and certain limited partnership interests.

⁽⁶⁾ Other underwriting and operating expenses from the “Corporate and Other” segment include charges of $2.9 million and $13.5 million (pre-tax) or $2.2 million and $9.8 million (after tax) for stock option expenses and related share-based compensation expenses in the third quarter and first nine months of 2007, respectively, compared to $2.3 million and $9.9 million (pre-tax) or $1.9 million and $7.6 million (after tax) for the corresponding periods in 2006.

⁽⁷⁾ The expense ratio is expressed as a ratio, of the sum of amortization of deferred policy acquisition costs and other underwriting and operating expenses to net premiums written. The loss ratio is expressed as a ratio, of losses and loss adjustment expenses (“LAE”) to premiums earned.

⁽⁸⁾ Pool insurance includes modified pool, GSE pool, old pool and all other pool insurance products for U.S. Mortgage Insurance Operations.

⁽⁹⁾ The statutory risk-to-capital ratio is for PMI Mortgage Insurance Co. only.

⁽¹⁰⁾ In July 2007, our Board of Directors authorized an additional $150 million to its existing common share repurchase program which brings total current authorizations to $300 million.

⁽¹¹⁾ Interest expense in our Financial Guaranty segment relates to a $50 million surplus note provided to PMI Guaranty by the Company. The surplus note bears interest at an annual rate of 5.85% and is due October 20, 2026. The surplus note and the interest expense are eliminated in the Corporate and Other segment.

⁽¹²⁾ For the first half of 2006, PMI Asia’s income statements represent the results of PMI’s Hong Kong Branch.

⁽¹³⁾ As of data, such as insurance in force, risk in force, policy in force and loans in default, are the same as recent period end in the total column.

⁽¹⁴⁾ Due to the net loss in this quarter, normally dilutive components of shares outstanding such as stock options were not included in fully diluted shares outstanding as their inclusion would have been anti-dilutive.

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

The PMI Group Inc.’s Investor Relations contacts:

Bill Horning	Kosta Karmaniolas
(925) 658-6193	(925) 658-6137

Page 3

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
	(Unaudited)						(Unaudited)
	(Dollars and shares, except per share data, in thousands)
Net premiums written	$	276,723		$	212,426		$	776,751		$	626,145
Revenues
Premiums earned	$	256,834		$	214,903		$	735,532		$	634,787
Net (loss) income from credit default swaps		(8,371	)		978			(4,964	)		4,744
Net investment income		55,408			49,680			159,166			145,561
Equity in (losses) earnings from unconsolidated subsidiaries(5)		(22,602	)		31,491			49,655			91,404
Net realized investment gains		394			726			2,386			1,621
Other income		5,307			3,142			11,561			10,099
Total revenues		286,970			300,920			953,336			888,216
Losses and expenses
Losses and loss adjustment expenses		372,844			79,603			628,324			212,403
Amortization of deferred policy acquisition costs		18,022			16,935			51,477			52,063
Other underwriting and operating expenses(6)		50,585			55,949			173,059			168,994
Interest expense		8,358			9,486			25,015			25,732
Total losses and expenses		449,809			161,973			877,875			459,192
(Loss) income before income taxes		(162,839	)		138,947			75,461			429,024
Income tax (benefit) expense		(76,066	)		34,709			(23,632	)		109,823
Net (loss) income	$	(86,773	)	$	104,238		$	99,093		$	319,201
Diluted net (loss) income per share	$	(1.04	)	$	1.16		$	1.14		$	3.38
Reconciliation of earnings per share
Net (loss) income	$	(86,773	)	$	104,238		$	99,093		$	319,201
Plus: Interest expense on contingently convertible debt, net of income taxes		—			799			—			3,513
Net (loss) income adjusted for diluted earnings per share calculation	$	(86,773	)	$	105,037		$	99,093		$	322,714
Share data:
Basic weighted average common shares outstanding		83,747			85,319			85,833			87,557
Stock options and other dilutive components (14)		—			1,029			881			1,125
Common stock equivalent shares related to contingently convertible debt (14)		—			4,453			—			6,906
Diluted weighted average common shares outstanding (14)		83,747			90,801			86,714			95,588
Share repurchase data:
Common shares repurchased(10)		5,454			7,189	*		6,684			10,491
Average price paid per common share repurchased (including commissions)	$	32.64		$	47.99	*	$	34.41		$	47.18

* In May 2007, upon completion of the $345 million accelerated share repurchase program, The PMI Group received the final delivery of 436,152 common shares bringing the total received under the program to 7,624,700 shares. The average price paid per common share upon completion of this program was $45.25 per common share.

Page 4

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30, 2007		December 31, 2006		September 30, 2006
	(Unaudited)		(Audited)		(Unaudited)
	(Dollars and shares, except per share data, in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	3,310,185	$	2,826,853	$	2,826,945
Equity securities:
Common		180,388		162,263		149,410
Preferred		311,206		248,761		239,919
Short term investments		31,661		55,056		139,981
Total investments	$	3,833,440	$	3,292,933	$	3,356,255
Cash and cash equivalents		233,256		457,207		693,250
Investments in unconsolidated subsidiaries(5)		1,126,781		1,100,387		1,062,897
Property, equipment and software, net of accumulated depreciation and amortization		166,295		174,128		177,538
Other assets		385,587		302,535		294,644
Total assets	$	5,745,359	$	5,327,190	$	5,584,584
Liabilities
Reserve for losses and loss adjustment expenses	$	770,386	$	414,736	$	394,210
Unearned premiums		612,889		520,264		489,838
Debt		496,593		496,593		1,264,435
Other liabilities		299,781		327,007		327,949
Total liabilities		2,179,649		1,758,600		2,476,432
Shareholders’ equity
Common stock		1,193		1,193		1,114
Additional paid-in capital, treasury stock and retained earnings		3,211,860		3,303,317		2,885,707
Accumulated other comprehensive income, net of deferred taxes		352,657		264,080		221,331
Total shareholders’ equity		3,565,710		3,568,590		3,108,152
Total liabilities and shareholders' equity	$	5,745,359	$	5,327,190	$	5,584,584
Basic shares issued and outstanding		81,120		86,747		79,421
Book value per share	$	43.96	$	41.14	$	39.14

Page 5

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS—THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

	U.S. Mortgage Insurance Operations (1)			International Operations (2)			Financial Guaranty (3)			Corporate and Other (4)			Consolidated Total
	Three Months Ended September 30, 2007 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	214,398		$	62,109		$	202		$	14		$	276,723
Revenues
Premiums earned	$	205,539		$	50,839		$	438		$	18		$	256,834
Net loss from credit default swaps		—			(8,371	)		—			—			(8,371	)
Net investment income		28,786			22,366			2,321			1,935			55,408
Equity in earnings (losses) from unconsolidated subsidiaries(5)		4,167			—			(26,741	)		(28	)		(22,602	)
Net realized investment gains (losses)		2,865			(231	)		(354	)		(1,886	)		394
Other income		167			577			—			4,563			5,307
Total revenues		241,524			65,180			(24,336	)		4,602			286,970
Losses and expenses
Losses and loss adjustment expenses		348,314			24,530			—			—			372,844
Amortization of deferred policy acquisition costs		12,809			4,939			274			—			18,022
Other underwriting and operating expenses(6)		18,420			14,740			507			16,918			50,585
Interest expense(11)		36			—			731			7,591			8,358
Total losses and expenses		379,579			44,209			1,512			24,509			449,809
(Loss) Income before income taxes		(138,055	)		20,971			(25,848	)		(19,907	)		(162,839	)
Income tax (benefit) expense		(72,833	)		7,092			(1,456	)		(8,869	)		(76,066	)
Net (loss) income	$	(65,222	)	$	13,879		$	(24,392	)	$	(11,038	)	$	(86,773	)
Expense ratio(7)		14.6	%		31.7	%
Loss ratio(7)		169.5	%		48.3	%
Combined ratio		184.1	%		80.0	%
	Three Months Ended September 30, 2006 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	160,468		$	51,942		$	—		$	16		$	212,426
Revenues
Premiums earned	$	168,118		$	46,766		$	—		$	19		$	214,903
Income from credit default swaps		—			978			—			—			978
Net investment income		27,082			17,442			(1	)		5,157			49,680
Equity in earnings (losses) from unconsolidated subsidiaries(5)		5,010			—			26,549			(68	)		31,491
Net realized investment gains (losses)		1,620			3,452			—			(4,346	)		726
Other (loss) income		(22	)		(40	)		—			3,204			3,142
Total revenues		201,808			68,598			26,548			3,966			300,920
Losses and expenses
Losses and loss adjustment expenses		67,699			11,907			—			(3	)		79,603
Amortization of deferred policy acquisition costs		12,830			4,105			—			—			16,935
Other underwriting and operating expenses(6)		22,619			10,971			—			22,359			55,949
Interest expense		1			124			—			9,361			9,486
Total losses and expenses		103,149			27,107			—			31,717			161,973
Income (loss) before income taxes		98,659			41,491			26,548			(27,751	)		138,947
Income tax expense (benefit)		27,819			12,048			2,820			(7,978	)		34,709
Net income (loss)	$	70,840		$	29,443		$	23,728		$	(19,773	)	$	104,238
Expense ratio(7)		22.1	%		29.0	%
Loss ratio(7)		40.3	%		25.5	%
Combined ratio		62.4	%		54.5	%

Page 6

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS—NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

	U.S. Mortgage Insurance Operations (1)			International Operations (2)			Financial Guaranty (3)			Corporate and Other (4)			Consolidated Total
	Nine Months Ended September 30, 2007 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	599,494		$	170,867		$	6,357		$	33		$	776,751
Revenues
Premiums earned	$	594,683		$	139,605		$	1,197		$	47		$	735,532
Net loss from credit default swaps		—			(4,964	)		—			—			(4,964	)
Net investment income		83,074			62,111			6,956			7,025			159,166
Equity in earnings from unconsolidated subsidiaries(5)		13,645			—			35,804			206			49,655
Net realized investment gains (losses)		6,113			(141	)		(354	)		(3,232	)		2,386
Other income		171			352			—			11,038			11,561
Total revenues		697,686			196,963			43,603			15,084			953,336
Losses and expenses
Losses and loss adjustment expenses		575,482			52,842			—			—			628,324
Amortization of deferred policy acquisition costs		38,001			12,831			645			—			51,477
Other underwriting and operating expenses(6)		72,840			37,970			1,393			60,856			173,059
Interest expense(11)		75			6			2,194			22,740			25,015
Total losses and expenses		686,398			103,649			4,232			83,596			877,875
Income (loss) before income taxes		11,288			93,314			39,371			(68,512	)		75,461
Income tax (benefit) expense		(33,913	)		28,212			4,885			(22,816	)		(23,632	)
Net income (loss)	$	45,201		$	65,102		$	34,486		$	(45,696	)	$	99,093
Expense ratio(7)		18.5	%		29.7	%
Loss ratio(7)		96.8	%		37.9	%
Combined ratio		115.3	%		67.6	%
	Nine Months Ended September 30, 2006 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	482,846		$	143,263		$	—		$	36		$	626,145
Revenues
Premiums earned	$	503,482		$	131,252		$	—		$	53		$	634,787
Income from credit default swaps		—			4,744			—			—			4,744
Net investment income		79,823			47,852			1			17,885			145,561
Equity in earnings (losses) from unconsolidated subsidiaries(5)		15,231			—			76,260			(87	)		91,404
Net realized investment gains (losses)		2,162			3,846			—			(4,387	)		1,621
Other (loss) income		(38	)		(559	)		—			10,696			10,099
Total revenues		600,660			187,135			76,261			24,160			888,216
Losses and expenses
Losses and loss adjustment expenses		190,999			21,407			—			(3	)		212,403
Amortization of deferred policy acquisition costs		39,434			12,629			—			—			52,063
Other underwriting and operating expenses(6)		73,455			30,873			—			64,666			168,994
Interest expense		2			124			—			25,606			25,732
Total losses and expenses		303,890			65,033			—			90,269			459,192
Income (loss) before income taxes		296,770			122,102			76,261			(66,109	)		429,024
Income tax expense (benefit)		83,660			38,554			7,426			(19,817	)		109,823
Net income (loss)	$	213,110		$	83,548		$	68,835		$	(46,292	)	$	319,201
Expense ratio(7)		23.4	%		30.4	%
Loss ratio(7)		37.9	%		16.3	%
Combined ratio		61.3	%		46.7	%

Page 7

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS BALANCE SHEETS

	U.S. Mortgage Insurance Operations (1)		International Operations (2)		Financial Guaranty (3)			Corporate and Other (4)			Consolidated Total
	September 30, 2007 (Unaudited)
	(Dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	1,567,122	$	1,522,699	$	167,276		$	53,088		$	3,310,185
Equity securities:
Common		135,738		44,650		—			—			180,388
Preferred		283,051		—		26,880			1,275			311,206
Short term investments		951		29,409		—			1,301			31,661
Total investments	$	1,986,862	$	1,596,758	$	194,156		$	55,664		$	3,833,440
Cash and cash equivalents		91,460		84,851		11,610			45,335			233,256
Investments in unconsolidated subsidiaries(5)		127,206		—		984,417			15,158			1,126,781
Property, equipment and software, net of accumulated depreciation and amortization		80,170		6,400		131			79,594			166,295
Other assets		234,041		103,905		7,740			39,901			385,587
Total assets	$	2,519,739	$	1,791,914	$	1,198,054		$	235,652		$	5,745,359
Liabilities
Reserve for losses and loss adjustment expenses	$	698,238	$	72,148	$	—		$	—		$	770,386
Unearned premiums		112,634		493,486		6,748			21			612,889
Long-term debt		—		—		50,000			446,593			496,593
Other liabilities (assets)		205,749		72,522		37,766			(16,256	)		299,781
Total liabilities		1,016,621		638,156		94,514			430,358			2,179,649
Shareholders’ equity
Common stock, additional paid-in capital, treasury stock and retained earnings		1,422,818		876,693		1,105,295			(191,753	)		3,213,053
Accumulated other comprehensive income (loss), net of deferred taxes		80,300		277,065		(1,755	)		(2,953	)		352,657
Total shareholders’ equity (deficit)		1,503,118		1,153,758		1,103,540			(194,706	)		3,565,710
Total liabilities and shareholders' equity	$	2,519,739	$	1,791,914	$	1,198,054		$	235,652		$	5,745,359
	December 31, 2006 (Audited)
	(Dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	1,563,335	$	1,129,580	$	77,803		$	56,135		$	2,826,853
Equity securities:
Common		127,825		34,438		—			—			162,263
Preferred		232,736		—		16,025			—			248,761
Short term investments		929		52,827		—			1,300			55,056
Total investments	$	1,924,825	$	1,216,845	$	93,828		$	57,435		$	3,292,933
Cash and cash equivalents		65,501		132,224		116,449			143,033			457,207
Investments in unconsolidated subsidiaries(5)		132,403		—		950,249			17,735			1,100,387
Property, equipment and software, net of accumulated depreciation and amortization		87,139		4,002		—			82,987			174,128
Other assets		185,820		88,562		4,292			23,861			302,535
Total assets	$	2,395,688	$	1,441,633	$	1,164,818		$	325,051		$	5,327,190
Liabilities
Reserve for losses and loss adjustment expenses	$	366,182	$	48,554	$	—		$	—		$	414,736
Unearned premiums		106,445		412,196		1,589			34			520,264
Debt		—		—		50,000			446,593			496,593
Other liabilities (assets)		283,544		67,645		41,440			(65,622	)		327,007
Total liabilities		756,171		528,395		93,029			381,005			1,758,600
Shareholders’ equity
Common stock, additional paid-in capital, treasury stock and retained earnings		1,548,452		737,118		1,071,865			(52,925	)		3,304,510
Accumulated other comprehensive income (loss), net of deferred taxes		91,065		176,120		(76	)		(3,029	)		264,080
Total shareholders’ equity (deficit)		1,639,517		913,238		1,071,789			(55,954	)		3,568,590
Total liabilities and shareholders’ equity	$	2,395,688	$	1,441,633	$	1,164,818		$	325,051		$	5,327,190

Page 8

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS SEGMENT ⁽¹⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2007												2006
Income Statement Components—Quarter Ended	9/30/07			6/30/07			3/31/07			Total			12/31/06			9/30/06			6/30/06			3/31/06			Total
	(Dollars in thousands)												(Dollars in thousands)
Revenues
Premiums written:
Gross premiums written	$	266,545		$	236,412		$	240,430		$	743,387		$	221,747		$	205,848		$	203,426		$	208,136		839,157
Ceded premiums, net of assumed premiums		(46,993	)		(42,973	)		(41,135	)		(131,101	)		(42,608	)		(42,108	)		(41,402	)		(41,655	)	(167,773	)
Refunded premiums		(5,154	)		(4,259	)		(3,379	)		(12,792	)		(3,409	)		(3,272	)		(3,120	)		(3,007	)	(12,808	)
Net premiums written		214,398			189,180			195,916			599,494			175,730			160,468			158,904			163,474		658,576
Change in unearned premiums		(8,859	)		6,205			(2,157	)		(4,811	)		8,781			7,650			8,922			4,064		29,417
Premiums earned	$	205,539		$	195,385		$	193,759		$	594,683		$	184,511		$	168,118		$	167,826		$	167,538		687,993
Net investment income		28,786			25,966			28,322			83,074			26,071			27,082			27,064			25,676		105,893
Equity in earnings from unconsolidated subsidiaries		4,167			4,617			4,861			13,645			5,077			5,010			5,729			4,492		20,308
Net realized investment gains		2,865			981			2,267			6,113			1,627			1,620			305			237		3,789
Other income (loss)		167			17			(13	)		171			(30	)		(22	)		7			(24	)	(69	)
Total revenues		241,524			226,966			229,196			697,686			217,256			201,808			200,931			197,919		817,914
Losses and expenses
Losses and loss adjustment expenses		348,314			134,384			92,784			575,482			72,039			67,699			64,153			59,146		263,037
Amortization of deferred policy acquisition costs		12,809			12,610			12,582			38,001			12,544			12,830			13,162			13,443		51,979
Other underwriting and operating expenses		18,420			26,759			27,661			72,840			27,116			22,619			22,970			27,864		100,569
Interest expense		36			39			—			75			—			1			1			—		2
Total losses and expenses		379,579			173,792			133,027			686,398			111,699			103,149			100,286			100,453		415,587
(Loss) income before income taxes		(138,055	)		53,174			96,169			11,288			105,557			98,659			100,645			97,466		402,327
Income tax (benefit) expense		(72,833	)		11,627			27,293			(33,913	)		28,349			27,819			28,480			27,362		112,010
Net (loss) income	$	(65,222	)	$	41,547		$	68,876		$	45,201		$	77,208		$	70,840		$	72,165		$	70,104		290,317
Expense ratio(7)		14.6	%		20.8	%		20.5	%		18.5	%		22.6	%		22.1	%		22.7	%		25.3	%	23.2	%
Loss ratio(7)		169.5	%		68.8	%		47.9	%		96.8	%		39.0	%		40.3	%		38.2	%		35.3	%	38.2	%
Combined ratio		184.1	%		89.6	%		68.4	%		115.3	%		61.6	%		62.4	%		60.9	%		60.6	%	61.4	%
Balance Sheet Components—As of Quarter End	9/30/07			6/30/07			3/31/07						12/31/06			9/30/06			6/30/06			3/31/06
	(Dollars in thousands)												(Dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	1,567,122		$	1,523,285		$	1,540,150					$	1,563,335		$	1,614,966		$	1,666,359		$	1,776,309
Equity securities:
Common		135,738			141,255			129,096						127,825			119,493			113,698			118,310
Preferred		283,051			236,403			229,948						232,736			239,919			180,884			156,262
Short term investments		951			947			930						929			930			795			399
Total investments	$	1,986,862		$	1,901,890		$	1,900,124					$	1,924,825		$	1,975,308		$	1,961,736		$	2,051,280
Cash and cash equivalents		91,460			165,114			262,327						65,501			89,263			297,657			152,155
Investments in unconsolidated subsidiaries		127,206			122,072			137,041						132,403			127,424			120,574			133,218
Property, equipment and software, net of accumulated depreciation and amortization		80,170			83,293			84,448						87,139			90,093			93,249			95,693
Other assets		234,041			186,205			170,820						185,820			184,494			173,512			174,898
Total assets	$	2,519,739		$	2,458,574		$	2,554,760					$	2,395,688		$	2,466,582		$	2,646,728		$	2,607,244
Liabilities
Reserve for losses and loss adjustment expenses	$	698,238		$	444,594		$	386,036					$	366,182		$	358,784		$	355,832		$	346,437
Unearned premiums		112,634			103,331			108,968						106,445			114,720			147,739			156,993
Other liabilities		205,749			265,268			347,720						283,544			257,035			284,851			282,510
Total liabilities		1,016,621			813,193			842,724						756,171			730,539			788,422			785,940
Shareholder’s equity
Common stock, additional paid-in capital and retained earnings		1,422,818			1,564,260			1,627,452						1,548,452			1,645,914			1,797,158			1,742,255
Accumulated other comprehensive income, net of deferred taxes		80,300			81,121			84,584						91,065			90,129			61,148			79,049
Total shareholder’s equity		1,503,118			1,645,381			1,712,036						1,639,517			1,736,043			1,858,306			1,821,304
Total liabilities and shareholder’s equity	$	2,519,739		$	2,458,574		$	2,554,760					$	2,395,688		$	2,466,582		$	2,646,728		$	2,607,244

Page 9

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (1)

	2007												2006
	9/30/2007			6/30/2007			3/31/2007			Total			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total
	(Dollars in millions)												(Dollars in millions)
New Insurance Written
Flow insurance written	$	11,091		$	10,268		$	7,524		$	28,883		$	6,498		$	6,015		$	5,716		$	5,041		$	23,270
Structured insurance written		3,404			1,337			3,439			8,180			2,932			1,641			1,344			3,047			8,964
Primary new insurance written	$	14,495		$	11,605		$	10,963		$	37,063		$	9,430		$	7,656		$	7,060		$	8,088		$	32,234
Primary new risk written	$	3,533		$	2,806		$	2,920		$	9,259		$	2,427		$	1,980		$	1,790		$	2,148		$	8,345
Pool new insurance written(8)	$	1,953		$	5,270		$	6,188		$	13,411		$	12,338		$	3,924		$	3,575		$	4,726		$	24,563
Pool new risk written(8)	$	41		$	122		$	178		$	341		$	450		$	84		$	108		$	104		$	746
Product mix as a % of primary new insurance written:
High LTV (above 97% LTV’s)		31	%		35	%		36	%		34	%		27	%		19	%		17	%		13	%		19	%
90.01% to 97% LTV’s		28	%		24	%		25	%		26	%		22	%		23	%		24	%		22	%		23	%
85.01% to 90% LTV’s		30	%		31	%		27	%		29	%		34	%		44	%		46	%		46	%		42	%
85.00% and below		11	%		10	%		12	%		11	%		17	%		14	%		13	%		19	%		16	%
Less than A quality loans		12	%		10	%		9	%		11	%		7	%		5	%		5	%		8	%		6	%
Alt-A loans		22	%		32	%		38	%		30	%		36	%		37	%		33	%		35	%		34	%
Interest only loans		18	%		24	%		26	%		22	%		23	%		16	%		11	%		22	%		18	%
Payment option ARMS		2	%		3	%		3	%		3	%		6	%		9	%		10	%		8	%		8	%
ARMs		8	%		8	%		16	%		10	%		20	%		19	%		20	%		39	%		24	%
Monthlies		86	%		98	%		95	%		92	%		96	%		96	%		96	%		97	%		96	%
Refinances		31	%		38	%		47	%		38	%		38	%		34	%		32	%		39	%		36	%
Structured transactions		23	%		12	%		31	%		22	%		31	%		21	%		19	%		38	%		28	%

Page 10

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (2)

	2007									2006
	9/30/2007			6/30/2007			3/31/2007			12/31/2006			9/30/2006			6/30/2006			3/31/2006
	(Dollars in millions, except loan size)									(Dollars in millions, except loan size)
Primary Insurance and Risk in Force
Primary insurance in force
Flow	$	98,105		$	91,864		$	87,184		$	85,086		$	84,405		$	84,644		$	85,685
Structured transactions		21,864			19,803			19,701			17,549			15,877			15,741			15,826
Total	$	119,969		$	111,667		$	106,885		$	102,635		$	100,282		$	100,385		$	101,511
Primary risk in force
Flow	$	24,754		$	23,075		$	21,837		$	21,095		$	20,855		$	20,883		$	21,102
Structured transactions		5,324			5,016			5,138			4,616			4,193			4,127			4,147
Total	$	30,078		$	28,091		$	26,975		$	25,711		$	25,048		$	25,010		$	25,249
Pool risk in force(8)	$	3,476		$	3,461		$	3,373		$	3,216		$	2,773		$	2,737		$	2,666
Primary risk in force—credit score distribution
Flow
620 or above		93.1	%		93.6	%		93.8	%		93.7	%		93.5	%		93.3	%		93.2	%
619-575		5.3	%		5.0	%		4.9	%		5.0	%		5.2	%		5.3	%		5.4	%
574 or below		1.6	%		1.4	%		1.3	%		1.3	%		1.3	%		1.4	%		1.4	%
Structured transactions
620 or above		86.1	%		85.4	%		85.3	%		84.7	%		82.8	%		80.6	%		79.2	%
619-575		8.8	%		9.2	%		9.2	%		9.8	%		10.8	%		12.3	%		13.2	%
574 or below		5.1	%		5.4	%		5.5	%		5.5	%		6.4	%		7.1	%		7.6	%
Total
620 or above		91.9	%		92.1	%		92.2	%		92.0	%		91.7	%		91.3	%		90.9	%
619-575		5.9	%		5.8	%		5.7	%		5.9	%		6.1	%		6.4	%		6.6	%
574 or below		2.2	%		2.1	%		2.1	%		2.1	%		2.2	%		2.3	%		2.5	%
Primary average loan size(in thousands)
Flow	$	150.6		$	146.6		$	142.8		$	140.0		$	138.3		$	136.9		$	135.6
Structured transactions	$	162.0		$	159.6		$	159.2		$	155.6		$	151.8		$	150.7		$	150.7
Total	$	152.6		$	148.7		$	145.5		$	142.5		$	140.3		$	138.9		$	137.8
Loss severity—primary(quarterly)
Flow		90.6	%		87.9	%		88.5	%		88.6	%		83.1	%		83.2	%		84.9	%
Structured transactions		92.0	%		92.5	%		90.3	%		92.4	%		86.7	%		86.8	%		91.2	%
Total		91.1	%		89.3	%		89.0	%		89.6	%		84.0	%		84.1	%		86.5	%
Persistency
Primary persistency rate		73.3	%		71.7	%		70.7	%		69.6	%		67.3	%		64.9	%		63.1	%
Risk-to-capital ratio(9)		9.6 to 1			8.6 to 1			8.3 to 1			8.1 to 1			8.2 to 1			7.7 to 1			8.1 to 1

Page 11

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (3)

	9/30/2007					6/30/2007					12/31/2006
Policy Year As a Percentage of Primary Risk in Force (RIF)	Primary Risk in Force			Percent of Total		Primary Risk in Force			Percent of Total		Primary Risk in Force			Percent of Total
	(In millions)					(In millions)					(In millions)
Prior to 1999	$	462		1.5	%	$	494		1.8	%	$	571		2.2	%
1999		324		1.1	%		337		1.2	%		377		1.5	%
2000		151		0.5	%		161		0.6	%		190		0.7	%
2001		569		1.9	%		606		2.2	%		696		2.7	%
2002		1,245		4.1	%		1,325		4.7	%		1,520		5.9	%
2003		3,346		11.1	%		3,562		12.7	%		4,084		15.9	%
2004		3,557		11.8	%		3,831		13.6	%		4,507		17.5	%
2005		5,092		16.9	%		5,445		19.4	%		6,254		24.3	%
2006		6,456		21.5	%		6,764		24.1	%		7,512		29.3	%
2007		8,876		29.5	%		5,566		19.8	%		—
Total	$	30,078				$	28,091				$	25,711
	9/30/2007					6/30/2007					12/31/2006
	% of Primary RIF			Primary Default Rate		% of Primary RIF			Primary Default Rate		% of Primary RIF			Primary Default Rate
Top 10 States as a Percentage of Primary Risk in Force, (Ranking based on 9/30/07 RIF)
Florida		10.8	%	7.0	%		10.8	%	5.1	%		10.7	%	3.4	%
California		7.7	%	7.4	%		7.3	%	5.3	%		7.0	%	3.6	%
Texas		7.2	%	5.3	%		7.1	%	5.0	%		7.4	%	5.6	%
Illinois		5.1	%	6.5	%		5.1	%	5.8	%		5.1	%	5.6	%
Georgia		4.7	%	8.2	%		4.7	%	7.3	%		4.7	%	7.9	%
Ohio		3.9	%	9.3	%		4.1	%	8.9	%		4.3	%	8.8	%
New York		3.6	%	6.2	%		3.6	%	5.5	%		3.8	%	5.4	%
Pennsylvania		3.4	%	6.5	%		3.5	%	5.8	%		3.6	%	6.0	%
New Jersey		3.1	%	6.1	%		3.1	%	5.1	%		3.1	%	4.6	%
Washington		3.0	%	2.8	%		2.9	%	2.6	%		2.9	%	2.8	%

	2007							2006
	9/30/2007		��	6/30/2007		3/31/2007		12/31/2006		9/30/2006		6/30/2006		3/31/2006
As a Percentage of Primary Risk in Force—loan to value ratios
High LTV (above 97% LTV’s)	23.8	%		22.4	%	20.3	%	17.6	%	15.9	%	15.1	%	14.6	%
90.01% to 97% LTV’s	33.4	%		33.7	%	34.5	%	35.6	%	36.7	%	37.4	%	38.0	%
85.01% to 90% LTV’s	34.9	%		35.7	%	36.5	%	37.9	%	38.5	%	38.3	%	37.9	%
85.00% and below	7.9	%		8.2	%	8.7	%	8.9	%	8.9	%	9.2	%	9.5	%
As a Percentage of Risk in Force:
Less-than-A quality (FICO scores below 620)	8.1	%		7.9	%	7.8	%	8.0	%	8.3	%	8.7	%	9.1	%
Less-than-A quality (FICO scores below 575)(A)	2.2	%		2.1	%	2.1	%	2.1	%	2.2	%	2.3	%	2.5	%
Alt-A Loans:
With FICO scores of 660 and above	20.0	%		19.3	%	18.3	%	16.3	%	15.1	%	14.0	%	15.3	%
With FICO scores below 660 and above 619	3.4	%		3.7	%	3.8	%	3.6	%	3.5	%	3.3	%	3.1	%
Total Alt-A Loans	23.4	%		23.0	%	22.1	%	19.9	%	18.6	%	17.3	%	18.4	%
ARMs(B)	14.1	%		16.0	%	17.7	%	18.7	%	19.4	%	20.4	%	21.1	%
Interest Only(C)	14.2	%		13.6	%	12.1	%	9.9	%	8.2	%	7.6	%	7.5	%
Payment Option ARMs	3.9	%		4.2	%	4.3	%	4.5	%	4.5	%	4.2	%	3.8	%

^(A) Less-than-A quality loans with FICO scores below 575 is a subset of PMI’s less-than-A quality loan portfolio.

^(B) Approximately 1.3% of RIF are subject to initial payment adjustment in the last quarter of 2007. In 2008, approximately 3.7% of RIF are subject to initial payment adjustment.

^(C) Approximately 98% of interest only loans written in the first nine months of 2007 have an initial deferral period of 5 years or greater. Approximately 89% of interest only loans written in 2006 have an initial deferral period of 5 years or greater.

Page 12

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS DEFAULT INFORMATION AND ANALYSIS OF LOSS RESERVES

	2007												2006
	9/30/2007			6/30/2007			3/31/2007			Total(13)			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total(13)
				(Dollars in millions, except claim size)									(Dollars in millions, except claim size)
Primary loans, defaults and default rates
Primary policies in force		786,301			750,835			734,431			786,301			720,347			714,742			722,756			736,908			720,347
Primary loans in default		50,742			42,349			39,206			50,742			39,997			38,573			37,102			37,784			39,997
Primary default rate		6.45	%		5.64	%		5.34	%		6.45	%		5.55	%		5.40	%		5.13	%		5.13	%		5.55	%
Flow only default rate		5.38	%		4.70	%		4.54	%		5.38	%		4.75	%		4.61	%		4.44	%		4.55	%		4.75	%
Structured transactions only default rate		11.65	%		10.37	%		9.29	%		11.65	%		9.86	%		9.96	%		9.26	%		8.59	%		9.86	%
Pool default rate		6.18	%		5.17	%		4.82	%		6.18	%		4.24	%		4.81	%		5.60	%		6.17	%		4.24	%
Claims paid(in millions)
Primary claims paid—flow	$	58.2		$	46.3		$	46.6		$	151.1		$	43.0		$	42.6		$	36.2		$	37.3		$	159.1
Primary claims paid—structured transactions		29.5			21.5			18.3			69.3			15.4			14.7			11.3			13.5		$	54.9
Total primary claims paid		87.7			67.8			64.9			220.4			58.4			57.3			47.5			50.8			214.0
Total pool and other		4.9			4.5			4.4			13.8			3.0			4.7			4.6			4.3			16.6
Total claims paid		92.6			72.3			69.3			234.2			61.4			62.0			52.1			55.1			230.6
Loss adjustment expenses		3.3			3.4			3.5			10.2			3.3			3.0			2.9			2.9			12.1
Total claims paid including loss adjustment expenses	$	95.9		$	75.7		$	72.8		$	244.4		$	64.7		$	65.0		$	55.0		$	58.0		$	242.7
Number of primary claims paid		2,675			2,336			2,362			7,373			2,195			2,346			2,038			2,058			8,637
Average primary claim size(in thousands)	$	32.8		$	29.0		$	27.5		$	29.9		$	26.6		$	24.4		$	23.3		$	24.7		$	24.8
Captive reinsurance arrangements(quarter-to-date)
Percentage of flow NIW subject to captive reinsurance arrangements		64.2	%		60.9	%		49.2	%		59.1	%		61.6	%		72.2	%		72.8	%		69.6	%		68.8	%
Percentage of primary NIW subject to captive reinsurance arrangements		49.1	%		53.9	%		34.0	%		46.2	%		43.0	%		57.3	%		59.3	%		44.8	%		50.4	%
Percentage of primary IIF subject to captive reinsurance arrangements		50.2	%		50.3	%		51.0	%		50.2	%		52.9	%		53.9	%		53.3	%		53.2	%		52.9	%
Percentage of primary RIF subject to captive reinsurance arrangements		50.2	%		50.2	%		50.8	%		50.2	%		53.2	%		54.4	%		53.9	%		53.9	%		53.2	%

Loss Reserve Analysis	September 30, 2007			June 30, 2007			December 31, 2006			September 30, 2006
	(Dollars in millions)
Beginning reserves for losses and LAE at January 1,	$	366.2		$	366.2		$	345.5		$	345.5
Reinsurance recoverables		(2.9	)		(2.9	)		(2.5	)		(2.5	)
Net balance at January 1,		363.3			363.3			343.0			343.0
Loss and LAE incurred (principally with respect to defaults occuring in):
Current year		419.6			181.5			260.8			190.0
Prior years		155.9			45.7			2.2			1.0
Total incurred		575.5			227.2			263.0			191.0
Loss and LAE payments (principally with respect to defaults occuring in):
Current year		(12.3	)		(1.0	)		(22.1	)		(7.2	)
Prior years		(232.1	)		(147.5	)		(220.6	)		(170.8	)
Total payments		(244.4	)		(148.5	)		(242.7	)		(178.0	)
Net ending balance		694.4			442.0			363.3			356.0
Reinsurance recoverables		3.8			2.6			2.9			2.8
Ending reserves for losses and LAE	$	698.2		$	444.6		$	366.2		$	358.8

	September 30, 2007			June 30, 2007			December 31, 2006			September 30, 2006
	Loans in Default	Reserve for Losses and LAE		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 millions)
Primary insurance	50,742	$	651.2	42,349	$	402.8	39,997	$	332.9	38,573	$	325.5
Pool insurance(8)	23,789		47.0	20,238		41.8	15,898		33.3	15,253		33.3
Total	74,531	$	698.2	62,587	$	444.6	55,895	$	366.2	53,826	$	358.8

Page 13

THE PMI GROUP, INC. AND SUBSIDIARIES

CMG MORTGAGE INSURANCE COMPANY STATISTICAL INFORMATION

	2007												2006
	9/30/2007			6/30/2007			3/31/2007			Total(13)			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total(13)
	(Dollars in millions, except claims paid and claim size)
Primary new insurance written	$	1,621		$	1,566		$	1,053		$	4,240		$	1,064		$	1,238		$	1,167		$	891		$	4,360
Primary insurance in force	$	18,265		$	17,415		$	16,670		$	18,265		$	16,320		$	16,063		$	15,774		$	15,476		$	16,320
Primary risk in force	$	4,532		$	4,292		$	4,085		$	4,532		$	3,984		$	3,897		$	3,791		$	3,686		$	3,984
Policies in force		123,164			118,933			115,227			123,164			113,832			113,004			111,889			110,879			113,832
Primary loans in default		1,516			1,259			1,130			1,516			1,192			974			965			992			1,192
Primary default rate		1.23	%		1.06	%		0.98	%		1.23	%		1.05	%		0.86	%		0.86	%		0.89	%		1.05	%
Persistency		80.7	%		79.2	%		78.5	%		80.7	%		77.2	%		75.6	%		73.6	%		72.3	%		77.2	%
Primary claims paid(in thousands)	$	3,235		$	2,392		$	2,131		$	7,758		$	1,372		$	2,268		$	1,512		$	1,200		$	6,352
Number of primary claims paid		117			83			75			275			54			98			68			55			275
Average primary claim size(in thousands)	$	27.6		$	28.8		$	28.4		$	28.2		$	25.4		$	23.1		$	22.2		$	21.8		$	23.1

Page 14

THE PMI GROUP, INC. AND SUBSIDIARIES

INTERNATIONAL OPERATIONS SEGMENT⁽²⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2007												2006
Income Statement Components—Quarter Ended	9/30/2007			6/30/2007			3/31/2007			Total			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Net premiums written	$	62,109		$	65,376		$	43,382		$	170,867		$	58,129		$	51,942		$	52,900		$	38,421		$	201,392
Revenues
Premiums earned	$	50,839		$	46,384		$	42,382		$	139,605		$	41,219		$	46,766		$	45,801		$	38,685		$	172,471
Net (loss) income from credit default swaps		(8,371	)		1,579			1,828			(4,964	)		2,687			978			2,128			1,638			7,431
Net investment income		22,366			20,581			19,164			62,111			17,990			17,442			15,625			14,785			65,842
Net realized investment (losses) gains		(231	)		53			37			(141	)		(244	)		3,452			252			142			3,602
Other income (loss)		577			(614	)		389			352			(189	)		(40	)		(1,910	)		1,392			(747	)
Total revenues		65,180			67,983			63,800			196,963			61,463			68,598			61,896			56,642			248,599
Losses and expenses
Losses and loss adjustment expenses		24,530			11,776			16,536			52,842			18,492			11,907			7,708			1,794			39,901
Amortization of deferred policy acquisition costs		4,939			4,131			3,761			12,831			3,748			4,105			4,826			3,699			16,378
Other underwriting and operating expenses		14,740			12,657			10,573			37,970			11,064			10,971			10,267			9,633			41,935
Interest expense		—			—			6			6			1			124			—			—			125
Total losses and expenses		44,209			28,564			30,876			103,649			33,305			27,107			22,801			15,126			98,339
Income before income taxes		20,971			39,419			32,924			93,314			28,158			41,491			39,095			41,516			150,260
Income tax expense		7,092			11,322			9,798			28,212			8,193			12,048			13,598			12,908			46,747
Net income	$	13,879		$	28,097		$	23,126		$	65,102		$	19,965		$	29,443		$	25,497		$	28,608		$	103,513
Expense ratio(7)		31.7	%		25.7	%		33.0	%		29.7	%		25.5	%		29.0	%		28.5	%		34.7	%		29.0	%
Loss ratio(7)		48.3	%		25.4	%		39.0	%		37.9	%		44.9	%		25.5	%		16.8	%		4.6	%		23.1	%
Combined ratio		80.0	%		51.1	%		72.0	%		67.6	%		70.4	%		54.5	%		45.3	%		39.3	%		52.1	%
Balance Sheet Components—As of Quarter End	9/30/2007			6/30/2007			3/31/2007						12/31/2006			9/30/2006			6/30/2006			3/31/2006
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	1,522,699		$	1,318,542		$	1,219,205					$	1,129,580		$	1,082,140		$	1,000,338		$	892,251
Equity securities: common		44,650			42,026			37,417						34,438			29,917			29,408			29,190
Short term investments		29,409			24,221			56,265						52,827			40,561			41,478			27,978
Total investments	$	1,596,758		$	1,384,789		$	1,312,887					$	1,216,845		$	1,152,618		$	1,071,224		$	949,419
Cash and cash equivalents		84,851			194,700			85,749						132,224			94,526			85,230			144,897
Property, equipment and software, net of accumulated depreciation and amortization		6,400			5,508			4,149						4,002			3,624			3,513			2,646
Other assets		103,905			95,551			109,729						88,562			85,297			73,515			70,339
Total assets	$	1,791,914		$	1,680,548		$	1,512,514					$	1,441,633		$	1,336,065		$	1,233,482		$	1,167,301
Liabilities
Reserve for losses and loss adjustment expenses	$	72,148		$	62,357		$	56,984					$	48,554		$	35,426		$	28,773		$	23,476
Unearned premiums		493,486			461,464			422,733						412,196			375,091			343,136			323,431
Other liabilities		72,522			69,824			78,001						67,645			71,050			59,597			79,565
Total liabilities		638,156			593,645			557,718						528,395			481,567			431,506			426,472
Shareholder’s equity
Common stock, additional paid-in capital and retained earnings		876,693			862,812			760,243						737,118			717,102			670,446			628,613
Accumulated other comprehensive income, net of deferred taxes		277,065			224,091			194,553						176,120			137,396			131,530			112,216
Total shareholder’s equity		1,153,758			1,086,903			954,796						913,238			854,498			801,976			740,829
Total liabilities and shareholder’s equity	$	1,791,914		$	1,680,548		$	1,512,514					$	1,441,633		$	1,336,065		$	1,233,482		$	1,167,301

Page 15

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI AUSTRALIA QUARTERLY FINANCIAL INFORMATION

	2007												2006
Income Statement Components—Quarter Ended	9/30/07			6/30/07			3/31/07			Total			12/31/06			9/30/06			6/30/06			3/31/06			Total
	(U.S. dollars in thousands, unless otherwise noted)
Revenues
Premiums written
Gross premiums written	$	56,816		$	60,572		$	39,525		$	156,913		$	54,793		$	49,008		$	50,013		$	36,267		$	190,081
Ceded premiums		(826	)		(688	)		(623	)		(2,137	)		(887	)		(873	)		(713	)		(1,062	)		(3,535	)
Refunded premiums		(770	)		(773	)		(668	)		(2,211	)		(668	)		(663	)		(696	)		(566	)		(2,593	)
Net premiums written		55,220			59,111			38,234			152,565			53,238			47,472			48,604			34,639			183,953
Change in unearned premiums		(10,996	)		(19,006	)		(1,870	)		(31,872	)		(19,071	)		(7,623	)		(9,493	)		(2,373	)		(38,560	)
Premiums earned		44,224			40,105			36,364			120,693			34,167			39,849			39,111			32,266			145,393
Net investment income		18,779			17,251			16,146			52,176			15,001			14,298			13,088			12,354			54,741
Net realized investment gains (losses)		36			68			(75	)		29			(291	)		2,801			(194	)		122			2,438
Other income (loss)		487			(599	)		488			376			(189	)		(38	)		(1,778	)		1,446			(559	)
Total revenues		63,526			56,825			52,923			173,274			48,688			56,910			50,227			46,188			202,013
Losses and expenses
Losses and loss adjustment expenses		21,849			10,144			16,157			48,150			17,809			10,526			6,751			1,224			36,310
Amortization of deferred policy acquisition costs		4,424			3,655			3,363			11,442			3,318			3,721			4,483			3,404			14,926
Other underwriting and operating expenses		9,235			8,212			7,460			24,907			8,048			7,433			7,302			7,036			29,819
Interest expense		—			—			6			6			1			124			—			—			125
Total losses and expenses		35,508			22,011			26,986			84,505			29,176			21,804			18,536			11,664			81,180
Income before income taxes		28,018			34,814			25,937			88,769			19,512			35,106			31,691			34,524			120,833
Income tax expense		8,304			10,385			7,890			26,579			5,682			10,374			9,768			10,470			36,294
Net income	$	19,714		$	24,429		$	18,047		$	62,190		$	13,830		$	24,732		$	21,923		$	24,054		$	84,539
Net income (AUS $ in thousands)	$	23,225		$	29,320		$	22,953		$	75,498		$	18,073		$	32,688		$	29,332		$	32,546		$	112,639
Expense Ratio(7)		24.7	%		20.1	%		28.3	%		23.8	%		21.4	%		23.6	%		24.2	%		30.1	%		24.3	%
Loss Ratio(7)		49.4	%		25.2	%		44.4	%		39.9	%		52.1	%		26.4	%		17.3	%		3.8	%		25.0	%
Combined Ratio		74.1	%		45.3	%		72.7	%		63.7	%		73.5	%		50.0	%		41.5	%		33.9	%		49.3	%
Balance Sheet Components—As of Quarter End	9/30/07			6/30/07			3/31/07						12/31/06			9/30/06			6/30/06			3/31/06
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	1,194,701		$	1,064,267		$	966,509					$	882,976		$	847,500		$	809,802		$	701,519
Equity securities: common		44,646			42,022			37,413						34,435			29,913			29,405			29,187
Short term investments		14,315			13,472			51,409						48,875			34,497			33,077			27,978
Total investments	$	1,253,662		$	1,119,761		$	1,055,331					$	966,286		$	911,910		$	872,284		$	758,684
Cash and cash equivalents		31,422			86,796			57,164						105,022			68,538			61,221			114,716
Property, equipment and software, net of accumulated depreciation and amortization		4,141			3,725			2,653						2,454			2,240			2,293			2,350
Other assets		77,790			71,988			78,674						59,462			58,612			56,444			57,685
Total assets	$	1,367,015		$	1,282,270		$	1,193,822					$	1,133,224		$	1,041,300		$	992,242		$	933,435
Liabilities
Reserve for losses and loss adjustment expenses	$	51,284		$	44,023		$	39,167					$	30,424		$	18,039		$	11,988		$	8,230
Unearned premiums		448,166			417,721			379,252						367,987			329,631			320,564			300,313
Other liabilities		24,857			32,385			39,844						36,450			41,005			35,346			35,368
Total liabilities		524,307			494,129			458,263						434,861			388,675			367,898			343,911
Shareholder’s equity
Common stock, additional paid-in capital and retained earnings		627,544			607,829			583,401						565,353			551,523			526,791			504,868
Accumulated other comprehensive income, net of deferred taxes		215,164			180,312			152,158						133,010			101,102			97,553			84,656
Total shareholder’s equity		842,708			788,141			735,559						698,363			652,625			624,344			589,524
Total liabilities and shareholder’s equity	$	1,367,015		$	1,282,270		$	1,193,822					$	1,133,224		$	1,041,300		$	992,242		$	933,435

Page 16

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI AUSTRALIA STATISTICAL INFORMATION

	2007												2006
	9/30/2007			6/30/2007			3/31/2007			Total(13)			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total(13)
	(U.S. dollars in millions, except loan size, claims paid and claim size)
New insurance written
Flow insurance written	$	6,142		$	5,959		$	4,300		$	16,401		$	5,836		$	5,376		$	5,062		$	4,152		$	20,426
RMBS insurance written		3,594			6,151			3,284			13,029			3,078			3,899			7,744			5,291			20,012
New insurance written	$	9,736		$	12,110		$	7,584		$	29,430		$	8,914		$	9,275		$	12,806		$	9,443		$	40,438
Insurance in force
Flow	$	112,150		$	107,229		$	98,630		$	112,150		$	94,529		$	86,026		$	86,215		$	81,503		$	94,529
RMBS		70,647			65,632			58,068			70,647			54,236			48,975			49,314			41,547			54,236
Total	$	182,797		$	172,861		$	156,698		$	182,797		$	148,765		$	135,001		$	135,529		$	123,050		$	148,765
Risk in force
Flow	$	97,858		$	92,830		$	85,349		$	97,858		$	81,490		$	74,328		$	74,956		$	70,773		$	81,490
RMBS		70,424			65,405			57,858			70,424			54,051			48,831			49,183			41,426			54,051
Total	$	168,282		$	158,235		$	143,207		$	168,282		$	135,541		$	123,159		$	124,139		$	112,199		$	135,541
Average loan size (U.S. $ in thousands)
Flow	$	170.7		$	161.5		$	150.7		$	170.7		$	145.6		$	134.8		$	128.2		$	122.5		$	145.6
RMBS	$	158.4		$	149.5		$	139.4		$	158.4		$	133.7		$	125.9		$	122.6		$	115.1		$	133.7
Total	$	165.7		$	156.7		$	146.3		$	165.7		$	141.0		$	131.5		$	126.1		$	119.9		$	141.0
Loss severity (quarterly)
Flow		22.4	%		21.4	%		22.1	%		22.4	%		20.5	%		21.9	%		18.2	%		15.8	%		20.5	%
RMBS		20.7	%		16.6	%		16.6	%		20.7	%		15.5	%		21.7	%		1.6	%		3.9	%		15.5	%
Total		22.2	%		20.8	%		21.7	%		22.2	%		19.9	%		21.9	%		18.2	%		15.3	%		19.9	%
Primary loans, defaults and default rates
Policies in force—Flow		656,969			664,099			654,296			656,969			649,261			638,139			672,347			665,336			649,261
Policies in force—RMBS		445,912			439,106			416,678			445,912			405,796			388,851			402,271			360,924			405,796
Policies in force—Total		1,102,881			1,103,205			1,070,974			1,102,881			1,055,057			1,026,990			1,074,618			1,026,260			1,055,057
Loans in default—Flow		2,426			2,712			2,642			2,426			2,021			1,826			1,478			1,314			2,021
Loans in default—RMBS		493			444			421			493			260			273			253			206			260
Loans in default—Total		2,919			3,156			3,063			2,919			2,281			2,099			1,731			1,520			2,281
Default rate—Flow		0.37	%		0.41	%		0.40	%		0.37	%		0.31	%		0.29	%		0.22	%		0.20	%		0.31	%
Default rate—RMBS		0.11	%		0.10	%		0.10	%		0.11	%		0.06	%		0.07	%		0.06	%		0.06	%		0.06	%
Default rate—Total		0.26	%		0.29	%		0.29	%		0.26	%		0.22	%		0.20	%		0.16	%		0.15	%		0.22	%
Net claims paid (U.S. $ in thousands)
Net claims paid—Flow	$	14,629		$	6,530		$	7,923		$	29,082		$	5,999		$	4,123		$	3,179		$	1,211		$	14,512
Net claims paid—RMBS		2,167			787			466			3,420			585			411			2			13			1,011
Net claims paid—Total	$	16,796		$	7,317		$	8,389		$	32,502		$	6,584		$	4,534		$	3,181		$	1,224		$	15,523
Number of claims paid—Flow		222			117			115			454			107			72			72			30			281
Number of claims paid—RMBS		25			13			11			49			11			8			1			1			21
Number of claims paid—Total		247			130			126			503			118			80			73			31			302
Average claim size—Flow(U.S. $ in thousands)	$	65.9		$	55.8		$	68.9		$	64.1		$	56.1		$	57.3		$	44.2		$	40.4		$	51.6
Average claim size—RMBS	$	86.7		$	60.5		$	42.4		$	69.8		$	53.2		$	51.4		$	1.5		$	13.6		$	48.1
Average claim size—Total	$	68.0		$	56.3		$	66.6		$	64.6		$	55.8		$	56.7		$	43.6		$	39.5		$	51.4

Page 17

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI EUROPE QUARTERLY FINANCIAL INFORMATION

	2007												2006
Income Statement Components—Quarter Ended	9/30/07			6/30/07			3/31/07			Total			12/31/06			9/30/06			6/30/06			3/31/06			Total
	(U.S. dollars in thousands, unless otherwise noted)
Net premiums written	$	4,420		$	3,497		$	3,404		$	11,321		$	3,213		$	2,948		$	2,109		$	2,754		$	11,024
Revenues
Premiums earned	$	3,644		$	3,519		$	3,579		$	10,742		$	4,212		$	4,152		$	3,906		$	3,888		$	16,158
(Loss) income from credit default swaps:
Realized gains from credit default swaps		176			1,579			1,828			3,583			2,687			978			2,128			1,638			7,431
Unrealized loss from credit default swaps		(8,547	)		—			—			(8,547	)		—			—			—			—			—
Net (loss) income from credit default swaps		(8,371	)		1,579			1,828			(4,964	)		2,687			978			2,128			1,638			7,431
Net investment income		2,080			2,225			2,408			6,713			2,326			2,410			2,260			2,284			9,280
Net realized investment (losses) gains		(267	)		(15	)		112			(170	)		47			650			446			21			1,164
Other loss		(8	)		(26	)		(100	)		(134	)		—			(2	)		(52	)		(53	)		(107	)
Total revenues		(2,922	)		7,282			7,827			12,187			9,272			8,188			8,688			7,778			33,926
Losses and expenses
Losses and loss adjustment expenses		2,719			1,611			364			4,694			903			1,581			205			526			3,215
Amortization of deferred policy acquisition costs		341			284			227			852			274			234			194			153			855
Other underwriting and operating expenses		3,880			3,108			2,769			9,757			2,701			3,316			2,907			2,562			11,486
Total losses and expenses		6,940			5,003			3,360			15,303			3,878			5,131			3,306			3,241			15,556
(Loss) income before income taxes		(9,862	)		2,279			4,467			(3,116	)		5,394			3,057			5,382			4,537			18,370
Income tax (benefit) expense		(1,417	)		624			1,488			695			1,888			1,070			1,884			1,588			6,430
Net (loss) income	$	(8,445	)	$	1,655		$	2,979		$	(3,811	)	$	3,506		$	1,987		$	3,498		$	2,949		$	11,940
Net (loss) income(Euros in thousands)	€	(6,144	)	€	1,227		€	2,272		€	(2,645	)	€	2,718		€	1,559		€	2,780		€	2,451		€	9,508
Expense Ratio(7)		95.5	%		97.0	%		88.0	%		93.7	%		92.6	%		120.4	%		147.0	%		98.6	%		111.9	%
Loss Ratio(7)		74.6	%		45.8	%		10.2	%		43.7	%		21.4	%		38.1	%		5.2	%		13.5	%		19.9	%
Combined Ratio		170.1	%		142.8	%		98.2	%		137.4	%		114.0	%		158.5	%		152.2	%		112.1	%		131.8	%
Balance Sheet Components—As of Quarter End	9/30/07			6/30/07			3/31/07						12/31/06			9/30/06			6/30/06			3/31/06
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	203,992		$	197,165		$	198,445					$	191,691		$	181,996		$	186,602		$	190,735
Cash and cash equivalents		47,715			36,316			23,662						23,648			24,410			18,580			30,182
Property, equipment and software, net of accumulated depreciation and amortization		1,317			1,293			1,344						1,407			1,384			1,220			296
Other assets		22,980			21,589			27,725						26,713			23,515			16,943			12,652
Total assets	$	276,004		$	256,363		$	251,176					$	243,459		$	231,305		$	223,345		$	233,865
Liabilities
Reserve for losses and loss adjustment expenses	$	20,634		$	18,083		$	17,587					$	17,907		$	16,907		$	16,015		$	15,246
Unearned premiums		23,347			21,390			21,117						21,043			21,169			22,572			23,118
Other liabilities		43,347			31,134			34,888						30,029			28,882			23,608			44,197
Total liabilities		87,328			70,607			73,592						68,979			66,958			62,195			82,561
Shareholder’s equity
Common stock, additional paid-in capital and retained earnings		136,926			145,371			135,715						132,736			129,230			127,243			123,745
Accumulated other comprehensive income, net of deferred taxes		51,750			40,385			41,869						41,744			35,117			33,907			27,559
Total shareholder’s equity		188,676			185,756			177,584						174,480			164,347			161,150			151,304
Total liabilities and shareholder’s equity	$	276,004		$	256,363		$	251,176					$	243,459		$	231,305		$	223,345		$	233,865

Page 18

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI ASIA QUARTERLY FINANCIAL INFORMATION

Income Statement Components—Quarter Ended	2007												2006
	9/30/07			6/30/07			3/31/07			Total			12/31/06			9/30/06			6/30/06 (12)			3/31/06 (12)			Total
	(U.S. dollars in thousands, unless otherwise noted)
Reinsurance premiums written	$	2,470		$	2,768		$	1,743		$	6,981		$	1,678		$	1,522		$	2,187		$	1,027		$	6,414
Revenues
Premiums earned	$	2,971		$	2,760		$	2,439		$	8,170		$	2,840		$	2,764		$	2,784		$	2,532		$	10,920
Net investment income and other loss		720			606			610			1,936			663			732			197			147			1,739
Total revenues		3,691			3,366			3,049			10,106			3,503			3,496			2,981			2,679			12,659
Losses and expenses
Losses and loss adjustment expenses (reversals)		(38	)		21			15			(2	)		(218	)		(200	)		752			42			376
Amortization of deferred policy acquisition costs		174			192			171			537			158			149			150			140			597
Other underwriting and operating expenses		288			335			233			856			272			220			58			41			591
Total losses and expenses		424			548			419			1,391			212			169			960			223			1,564
Income before income taxes		3,267			2,818			2,630			8,715			3,291			3,327			2,021			2,456			11,095
Income tax expense		355			491			460			1,306			637			604			1,946			850			4,037
Net income	$	2,912		$	2,327		$	2,170		$	7,409		$	2,654		$	2,723		$	75		$	1,606		$	7,058
Net income (HK$ in thousands)	$	22,728		$	18,189		$	16,938		$	57,855		$	20,654		$	21,178		$	582		$	12,458		$	54,872
Expense Ratio(7)		18.7	%		19.0	%		23.2	%		20.0	%		25.6	%		24.2	%		9.5	%		17.6	%		18.5	%
Loss Ratio(7)		(1.3	)%		0.8	%		0.6	%		0.0	%		(7.7	)%		(7.2	)%		27.0	%		1.7	%		3.4	%
Combined Ratio		17.4	%		19.8	%		23.8	%		20.0	%		17.9	%		17.0	%		36.5	%		19.3	%		21.9	%
Balance Sheet Components—As of Quarter End	9/30/07			6/30/07			3/31/07						12/31/06			9/30/06			6/30/06
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	64,195		$	57,114		$	54,255					$	54,916		$	52,648		$	3,937
Short term investments		2,188			10,749			4,856						3,952			6,064			8,400
Total investments	$	66,383		$	67,863		$	59,111					$	58,868		$	58,712		$	12,337
Cash and cash equivalents		2,499			1,051			4,923						3,554			1,578			5,429
Property, equipment and software, net of accumulated depreciation and amortization		159			167			152						140			—			—
Other assets		1,772			1,716			3,330						2,372			3,170			130
Total assets	$	70,813		$	70,797		$	67,516					$	64,934		$	63,460		$	17,896
Liabilities
Reserve for losses and loss adjustment expenses	$	230		$	251		$	230					$	223		$	480		$	771
Unearned premiums		21,973			22,353			22,364						23,167			24,291			—
Other liabilities		1,654			5,155			3,173						1,126			1,163			642
Total liabilities		23,857			27,759			25,767						24,516			25,934			1,413
Shareholder’s equity
Common stock, additional paid-in capital and retained earnings		46,462			43,549			41,222						39,053			36,349			16,412
Accumulated other comprehensive income (loss), net of deferred taxes		494			(511	)		527						1,365			1,177			71
Total shareholder’s equity		46,956			43,038			41,749						40,418			37,526			16,483
Total liabilities and shareholder’s equity	$	70,813		$	70,797		$	67,516					$	64,934		$	63,460		$	17,896

Page 19

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI EUROPE STATISTICAL INFORMATION
	2007												2006
	9/30/07			6/30/07			3/31/07			Total (13)			12/31/06			9/30/06			6/30/06			3/31/06			Total (13)
	(U.S. dollars in millions, except claims paid)
New insurance written	$	132		$	141		$	136		$	409		$	160		$	62		$	24		$	32		$	278
New credit default swaps written	$	1,919		$	—		$	—		$	1,919		$	5,994		$	7,910		$	—		$	629		$	14,533
New reinsurance written	$	1,402		$	1,778		$	504		$	3,684		$	1,028		$	2,248		$	379		$	627		$	4,282
Insurance in force	$	51,707		$	48,120		$	48,121		$	51,707		$	48,467		$	49,976		$	39,996		$	39,254		$	48,467
Risk in force	$	5,711		$	3,813		$	3,824		$	5,711		$	3,850		$	4,441		$	2,836		$	2,760		$	3,850
Claims paid including credit default swaps(in thousands)	$	3,207		$	2,577		$	1,547		$	7,331		$	1,095		$	1,228		$	919		$	644		$	3,886
PMI ASIA STATISTICAL INFORMATION
	9/30/07			6/30/07			3/31/07			Total (13)			12/31/06			9/30/06			6/30/06			3/31/06			Total (13)
	(U.S. dollars in millions, except claims paid and average claim size)
New reinsurance written	$	220		$	212		$	167		$	599		$	156		$	234		$	105		$	105		$	600
Insurance in force	$	2,663		$	2,596		$	2,526		$	2,663		$	2,484		$	2,450		$	2,441		$	2,424		$	2,484
Risk in force	$	314		$	309		$	306		$	314		$	306		$	308		$	313		$	314		$	306
Policies in force		11,530			11,437			11,189			11,530			11,039			10,889			10,810			10,759			11,039
Loans in default		14			16			16			14			16			16			24			18			16
Default rate		0.12	%		0.14	%		0.14	%		0.12	%		0.14	%		0.15	%		0.22	%		0.17	%		0.14	%
Claims paid(in thousands)	$	19		$	—		$	9		$	28		$	39		$	89		$	27		$	25		$	180
Number of claims paid		1			—			1			2			2			4			1			1			8
Average claim size(in thousands)	$	19		$	—		$	9		$	14		$	20		$	22		$	27		$	25		$	23

Page 20

THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL GUARANTY SEGMENT⁽³⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2007												2006
Income Statement Components—Quarter Ended	9/30/2007			6/30/2007			3/31/2007			Total			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total
	(Dollars in thousands)												(Dollars in thousands)
Net premiums written	$	202		$	1,414		$	4,741		$	6,357		$	1,590		$	—		$	—		$	—		$	1,590
Revenues
Premiums earned	$	438		$	552		$	207		$	1,197		$	1		$	—		$	—		$	—		$	1
Net investment income		2,321			2,314			2,321			6,956			2,036			(1	)		2			—			2,037
Equity in earnings (losses) from unconsolidated subsidiaries:
Equity in earnings excluding gains and losses on credit derivative contracts		29,541			35,300			31,577			96,418			30,909			26,246			26,624			23,294			107,073
Net realized and unrealized losses on credit derivative contracts		(56,282	)		(4,458	)		126			(60,614	)		44			303			(148	)		(59	)		140
Equity in (losses) earnings from unconsolidated subsidiaries		(26,741	)		30,842			31,703			35,804			30,953			26,549			26,476			23,235			107,213
Net realized investment losses		(354	)		—			—			(354	)		—			—			—			—			—
Total revenues (including equity in losses)		(24,336	)		33,708			34,231			43,603			32,990			26,548			26,478			23,235			109,251
Losses and expenses
Losses and loss adjustment expenses		—			—			—			—			—			—			—			—			—
Amortization of deferred policy acquisition costs		274			269			102			645			1			—			—			—			1
Other underwriting and operating expenses		507			432			454			1,393			716			—			—			—			716
Interest expense(11)		731			732			731			2,194			569			—			—			—			569
Total losses and expenses		1,512			1,433			1,287			4,232			1,286			—			—			—			1,286
(Loss) income before income taxes		(25,848	)		32,275			32,944			39,371			31,704			26,548			26,478			23,235			107,965
Income tax (benefit) expense		(1,456	)		3,261			3,080			4,885			3,281			2,820			2,469			2,136			10,706
Net (loss) income	$	(24,392	)	$	29,014		$	29,864		$	34,486		$	28,423		$	23,728		$	24,009		$	21,099		$	97,259
Balance Sheet Components—As of Quarter End	9/30/2007			6/30/2007			3/31/2007						12/31/2006			9/30/2006			6/30/2006			3/31/2006
	(Dollars in thousands)												(Dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities	$	167,276		$	165,422		$	133,461					$	77,803		$	113		$	108		$	—
Equity securities: preferred		26,880			25,131			24,459						16,025			—			—			—
Total investments	$	194,156		$	190,553		$	157,920					$	93,828		$	113		$	108		$	—
Cash and cash equivalents		11,610			15,414			56,260						116,449			1,890			1,887			—
Investments in unconsolidated subsidiaries		984,417			996,431			977,523						950,249			916,659			867,923			850,686
Property, equipment and software, net of accumulated depreciation and amortization		131			132			133						—			—			—			—
Other assets		7,740			7,594			7,464						4,292			1			3			—
Total assets	$	1,198,054		$	1,210,124		$	1,199,300					$	1,164,818		$	918,663		$	869,921		$	850,686
Liabilities
Reserve for losses and loss adjustment expenses	$	—		$	—		$	—					$	—		$	—		$	—		$	—
Unearned premiums		6,748			6,984			6,123						1,589			—			—			—
Long-term debt		50,000			50,000			50,000						50,000			—			—			—
Other liabilities		37,766			40,817			45,745						41,440			26,051			23,421			21,148
Total liabilities		94,514			97,801			101,868						93,029			26,051			23,421			21,148
Shareholder’s equity
Common stock, additional paid-in capital and retained earnings		1,105,295			1,114,767			1,097,493						1,071,865			892,610			846,502			829,538
Accumulated other comprehensive (loss) income, net of deferred taxes		(1,755	)		(2,444	)		(61	)					(76	)		2			(2	)		—
Total shareholder’s equity		1,103,540			1,112,323			1,097,432						1,071,789			892,612			846,500			829,538
Total liabilities and shareholder’s equity	$	1,198,054		$	1,210,124		$	1,199,300					$	1,164,818		$	918,663		$	869,921		$	850,686

Page 21

THE PMI GROUP, INC. AND SUBSIDIARIES

CORPORATE AND OTHER SEGMENT⁽⁴⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2007												2006
Income Statement Components—Quarter Ended	9/30/2007			6/30/2007			3/31/2007			Total			12/31/2006			9/30/2006			6/30/2006			3/31/2006			Total
	(Dollars in thousands)
Net premiums written	$	14		$	7		$	12		$	33		$	19		$	16		$	11		$	10		$	56
Revenues
Premiums earned	$	18		$	16		$	13		$	47		$	12		$	19		$	16		$	18		$	65
Net investment income		1,935			2,258			2,832			7,025			3,643			5,157			6,324			6,405			21,529
Equity in (losses) earnings from unconsolidated subsidiaries		(28	)		289			(55	)		206			(124	)		(68	)		82			(102	)		(212	)
Net realized investment losses		(1,886	)		(620	)		(726	)		(3,232	)		(248	)		(4,346	)		(1	)		(40	)		(4,635	)
Other income		4,563			4,769			1,706			11,038			2,829			3,204			3,714			3,779			13,526
Total revenues		4,602			6,712			3,770			15,084			6,112			3,966			10,135			10,060			30,273
Losses and expenses
Losses and loss adjustment expenses		—			—			—			—			1			(3	)		—			—			(2	)
Other underwriting and operating expenses(6)		16,918			19,925			24,013			60,856			29,085			22,359			19,443			22,866			93,753
Interest expense		7,591			7,627			7,522			22,740			11,753			9,361			8,066			8,179			37,359
Total losses and expenses		24,509			27,552			31,535			83,596			40,839			31,717			27,509			31,045			131,110
(Loss) income before income taxes		(19,907	)		(20,840	)		(27,765	)		(68,512	)		(34,727	)		(27,751	)		(17,374	)		(20,985	)		(100,837	)
Income tax (benefit) expense		(8,869	)		(6,015	)		(7,932	)		(22,816	)		(9,581	)		(7,978	)		(5,319	)		(6,521	)		(29,399	)
Net loss	$	(11,038	)	$	(14,825	)	$	(19,833	)	$	(45,696	)	$	(25,146	)	$	(19,773	)	$	(12,055	)	$	(14,464	)	$	(71,438	)
Balance Sheet Components—As of Quarter End	9/30/2007			6/30/2007			3/31/2007						12/31/2006			9/30/2006			6/30/2006			3/31/2006
	(Dollars in thousands)												(Dollars in thousands)
Assets
Investments—available-for-sale, at fair value:
Fixed income securities		53,088			53,120			53,849						56,135			129,727			153,702			167,432
Equity securities: preferred		1,275			3,477			4,250						—			—			—			—
Short term investments		1,301			1,300			1,300						1,300			98,491			117,295			116,362
Total investments		55,664			57,897			59,399						57,435			228,218			270,997			283,794
Cash and cash equivalents		45,335			163,700			100,574						143,033			507,569			155,572			295,408
Investments in unconsolidated subsidiaries		15,158			15,224			15,200						17,735			18,814			19,283			18,803
Property, equipment and software, net of accumulated depreciation and amortization		79,594			80,807			81,867						82,987			83,822			85,212			86,131
Other assets		39,901			42,165			14,222						23,861			24,851			32,271			38,143
Total assets	$	235,652		$	359,793		$	271,262					$	325,051		$	863,274		$	563,335		$	722,279
Liabilities
Unearned premiums	$	21		$	25		$	33					$	34		$	27		$	31		$	36
Debt		446,593			446,593			446,593						446,593			1,264,435			819,529			819,529
Other (assets)		(16,256	)		(2,423	)		(76,061	)					(65,622	)		(26,187	)		(43,410	)		(32,873	)
Total liabilities		430,358			444,195			370,565						381,005			1,238,275			776,150			786,692
Shareholder’s equity
Common stock, additional paid-in capital, treasury stock and retained earnings		(191,753	)		(65,912	)		(92,503	)					(52,925	)		(368,806	)		(190,462	)		(46,502	)
Accumulated other comprehensive loss, net of deferred taxes		(2,953	)		(18,490	)		(6,800	)					(3,029	)		(6,195	)		(22,353	)		(17,911	)
Total shareholder’s deficit		(194,706	)		(84,402	)		(99,303	)					(55,954	)		(375,001	)		(212,815	)		(64,413	)
Total liabilities and shareholder’s equity (deficit)	$	235,652		$	359,793		$	271,262					$	325,051		$	863,274		$	563,335		$	722,279

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