Exhibit 99.1
NEWS RELEASE
Investors and Media Contacts:
Bill Horning / Tom Taggart
925.658.6193 / 925.658.6511
THE PMI GROUP, INC. REPORTS
SECOND QUARTER 2008 FINANCIAL RESULTS
Walnut Creek, CA, August 7, 2008 - The PMI Group, Inc. (NYSE: PMI) (the “Company”) today reported a net loss for the second quarter of 2008 of $246.3 million, or $3.03 per basic and diluted1 share, compared to net income in the second quarter of 2007 of $83.8 million, or $0.95 per diluted share. The net loss for the second quarter of 2008 was primarily due to a net loss of $225.9 million in the U.S. Mortgage Insurance Operations due to increases in paid claims and loss adjustment expenses and additions to the reserve for losses (collectively “losses and LAE”), partially offset by higher net income from International Operations.
Second Quarter 2008 Update:
• | PMI Canada will cease operations and the Company expects to repatriate approximately $60 million of capital to U.S. Mortgage Insurance Operations in the second half of 2008. |
• | PMI Europe will be reconfigured to conserve and enhance capital and reduce expenses while maintaining a presence in Europe. We will continue to service existing customers out of our Dublin, Ireland office. |
• | PMI Australia continues to deliver solid results with net income of $24.0 million and $54.5 million for the second quarter and first half of 2008, respectively. |
• | PMI Asia also reported net income of $2.5 million and $5.2 million for the second quarter and first half of 2008, respectively. |
• | PMI Guaranty Co. received all regulatory approvals and entered into an agreement to transfer its entire FGIC-related reinsurance portfolio to a third party. In early August, PMI Guaranty paid approximately $144 million of its excess capital to the Company. Before the end of the third quarter, the Company expects to reinvest at least 80 percent of the capital at the Company into U.S. Mortgage Insurance Operations. |
1 | Due to the net loss in the second quarter 2008, 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. |
Consolidated Operating Results
Consolidated net premiums written for the second quarter and first half of 2008 totaled $247.4 million and $502.7 million, respectively, compared with $256.0 million and $500.0 million for the same periods one year ago. The decreases were due primarily to lower levels of new insurance written in both U.S. Mortgage Insurance and International operations partially offset by favorable foreign exchange rates.
Consolidated premiums earned for the second quarter and first half of 2008 were $260.1 and $522.0 million, respectively, compared with $242.3 and $478.7 million for the same periods one year ago. The increases were due primarily to higher persistency and increases in the insurance in force in the U.S. Mortgage Insurance Operations and higher levels of policy terminations combined with the continued strengthening of the Australian dollar in the International Operations.
Consolidated losses and LAE for the second quarter and first half of 2008 were $605.0 and $1,184.8 million, respectively, compared with $146.2 and $255.5 million for the same periods one year ago. The increases were primarily a result of higher losses and LAE in U.S. Mortgage Insurance Operations as a result of the significant deterioration in the U.S. housing, mortgage and capital markets and, to a lesser extent, increased delinquencies in PMI Australia.
Consolidated reserve for losses and LAE totaled $2.3 billion as of June 30, 2008 compared with $1.7 billion as of March 31, 2008 and $507.0 million as of June 30, 2007. Reserves for losses and LAE in the U.S. Mortgage Insurance Operations increased in the second quarter of 2008 by a gross amount of $543.3 million and were offset by a $189.6 million credit from reinsurance recoverables, primarily from captive reinsurance agreements. The increase in reserves for losses and LAE was primarily due to increases in notices of default, claim rates and average claim sizes. PMI Australia’s reserve for losses and LAE increased $12.6 million in the second quarter of 2008 also principally due to increases in notices of default, claim rates and average claim sizes.
Consolidated other underwriting and operating expensesfor the second quarter and first half of 2008 were $64.4 and $123.4 million, respectively, compared with $59.8 and $122.5 million for the same periods one year ago. The increases were primarily a result of higher operating expenses in International Operations partially offset by lower employee compensation expenses in the U.S. Mortgage Insurance Operations.
The PMI Group, Inc. Second Quarter Results by Segment
Second Quarter Total Revenues | Second Quarter Net (Loss) Income | ||||||||||||||
(Dollars in millions, except per share data) | 2008 | 2007 | 2008 | 2007 | |||||||||||
U.S. Mortgage Insurance Operations2 | $ | 219.9 | $ | 222.3 | $ | (225.9 | ) | $ | 41.5 | ||||||
International Operations3 | 90.1 | 68.0 | 31.1 | 28.1 | |||||||||||
Financial Guaranty4 | (1.7 | ) | 2.9 | (46.1 | ) | 29.0 | |||||||||
Corporate and Other5 | 22.3 | 6.4 | (5.4 | ) | (14.8 | ) | |||||||||
Consolidated Total | $ | 330.6 | $ | 299.6 | $ | (246.3 | ) | $ | 83.8 | ||||||
Diluted Net (Loss) Income Per Share1 | $ | (3.03 | ) | $ | 0.95 | ||||||||||
Book Value Per Share | $ | 24.72 | $ | 43.46 |
The PMI Group, Inc. Year to Date Results by Segment
Six Months Ended June 30 Total Revenues | Six Months Ended June 30 Net (Loss) Income | ||||||||||||||
(Dollars in millions, except per share data) | 2008 | 2007 | 2008 | 2007 | |||||||||||
U.S. Mortgage Insurance Operations2 | $ | 497.2 | $ | 446.7 | $ | (398.3 | ) | $ | 110.4 | ||||||
International Operations3 | 180.9 | 131.8 | 48.9 | 51.2 | |||||||||||
Financial Guaranty4 | (87.1 | ) | 5.4 | (170.4 | ) | 58.9 | |||||||||
Corporate and Other5 | 55.5 | 10.2 | (0.5 | ) | (34.7 | ) | |||||||||
Consolidated Total | $ | 646.5 | $ | 594.1 | $ | (520.3 | ) | $ | 185.9 | ||||||
Diluted Net (Loss) Income Per Share | $ | (6.41 | ) | $ | 2.11 |
May not total due to rounding.
Segment Highlights
U.S. Mortgage Insurance Operations
• | The net loss totaled $225.9 million for the second quarter of 2008 compared with net income of $41.5 million in the second quarter of 2007. The net loss in the second quarter was due primarily to higher losses and LAE partially offset by higher premiums earned and lower other underwriting and operating expenses. |
• | Net premiums earned in the second quarter of 2008 increased 4.2% to $203.6 million from $195.4 million in the second quarter of 2007. The increase was due primarily to a 10.3% increase in primary insurance in force to $123.2 billion at June 30, 2008 from $111.7 billion at June 30, 2007 and a higher primary persistency rate. In the second quarter of 2008, the primary persistency rate increased to 79.6% compared with 71.7% in the second quarter of 2007. |
2 | “U.S. Mortgage Insurance Operations” includes the results of PMI Mortgage Insurance Co. (PMI), affiliated U.S. reinsurance companies and equity in earnings from CMG Mortgage Insurance Company (CMG MI). |
3 | “International Operations” includes the results of PMI Australia, PMI Europe, PMI Asia and PMI Canada. |
4 | “Financial Guaranty” includes PMI Guaranty Co. (PMI Guaranty) and our equity investments in Financial Guaranty Insurance Company, Inc. (FGIC) and Ram Reinsurance Company Ltd. (RAM Re). |
5 | The “Corporate and Other” segment primarily consists of the holding company, contract underwriting operations and intercompany eliminations. |
• | Losses and LAE in the second quarter of 2008 were $552.5 million compared with $134.4 million in the second quarter of 2007 driven by increases in notices of default, claim rates and claim sizes. |
• | Reserves for losses and LAE in the U.S. Mortgage Insurance Operations totaled $2.1 billion at June 30, 2008. The net loss reserve increase in the quarter was $353.7 million, which includes a $189.6 million credit from reinsurance recoverables, primarily from captive reinsurance agreements. |
• | Total claims paid increased to $192.7 million for the second quarter of 2008 compared with $72.3 million in the second quarter of 2007 driven by an increase in claims paid, claim rates and larger average claim sizes. |
• | After tax equity in earnings from CMG MI for the second quarter of 2008 were $1.9 million, compared with $3.0 million for the same period of 2007. The decline in equity in earnings was primarily driven by higher losses and LAE partially offset by higher premiums earned. CMG MI’s insurance in force grew to $20.6 billion, persistency increased to 82.6%, the loss ratio was 55.6% and the primary default rate was 1.60%. |
International Operations
• | The key components of PMI’s International Operations—PMI Australia, PMI Europe and PMI Asia—provide financial flexibility to The PMI Group, Inc., that is important to the Company’s five-point plan to navigate through turbulent U.S. market conditions. |
• | PMI Australia reported net income of $24.0 million for the second quarter of 2008 compared with net income of $24.4 million for the second quarter of 2007. The decrease in net income was due primarily to higher losses and LAE offset by increased premiums earned and net investment income. The second quarter of 2008 addition to reserves for losses and LAE was $12.6 million bringing the total reserves for losses and LAE to $86.7 million. Claims paid for the second quarter totaled $13.4 million. |
• | PMI Europe reported net income of $5.8 million in the second quarter of 2008 compared with net income of $1.7 million for the same period a year ago. The increase was driven by fair value gains from credit default swaps derivative contracts partially offset by an increase in other underwriting and operating expenses and loss reserves. |
• | PMI Asia’s net income in the second quarter of 2008 totaled $2.5 million compared with $2.3 million for the same period a year ago. |
Financial Guaranty
• | After tax equity in losses from RAM Re for the second quarter of 2008 were $24.3 million compared with after tax equity in earnings of $2.2 million for the same period one year ago. The change was due primarily to net unrealized mark-to-market losses on its derivative portfolio as a result of widening spreads and an increase in loss reserves related to continuing deterioration in the performance of residential mortgage backed securities (“RMBS”). In the second quarter of 2008, the Company reduced the carrying value of its investment in RAM Re from $26.0 million to zero. |
• | PMI Guaranty reported a net loss of $21.8 million in the second quarter of 2008 compared with net income of $1.4 million for the same period one year ago. Effective June 2008, PMI Guaranty, FGIC and Assured Guaranty Re Ltd. (“AG Re”) executed an agreement pursuant to which all of the direct FGIC business currently reinsured by PMI Guaranty was recaptured by FGIC and ceded by FGIC to AG Re. The 2008 net loss was primarily due to a $26.7 million loss recorded in the second quarter of 2008 principally related to the above agreement. |
• | With the completion of the PMI Guaranty transaction and related accounting effects recognized in the second quarter, combined with the carrying value of FGIC and RAM Re at zero, the Company does not foresee any further losses of significance resulting from this segment. Equity in earnings from FGIC or RAM Re could be recognized in the future to the extent those earnings are deemed recoverable. |
Corporate and Other
• | The Corporate and Other segment reported a net loss of $5.4 million for the second quarter of 2008 compared with a net loss of $14.8 million for the same period a year ago. The decrease in net loss was due primarily to the reporting of certain debt instruments at fair value in accordance with SFAS No. 1596 partially offset by higher other underwriting and operating expenses related to PMI Mortgage Services and interest expense related to a $200 million borrowing from the Company’s revolving credit facility. |
Supplemental Financial Information
• | The PMI Group, Inc.’s Second Quarter 2008 Financial Supplement can be found atwww.pmigroup.com under Investor Relations. |
ABOUT THE PMI GROUP, INC.
The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA, 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, financial guaranty insurance, and financial guaranty reinsurance. Through its subsidiaries, The PMI Group, Inc. is one of the world’s largest providers of private mortgage insurance with operations in the United States, Australia and New Zealand, Canada and the European Union, as well as one of the largest providers of mortgage guaranty reinsurance in Hong Kong. For more information:www.pmigroup.com.
Cautionary Statement: Statements in this press release that are not historical facts, or 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 forward-looking statements. Such factors include, among others, national or regional recessions, and further deterioration in the housing, mortgage and related credit markets. In particular, declines in housing values and/or housing demand, deterioration of borrower credit, higher unemployment rates, changes in interest rates, higher levels of consumer credit, higher mortgage default and claim rates, lower cure rates, higher claim sizes, the aging of our mortgage insurance portfolios, adverse changes in liquidity in the capital markets, the inability of loans servicers to process higher volumes of delinquent loans, and the further contraction of credit markets could negatively affect our losses. Other risks and uncertainties are discussed in our SEC filings, including our Annual Report Form 10-K for the year ended December 31, 2007 (in Item 1A) and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008. We undertake no obligation to update forward-looking statements.
# # #
6 | Effective January 1, 2008 the Company adopted SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB No. 115.SFAS No. 159 allows an entity the irrevocable option to elect fair value for the initial subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. |
THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||
Net premiums written | $ | 247,374 | $ | 255,977 | $ | 502,699 | $ | 500,028 | ||||||
Revenues | ||||||||||||||
Premiums earned | $ | 260,078 | $ | 242,337 | $ | 522,043 | $ | 478,698 | ||||||
Net gains from credit default swaps | 9,550 | 1,579 | 10,350 | 3,407 | ||||||||||
Net investment income | 61,053 | 51,119 | 119,366 | 103,758 | ||||||||||
Net realized investment (losses) gains | (19,711 | ) | 414 | 31,299 | 1,992 | |||||||||
Change in fair value of certain debt instruments | 16,957 | — | 45,665 | — | ||||||||||
Impairment of unconsolidated subsidiary | — | — | (87,981 | ) | — | |||||||||
Other income | 2,669 | 4,172 | 5,754 | 6,254 | ||||||||||
Total revenues | 330,596 | 299,621 | 646,496 | 594,109 | ||||||||||
Losses and expenses | ||||||||||||||
Losses and loss adjustment expenses | 605,004 | 146,160 | 1,184,798 | 255,480 | ||||||||||
Amortization of deferred policy acquisition costs | 12,031 | 17,010 | 21,927 | 33,455 | ||||||||||
Other underwriting and operating expenses | 64,447 | 59,773 | 123,367 | 122,474 | ||||||||||
Interest expense | 9,835 | 8,398 | 18,198 | 16,657 | ||||||||||
Total losses and expenses | 691,317 | 231,341 | 1,348,290 | 428,066 | ||||||||||
(Loss) income before equity in (losses) earnings from unconsolidated subsidiaries and income taxes | (360,721 | ) | 68,280 | (701,794 | ) | 166,043 | ||||||||
Equity in (losses) earnings from unconsolidated subsidiaries | (21,456 | ) | 35,748 | (54,933 | ) | 72,257 | ||||||||
(Loss) income before income taxes | (382,177 | ) | 104,028 | (756,727 | ) | 238,300 | ||||||||
Income tax (benefit) expense | (135,891 | ) | 20,195 | (236,477 | ) | 52,434 | ||||||||
Net (loss) income | $ | (246,286 | ) | $ | 83,833 | $ | (520,250 | ) | $ | 185,866 | ||||
Diluted net (loss) income per share | $ | (3.03 | ) | $ | 0.95 | $ | (6.41 | ) | $ | 2.11 | ||||
THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2008 | December 31, 2007 | June 30, 2007 | |||||||
(Unaudited) | (Audited) | (Unaudited) | |||||||
(Dollars and shares in thousands, except per share data) | |||||||||
Assets | |||||||||
Investments | $ | 4,124,650 | $ | 3,729,151 | $ | 3,512,960 | |||
Cash and cash equivalents | 508,319 | 427,912 | 561,097 | ||||||
Investments in unconsolidated subsidiaries | 151,226 | 309,800 | 1,133,727 | ||||||
Reinsurance recoverables | 314,615 | 36,917 | 3,470 | ||||||
Deferred policy acquisition costs | 69,969 | 59,711 | 93,178 | ||||||
Property, equipment and software, net of accumulated depreciation and amortization | 155,440 | 161,762 | 169,740 | ||||||
Other assets | 396,938 | 345,187 | 227,887 | ||||||
Total assets | $ | 5,721,157 | $ | 5,070,440 | $ | 5,702,059 | |||
Liabilities | |||||||||
Reserve for losses and loss adjustment expenses | $ | 2,289,374 | $ | 1,242,599 | $ | 506,951 | |||
Unearned premiums | 631,483 | 611,247 | 571,804 | ||||||
Debt | 604,694 | 496,593 | 496,593 | ||||||
Other liabilities | 187,021 | 207,039 | 366,506 | ||||||
Total liabilities | 3,712,572 | 2,557,478 | 1,941,854 | ||||||
Shareholders’ equity | 2,008,585 | 2,512,962 | 3,760,205 | ||||||
Total liabilities and shareholders’ equity | $ | 5,721,157 | $ | 5,070,440 | $ | 5,702,059 | |||
Basic shares issued and outstanding | 81,245 | 81,120 | 86,513 | ||||||
Book value per share | $ | 24.72 | $ | 30.98 | $ | 43.46 | |||
Note: Please refer toThe PMI Group, Inc. Second Quarter 2008 Financial Supplement for additional information.
The PMI Group, Inc.
Second Quarter 2008
Financial Supplement
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED JUNE 30, 2008
Page | ||
3 | ||
Consolidated Results | ||
4 | ||
5 | ||
Business Segments Results of Operations - Three Months Ended June 30, 2008 and 2007 | 6 | |
Business Segments Results of Operations - Six Months Ended June 30, 2008 and 2007 | 7 | |
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 | |
13 | ||
U.S. Mortgage Insurance Operations Analysis of Loss Reserves | 14 | |
15 | ||
International Mortgage Insurance Operations Segment Results | ||
International Operations Segment Results of Operations and Balance Sheets | 16 | |
17 | ||
18 | ||
19 | ||
20 | ||
21 | ||
Financial Guaranty Segment Results | ||
Financial Guaranty Segment Results of Operations and Balance Sheets | 22 | |
Corporate and Other Segment Results | ||
Corporate and Other Segment Results of Operations and Balance Sheets | 23 |
Page 2
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED JUNE 30, 2008
Notes to Financial Results and Statistical Information:
(1) | U.S. Mortgage Insurance Operations segment includes 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 segment includes PMI Australia, PMI Europe, PMI Asia and PMI Canada. |
(3) | Financial Guaranty segment represents PMI Guaranty Co. (“PMI Guaranty”) and our equity investments in FGIC Corporation and RAM Reinsurance Company, Ltd. (“RAM Re”). See note 15 below for discussion on impairment of The PMI Group, Inc’s (the “Company”) investment in FGIC. |
(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 Company; the results of Commercial Loan Insurance Corporation, WMAC Credit Insurance Corporation and equity in earnings(losses) from certain limited partnerships. |
(5) | For the quarter and six months ended June 30, 2008, the Company’s equity in earnings (losses) from unconsolidated subsidiaries include 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 $2.1 million and $6.5 million (pre-tax) or $1.4 million and $4.5 million (after tax) for share-based compensation expenses in the second quarter and first half of 2008, compared to $3.5 million and $10.6 million (pre-tax) or $2.6 million and $7.6 million (after tax) for the corresponding periods in 2007. |
(7) | The loss ratio is expressed as a ratio of losses and loss adjustment expenses (“LAE”) to premiums earned. 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. |
(8) | Pool insurance includes modified pool, GSE pool, old pool and all other pool insurance products for U.S. Mortgage Insurance Operations. As of June 30, 2008, we adjusted pool risk in force to appropriately reflect the effect of loan repayments on risk limits. |
(9) | The statutory risk-to-capital ratio is for PMI Mortgage Insurance Co. only. |
(10) | 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. |
(11) | 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. |
(12) | 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. |
(13) | Loss severity is, for a given period, claims paid as a percentage of the total risk in force of loans for which claims were paid. |
(14) | PMI’s persistency rate was calculated based upon the percentage of primary insurance in force at the beginning of a 12-month period that remains in force at the end of that period. |
(15) | In connection with the preparation of its consolidated financial statements for the first quarter of 2008, the Company determined that its investment in FGIC was other-than-temporarily impaired and reduced the carrying value of its investment in FGIC from $103.6 million at December 31, 2007 to zero. This reduction resulted in an $88.0 million net realized investment loss in the consolidated statement of operations and $15.6 million loss in other comprehensive income in the first quarter. Due to the impairment of its FGIC investment in the first quarter of 2008, the Company did not recognize any equity in earnings (losses) from FGIC in the first and second quarter of 2008. |
(16) | Effective January 1, 2008, the Company adopted SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”). The Company elected to adopt the fair value option for certain corporate debt on the adoption date. The Company’s net income included a $17.0 and $45.7 million gain for the second quarter and first half of 2008, respectively, related to the subsequent measurement of fair value for these debt instruments. |
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 | |
Vice President, Investor Relations | Manager, Investor Relations | |
(925) 658-6193 | (925) 658-6137 |
Page 3
THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
(Dollars and shares in thousands, except per share data) | ||||||||||||||
Net premiums written | ||||||||||||||
Revenues | $ | 247,374 | $ | 255,977 | $ | 502,699 | $ | 500,028 | ||||||
Premiums earned | $ | 260,078 | $ | 242,337 | $ | 522,043 | $ | 478,698 | ||||||
Net gains from credit default swaps | 9,550 | 1,579 | 10,350 | 3,407 | ||||||||||
Net investment income | 61,053 | 51,119 | 119,366 | 103,758 | ||||||||||
Net realized investment (losses) gains | (19,711 | ) | 414 | 31,299 | 1,992 | |||||||||
Change in fair value of certain debt instruments(16) | 16,957 | — | 45,665 | — | ||||||||||
Impairment of unconsolidated subsidiary(15) | — | — | (87,981 | ) | — | |||||||||
Other income | 2,669 | 4,172 | 5,754 | 6,254 | ||||||||||
Total revenues | 330,596 | 299,621 | 646,496 | 594,109 | ||||||||||
Losses and expenses | ||||||||||||||
Losses and loss adjustment expenses | 605,004 | 146,160 | 1,184,798 | 255,480 | ||||||||||
Amortization of deferred policy acquisition costs | 12,031 | 17,010 | 21,927 | 33,455 | ||||||||||
Other underwriting and operating expenses(6) | 64,447 | 59,773 | 123,367 | 122,474 | ||||||||||
Interest expense | 9,835 | 8,398 | 18,198 | 16,657 | ||||||||||
Total losses and expenses | 691,317 | 231,341 | 1,348,290 | 428,066 | ||||||||||
(Loss) income before equity in (losses) earnings from unconsolidated subsidiaries and income taxes | (360,721 | ) | 68,280 | (701,794 | ) | 166,043 | ||||||||
Equity in (losses) earnings from unconsolidated subsidiaries(5) | (21,456 | ) | 35,748 | (54,933 | ) | 72,257 | ||||||||
(Loss) income before income taxes | (382,177 | ) | 104,028 | (756,727 | ) | 238,300 | ||||||||
Income tax (benefit) expense | (135,891 | ) | 20,195 | (236,477 | ) | 52,434 | ||||||||
Net (loss) income | $ | (246,286 | ) | $ | 83,833 | $ | (520,250 | ) | $ | 185,866 | ||||
Diluted net (loss) income per share | $ | (3.03 | ) | $ | 0.95 | $ | (6.41 | ) | $ | 2.11 | ||||
Reconciliation of (losses) earnings per share | ||||||||||||||
Net (loss) income | $ | (246,286 | ) | $ | 83,833 | $ | (520,250 | ) | $ | 185,866 | ||||
Net (loss) income adjusted for diluted earnings per share calculation | $ | (246,286 | ) | $ | 83,833 | $ | (520,250 | ) | $ | 185,866 | ||||
Share data: | ||||||||||||||
Basic weighted average common shares outstanding | 81,223 | 86,819 | 81,214 | 86,893 | ||||||||||
Stock options and other dilutive components(12) | — | 1,171 | — | 1,178 | ||||||||||
Diluted weighted average common shares outstanding(12) | 81,223 | 87,990 | 81,214 | 88,071 | ||||||||||
Page 4
THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2008 | December 31, 2007 | June 30, 2007 | |||||||
(Unaudited) | (Audited) | (Unaudited) | |||||||
(Dollars and shares in thousands, except per share data) | |||||||||
Assets | |||||||||
Investments: | |||||||||
Fixed income securities | $ | 3,846,333 | $ | 3,266,693 | $ | 3,060,369 | |||
Equity securities: | |||||||||
Common | 12,484 | 159,936 | 186,758 | ||||||
Preferred | 263,556 | 299,630 | 261,534 | ||||||
Short term investments | 2,277 | 2,892 | 4,299 | ||||||
Total investments | $ | 4,124,650 | $ | 3,729,151 | $ | 3,512,960 | |||
Cash and cash equivalents | 508,319 | 427,912 | 561,097 | ||||||
Investments in unconsolidated subsidiaries | 151,226 | 309,800 | 1,133,727 | ||||||
Reinsurance recoverables | 314,615 | 36,917 | 3,470 | ||||||
Deferred policy acquisition costs | 69,969 | 59,711 | 93,178 | ||||||
Property, equipment and software, net of accumulated depreciation and amortization | 155,440 | 161,762 | 169,740 | ||||||
Other assets | 396,938 | 345,187 | 227,887 | ||||||
Total assets | $ | 5,721,157 | $ | 5,070,440 | $ | 5,702,059 | |||
Liabilities | |||||||||
Reserve for losses and loss adjustment expenses | $ | 2,289,374 | $ | 1,242,599 | $ | 506,951 | |||
Unearned premiums | 631,483 | 611,247 | 571,804 | ||||||
Debt | 604,694 | 496,593 | 496,593 | ||||||
Other liabilities | 187,021 | 207,039 | 366,506 | ||||||
Total liabilities | 3,712,572 | 2,557,478 | 1,941,854 | ||||||
Shareholders’ equity | |||||||||
Common stock | 1,193 | 1,193 | 1,193 | ||||||
Additional paid-in capital, treasury stock and retained earnings | 1,715,843 | 2,196,692 | 3,474,734 | ||||||
Accumulated other comprehensive income, net of deferred taxes | 291,549 | 315,077 | 284,278 | ||||||
Total shareholders’ equity | 2,008,585 | 2,512,962 | 3,760,205 | ||||||
Total liabilities and shareholders’ equity | $ | 5,721,157 | $ | 5,070,440 | $ | 5,702,059 | |||
Basic shares issued and outstanding | 81,245 | 81,120 | 86,513 | ||||||
Book value per share | $ | 24.72 | $ | 30.98 | $ | 43.46 | |||
Page 5
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2008 AND 2007
U.S. Mortgage Insurance Operations(1) | International Operations (2) | Financial Guaranty (3) | Corporate and Other (4) | Consolidated Total | ||||||||||||||||
Three Months Ended June 30, 2008 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 196,063 | $ | 51,036 | $ | 270 | $ | 5 | $ | 247,374 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 203,635 | $ | 55,552 | $ | 880 | $ | 11 | $ | 260,078 | ||||||||||
Net gains from credit default swaps | — | 9,550 | — | — | 9,550 | |||||||||||||||
Net investment income | 29,255 | 27,763 | 2,009 | 2,026 | 61,053 | |||||||||||||||
Net realized investment losses | (12,900 | ) | (2,172 | ) | (4,636 | ) | (3 | ) | (19,711 | ) | ||||||||||
Change in fair value of certain debt instruments(16) | — | — | — | 16,957 | 16,957 | |||||||||||||||
Other (loss) income | (91 | ) | (559 | ) | — | 3,319 | 2,669 | |||||||||||||
Total revenues | 219,899 | 90,134 | (1,747 | ) | 22,310 | 330,596 | ||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 552,476 | 25,848 | 26,680 | — | 605,004 | |||||||||||||||
Amortization of deferred policy acquisition costs | 3,819 | 4,612 | 3,600 | — | 12,031 | |||||||||||||||
Other underwriting and operating expenses(6) | 24,159 | 17,529 | 1,614 | 21,145 | 64,447 | |||||||||||||||
Interest expense (income)(10) | 29 | (77 | ) | 731 | 9,152 | 9,835 | ||||||||||||||
Total losses and expenses | 580,483 | 47,912 | 32,625 | 30,297 | 691,317 | |||||||||||||||
(Loss) income before equity in earnings (losses) from unconsolidated subsidiaries and income taxes | (360,584 | ) | 42,222 | (34,372 | ) | (7,987 | ) | (360,721 | ) | |||||||||||
Equity in earnings (losses) from unconsolidated subsidiaries (5) | 2,986 | — | (24,321 | ) | (121 | ) | (21,456 | ) | ||||||||||||
(Loss) income before income taxes | (357,598 | ) | 42,222 | (58,693 | ) | (8,108 | ) | (382,177 | ) | |||||||||||
Income tax (benefit) expense | (131,739 | ) | 11,119 | (12,587 | ) | (2,684 | ) | (135,891 | ) | |||||||||||
Net (loss) income | $ | (225,859 | ) | $ | 31,103 | $ | (46,106 | ) | $ | (5,424 | ) | $ | (246,286 | ) | ||||||
Loss ratio(7) | 271.3 | % | 46.5 | % | ||||||||||||||||
Expense ratio(7) | 14.3 | % | 43.4 | % | ||||||||||||||||
Combined ratio | 285.6 | % | 89.9 | % | ||||||||||||||||
Three Months Ended June 30, 2007 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 189,180 | $ | 65,376 | $ | 1,414 | $ | 7 | $ | 255,977 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 195,385 | $ | 46,384 | $ | 552 | $ | 16 | $ | 242,337 | ||||||||||
Net gains from credit default swaps | — | 1,579 | — | — | 1,579 | |||||||||||||||
Net investment income | 25,966 | 20,581 | 2,314 | 2,258 | 51,119 | |||||||||||||||
Net realized investment gains (losses) | 981 | 53 | — | (620 | ) | 414 | ||||||||||||||
Other income (loss) | 17 | (614 | ) | — | 4,769 | 4,172 | ||||||||||||||
Total revenues | 222,349 | 67,983 | 2,866 | 6,423 | 299,621 | |||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 134,384 | 11,776 | — | — | 146,160 | |||||||||||||||
Amortization of deferred policy acquisition costs | 12,610 | 4,131 | 269 | — �� | 17,010 | |||||||||||||||
Other underwriting and operating expenses(6) | 26,759 | 12,657 | 432 | 19,925 | 59,773 | |||||||||||||||
Interest expense(10) | 39 | — | 732 | 7,627 | 8,398 | |||||||||||||||
Total losses and expenses | 173,792 | 28,564 | 1,433 | 27,552 | 231,341 | |||||||||||||||
Income (loss) before equity in earnings from unconsolidated subsidiaries and income taxes | 48,557 | 39,419 | 1,433 | (21,129 | ) | 68,280 | ||||||||||||||
Equity in earnings from unconsolidated subsidiaries(5) | 4,617 | — | 30,842 | 289 | 35,748 | |||||||||||||||
Income (loss) before income taxes | 53,174 | 39,419 | 32,275 | (20,840 | ) | 104,028 | ||||||||||||||
Income taxes (benefit) | 11,627 | 11,322 | 3,261 | (6,015 | ) | 20,195 | ||||||||||||||
Net income (loss) | $ | 41,547 | $ | 28,097 | $ | 29,014 | $ | (14,825 | ) | $ | 83,833 | |||||||||
Loss ratio(7) | 68.8 | % | 25.4 | % | ||||||||||||||||
Expense ratio(7) | 20.8 | % | 25.7 | % | ||||||||||||||||
Combined ratio | 89.6 | % | 51.1 | % |
Page 6
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2008 AND 2007
U.S. Mortgage Insurance Operations(1) | International Operations (2) | Financial Guaranty (3) | Corporate and Other(4) | Consolidated Total | ||||||||||||||||
Six Months Ended June 30, 2008 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 401,061 | $ | 101,321 | $ | 304 | $ | 13 | $ | 502,699 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 411,459 | $ | 109,269 | $ | 1,292 | $ | 23 | $ | 522,043 | ||||||||||
Net gains from credit default swaps | — | 10,350 | — | — | 10,350 | |||||||||||||||
Net investment income | 57,255 | 54,635 | 4,239 | 3,237 | 119,366 | |||||||||||||||
Net realized investment gains (losses) | 28,651 | 7,298 | (4,636 | ) | (14 | ) | 31,299 | |||||||||||||
Change in fair value of certain debt instruments(16) | — | — | — | 45,665 | 45,665 | |||||||||||||||
Impairment of unconsolidated subsidiary(15) | — | — | (87,981 | ) | — | (87,981 | ) | |||||||||||||
Other (loss) income | (167 | ) | (641 | ) | — | 6,562 | 5,754 | |||||||||||||
Total revenues | 497,198 | 180,911 | (87,086 | ) | 55,473 | 646,496 | ||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 1,089,509 | 65,523 | 29,766 | — | 1,184,798 | |||||||||||||||
Amortization of deferred policy acquisition costs | 8,070 | 9,946 | 3,911 | — | 21,927 | |||||||||||||||
Other underwriting and operating expenses(6) | 46,498 | 34,391 | 3,050 | 39,428 | 123,367 | |||||||||||||||
Interest expense (income)(10) | 61 | (77 | ) | 1,462 | 16,752 | 18,198 | ||||||||||||||
Total losses and expenses | 1,144,138 | 109,783 | 38,189 | 56,180 | 1,348,290 | |||||||||||||||
(Loss) income before equity in earnings (losses) from unconsolidated subsidiaries and income taxes | (646,940 | ) | 71,128 | (125,275 | ) | (707 | ) | (701,794 | ) | |||||||||||
Equity in earnings (losses) from unconsolidated subsidiaries (5) | 5,866 | — | (60,557 | ) | (242 | ) | (54,933 | ) | ||||||||||||
(Loss) income before income taxes | (641,074 | ) | 71,128 | (185,832 | ) | (949 | ) | (756,727 | ) | |||||||||||
Income tax (benefit) expense | (242,738 | ) | 22,249 | (15,488 | ) | (500 | ) | (236,477 | ) | |||||||||||
Net (loss) income | $ | (398,336 | ) | $ | 48,879 | $ | (170,344 | ) | $ | (449 | ) | $ | (520,250 | ) | ||||||
Loss ratio(7) | 264.8 | % | 60.0 | % | ||||||||||||||||
Expense ratio(7) | 13.6 | % | 43.8 | % | ||||||||||||||||
Combined ratio | 278.4 | % | 103.8 | % | ||||||||||||||||
Six Months Ended June 30, 2007 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 385,096 | $ | 108,758 | $ | 6,155 | $ | 19 | $ | 500,028 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 389,144 | $ | 88,766 | $ | 759 | $ | 29 | $ | 478,698 | ||||||||||
Net gains from credit default swaps | — | 3,407 | — | — | 3,407 | |||||||||||||||
Net investment income | 54,288 | 39,745 | 4,635 | 5,090 | 103,758 | |||||||||||||||
Net realized investment gains (losses) | 3,248 | 90 | — | (1,346 | ) | 1,992 | ||||||||||||||
Other income (loss) | 4 | (225 | ) | — | 6,475 | 6,254 | ||||||||||||||
Total revenues | 446,684 | 131,783 | 5,394 | 10,248 | 594,109 | |||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 227,168 | 28,312 | — | — | 255,480 | |||||||||||||||
Amortization of deferred policy acquisition costs | 25,192 | 7,892 | 371 | — | 33,455 | |||||||||||||||
Other underwriting and operating expenses(6) | 54,420 | 23,230 | 886 | 43,938 | 122,474 | |||||||||||||||
Interest expense(10) | 39 | 6 | 1,463 | 15,149 | 16,657 | |||||||||||||||
Total losses and expenses | 306,819 | 59,440 | 2,720 | 59,087 | 428,066 | |||||||||||||||
Income (loss) before equity in earnings from unconsolidated subsidiaries and income taxes | 139,865 | 72,343 | 2,674 | (48,839 | ) | 166,043 | ||||||||||||||
Equity in earnings from unconsolidated subsidiaries(5) | 9,478 | — | 62,545 | 234 | 72,257 | |||||||||||||||
Income (loss) before income taxes | 149,343 | 72,343 | 65,219 | (48,605 | ) | 238,300 | ||||||||||||||
Income taxes (benefit) | 38,920 | 21,120 | 6,341 | (13,947 | ) | 52,434 | ||||||||||||||
Net income (loss) | $ | 110,423 | $ | 51,223 | $ | 58,878 | $ | (34,658 | ) | $ | 185,866 | |||||||||
Loss ratio(7) | 58.4 | % | 31.9 | % | ||||||||||||||||
Expense ratio(7) | 20.7 | % | 28.6 | % | ||||||||||||||||
Combined ratio | 79.1 | % | 60.5 | % |
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 | ||||||||||||||
June 30, 2008 (Unaudited) | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Assets | ||||||||||||||||||
Investments: | ||||||||||||||||||
Fixed income securities | $ | 1,960,626 | $ | 1,718,020 | $ | 117,607 | $ | 50,080 | $ | 3,846,333 | ||||||||
Equity securities: | ||||||||||||||||||
Common | 10,927 | 570 | — | 987 | 12,484 | |||||||||||||
Preferred | 243,459 | — | 20,097 | — | 263,556 | |||||||||||||
Short term investments | 977 | — | — | 1,300 | 2,277 | |||||||||||||
Total investments | $ | 2,215,989 | $ | 1,718,590 | $ | 137,704 | $ | 52,367 | $ | 4,124,650 | ||||||||
Cash and cash equivalents | 106,317 | 147,947 | 29,276 | 224,779 | 508,319 | |||||||||||||
Investments in unconsolidated subsidiaries | 135,580 | — | — | 15,646 | 151,226 | |||||||||||||
Reinsurance recoverables | 313,549 | 1,066 | — | — | 314,615 | |||||||||||||
Deferred policy acquisition costs | 22,532 | 47,437 | — | — | 69,969 | |||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 70,330 | 6,906 | 162 | 78,042 | 155,440 | |||||||||||||
Other assets (liabilities) | 264,577 | 70,678 | 67,520 | (5,837 | ) | 396,938 | ||||||||||||
Total assets | $ | 3,128,874 | $ | 1,992,624 | $ | 234,662 | $ | 364,997 | $ | 5,721,157 | ||||||||
Liabilities | ||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 2,132,632 | $ | 149,501 | $ | 7,241 | $ | — | $ | 2,289,374 | ||||||||
Unearned premiums | 96,739 | 533,906 | 820 | 18 | 631,483 | |||||||||||||
Debt | — | — | 50,000 | 554,694 | 604,694 | |||||||||||||
Other liabilities (assets) | 115,973 | 75,273 | 2,897 | (7,122 | ) | 187,021 | ||||||||||||
Total liabilities | 2,345,344 | 758,680 | 60,958 | 547,590 | 3,712,572 | |||||||||||||
Shareholders’ equity | ||||||||||||||||||
Common stock, additional paid-in capital, treasury stock and retained earnings | 799,781 | 916,247 | 178,043 | (177,035 | ) | 1,717,036 | ||||||||||||
Accumulated other comprehensive (loss) income, net of deferred taxes | (16,251 | ) | 317,697 | (4,339 | ) | (5,558 | ) | 291,549 | ||||||||||
Total shareholders’ equity (deficit) | 783,530 | 1,233,944 | 173,704 | (182,593 | ) | 2,008,585 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 3,128,874 | $ | 1,992,624 | $ | 234,662 | $ | 364,997 | $ | 5,721,157 | ||||||||
December 31, 2007 (Audited) | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Assets | ||||||||||||||||||
Investments: | ||||||||||||||||||
Fixed income securities | $ | 1,531,606 | $ | 1,514,198 | $ | 167,915 | $ | 52,974 | $ | 3,266,693 | ||||||||
Equity securities: | ||||||||||||||||||
Common | 116,005 | 42,689 | — | 1,242 | 159,936 | |||||||||||||
Preferred | 277,165 | — | 22,465 | — | 299,630 | |||||||||||||
Short term investments | 951 | 641 | — | 1,300 | 2,892 | |||||||||||||
Total investments | $ | 1,925,727 | $ | 1,557,528 | $ | 190,380 | $ | 55,516 | $ | 3,729,151 | ||||||||
Cash and cash equivalents | 229,446 | 135,702 | 11,252 | 51,512 | 427,912 | |||||||||||||
Investments in unconsolidated subsidiaries | 131,225 | — | 163,661 | 14,914 | 309,800 | |||||||||||||
Reinsurance recoverables | 35,930 | 987 | — | — | 36,917 | |||||||||||||
Deferred policy acquisition costs | 10,474 | 45,327 | 3,910 | — | 59,711 | |||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 75,884 | 6,549 | 187 | 79,142 | 161,762 | |||||||||||||
Other assets | 188,018 | 54,594 | 52,918 | 49,657 | 345,187 | |||||||||||||
Total assets | $ | 2,596,704 | $ | 1,800,687 | $ | 422,308 | $ | 250,741 | $ | 5,070,440 | ||||||||
Liabilities | ||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 1,133,080 | $ | 106,869 | $ | 2,650 | $ | — | $ | 1,242,599 | ||||||||
Unearned premiums | 107,200 | 497,309 | 6,709 | 29 | 611,247 | |||||||||||||
Debt | — | — | 50,000 | 446,593 | 496,593 | |||||||||||||
Other liabilities (assets) | 129,246 | 75,416 | 2,892 | (515 | ) | 207,039 | ||||||||||||
Total liabilities | 1,369,526 | 679,594 | 62,251 | 446,107 | 2,557,478 | |||||||||||||
Shareholders’ equity | ||||||||||||||||||
Common stock, additional paid-in capital, treasury stock and retained earnings | 1,173,202 | 866,585 | 348,388 | (190,290 | ) | 2,197,885 | ||||||||||||
Accumulated other comprehensive income (loss), net of deferred taxes | 53,976 | 254,508 | 11,669 | (5,076 | ) | 315,077 | ||||||||||||
Total shareholders’ equity (deficit) | 1,227,178 | 1,121,093 | 360,057 | (195,366 | ) | 2,512,962 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 2,596,704 | $ | 1,800,687 | $ | 422,308 | $ | 250,741 | $ | 5,070,440 | ||||||||
Page 8
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS SEGMENT(1) RESULTS OF OPERATIONS AND BALANCE SHEETS
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums written: | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 251,677 | $ | 262,870 | $ | 514,547 | $ | 258,026 | $ | 266,545 | $ | 236,412 | $ | 240,430 | $ | 1,001,413 | ||||||||||||||||
Ceded and refunded premiums, net of assumed premiums | (55,614 | ) | (57,872 | ) | (113,486 | ) | (57,773 | ) | (52,147 | ) | (47,232 | ) | (44,514 | ) | (201,666 | ) | ||||||||||||||||
Net premiums written | 196,063 | 204,998 | 401,061 | 200,253 | 214,398 | 189,180 | 195,916 | 799,747 | ||||||||||||||||||||||||
Change in unearned premiums | 7,572 | 2,826 | 10,398 | 6,001 | (8,859 | ) | 6,205 | (2,157 | ) | 1,190 | ||||||||||||||||||||||
Premiums earned | $ | 203,635 | $ | 207,824 | $ | 411,459 | $ | 206,254 | $ | 205,539 | $ | 195,385 | $ | 193,759 | $ | 800,937 | ||||||||||||||||
Net investment income | 29,255 | 28,000 | 57,255 | 27,281 | 28,786 | 25,966 | 28,322 | 110,355 | ||||||||||||||||||||||||
Net realized investment (losses) gains | (12,900 | ) | 41,551 | 28,651 | (1,526 | ) | 2,865 | 981 | 2,267 | 4,587 | ||||||||||||||||||||||
Other (loss) income | (91 | ) | (76 | ) | (167 | ) | (86 | ) | 167 | 17 | (13 | ) | 85 | |||||||||||||||||||
Total revenues | 219,899 | 277,299 | 497,198 | 231,923 | 237,357 | 222,349 | 224,335 | 915,964 | ||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 552,476 | 537,033 | 1,089,509 | 520,611 | 348,314 | 134,384 | 92,784 | 1,096,093 | ||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 3,819 | 4,251 | 8,070 | 46,213 | 12,809 | 12,610 | 12,582 | 84,214 | ||||||||||||||||||||||||
Other underwriting and operating expenses | 24,159 | 22,339 | 46,498 | 22,717 | 18,420 | 26,759 | 27,661 | 95,557 | ||||||||||||||||||||||||
Interest expense | 29 | 32 | 61 | 33 | 36 | 39 | — | 108 | ||||||||||||||||||||||||
Total losses and expenses | 580,483 | 563,655 | 1,144,138 | 589,574 | 379,579 | 173,792 | 133,027 | 1,275,972 | ||||||||||||||||||||||||
(Loss) income before equity in earnings from unconsolidated subsidiaries and income taxes | (360,584 | ) | (286,356 | ) | (646,940 | ) | (357,651 | ) | (142,222 | ) | 48,557 | 91,308 | (360,008 | ) | ||||||||||||||||||
Equity in earnings from unconsolidated subsidiaries | 2,986 | 2,880 | 5,866 | 3,474 | 4,167 | 4,617 | 4,861 | 17,119 | ||||||||||||||||||||||||
(Loss) income before income taxes | (357,598 | ) | (283,476 | ) | (641,074 | ) | (354,177 | ) | (138,055 | ) | 53,174 | 96,169 | (342,889 | ) | ||||||||||||||||||
Income tax (benefit) expense | (131,739 | ) | (110,999 | ) | (242,738 | ) | (118,160 | ) | (72,833 | ) | 11,627 | 27,293 | (152,073 | ) | ||||||||||||||||||
Net (loss) income | $ | (225,859 | ) | $ | (172,477 | ) | $ | (398,336 | ) | $ | (236,017 | ) | $ | (65,222 | ) | $ | 41,547 | $ | 68,876 | $ | (190,816 | ) | ||||||||||
Loss ratio(7) | 271.3 | % | 258.4 | % | 264.8 | % | 252.4 | % | 169.5 | % | 68.8 | % | 47.9 | % | 136.9 | % | ||||||||||||||||
Expense ratio(7) | 14.3 | % | 13.0 | % | 13.6 | % | 34.4 | % | 14.6 | % | 20.8 | % | 20.5 | % | 22.5 | % | ||||||||||||||||
Combined ratio | 285.6 | % | 271.4 | % | 278.4 | % | 286.8 | % | 184.1 | % | 89.6 | % | 68.4 | % | 159.4 | % | ||||||||||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 1,960,626 | $ | 1,746,902 | $ | 1,531,606 | $ | 1,567,122 | $ | 1,523,285 | $ | 1,540,150 | ||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Common | 10,927 | 14,159 | 116,005 | 135,738 | 141,255 | 129,096 | ||||||||||||||||||||||||||
Preferred | 243,459 | 260,646 | 277,165 | 283,051 | 236,403 | 229,948 | ||||||||||||||||||||||||||
Short term investments | 977 | 951 | 951 | 951 | 947 | 930 | ||||||||||||||||||||||||||
Total investments | $ | 2,215,989 | $ | 2,022,658 | $ | 1,925,727 | $ | 1,986,862 | $ | 1,901,890 | $ | 1,900,124 | ||||||||||||||||||||
Cash and cash equivalents | 106,317 | 285,074 | 229,446 | 91,460 | 165,114 | 262,327 | ||||||||||||||||||||||||||
Investments in unconsolidated subsidiaries | 135,580 | 133,664 | 131,225 | 127,206 | 122,072 | 137,041 | ||||||||||||||||||||||||||
Reinsurance recoverables | 313,549 | 123,864 | 35,930 | 3,782 | 2,554 | 2,669 | ||||||||||||||||||||||||||
Deferred policy acquisition costs | 22,532 | 15,992 | 10,474 | 43,344 | 43,906 | 43,193 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 70,330 | 73,832 | 75,884 | 80,170 | 83,293 | 84,448 | ||||||||||||||||||||||||||
Other assets | 264,577 | 242,679 | 188,018 | 186,915 | 139,745 | 124,958 | ||||||||||||||||||||||||||
Total assets | $ | 3,128,874 | $ | 2,897,763 | $ | 2,596,704 | $ | 2,519,739 | $ | 2,458,574 | $ | 2,554,760 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 2,132,632 | $ | 1,589,253 | $ | 1,133,080 | $ | 698,238 | $ | 444,594 | $ | 386,036 | ||||||||||||||||||||
Unearned premiums | 96,739 | 104,674 | 107,200 | 112,634 | 103,331 | 108,968 | ||||||||||||||||||||||||||
Other liabilities | 115,973 | 185,738 | 129,246 | 205,749 | 265,268 | 347,720 | ||||||||||||||||||||||||||
Total liabilities | 2,345,344 | 1,879,665 | 1,369,526 | 1,016,621 | 813,193 | 842,724 | ||||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital and retained earnings | 799,781 | 1,026,508 | 1,173,202 | 1,422,818 | 1,564,260 | 1,627,452 | ||||||||||||||||||||||||||
Accumulated other comprehensive (loss) income, net of deferred taxes | (16,251 | ) | (8,410 | ) | 53,976 | 80,300 | 81,121 | 84,584 | ||||||||||||||||||||||||
Total shareholder’s equity | 783,530 | 1,018,098 | 1,227,178 | 1,503,118 | 1,645,381 | 1,712,036 | ||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 3,128,874 | $ | 2,897,763 | $ | 2,596,704 | $ | 2,519,739 | $ | 2,458,574 | $ | 2,554,760 | ||||||||||||||||||||
Page 9
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (1)
2008 | 2007 | |||||||||||||||||||||||||||||||
6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | |||||||||||||||||||||||||
(Dollars in millions) | (Dollars in millions) | |||||||||||||||||||||||||||||||
New Insurance Written | ||||||||||||||||||||||||||||||||
Flow insurance written | $ | 4,364 | $ | 5,952 | $ | 10,316 | $ | 8,701 | $ | 11,091 | $ | 10,268 | $ | 7,524 | $ | 37,584 | ||||||||||||||||
Structured insurance written | 184 | 167 | 351 | 369 | 3,404 | 1,337 | 3,439 | 8,549 | ||||||||||||||||||||||||
Primary new insurance written | $ | 4,548 | $ | 6,119 | $ | 10,667 | $ | 9,070 | $ | 14,495 | $ | 11,605 | $ | 10,963 | $ | 46,133 | ||||||||||||||||
Primary new risk written | $ | 985 | $ | 1,417 | $ | 2,402 | $ | 2,215 | $ | 3,533 | $ | 2,806 | $ | 2,920 | $ | 11,474 | ||||||||||||||||
Pool new insurance written(8) | $ | — | $ | 274 | $ | 274 | $ | 968 | $ | 1,953 | $ | 5,270 | $ | 6,188 | $ | 14,379 | ||||||||||||||||
Pool new risk written(8) | $ | — | $ | 4 | $ | 4 | $ | 14 | $ | 41 | $ | 122 | $ | 178 | $ | 355 | ||||||||||||||||
Product mix as a % of primary new insurance written: | ||||||||||||||||||||||||||||||||
High LTV (above 97% LTV’s) | 4 | % | 15 | % | 10 | % | 21 | % | 31 | % | 35 | % | 36 | % | 32 | % | ||||||||||||||||
95.01% to 97% LTV’s | 5 | % | 2 | % | 3 | % | 2 | % | 2 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||
90.01% to 95% LTV’s | 22 | % | 23 | % | 22 | % | 26 | % | 26 | % | 21 | % | 22 | % | 24 | % | ||||||||||||||||
85.01% to 90% LTV’s | 49 | % | 44 | % | 46 | % | 40 | % | 30 | % | 31 | % | 27 | % | 31 | % | ||||||||||||||||
85% and below | 20 | % | 16 | % | 18 | % | 11 | % | 11 | % | 10 | % | 12 | % | 10 | % | ||||||||||||||||
Less than A quality loans | 1 | % | 4 | % | 3 | % | 8 | % | 12 | % | 10 | % | 9 | % | 10 | % | ||||||||||||||||
Alt-A loans | 8 | % | 13 | % | 11 | % | 15 | % | 22 | % | 32 | % | 38 | % | 27 | % | ||||||||||||||||
Interest only loans | 6 | % | 8 | % | 7 | % | 12 | % | 18 | % | 24 | % | 26 | % | 20 | % | ||||||||||||||||
Payment option ARMS | 0 | % | 0 | % | 0 | % | 1 | % | 2 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||
ARMs | 2 | % | 2 | % | 2 | % | 3 | % | 8 | % | 8 | % | 16 | % | 9 | % | ||||||||||||||||
Monthlies | 97 | % | 98 | % | 97 | % | 98 | % | 86 | % | 98 | % | 95 | % | 94 | % | ||||||||||||||||
Refinances | 41 | % | 45 | % | 43 | % | 36 | % | 31 | % | 38 | % | 47 | % | 37 | % | ||||||||||||||||
Structured transactions | 4 | % | 3 | % | 3 | % | 4 | % | 23 | % | 12 | % | 31 | % | 19 | % |
Page 10
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (2)
2008 | 2007 | |||||||||||||||||||||||
6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | |||||||||||||||||||
(Dollars in millions, except loan size) | ||||||||||||||||||||||||
Primary Insurance and Risk in Force | ||||||||||||||||||||||||
Primary insurance in force | ||||||||||||||||||||||||
Flow | $ | 103,626 | $ | 103,860 | $ | 102,410 | $ | 98,105 | $ | 91,864 | $ | 87,184 | ||||||||||||
Structured transactions | 19,525 | 20,403 | 21,213 | 21,864 | 19,803 | 19,701 | ||||||||||||||||||
Total | $ | 123,151 | $ | 124,263 | $ | 123,623 | $ | 119,969 | $ | 111,667 | $ | 106,885 | ||||||||||||
Primary risk in force | ||||||||||||||||||||||||
Flow | $ | 25,983 | $ | 26,156 | $ | 25,852 | $ | 24,754 | $ | 23,075 | $ | 21,837 | ||||||||||||
Structured transactions | 4,650 | 4,896 | 5,115 | 5,324 | 5,016 | 5,138 | ||||||||||||||||||
Total | $ | 30,633 | $ | 31,052 | $ | 30,967 | $ | 30,078 | $ | 28,091 | $ | 26,975 | ||||||||||||
Pool risk in force(8) | $ | 2,812 | $ | 3,443 | $ | 3,464 | $ | 3,476 | $ | 3,461 | $ | 3,373 | ||||||||||||
Primary risk in force - credit score distribution | ||||||||||||||||||||||||
Flow | ||||||||||||||||||||||||
620 or above | 93.4 | % | 93.2 | % | 93.1 | % | 93.1 | % | 93.6 | % | 93.8 | % | ||||||||||||
619-575 | 5.1 | % | 5.3 | % | 5.3 | % | 5.3 | % | 5.0 | % | 4.9 | % | ||||||||||||
574 or below | 1.5 | % | 1.5 | % | 1.6 | % | 1.6 | % | 1.4 | % | 1.3 | % | ||||||||||||
Structured transactions | ||||||||||||||||||||||||
620 or above | 86.2 | % | 86.2 | % | 86.1 | % | 86.1 | % | 85.4 | % | 85.3 | % | ||||||||||||
619-575 | 8.7 | % | 8.7 | % | 8.8 | % | 8.8 | % | 9.2 | % | 9.2 | % | ||||||||||||
574 or below | 5.1 | % | 5.1 | % | 5.1 | % | 5.1 | % | 5.4 | % | 5.5 | % | ||||||||||||
Total | ||||||||||||||||||||||||
620 or above | 92.4 | % | 92.1 | % | 91.9 | % | 91.9 | % | 92.1 | % | 92.2 | % | ||||||||||||
619-575 | 5.6 | % | 5.8 | % | 5.9 | % | 5.9 | % | 5.8 | % | 5.7 | % | ||||||||||||
574 or below | 2.0 | % | 2.1 | % | 2.2 | % | 2.2 | % | 2.1 | % | 2.1 | % | ||||||||||||
Primary average loan size(in thousands) | ||||||||||||||||||||||||
Flow | $ | 157.0 | $ | 155.6 | $ | 153.7 | $ | 150.6 | $ | 146.6 | $ | 142.8 | ||||||||||||
Structured transactions | $ | 160.3 | $ | 160.8 | $ | 161.7 | $ | 162.0 | $ | 159.6 | $ | 159.2 | ||||||||||||
Total | $ | 157.5 | $ | 156.4 | $ | 155.0 | $ | 152.6 | $ | 148.7 | $ | 145.5 | ||||||||||||
Loss severity(13) - primary(quarterly) | ||||||||||||||||||||||||
Flow | 98.8 | % | 95.7 | % | 95.5 | % | 90.6 | % | 87.9 | % | 88.5 | % | ||||||||||||
Structured transactions | 98.2 | % | 98.9 | % | 94.6 | % | 92.0 | % | 92.5 | % | 90.3 | % | ||||||||||||
Total | 98.6 | % | 96.9 | % | 95.2 | % | 91.1 | % | 89.3 | % | 89.0 | % | ||||||||||||
Persistency (14) | ||||||||||||||||||||||||
Primary persistency rate | 79.6 | % | 77.6 | % | 75.5 | % | 73.3 | % | 71.7 | % | 70.7 | % | ||||||||||||
Risk-to-capital ratio(9) | 12.6 to 1 | 12.0 to 1 | 10.8 to 1 | 9.6 to 1 | 8.6 to 1 | 8.3 to 1 |
Page 11
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (3)
6/30/2008 | 12/31/2007 | 6/30/2007 | |||||||||||||||||||
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 | $ | 384 | 1.3 | % | $ | 436 | 1.4 | % | $ | 494 | 1.7 | % | |||||||||
1999 | 289 | 0.9 | % | 312 | 1.0 | % | 337 | 1.2 | % | ||||||||||||
2000 | 131 | 0.4 | % | 144 | 0.5 | % | 161 | 0.6 | % | ||||||||||||
2001 | 480 | 1.6 | % | 539 | 1.7 | % | 606 | 2.2 | % | ||||||||||||
2002 | 1,048 | 3.4 | % | 1,173 | 3.8 | % | 1,325 | 4.7 | % | ||||||||||||
2003 | 2,827 | 9.2 | % | 3,174 | 10.2 | % | 3,562 | 12.7 | % | ||||||||||||
2004 | 2,996 | 9.8 | % | 3,344 | 10.8 | % | 3,831 | 13.6 | % | ||||||||||||
2005 | 4,370 | 14.3 | % | 4,829 | 15.6 | % | 5,445 | 19.4 | % | ||||||||||||
2006 | 5,618 | 18.3 | % | 6,191 | 20.0 | % | 6,764 | 24.1 | % | ||||||||||||
2007 | 10,164 | 33.2 | % | 10,825 | 35.0 | % | 5,566 | 19.8 | % | ||||||||||||
2008 | 2,326 | 7.6 | % | — | 0.0 | % | — | 0.0 | % | ||||||||||||
Total | $ | 30,633 | $ | 30,967 | $ | 28,091 | |||||||||||||||
6/30/2008 | 12/31/2007 | 6/30/2007 | |||||||||||||||||||
% 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 6/30/08 RIF) | |||||||||||||||||||||
Florida | 10.8 | % | 18.2 | % | 10.8 | % | 10.6 | % | 10.8 | % | 5.1 | % | |||||||||
California | 8.4 | % | 18.0 | % | 8.1 | % | 10.9 | % | 7.3 | % | 5.3 | % | |||||||||
Texas | 7.2 | % | 6.9 | % | 7.2 | % | 6.0 | % | 7.1 | % | 5.0 | % | |||||||||
Illinois | 5.0 | % | 10.8 | % | 5.0 | % | 8.2 | % | 5.1 | % | 5.8 | % | |||||||||
Georgia | 4.7 | % | 10.6 | % | 4.7 | % | 9.5 | % | 4.7 | % | 7.3 | % | |||||||||
Ohio | 3.8 | % | 11.4 | % | 3.8 | % | 10.8 | % | 4.1 | % | 8.9 | % | |||||||||
New York | 3.7 | % | 8.2 | % | 3.6 | % | 6.8 | % | 3.7 | % | 5.5 | % | |||||||||
Pennsylvania | 3.3 | % | 8.4 | % | 3.3 | % | 7.5 | % | 3.5 | % | 5.8 | % | |||||||||
Washington | 3.1 | % | 5.4 | % | 3.1 | % | 3.6 | % | 2.9 | % | 2.6 | % | |||||||||
New Jersey | 3.0 | % | 10.6 | % | 3.0 | % | 7.5 | % | 3.1 | % | 5.1 | % | |||||||||
2008 | 2007 | ||||||||||||||||||||
6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||
As a Percentage of Primary Risk in Force - loan to value ratios | |||||||||||||||||||||
High LTV (above 97% LTV’s) | 24.0 | % | 24.4 | % | 24.6 | % | 23.9 | % | 22.4 | % | 20.3 | % | |||||||||
95.01% to 97% LTV’s | 3.9 | % | 3.8 | % | 3.8 | % | 4.0 | % | 4.3 | % | 4.5 | % | |||||||||
90.01% to 95% LTV’s | 29.3 | % | 29.4 | % | 29.5 | % | 29.3 | % | 29.4 | % | 30.1 | % | |||||||||
85.01% to 90% LTV’s | 35.7 | % | 35.3 | % | 35.0 | % | 34.9 | % | 35.7 | % | 36.5 | % | |||||||||
85% and below | 7.1 | % | 7.1 | % | 7.1 | % | 7.9 | % | 8.2 | % | 8.6 | % | |||||||||
As a Percentage of Primary Risk in Force: | |||||||||||||||||||||
Less-than-A quality (FICO scores below 620) | 7.7 | % | 7.9 | % | 8.1 | % | 8.1 | % | 7.9 | % | 7.8 | % | |||||||||
Less-than-A quality (FICO scores below 575)(A) | 2.0 | % | 2.1 | % | 2.2 | % | 2.2 | % | 2.1 | % | 2.1 | % | |||||||||
Alt-A Loans: | |||||||||||||||||||||
With FICO scores of 660 and above | 19.0 | % | 19.4 | % | 19.6 | % | 20.0 | % | 19.3 | % | 18.3 | % | |||||||||
With FICO scores below 660 and above 619 | 2.9 | % | 3.0 | % | 3.2 | % | 3.4 | % | 3.7 | % | 3.8 | % | |||||||||
Total Alt-A Loans | 21.9 | % | 22.4 | % | 22.8 | % | 23.4 | % | 23.0 | % | 22.1 | % | |||||||||
ARMs(B) | 11.6 | % | 12.1 | % | 12.8 | % | 14.1 | % | 16.0 | % | 17.7 | % | |||||||||
Interest Only(C) | 13.8 | % | 14.0 | % | 14.2 | % | 14.2 | % | 13.6 | % | 12.1 | % | |||||||||
Payment Option ARMs | 3.7 | % | 3.7 | % | 3.8 | % | 3.9 | % | 4.2 | % | 4.3 | % |
(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 2.9% and 1.1% of RIF are subject to initial payment adjustment in 2008 and 2009, respectively. |
(C) | Approximately 97.8% and 94.7% of interest only loans written in 2007 and the first six months of 2008, respectively, 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
2008 | 2007 | |||||||||||||||||||||||||||||||
6/30/2008 | 3/31/2008 | Total(11) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total(11) | |||||||||||||||||||||||||
(Dollars in millions, except claim size) | (Dollars in millions, except claim size) | |||||||||||||||||||||||||||||||
Primary loans, defaults and default rates | ||||||||||||||||||||||||||||||||
Primary policies in force | 781,867 | 794,323 | 781,867 | 797,419 | 786,301 | 750,835 | 734,431 | 797,419 | ||||||||||||||||||||||||
Primary loans in default | 80,895 | 69,718 | 80,895 | 63,197 | 50,742 | 42,349 | 39,206 | 63,197 | ||||||||||||||||||||||||
Primary default rate | 10.35 | % | 8.78 | % | 10.35 | % | 7.93 | % | 6.45 | % | 5.64 | % | 5.34 | % | 7.93 | % | ||||||||||||||||
Flow only default rate | 9.26 | % | 7.57 | % | 9.26 | % | 6.74 | % | 5.38 | % | 4.70 | % | 4.54 | % | 6.74 | % | ||||||||||||||||
Structured transactions only default rate | 16.25 | % | 15.14 | % | 16.25 | % | 13.92 | % | 11.65 | % | 10.37 | % | 9.29 | % | 13.92 | % | ||||||||||||||||
Pool default rate | 10.76 | % | 9.20 | % | 10.76 | % | 7.76 | % | 6.18 | % | 5.17 | % | 4.82 | % | 7.76 | % | ||||||||||||||||
Primary default rates by loan type | ||||||||||||||||||||||||||||||||
Alt-A loans | 21.67 | % | 17.47 | % | 21.67 | % | 13.86 | % | 9.92 | % | 7.32 | % | 6.06 | % | 13.86 | % | ||||||||||||||||
Less than A quality loans | 23.27 | % | 20.74 | % | 23.27 | % | 20.21 | % | 17.27 | % | 16.83 | % | 16.94 | % | 20.21 | % | ||||||||||||||||
Above 97s | 12.39 | % | 10.18 | % | 12.39 | % | 9.11 | % | 6.98 | % | 6.02 | % | 5.74 | % | 9.11 | % | ||||||||||||||||
ARMs (excluding 2/28 Hybrid ARMs) | 23.41 | % | 19.03 | % | 23.41 | % | 15.48 | % | 11.74 | % | 9.72 | % | 8.43 | % | 15.48 | % | ||||||||||||||||
2/28 Hybrid ARMs | 45.38 | % | 42.95 | % | 45.38 | % | 38.62 | % | 31.00 | % | 22.06 | % | 18.08 | % | 38.62 | % | ||||||||||||||||
Payment option ARMs | 26.72 | % | 19.59 | % | 26.72 | % | 14.46 | % | 9.28 | % | 6.32 | % | 4.34 | % | 14.46 | % | ||||||||||||||||
Interest Only | 19.25 | % | 15.04 | % | 19.25 | % | 10.98 | % | 7.11 | % | 5.02 | % | 4.15 | % | 10.98 | % | ||||||||||||||||
Claims paid(in millions) | ||||||||||||||||||||||||||||||||
Primary claims paid - flow | $ | 117.2 | $ | 93.0 | $ | 210.2 | $ | 71.0 | $ | 57.7 | $ | 46.7 | $ | 46.9 | $ | 222.3 | ||||||||||||||||
Primary claims paid - structured transactions | 71.8 | 59.9 | 131.7 | 34.7 | 29.4 | 21.6 | 18.4 | 104.1 | ||||||||||||||||||||||||
Supplemental and other | 0.9 | 1.8 | 2.7 | 3.5 | 0.6 | (0.5 | ) | (0.4 | ) | 3.2 | ||||||||||||||||||||||
Total primary claims paid | 189.9 | 154.7 | 344.6 | 109.2 | 87.7 | 67.8 | 64.9 | 329.6 | ||||||||||||||||||||||||
Total pool and other | 2.8 | 7.9 | 10.7 | 5.3 | 4.9 | 4.5 | 4.4 | 19.1 | ||||||||||||||||||||||||
Total claims paid | 192.7 | 162.6 | 355.3 | 114.5 | 92.6 | 72.3 | 69.3 | 348.7 | ||||||||||||||||||||||||
Loss adjustment expenses | 6.1 | 6.2 | 12.3 | 3.4 | 3.3 | 3.4 | 3.5 | 13.6 | ||||||||||||||||||||||||
Total claims paid including loss adjustment expenses | $ | 198.8 | $ | 168.8 | $ | 367.6 | $ | 117.9 | $ | 95.9 | $ | 75.7 | $ | 72.8 | $ | 362.3 | ||||||||||||||||
Number of primary claims paid | 4,329 | 3,722 | 8,051 | 2,889 | 2,675 | 2,336 | 2,362 | 10,262 | ||||||||||||||||||||||||
Average primary claim size(in thousands) | $ | 43.9 | $ | 41.6 | $ | 42.8 | $ | 37.8 | $ | 32.8 | $ | 29.0 | $ | 27.5 | $ | 32.1 | ||||||||||||||||
Captive reinsurance arrangements | ||||||||||||||||||||||||||||||||
Percentage of flow NIW subject to captive reinsurance arrangements | 50.8 | % | 68.4 | % | 60.9 | % | 74.3 | % | 64.2 | % | 60.9 | % | 49.2 | % | 62.7 | % | ||||||||||||||||
Percentage of primary NIW subject to captive reinsurance arrangements | 48.7 | % | 66.5 | % | 58.9 | % | 71.3 | % | 49.1 | % | 53.9 | % | 34.0 | % | 51.1 | % | ||||||||||||||||
Percentage of primary IIF subject to captive reinsurance arrangements | 53.0 | % | 53.0 | % | 53.0 | % | 52.2 | % | 50.2 | % | 50.3 | % | 51.0 | % | 52.2 | % | ||||||||||||||||
Percentage of primary RIF subject to captive reinsurance arrangements | 53.1 | % | 53.1 | % | 53.1 | % | 52.3 | % | 50.2 | % | 50.2 | % | 50.8 | % | 52.3 | % |
Page 13
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS ANALYSIS OF LOSS RESERVES
Loss Reserve Analysis | 2008 | 2007 | ||||||||||||||||||||||
6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | |||||||||||||||||||
(Dollars in millions) | (Dollars in millions) | |||||||||||||||||||||||
Beginning reserves for losses and LAE at January 1, | $ | 1,133.1 | $ | 1,133.1 | $ | 366.2 | $ | 366.2 | $ | 366.2 | $ | 366.2 | ||||||||||||
Reinsurance recoverables | (35.9 | ) | (35.9 | ) | (2.9 | ) | (2.9 | ) | (2.9 | ) | (2.9 | ) | ||||||||||||
Net balance at January 1, | 1,097.2 | 1,097.2 | 363.3 | 363.3 | 363.3 | 363.3 | ||||||||||||||||||
Loss and LAE incurred (principally with respect to defaults occurring in): | ||||||||||||||||||||||||
Current year | 843.6 | 363.2 | 894.4 | 419.6 | 181.5 | 80.1 | ||||||||||||||||||
Prior years | 245.9 | 173.8 | 201.7 | 155.9 | 45.7 | 12.7 | ||||||||||||||||||
Total incurred | 1,089.5 | 537.0 | 1,096.1 | 575.5 | 227.2 | 92.8 | ||||||||||||||||||
Loss and LAE payments (principally with respect to defaults occurring in): | ||||||||||||||||||||||||
Current year | (5.5 | ) | (0.1 | ) | (43.6 | ) | (12.3 | ) | (1.0 | ) | (0.1 | ) | ||||||||||||
Prior years | (362.1 | ) | (168.7 | ) | (318.6 | ) | (232.1 | ) | (147.5 | ) | (72.7 | ) | ||||||||||||
Total payments | (367.6 | ) | (168.8 | ) | (362.2 | ) | (244.4 | ) | (148.5 | ) | (72.8 | ) | ||||||||||||
Net ending balance | 1,819.1 | 1,465.4 | 1,097.2 | 694.4 | 442.0 | 383.3 | ||||||||||||||||||
Reinsurance recoverables(A) | 313.5 | 123.9 | 35.9 | 3.8 | 2.6 | 2.7 | ||||||||||||||||||
Ending reserves for losses and LAE | $ | 2,132.6 | $ | 1,589.3 | $ | 1,133.1 | $ | 698.2 | $ | 444.6 | $ | 386.0 | ||||||||||||
Loss Reserves by Book Year | 6/30/2008 | 3/31/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | |||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||
2002 and prior |
| $ | 125,014 | $ | 134,477 | $ | 117,987 | $ | 103,053 | $ | 149,157 | |||||||||||||
2003 |
| 101,505 | 95,622 | 87,713 | 65,107 | 80,443 | ||||||||||||||||||
2004 |
| 152,214 | 133,461 | 119,017 | 76,606 | 80,865 | ||||||||||||||||||
2005 |
| 371,433 | 298,904 | 238,077 | 83,339 | 35,071 | ||||||||||||||||||
2006 |
| 633,559 | 462,662 | 345,918 | 38,077 | — | ||||||||||||||||||
2007 |
| 725,815 | 461,633 | 224,368 | — | — | ||||||||||||||||||
2008 |
| 23,092 | 2,494 | — | — | — | ||||||||||||||||||
Total Loss Reserves |
| $ | 2,132,632 | $ | 1,589,253 | $ | 1,133,080 | $ | 366,182 | $ | 345,536 | |||||||||||||
6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | |||||||||||||||||||||
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 | Loans in Default | Reserve for Losses and LAE | ||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Primary insurance | 80,895 | $ | 2,037.4 | 69,718 | $ | 1,498.9 | 63,197 | $ | 1,054.3 | 50,742 | $ | 651.2 | 42,349 | $ | 402.8 | ||||||||||
Pool insurance(8) | 37,640 | 95.2 | 33,536 | 90.4 | 29,143 | 78.8 | 23,789 | 47.0 | 20,238 | 41.8 | |||||||||||||||
Total | 118,535 | $ | 2,132.6 | 103,254 | $ | 1,589.3 | 92,340 | $ | 1,133.1 | 74,531 | $ | 698.2 | 62,587 | $ | 444.6 | ||||||||||
(A) | Reinsurance recoverables includes captive reinsurance agreements and other reinsurance and other reinsurance recoverables. |
Page 14
THE PMI GROUP, INC. AND SUBSIDIARIES
CMG MORTGAGE INSURANCE COMPANY STATISTICAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||
6/30/2008 | 3/31/2008 | Total(11) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total(11) | |||||||||||||||||||||||||
(Dollars in millions, except claims paid and claim size) | ||||||||||||||||||||||||||||||||
Primary new insurance written | $ | 1,877 | $ | 1,353 | $ | 3,230 | $ | 1,389 | $ | 1,621 | $ | 1,566 | $ | 1,053 | $ | 5,629 | ||||||||||||||||
Primary insurance in force | $ | 20,627 | $ | 19,530 | $ | 20,627 | $ | 18,942 | $ | 18,265 | $ | 17,415 | $ | 16,670 | $ | 18,942 | ||||||||||||||||
Primary risk in force | $ | 5,137 | $ | 4,871 | $ | 5,137 | $ | 4,721 | $ | 4,532 | $ | 4,292 | $ | 4,085 | $ | 4,721 | ||||||||||||||||
Policies in force | 134,451 | 129,032 | 134,451 | 126,342 | 123,164 | 118,933 | 115,224 | 126,342 | ||||||||||||||||||||||||
Primary loans in default | 2,157 | 1,832 | 2,157 | 1,796 | 1,516 | 1,259 | 1,130 | 1,796 | ||||||||||||||||||||||||
Primary default rate | 1.60 | % | 1.42 | % | 1.60 | % | 1.42 | % | 1.23 | % | 1.06 | % | 0.98 | % | 1.42 | % | ||||||||||||||||
Persistency | 82.6 | % | 81.6 | % | 82.6 | % | 81.6 | % | 80.7 | % | 79.2 | % | 78.5 | % | 81.6 | % | ||||||||||||||||
Primary claims paid(in thousands) | $ | 6,051 | $ | 4,033 | $ | 10,084 | $ | 3,726 | $ | 3,235 | $ | 2,392 | $ | 2,131 | $ | 11,484 | ||||||||||||||||
Number of primary claims paid | 173 | 118 | 291 | 112 | 116 | 83 | 75 | 386 | ||||||||||||||||||||||||
Average primary claim size (in thousands) | $ | 35.0 | $ | 34.2 | $ | 34.7 | $ | 33.3 | $ | 27.9 | $ | 28.8 | $ | 28.4 | $ | 29.8 |
Page 15
THE PMI GROUP, INC. AND SUBSIDIARIES
INTERNATIONAL OPERATIONS SEGMENT(2) RESULTS OF OPERATIONS AND BALANCE SHEETS
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(U.S. dollars in thousands) | (U.S. dollars in thousands) | |||||||||||||||||||||||||||||||
Net premiums written | $ | 51,036 | $ | 50,285 | $ | 101,321 | $ | 62,817 | $ | 62,109 | $ | 65,376 | $ | 43,382 | $ | 233,684 | ||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums earned | $ | 55,552 | $ | 53,717 | $ | 109,269 | $ | 52,940 | $ | 50,839 | $ | 46,384 | $ | 42,382 | $ | 192,545 | ||||||||||||||||
Net gains (losses) from credit default swaps | 9,550 | 800 | 10,350 | (9,483 | ) | (8,371 | ) | 1,579 | 1,828 | (14,447 | ) | |||||||||||||||||||||
Net investment income | 27,763 | 26,872 | 54,635 | 23,905 | 22,366 | 20,581 | 19,164 | 86,016 | ||||||||||||||||||||||||
Net realized investment (losses) gains | (2,172 | ) | 9,470 | 7,298 | 183 | (231 | ) | 53 | 37 | 42 | ||||||||||||||||||||||
Other (loss) income | (559 | ) | (82 | ) | (641 | ) | 476 | 577 | (614 | ) | 389 | 828 | ||||||||||||||||||||
Total revenues | 90,134 | 90,777 | 180,911 | 68,021 | 65,180 | 67,983 | 63,800 | 264,984 | ||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 25,848 | 39,675 | 65,523 | 51,420 | 24,530 | 11,776 | 16,536 | 104,262 | ||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 4,612 | 5,334 | 9,946 | 6,882 | 4,939 | 4,131 | 3,761 | 19,713 | ||||||||||||||||||||||||
Other underwriting and operating expenses | 17,529 | 16,862 | 34,391 | 14,505 | 14,740 | 12,657 | 10,573 | 52,475 | ||||||||||||||||||||||||
Interest (income) expense | (77 | ) | — | (77 | ) | — | — | — | 6 | 6 | ||||||||||||||||||||||
Total losses and expenses | 47,912 | 61,871 | 109,783 | 72,807 | 44,209 | 28,564 | 30,876 | 176,456 | ||||||||||||||||||||||||
Income (loss) before income taxes | 42,222 | 28,906 | 71,128 | (4,786 | ) | 20,971 | 39,419 | 32,924 | 88,528 | |||||||||||||||||||||||
Income tax expense | 11,119 | 11,130 | 22,249 | 5,326 | 7,092 | 11,322 | 9,798 | 33,538 | ||||||||||||||||||||||||
Net income (loss) | $ | 31,103 | $ | 17,776 | $ | 48,879 | $ | (10,112 | ) | $ | 13,879 | $ | 28,097 | $ | 23,126 | $ | 54,990 | |||||||||||||||
Loss ratio(7) | 46.5 | % | 73.9 | % | 60.0 | % | 97.1 | % | 48.3 | % | 25.4 | % | 39.0 | % | 54.1 | % | ||||||||||||||||
Expense ratio(7) | 43.4 | % | 44.1 | % | 43.8 | % | 34.0 | % | 31.7 | % | 25.7 | % | 33.0 | % | 30.9 | % | ||||||||||||||||
Combined ratio | 89.9 | % | 118.0 | % | 103.8 | % | 131.1 | % | 80.0 | % | 51.1 | % | 72.0 | % | 85.0 | % | ||||||||||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
(U.S. dollars in thousands) | (U.S. dollars in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 1,718,020 | $ | 1,661,018 | $ | 1,514,198 | $ | 1,522,699 | $ | 1,318,542 | $ | 1,219,205 | ||||||||||||||||||||
Equity securities: common | 570 | 1,867 | 42,689 | 44,650 | 42,026 | 37,417 | ||||||||||||||||||||||||||
Short term investments | — | 643 | 641 | 1,413 | 2,052 | 3,570 | ||||||||||||||||||||||||||
Total investments | $ | 1,718,590 | $ | 1,663,528 | $ | 1,557,528 | $ | 1,568,762 | $ | 1,362,620 | $ | 1,260,192 | ||||||||||||||||||||
Cash and cash equivalents | 147,947 | 122,802 | 135,702 | 112,847 | 216,869 | 138,444 | ||||||||||||||||||||||||||
Reinsurance recoverables | 1,066 | 1,068 | 987 | 956 | 916 | 904 | ||||||||||||||||||||||||||
Deferred policy acquisition costs | 47,437 | 46,359 | 45,327 | 47,541 | 45,960 | 43,397 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 6,906 | 6,879 | 6,549 | 6,400 | 5,508 | 4,149 | ||||||||||||||||||||||||||
Other assets | 70,678 | 56,466 | 54,594 | 48,833 | 41,695 | 57,237 | ||||||||||||||||||||||||||
Total assets | $ | 1,992,624 | $ | 1,897,102 | $ | 1,800,687 | $ | 1,785,339 | $ | 1,673,568 | $ | 1,504,323 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 149,501 | $ | 135,016 | $ | 106,869 | $ | 72,148 | $ | 62,357 | $ | 56,984 | ||||||||||||||||||||
Unearned premiums | 533,906 | 515,431 | 497,309 | 493,486 | 461,464 | 422,733 | ||||||||||||||||||||||||||
Other liabilities | 75,273 | 69,042 | 75,416 | 65,947 | 62,844 | 69,810 | ||||||||||||||||||||||||||
Total liabilities | 758,680 | 719,489 | 679,594 | 631,581 | 586,665 | 549,527 | ||||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital and retained earnings | 916,247 | 885,145 | 866,585 | 876,693 | 862,812 | 760,243 | ||||||||||||||||||||||||||
Accumulated other comprehensive income, net of deferred taxes | 317,697 | 292,468 | 254,508 | 277,065 | 224,091 | 194,553 | ||||||||||||||||||||||||||
Total shareholder’s equity | 1,233,944 | 1,177,613 | 1,121,093 | 1,153,758 | 1,086,903 | 954,796 | ||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 1,992,624 | $ | 1,897,102 | $ | 1,800,687 | $ | 1,785,339 | $ | 1,673,568 | $ | 1,504,323 | ||||||||||||||||||||
Page 16
THE PMI GROUP, INC. AND SUBSIDIARIES
PMI AUSTRALIA QUARTERLY FINANCIAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(U.S. dollars in thousands, unless otherwise noted) | ||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums written | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 44,334 | $ | 42,236 | $ | 86,570 | $ | 59,041 | $ | 56,816 | $ | 60,572 | $ | 39,525 | $ | 215,954 | ||||||||||||||||
Ceded and refunded premiums | (2,770 | ) | (2,722 | ) | (5,492 | ) | (1,525 | ) | (1,596 | ) | (1,461 | ) | (1,291 | ) | (5,873 | ) | ||||||||||||||||
Net premiums written | 41,564 | 39,514 | 81,078 | 57,516 | 55,220 | 59,111 | 38,234 | 210,081 | ||||||||||||||||||||||||
Change in unearned premiums | 7,235 | 7,761 | 14,996 | (11,103 | ) | (10,996 | ) | (19,006 | ) | (1,870 | ) | (42,975 | ) | |||||||||||||||||||
Premiums earned | 48,799 | 47,275 | 96,074 | 46,413 | 44,224 | 40,105 | 36,364 | 167,106 | ||||||||||||||||||||||||
Net investment income | 23,312 | 21,409 | 44,721 | 20,325 | 18,779 | 17,251 | 16,146 | 72,501 | ||||||||||||||||||||||||
Net realized investment (losses) gains | (1,692 | ) | 9,654 | 7,962 | 160 | 36 | 68 | (75 | ) | 189 | ||||||||||||||||||||||
Other (loss) income | (580 | ) | (111 | ) | (691 | ) | 574 | 487 | (599 | ) | 488 | 950 | ||||||||||||||||||||
Total revenues | 69,839 | 78,227 | 148,066 | 67,472 | 63,526 | 56,825 | 52,923 | 240,746 | ||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 22,329 | 20,634 | 42,963 | 29,350 | 21,849 | 10,144 | 16,157 | 77,500 | ||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 3,980 | 4,773 | 8,753 | 4,054 | 4,424 | 3,655 | 3,363 | 15,496 | ||||||||||||||||||||||||
Other underwriting and operating expenses | 9,228 | 9,289 | 18,517 | 8,223 | 9,235 | 8,212 | 7,460 | 33,130 | ||||||||||||||||||||||||
Interest (income) expense | (77 | ) | — | (77 | ) | — | — | — | 6 | 6 | ||||||||||||||||||||||
Total losses and expenses | 35,460 | 34,696 | 70,156 | 41,627 | 35,508 | 22,011 | 26,986 | 126,132 | ||||||||||||||||||||||||
Income before income taxes | 34,379 | 43,531 | 77,910 | 25,845 | 28,018 | 34,814 | 25,937 | 114,614 | ||||||||||||||||||||||||
Income tax expense | 10,391 | 13,041 | 23,432 | 8,030 | 8,304 | 10,385 | 7,890 | 34,609 | ||||||||||||||||||||||||
Net income | $ | 23,988 | $ | 30,490 | $ | 54,478 | $ | 17,815 | $ | 19,714 | $ | 24,429 | $ | 18,047 | $ | 80,005 | ||||||||||||||||
Net income (AUS $ in thousands) | $ | 25,468 | $ | 33,601 | $ | 59,069 | $ | 19,867 | $ | 23,225 | $ | 29,320 | $ | 22,953 | $ | 95,365 | ||||||||||||||||
Loss Ratio(7) | 45.8 | % | 43.6 | % | 44.7 | % | 63.2 | % | 49.4 | % | 25.2 | % | 44.4 | % | 46.4 | % | ||||||||||||||||
Expense Ratio(7) | 31.8 | % | 35.6 | % | 33.6 | % | 21.3 | % | 24.7 | % | 20.1 | % | 28.3 | % | 23.1 | % | ||||||||||||||||
Combined Ratio | 77.6 | % | 79.2 | % | 78.3 | % | 84.5 | % | 74.1 | % | 45.3 | % | 72.7 | % | 69.5 | % | ||||||||||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
(U.S. dollars in thousands) | (U.S. dollars in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 1,360,776 | $ | 1,302,855 | $ | 1,182,179 | $ | 1,194,701 | $ | 1,064,267 | $ | 966,509 | ||||||||||||||||||||
Equity securities: common | 566 | 1,863 | 42,685 | 44,646 | 42,022 | 37,413 | ||||||||||||||||||||||||||
Total investments | $ | 1,361,342 | $ | 1,304,718 | $ | 1,224,864 | $ | 1,239,347 | $ | 1,106,289 | $ | 1,003,922 | ||||||||||||||||||||
Cash and cash equivalents | 76,271 | 55,968 | 69,824 | 45,737 | 100,268 | 108,573 | ||||||||||||||||||||||||||
Deferred policy acquisition costs | 39,898 | 38,844 | 38,958 | 39,961 | 39,495 | 37,790 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 4,904 | 4,699 | 4,325 | 4,141 | 3,725 | 2,653 | ||||||||||||||||||||||||||
Other assets | 54,302 | 37,417 | 40,787 | 37,829 | 32,493 | 40,884 | ||||||||||||||||||||||||||
Total assets | $ | 1,536,717 | $ | 1,441,646 | $ | 1,378,758 | $ | 1,367,015 | $ | 1,282,270 | $ | 1,193,822 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 86,678 | $ | 74,050 | $ | 65,060 | $ | 51,284 | $ | 44,023 | $ | 39,167 | ||||||||||||||||||||
Unearned premiums | 480,406 | 464,575 | 452,743 | 448,166 | 417,721 | 379,252 | ||||||||||||||||||||||||||
Other liabilities | 22,366 | 13,133 | 27,159 | 24,857 | 32,385 | 39,844 | ||||||||||||||||||||||||||
Total liabilities | 589,450 | 551,758 | 544,962 | 524,307 | 494,129 | 458,263 | ||||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital and retained earnings | 700,621 | 676,633 | 645,359 | 627,544 | 607,829 | 583,401 | ||||||||||||||||||||||||||
Accumulated other comprehensive income, net of deferred taxes | 246,646 | 213,255 | 188,437 | 215,164 | 180,312 | 152,158 | ||||||||||||||||||||||||||
Total shareholder’s equity | 947,267 | 889,888 | 833,796 | 842,708 | 788,141 | 735,559 | ||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 1,536,717 | $ | 1,441,646 | $ | 1,378,758 | $ | 1,367,015 | $ | 1,282,270 | $ | 1,193,822 | ||||||||||||||||||||
Page 17
THE PMI GROUP, INC. AND SUBSIDIARIES
PMI AUSTRALIA STATISTICAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||
6/30/2008 | 3/31/2008 | Total(11) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total(11) | |||||||||||||||||||||||||
New insurance written | (U.S. dollars in millions, except loan size, claims paid and claim size) | |||||||||||||||||||||||||||||||
Flow insurance written | $ | 4,493 | $ | 4,654 | $ | 9,147 | $ | 6,357 | $ | 6,142 | $ | 5,959 | $ | 4,300 | $ | 22,758 | ||||||||||||||||
RMBS insurance written | 982 | 408 | 1,390 | 1,714 | 3,594 | 6,151 | 3,284 | 14,743 | ||||||||||||||||||||||||
New insurance written | $ | 5,475 | $ | 5,062 | $ | 10,537 | $ | 8,071 | $ | 9,736 | $ | 12,110 | $ | 7,584 | $ | 37,501 | ||||||||||||||||
Insurance in force | ||||||||||||||||||||||||||||||||
Flow | $ | 119,983 | $ | 115,740 | $ | 119,983 | $ | 109,943 | $ | 112,150 | $ | 107,229 | $ | 98,630 | $ | 109,943 | ||||||||||||||||
RMBS | 64,863 | 66,962 | 64,863 | 65,586 | 70,647 | 65,632 | 58,068 | 65,586 | ||||||||||||||||||||||||
Total | $ | 184,846 | $ | 182,702 | $ | 184,846 | $ | 175,529 | $ | 182,797 | $ | 172,861 | $ | 156,698 | $ | 175,529 | ||||||||||||||||
Risk in force | ||||||||||||||||||||||||||||||||
Flow | $ | 105,155 | $ | 101,151 | $ | 105,155 | $ | 96,040 | $ | 97,858 | $ | 92,830 | $ | 85,349 | $ | 96,040 | ||||||||||||||||
RMBS | 64,645 | 66,738 | 64,645 | 65,364 | 70,424 | 65,405 | 57,858 | 65,364 | ||||||||||||||||||||||||
Total | $ | 169,800 | $ | 167,889 | $ | 169,800 | $ | 161,404 | $ | 168,282 | $ | 158,235 | $ | 143,207 | $ | 161,404 | ||||||||||||||||
Average loan size(U.S. $ in thousands) | ||||||||||||||||||||||||||||||||
Flow | $ | 190.0 | $ | 181.4 | $ | 190.0 | $ | 172.3 | $ | 170.7 | $ | 161.5 | $ | 150.7 | $ | 172.3 | ||||||||||||||||
RMBS | $ | 178.4 | $ | 165.0 | $ | 178.4 | $ | 158.5 | $ | 158.4 | $ | 149.5 | $ | 139.4 | $ | 158.5 | ||||||||||||||||
Total | $ | 185.8 | $ | 175.0 | $ | 185.8 | $ | 166.9 | $ | 165.7 | $ | 156.7 | $ | 146.3 | $ | 166.9 | ||||||||||||||||
Loss severity | ||||||||||||||||||||||||||||||||
Flow | 20.7 | % | 22.2 | % | 21.5 | % | 21.7 | % | 22.4 | % | 21.4 | % | 22.1 | % | 22.0 | % | ||||||||||||||||
RMBS | 29.1 | % | 28.3 | % | 28.8 | % | 18.9 | % | 20.7 | % | 16.6 | % | 16.6 | % | 19.0 | % | ||||||||||||||||
Total | 21.6 | % | 22.6 | % | 22.1 | % | 21.6 | % | 22.2 | % | 20.8 | % | 21.7 | % | 21.7 | % | ||||||||||||||||
Primary loans, defaults and default rates | ||||||||||||||||||||||||||||||||
Policies in force - Flow | 631,447 | 638,159 | 631,447 | 638,135 | 656,969 | 664,099 | 654,296 | 638,135 | ||||||||||||||||||||||||
Policies in force - RMBS | 363,618 | 405,823 | 363,618 | 413,718 | 445,912 | 439,106 | 416,678 | 413,718 | ||||||||||||||||||||||||
Policies in force - Total | 995,065 | 1,043,982 | 995,065 | 1,051,853 | 1,102,881 | 1,103,205 | 1,070,974 | 1,051,853 | ||||||||||||||||||||||||
Loans in default - Flow | 2,757 | 2,525 | 2,757 | 2,139 | 2,426 | 2,712 | 2,642 | 2,139 | ||||||||||||||||||||||||
Loans in default - RMBS | 816 | 753 | 816 | 527 | 493 | 444 | 421 | 527 | ||||||||||||||||||||||||
Loans in default - Total | 3,573 | 3,278 | 3,573 | 2,666 | 2,919 | 3,156 | 3,063 | 2,666 | ||||||||||||||||||||||||
Default rate - Flow | 0.44 | % | 0.40 | % | 0.44 | % | 0.34 | % | 0.37 | % | 0.41 | % | 0.40 | % | 0.34 | % | ||||||||||||||||
Default rate - RMBS | 0.22 | % | 0.19 | % | 0.22 | % | 0.13 | % | 0.11 | % | 0.10 | % | 0.10 | % | 0.13 | % | ||||||||||||||||
Default rate - Total | 0.36 | % | 0.31 | % | 0.36 | % | 0.25 | % | 0.26 | % | 0.29 | % | 0.29 | % | 0.25 | % | ||||||||||||||||
Net claims paid(U.S. $ in thousands) | ||||||||||||||||||||||||||||||||
Net claims paid - Flow | $ | 11,556 | $ | 13,247 | $ | 24,803 | $ | 14,125 | $ | 14,629 | $ | 6,530 | $ | 7,923 | $ | 43,207 | ||||||||||||||||
Net claims paid - RMBS | 1,834 | 1,171 | 3,005 | 777 | 2,167 | 787 | 466 | 4,197 | ||||||||||||||||||||||||
Net claims paid - Total | $ | 13,390 | $ | 14,418 | $ | 27,808 | $ | 14,902 | $ | 16,796 | $ | 7,317 | $ | 8,389 | $ | 47,404 | ||||||||||||||||
Number of claims paid - Flow | 167 | 189 | 356 | 208 | 222 | 117 | 115 | 662 | ||||||||||||||||||||||||
Number of claims paid - RMBS | 16 | 12 | 28 | 14 | 25 | 13 | 11 | 63 | ||||||||||||||||||||||||
Number of claims paid - Total | 183 | 201 | 384 | 222 | 247 | 130 | 126 | 725 | ||||||||||||||||||||||||
Average claim size- Flow(U.S. $ in thousands) | $ | 69.2 | $ | 70.1 | $ | 69.7 | $ | 67.9 | $ | 65.9 | $ | 55.8 | $ | 68.9 | $ | 65.3 | ||||||||||||||||
Average claim size- RMBS | $ | 114.6 | $ | 97.6 | $ | 107.3 | $ | 55.5 | $ | 86.7 | $ | 60.5 | $ | 42.4 | $ | 66.6 | ||||||||||||||||
Average claim size- Total | $ | 73.2 | $ | 71.7 | $ | 72.4 | $ | 67.1 | $ | 68.0 | $ | 56.3 | $ | 66.6 | $ | 65.4 |
Page 18
THE PMI GROUP, INC. AND SUBSIDIARIES
PMI EUROPE QUARTERLY FINANCIAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(U.S. dollars in thousands, unless otherwise noted) | ||||||||||||||||||||||||||||||||
Net premiums written | $ | 6,093 | $ | 5,368 | $ | 11,461 | $ | 2,802 | $ | 4,420 | $ | 3,497 | $ | 3,404 | $ | 14,123 | ||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums earned | $ | 3,660 | $ | 3,156 | $ | 6,816 | $ | 3,704 | $ | 3,644 | $ | 3,519 | $ | 3,579 | $ | 14,446 | ||||||||||||||||
Net gains (losses) from credit default swaps | 9,550 | 800 | 10,350 | (9,483 | ) | (8,371 | ) | 1,579 | 1,828 | (14,447 | ) | |||||||||||||||||||||
Net investment income | 2,971 | 3,972 | 6,943 | 1,919 | 2,080 | 2,225 | 2,408 | 8,632 | ||||||||||||||||||||||||
Net realized investment (losses) gains | (480 | ) | (231 | ) | (711 | ) | 6 | (267 | ) | (15 | ) | 112 | (164 | ) | ||||||||||||||||||
Other loss | — | — | — | — | (8 | ) | (26 | ) | (100 | ) | (134 | ) | ||||||||||||||||||||
Total revenues | 15,701 | 7,697 | 23,398 | (3,854 | ) | (2,922 | ) | 7,282 | 7,827 | 8,333 | ||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 3,589 | 18,975 | 22,564 | 22,111 | 2,719 | 1,611 | 364 | 26,805 | ||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 401 | 345 | 746 | 2,617 | 341 | 284 | 227 | 3,469 | ||||||||||||||||||||||||
Other underwriting and operating expenses | 5,587 | 4,633 | 10,220 | 4,283 | 3,880 | 3,108 | 2,769 | 14,040 | ||||||||||||||||||||||||
Total losses and expenses | 9,577 | 23,953 | 33,530 | 29,011 | 6,940 | 5,003 | 3,360 | 44,314 | ||||||||||||||||||||||||
Income (loss) before income taxes | 6,124 | (16,256 | ) | (10,132 | ) | (32,865 | ) | (9,862 | ) | 2,279 | 4,467 | (35,981 | ) | |||||||||||||||||||
Income tax expense (benefit) | 340 | (2,336 | ) | (1,996 | ) | (3,281 | ) | (1,417 | ) | 624 | 1,488 | (2,586 | ) | |||||||||||||||||||
Net income (loss) | $ | 5,784 | $ | (13,920 | ) | $ | (8,136 | ) | $ | (29,584 | ) | $ | (8,445 | ) | $ | 1,655 | $ | 2,979 | $ | (33,395 | ) | |||||||||||
Net (loss) income(Euros in thousands) | € | 3,704 | € | (8,857 | ) | € | (5,153 | ) | € | (21,715 | ) | € | (6,144 | ) | € | 1,227 | € | 2,272 | € | (24,360 | ) | |||||||||||
Loss Ratio(7) | 98.1 | % | 601.2 | % | 331.0 | % | 596.9 | % | 74.6 | % | 45.8 | % | 10.2 | % | 185.6 | % | ||||||||||||||||
Expense Ratio(7) | 98.3 | % | 92.7 | % | 95.7 | % | 246.3 | % | 95.5 | % | 97.0 | % | 88.0 | % | 124.0 | % | ||||||||||||||||
Combined Ratio | 196.4 | % | 693.9 | % | 426.7 | % | 843.2 | % | 170.1 | % | 142.8 | % | 98.2 | % | 309.6 | % | ||||||||||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
(U.S. dollars in thousands) | (U.S. dollars in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 220,099 | $ | 222,364 | $ | 200,825 | $ | 203,992 | $ | 197,165 | $ | 198,445 | ||||||||||||||||||||
Cash and cash equivalents | 58,256 | 53,765 | 53,335 | 47,715 | 36,316 | 23,662 | ||||||||||||||||||||||||||
Reinsurance recoverables | 1,066 | 1,068 | 987 | 956 | 916 | 904 | ||||||||||||||||||||||||||
Deferred policy acquisition costs | 4,581 | 4,623 | 3,921 | 5,346 | 4,366 | 3,821 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 1,269 | 1,372 | 1,323 | 1,317 | 1,293 | 1,344 | ||||||||||||||||||||||||||
Other assets | 15,287 | 15,837 | 11,780 | 10,103 | 9,327 | 14,809 | ||||||||||||||||||||||||||
Total assets | $ | 300,558 | $ | 299,029 | $ | 272,171 | $ | 269,429 | $ | 249,383 | $ | 242,985 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 62,620 | $ | 60,692 | $ | 41,579 | $ | 20,634 | $ | 18,083 | $ | 17,587 | ||||||||||||||||||||
Unearned premiums | 29,521 | 27,140 | 22,983 | 23,347 | 21,390 | 21,117 | ||||||||||||||||||||||||||
Other liabilities | 47,284 | 50,432 | 45,534 | 36,772 | 24,154 | 26,697 | ||||||||||||||||||||||||||
Total liabilities | 139,425 | 138,264 | 110,096 | 80,753 | 63,627 | 65,401 | ||||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital and retained earnings | 99,204 | 93,421 | 107,341 | 136,926 | 145,371 | 135,715 | ||||||||||||||||||||||||||
Accumulated other comprehensive income, net of deferred taxes | 61,929 | 67,344 | 54,734 | 51,750 | 40,385 | 41,869 | ||||||||||||||||||||||||||
Total shareholder’s equity | 161,133 | 160,765 | 162,075 | 188,676 | 185,756 | 177,584 | ||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 300,558 | $ | 299,029 | $ | 272,171 | $ | 269,429 | $ | 249,383 | $ | 242,985 | ||||||||||||||||||||
Page 19
THE PMI GROUP, INC. AND SUBSIDIARIES
PMI ASIA QUARTERLY FINANCIAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(U.S. dollars in thousands, unless otherwise noted) | ||||||||||||||||||||||||||||||||
Reinsurance premiums written | $ | 3,379 | $ | 3,083 | $ | 6,462 | $ | 2,499 | $ | 2,470 | $ | 2,768 | $ | 1,743 | $ | 9,480 | ||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums earned | $ | 2,984 | $ | 3,237 | $ | 6,221 | $ | 2,823 | $ | 2,971 | $ | 2,760 | $ | 2,439 | $ | 10,993 | ||||||||||||||||
Net investment income and other | 687 | 744 | 1,431 | 740 | 720 | 606 | 610 | 2,676 | ||||||||||||||||||||||||
Total revenues | 3,671 | 3,981 | 7,652 | 3,563 | 3,691 | 3,366 | 3,049 | 13,669 | ||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment (reversals) expenses | (70 | ) | 21 | (49 | ) | (41 | ) | (38 | ) | 21 | 15 | (43 | ) | |||||||||||||||||||
Amortization of deferred policy acquisition costs | 229 | 216 | 445 | 211 | 174 | 192 | 171 | 748 | ||||||||||||||||||||||||
Other underwriting and operating expenses | 643 | 592 | 1,235 | 385 | 288 | 335 | 233 | 1,241 | ||||||||||||||||||||||||
Total losses and expenses | 802 | 829 | 1,631 | 555 | 424 | 548 | 419 | 1,946 | ||||||||||||||||||||||||
Income before income taxes | 2,869 | 3,152 | 6,021 | 3,008 | 3,267 | 2,818 | 2,630 | 11,723 | ||||||||||||||||||||||||
Income tax expense | 388 | 425 | 813 | 152 | 355 | 491 | 460 | 1,458 | ||||||||||||||||||||||||
Net income | $ | 2,481 | $ | 2,727 | $ | 5,208 | $ | 2,856 | $ | 2,912 | $ | 2,327 | $ | 2,170 | $ | 10,265 | ||||||||||||||||
Net income(HK$ in thousands) | $ | 19,354 | $ | 21,254 | $ | 40,608 | $ | 22,210 | $ | 22,728 | $ | 18,189 | $ | 16,938 | $ | 80,065 | ||||||||||||||||
Loss Ratio(7) | (2.3 | )% | 0.6 | % | (0.8 | )% | (1.5 | )% | (1.3 | )% | 0.8 | % | 0.6 | % | (0.4 | )% | ||||||||||||||||
Expense Ratio(7) | 25.8 | % | 26.2 | % | 26.0 | % | 23.8 | % | 18.7 | % | 19.0 | % | 23.2 | % | 21.0 | % | ||||||||||||||||
Combined Ratio | 23.5 | % | 26.8 | % | 25.2 | % | 22.3 | % | 17.4 | % | 19.8 | % | 23.8 | % | 20.6 | % | ||||||||||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
�� | (U.S. dollars in thousands) | (U.S. dollars in thousands) | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 71,434 | $ | 70,120 | $ | 66,366 | $ | 64,195 | $ | 57,114 | $ | 54,255 | ||||||||||||||||||||
Short term investments | — | 643 | 641 | 1,413 | 2,052 | 3,570 | ||||||||||||||||||||||||||
Total investments | $ | 71,434 | $ | 70,763 | $ | 67,007 | $ | 65,608 | $ | 59,166 | $ | 57,825 | ||||||||||||||||||||
Cash and cash equivalents | 7,110 | 5,102 | 3,580 | 3,274 | 9,748 | 6,209 | ||||||||||||||||||||||||||
Deferred policy acquisition costs | 2,574 | 2,509 | 2,448 | 2,234 | 2,099 | 1,786 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 101 | 115 | 129 | 159 | 167 | 152 | ||||||||||||||||||||||||||
Other assets | 561 | 2,212 | 1,633 | (462 | ) | (383 | ) | 1,544 | ||||||||||||||||||||||||
Total assets | $ | 81,780 | $ | 80,701 | $ | 74,797 | $ | 70,813 | $ | 70,797 | $ | 67,516 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 159 | $ | 230 | $ | 230 | $ | 230 | $ | 251 | $ | 230 | ||||||||||||||||||||
Unearned premiums | 21,840 | 21,478 | 21,583 | 21,973 | 22,353 | 22,364 | ||||||||||||||||||||||||||
Other liabilities | 3,992 | 3,215 | 1,605 | 1,654 | 5,155 | 3,173 | ||||||||||||||||||||||||||
Total liabilities | 25,991 | 24,923 | 23,418 | 23,857 | 27,759 | 25,767 | �� | |||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital and retained earnings | 54,526 | 52,045 | 49,318 | 46,462 | 43,549 | 41,222 | ||||||||||||||||||||||||||
Accumulated other comprehensive income (loss), net of deferred taxes | 1,263 | 3,733 | 2,061 | 494 | (511 | ) | 527 | |||||||||||||||||||||||||
Total shareholder’s equity | 55,789 | 55,778 | 51,379 | 46,956 | 43,038 | 41,749 | ||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 81,780 | $ | 80,701 | $ | 74,797 | $ | 70,813 | $ | 70,797 | $ | 67,516 | ||||||||||||||||||||
Page 20
THE PMI GROUP, INC. AND SUBSIDIARIES
PMI EUROPE STATISTICAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||
6/30//2008 | 3/31/2008 | Total (11) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total (11) | |||||||||||||||||||||||||
(U.S. dollars in millions, except claims paid) | ||||||||||||||||||||||||||||||||
New insurance written | $ | 129 | $ | 95 | $ | 224 | $ | 236 | $ | 132 | $ | 141 | $ | 136 | $ | 645 | ||||||||||||||||
New credit default swaps written | $ | — | $ | — | $ | — | $ | 12,067 | $ | 1,919 | $ | — | $ | — | $ | 13,986 | ||||||||||||||||
New reinsurance written | $ | 3,627 | $ | 1,934 | $ | 5,561 | $ | 617 | $ | 1,402 | $ | 1,778 | $ | 504 | $ | 4,301 | ||||||||||||||||
Insurance in force | $ | 62,422 | $ | 63,103 | $ | 62,422 | $ | 62,929 | $ | 51,707 | $ | 48,120 | $ | 48,121 | $ | 62,929 | ||||||||||||||||
Risk in force | $ | 9,182 | $ | 9,628 | $ | 9,182 | $ | 9,420 | $ | 5,711 | $ | 3,813 | $ | 3,824 | $ | 9,420 | ||||||||||||||||
Claims paid including credit default swaps(in thousands) | $ | 3,593 | $ | 3,562 | $ | 7,155 | $ | 2,898 | $ | 3,207 | $ | 2,577 | $ | 1,547 | $ | 10,229 | ||||||||||||||||
PMI ASIA STATISTICAL INFORMATION | ||||||||||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||||||||||
6/30/2008 | 3/31/2008 | Total(11) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total(11) | |||||||||||||||||||||||||
(U.S. dollars in millions, except claims paid and average claim size) | ||||||||||||||||||||||||||||||||
New reinsurance written | $ | 484 | $ | 307 | $ | 791 | $ | 256 | $ | 220 | $ | 212 | $ | 167 | $ | 855 | ||||||||||||||||
Insurance in force | $ | 3,052 | $ | 2,804 | $ | 3,052 | $ | 2,724 | $ | 2,663 | $ | 2,596 | $ | 2,526 | $ | 2,724 | ||||||||||||||||
Risk in force | $ | 312 | $ | 310 | $ | 312 | $ | 310 | $ | 314 | $ | 309 | $ | 306 | $ | 310 | ||||||||||||||||
Policies in force | 12,435 | 11,901 | 12,435 | 11,773 | 11,530 | 11,437 | 11,189 | 11,773 | ||||||||||||||||||||||||
Loans in default | 9 | 13 | 9 | 14 | 14 | 16 | 16 | 14 | ||||||||||||||||||||||||
Default rate | 0.07 | % | 0.11 | % | 0.07 | % | 0.12 | % | 0.12 | % | 0.14 | % | 0.14 | % | 0.12 | % | ||||||||||||||||
Claims paid(in thousands) | $ | — | $ | — | $ | — | $ | 24 | $ | — | $ | — | $ | 9 | $ | 33 | ||||||||||||||||
Number of claims paid | — | — | — | 1 | — | — | 1 | 2 | ||||||||||||||||||||||||
Average claim size(in thousands) | $ | — | $ | — | $ | — | $ | 24 | $ | — | $ | — | $ | 9 | $ | 17 |
Page 21
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL GUARANTY SEGMENT(3) RESULTS OF OPERATIONS AND BALANCE SHEETS
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Net premiums written | $ | 270 | $ | 34 | $ | 304 | $ | 396 | $ | 202 | $ | 1,414 | $ | 4,741 | $ | 6,753 | ||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums earned | $ | 880 | $ | 412 | $ | 1,292 | $ | 436 | $ | 438 | $ | 552 | $ | 207 | $ | 1,633 | ||||||||||||||||
Net investment income | 2,009 | 2,230 | 4,239 | 2,250 | 2,321 | 2,314 | 2,321 | 9,206 | ||||||||||||||||||||||||
Net realized investment (losses) gains | (4,636 | ) | — | (4,636 | ) | 3 | (354 | ) | — | — | (351 | ) | ||||||||||||||||||||
Impairment of unconsolidated subsidiary(15) | — | (87,981 | ) | (87,981 | ) | (38,499 | ) | — | — | — | (38,499 | ) | ||||||||||||||||||||
Total revenues | (1,747 | ) | (85,339 | ) | (87,086 | ) | (35,810 | ) | 2,405 | 2,866 | 2,528 | (28,011 | ) | |||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 26,680 | 3,086 | 29,766 | 2,649 | — | — | — | 2,649 | ||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 3,600 | 311 | 3,911 | 313 | 274 | 269 | 102 | 958 | ||||||||||||||||||||||||
Other underwriting and operating expenses | 1,614 | 1,436 | 3,050 | 1,112 | 507 | 432 | 454 | 2,505 | ||||||||||||||||||||||||
Interest expense(10) | 731 | 731 | 1,462 | 731 | 731 | 732 | 731 | 2,925 | ||||||||||||||||||||||||
Total losses and expenses | 32,625 | 5,564 | 38,189 | 4,805 | 1,512 | 1,433 | 1,287 | 9,037 | ||||||||||||||||||||||||
(Loss) income before equity in (losses) earnings from unconsolidated subsidiaries and income taxes | (34,372 | ) | (90,903 | ) | (125,275 | ) | (40,615 | ) | 893 | 1,433 | 1,241 | (37,048 | ) | |||||||||||||||||||
Equity in (losses) earnings from unconsolidated subsidiaries | (24,321 | ) | (36,236 | ) | (60,557 | ) | (794,637 | ) | (26,741 | ) | 30,842 | 31,703 | (758,833 | ) | ||||||||||||||||||
(Loss) income before income taxes | (58,693 | ) | (127,139 | ) | (185,832 | ) | (835,252 | ) | (25,848 | ) | 32,275 | 32,944 | (795,881 | ) | ||||||||||||||||||
Income tax (benefit) expense | (12,587 | ) | (2,901 | ) | (15,488 | ) | (69,096 | ) | (1,456 | ) | 3,261 | 3,080 | (64,211 | ) | ||||||||||||||||||
Net (loss) income | $ | (46,106 | ) | $ | (124,238 | ) | $ | (170,344 | ) | $ | (766,156 | ) | $ | (24,392 | ) | $ | 29,014 | $ | 29,864 | $ | (731,670 | ) | ||||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 117,607 | $ | 163,534 | $ | 167,915 | $ | 167,276 | $ | 165,422 | $ | 133,461 | ||||||||||||||||||||
Equity securities: preferred | 20,097 | 21,102 | 22,465 | 26,880 | 25,131 | 24,459 | ||||||||||||||||||||||||||
Total investments | $ | 137,704 | $ | 184,636 | $ | 190,380 | $ | 194,156 | $ | 190,553 | $ | 157,920 | ||||||||||||||||||||
Cash and cash equivalents | 29,276 | 7,419 | 11,252 | 11,610 | 15,414 | 56,260 | ||||||||||||||||||||||||||
Investments in unconsolidated subsidiaries | — | 25,998 | 163,661 | 984,417 | 996,431 | 977,523 | ||||||||||||||||||||||||||
Deferred policy acquisition costs | — | 3,600 | 3,910 | 3,902 | 3,312 | 2,182 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 162 | 174 | 187 | 131 | 132 | 133 | ||||||||||||||||||||||||||
Other assets | 67,520 | 7,323 | 52,918 | 3,838 | 4,282 | 5,282 | ||||||||||||||||||||||||||
Total assets | $ | 234,662 | $ | 229,150 | $ | 422,308 | $ | 1,198,054 | $ | 1,210,124 | $ | 1,199,300 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 7,241 | $ | (878 | ) | $ | 2,650 | $ | — | $ | — | $ | — | |||||||||||||||||||
Unearned premiums | 820 | 6,331 | 6,709 | 6,748 | 6,984 | 6,123 | ||||||||||||||||||||||||||
Long-term debt | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||||||||||||||||
Other liabilities | 2,897 | (45,082 | ) | 2,892 | 37,766 | 40,817 | 45,745 | |||||||||||||||||||||||||
Total liabilities | 60,958 | 10,371 | 62,251 | 94,514 | 97,801 | 101,868 | ||||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital and retained earnings | 178,043 | 224,150 | 348,388 | 1,105,295 | 1,114,767 | 1,097,493 | ||||||||||||||||||||||||||
Accumulated other comprehensive (loss) income, net of deferred taxes | (4,339 | ) | (5,371 | ) | 11,669 | (1,755 | ) | (2,444 | ) | (61 | ) | |||||||||||||||||||||
Total shareholder’s equity | 173,704 | 218,779 | 360,057 | 1,103,540 | 1,112,323 | 1,097,432 | ||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 234,662 | $ | 229,150 | $ | 422,308 | $ | 1,198,054 | $ | 1,210,124 | $ | 1,199,300 | ||||||||||||||||||||
Page 22
THE PMI GROUP, INC. AND SUBSIDIARIES
CORPORATE AND OTHER SEGMENT(4) RESULTS OF OPERATIONS AND BALANCE SHEETS
2008 | 2007 | |||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 6/30/2008 | 3/31/2008 | Total | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Net premiums written | $ | 5 | $ | 8 | $ | 13 | $ | 19 | $ | 14 | $ | 7 | $ | 12 | $ | 52 | ||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||
Premiums earned | $ | 11 | $ | 12 | $ | 23 | $ | 10 | $ | 18 | $ | 16 | $ | 13 | $ | 57 | ||||||||||||||||
Net investment income | 2,026 | 1,211 | 3,237 | 1,400 | 1,935 | 2,258 | 2,832 | 8,425 | ||||||||||||||||||||||||
Net realized investment (losses) gains | (3 | ) | (11 | ) | (14 | ) | 12,669 | (1,886 | ) | (620 | ) | (726 | ) | 9,437 | ||||||||||||||||||
Change in fair value of certain debt instruments(16) | 16,957 | 28,708 | 45,665 | — | — | — | — | — | ||||||||||||||||||||||||
Other income | 3,319 | 3,243 | 6,562 | 3,270 | 4,563 | 4,769 | 1,706 | 14,308 | ||||||||||||||||||||||||
Total revenues | 22,310 | 33,163 | 55,473 | 17,349 | 4,630 | 6,423 | 3,825 | 32,227 | ||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other underwriting and operating expenses(6) | 21,145 | 18,283 | 39,428 | 18,400 | 16,918 | 19,925 | 24,013 | 79,256 | ||||||||||||||||||||||||
Interest expense | 9,152 | 7,600 | 16,752 | 7,619 | 7,591 | 7,627 | 7,522 | 30,359 | ||||||||||||||||||||||||
Total losses and expenses | 30,297 | 25,883 | 56,180 | 26,019 | 24,509 | 27,552 | 31,535 | 109,615 | ||||||||||||||||||||||||
(Loss) income before equity in (losses) earnings from unconsolidated subsidiaries and income taxes | (7,987 | ) | 7,280 | (707 | ) | (8,670 | ) | (19,879 | ) | (21,129 | ) | (27,710 | ) | (77,388 | ) | |||||||||||||||||
Equity in (losses) earnings from unconsolidated subsidiaries | (121 | ) | (121 | ) | (242 | ) | 8 | (28 | ) | 289 | (55 | ) | 214 | |||||||||||||||||||
(Loss) income before income taxes | (8,108 | ) | 7,159 | (949 | ) | (8,662 | ) | (19,907 | ) | (20,840 | ) | (27,765 | ) | (77,174 | ) | |||||||||||||||||
Income tax (benefit) expense | (2,684 | ) | 2,184 | (500 | ) | (6,528 | ) | (8,869 | ) | (6,015 | ) | (7,932 | ) | (29,344 | ) | |||||||||||||||||
Net (loss) income | $ | (5,424 | ) | $ | 4,975 | $ | (449 | ) | $ | (2,134 | ) | $ | (11,038 | ) | $ | (14,825 | ) | $ | (19,833 | ) | $ | (47,830 | ) | |||||||||
Balance Sheet Components - As of Quarter End | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | ||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Fixed income securities | $ | 50,080 | $ | 51,979 | $ | 52,974 | $ | 53,088 | $ | 53,120 | $ | 53,849 | ||||||||||||||||||||
Equity securities: common | 987 | 1,242 | 1,242 | 1,275 | 3,477 | 4,250 | ||||||||||||||||||||||||||
Short term investments | 1,300 | 1,300 | 1,300 | 1,301 | 1,300 | 1,300 | ||||||||||||||||||||||||||
Total investments | $ | 52,367 | $ | 54,521 | $ | 55,516 | $ | 55,664 | $ | 57,897 | $ | 59,399 | ||||||||||||||||||||
Cash and cash equivalents | 224,779 | 40,214 | 51,512 | 45,335 | 163,700 | 100,574 | ||||||||||||||||||||||||||
Investments in unconsolidated subsidiaries | 15,646 | 15,493 | 14,914 | 15,158 | 15,224 | 15,200 | ||||||||||||||||||||||||||
Property, equipment and software, net of accumulated depreciation and amortization | 78,042 | 78,627 | 79,142 | 79,594 | 80,807 | 81,867 | ||||||||||||||||||||||||||
Other (liabilities) assets | (5,837 | ) | 8,821 | 49,657 | 39,901 | 42,165 | 14,222 | |||||||||||||||||||||||||
Total assets | $ | 364,997 | $ | 197,676 | $ | 250,741 | $ | 235,652 | $ | 359,793 | $ | 271,262 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Unearned premiums | $ | 18 | $ | 26 | $ | 29 | $ | 21 | $ | 25 | $ | 33 | ||||||||||||||||||||
Debt | 554,694 | 364,378 | 446,593 | 446,593 | 446,593 | 446,593 | ||||||||||||||||||||||||||
Other (assets) | (7,122 | ) | 7,893 | (515 | ) | (16,256 | ) | (2,423 | ) | (76,061 | ) | |||||||||||||||||||||
Total liabilities | 547,590 | 372,297 | 446,107 | 430,358 | 444,195 | 370,565 | ||||||||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||||||||||||||
Common stock, additional paid-in capital, treasury stock and retained earnings | (177,035 | ) | (169,824 | ) | (190,290 | ) | (191,753 | ) | (65,912 | ) | (92,503 | ) | ||||||||||||||||||||
Accumulated other comprehensive loss, net of deferred taxes | (5,558 | ) | (4,797 | ) | (5,076 | ) | (2,953 | ) | (18,490 | ) | (6,800 | ) | ||||||||||||||||||||
Total shareholder’s deficit | (182,593 | ) | (174,621 | ) | (195,366 | ) | (194,706 | ) | (84,402 | ) | (99,303 | ) | ||||||||||||||||||||
Total liabilities and shareholder’s deficit | $ | 364,997 | $ | 197,676 | $ | 250,741 | $ | 235,652 | $ | 359,793 | $ | 271,262 | ||||||||||||||||||||
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