Exhibit 99.2
The PMI Group, Inc.
Third Quarter 2008
Financial Supplement
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2008
Table of Contents
Page | ||
Notes to Financial Results and Statistical Information | 3 | |
Consolidated Results | ||
Consolidated Statements of Operations | 4 | |
Consolidated Balance Sheets | 5 | |
Business Segments Results of Operations - Three Months Ended September 30, 2008 and 2007 | 6 | |
Business Segments Results of Operations - Nine Months Ended September 30, 2008 and 2007 | 7 | |
Business Segments Balance Sheets | 8 | |
U.S. Mortgage Insurance Operations Segment Results | ||
U.S. Mortgage Insurance Operations Segment Results of Operations and Balance Sheets | 9 | |
U.S. Mortgage Insurance Operations Portfolio Characteristics | 10-12 | |
U.S. Mortgage Insurance Operations Default Information | 13 | |
U.S. Mortgage Insurance Operations Analysis of Loss Reserves | 14 | |
CMG Mortgage Insurance Company Statistical Information | 15 | |
International Mortgage Insurance Operations Segment Results | ||
International Operations Segment Results of Operations and Balance Sheets | 16 | |
PMI Europe Quarterly Financial Information | 17 | |
PMI Europe Statistical Information | 18 | |
Financial Guaranty Segment Results | ||
Financial Guaranty Segment Results of Operations and Balance Sheets | 19 | |
Corporate and Other Segment Results | ||
Corporate and Other Segment Results of Operations and Balance Sheets | 20 |
Page 2
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 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 Europe and PMI Canada. PMI Australia and PMI Asia are reported as discontinued operations for all periods presented. |
(3) | Financial Guaranty segment represents our equity investments in FGIC Corporation and RAM Reinsurance Company, Ltd. (“RAM Re”). PMI Guaranty Co. (“PMI Guaranty”) is reported as discontinued operations for all periods presented. See note 14 below for discussion on impairment of The PMI Group, Inc’s (the “Company”) investments in RAM Re and 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 nine months ended September 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 International segment include severance costs related to the reconfiguration of PMI Europe and disposal costs related to PMI Canada. |
(7) | The loss ratio is expressed as a ratio of losses and loss adjustment expenses (“LAE”) from continuing operations to premiums earned from continuing operations. The expense ratio is expressed as a ratio of the sum of amortization of deferred policy acquisition costs and other underwriting and operating expenses from continuing operations to net premiums written from continuing operations. |
(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) | 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. |
(11) | Due to the net loss in the quarter and nine months ended September 30, 2008, 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. |
(12) | Loss severity is, for a given period, initial claims paid as a percentage of the total risk in force of loans for which claims were paid. Initial claims paid does not include supplemental and other payments. |
(13) | 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. |
(14) | At June 30, 2008, the carrying value of our investment in RAM Re had been reduced to zero due to equity in losses in RAM Re. During the third quarter of 2008, we recognized equity in earnings from RAM Re of $9.4 million which increased our investment in RAM Re to $9.4 million; however, due to continuing deterioration of the credit market and declines in RAM Re’s share price we realized an other-than-temporary impairment charge of $2.9 million related to RAM Re thereby reducing the carrying value of our investment in RAM Re to $6.5 as of September 30, 2008. Additionally, the Company impaired its investment in FGIC in the first quarter and reduced the carrying value of its investment in FGIC 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. The Company did not recognize any equity in earnings (losses) from FGIC in 2008. |
(15) | 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 $66.3 million and $111.9 million gain for the third quarter and nine months of 2008, respectively, related to the subsequent measurement of fair value for these debt instruments. |
(16) | Included in the Supplemental and other in the third quarter of 2008 is $25.8 million recovered from two captive trust accounts due to the termination of captive agreements. The recovered amount was excluded from the calculation of average claim size for the three and nine months ended September 30, 2008. |
(17) | Unaudited due to reclassification as a result of discontinued operations. |
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
(Dollars and shares in thousands, except per share data) | ||||||||||||||||
Net premiums written | $ | 176,497 | $ | 218,831 | $ | 591,352 | $ | 610,848 | ||||||||
Revenues | ||||||||||||||||
Premiums earned | $ | 183,581 | $ | 209,201 | $ | 602,037 | $ | 605,472 | ||||||||
Net (losses) gains from credit default swaps | (9,911 | ) | (8,371 | ) | 439 | (4,964 | ) | |||||||||
Net investment income | 36,098 | 33,587 | 105,119 | 98,093 | ||||||||||||
Net realized investment (losses) gains | (49,920 | ) | 712 | (21,994 | ) | 2,709 | ||||||||||
Change in fair value of certain debt instruments(15) | 66,283 | — | 111,948 | — | ||||||||||||
Impairment of unconsolidated subsidiary(14) | (2,887 | ) | — | (90,868 | ) | — | ||||||||||
Other income | 1,973 | 4,821 | 8,419 | 11,192 | ||||||||||||
Total revenues | 225,217 | 239,950 | 715,100 | 712,502 | ||||||||||||
Losses and expenses | ||||||||||||||||
Losses and loss adjustment expenses | 382,689 | 351,033 | 1,494,807 | 580,176 | ||||||||||||
Amortization of deferred policy acquisition costs | 4,955 | 13,150 | 13,773 | 38,853 | ||||||||||||
Other underwriting and operating expenses(6) | 59,412 | 40,555 | 159,977 | 145,903 | ||||||||||||
Interest expense | 11,179 | 7,627 | 27,992 | 22,815 | ||||||||||||
Total losses and expenses | 458,235 | 412,365 | 1,696,549 | 787,747 | ||||||||||||
Loss before equity in earnings (losses) from unconsolidated subsidiaries and income taxes | (233,018 | ) | (172,415 | ) | (981,449 | ) | (75,245 | ) | ||||||||
Equity in earnings (losses) from unconsolidated subsidiaries(5) | 9,103 | (22,602 | ) | (45,830 | ) | 49,655 | ||||||||||
Loss from continuing operations before income taxes | (223,915 | ) | (195,017 | ) | (1,027,279 | ) | (25,590 | ) | ||||||||
Income tax benefit from continuing operations | (74,606 | ) | (84,382 | ) | (321,084 | ) | (51,211 | ) | ||||||||
(Loss) income from continuing operations | (149,309 | ) | (110,635 | ) | (706,195 | ) | 25,621 | |||||||||
(Loss) income from discontinued operations, net of taxes | (80,104 | ) | 23,862 | (43,468 | ) | 73,472 | ||||||||||
Net (loss) income | $ | (229,413 | ) | $ | (86,773 | ) | $ | (749,663 | ) | $ | 99,093 | |||||
Diluted (loss) income from continuing operations per share | $ | (1.83 | ) | $ | (1.32 | ) | $ | (8.68 | ) | $ | 0.29 | |||||
Diluted (loss) income from discontinued operations per share | (0.98 | ) | 0.28 | (0.54 | ) | 0.85 | ||||||||||
Diluted net (loss) income per share | $ | (2.81 | ) | $ | (1.04 | ) | $ | (9.22 | ) | $ | 1.14 | |||||
Share data: | ||||||||||||||||
Basic weighted average common shares outstanding | 81,597 | 83,747 | 81,343 | 85,833 | ||||||||||||
Stock options and other dilutive components(11) | — | — | — | 881 | ||||||||||||
Diluted weighted average common shares outstanding(11) | 81,597 | 83,747 | 81,343 | 86,714 | ||||||||||||
Page 4
THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2008 | December 31, 2007 | September 30, 2007 | ||||||||
(Unaudited) | (Unaudited)(17) | (Unaudited) | ||||||||
(Dollars and shares in thousands, except per share data) | ||||||||||
Assets | ||||||||||
Investments: | ||||||||||
Fixed income securities | $ | 2,019,042 | $ | 2,018,148 | $ | 2,051,289 | ||||
Equity securities: | ||||||||||
Common | 9,883 | 117,251 | 137,017 | |||||||
Preferred | 212,703 | 299,630 | 309,931 | |||||||
Short term investments | 2,280 | 2,251 | 2,252 | |||||||
Total investments | $ | 2,243,908 | $ | 2,437,280 | $ | 2,500,489 | ||||
Cash and cash equivalents | 713,241 | 354,508 | 212,241 | |||||||
Investments in unconsolidated subsidiaries | 154,397 | 309,800 | 1,126,781 | |||||||
Reinsurance recoverables | 393,654 | 36,917 | 4,747 | |||||||
Deferred policy acquisition costs | 31,036 | 18,305 | 52,592 | |||||||
Property, equipment and software, net of accumulated depreciation and amortization | 138,845 | 157,308 | 161,995 | |||||||
Other assets | 360,637 | 302,767 | 242,111 | |||||||
Assets - discontinued operations - held for sale | 1,324,795 | 1,453,555 | 1,437,828 | |||||||
Total assets | $ | 5,360,513 | $ | 5,070,440 | $ | 5,738,784 | ||||
Liabilities | ||||||||||
Reserve for losses and loss adjustment expenses | $ | 2,463,407 | $ | 1,177,309 | $ | 718,872 | ||||
Unearned premiums | 117,324 | 136,921 | 142,750 | |||||||
Debt | 532,177 | 496,593 | 496,593 | |||||||
Other liabilities | 250,897 | 178,275 | 266,695 | |||||||
Liabilities - discontinued operations - held for sale | 543,830 | 568,380 | 548,164 | |||||||
Total liabilities | 3,907,635 | 2,557,478 | 2,173,074 | |||||||
Shareholders’ equity | ||||||||||
Common stock | 1,193 | 1,193 | 1,193 | |||||||
Additional paid-in capital, treasury stock and retained earnings | 1,491,384 | 2,196,692 | 3,211,860 | |||||||
Accumulated other comprehensive (loss) income, net of deferred taxes | (39,699 | ) | 315,077 | 352,657 | ||||||
Total shareholders’ equity | 1,452,878 | 2,512,962 | 3,565,710 | |||||||
Total liabilities and shareholders’ equity | $ | 5,360,513 | $ | 5,070,440 | $ | 5,738,784 | ||||
Basic shares issued and outstanding | 81,624 | 81,120 | 81,120 | |||||||
Book value per share | $ | 17.80 | $ | 30.98 | $ | 43.96 | ||||
Page 5
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 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 September 30, 2008 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 173,908 | $ | 2,577 | $ | — | $ | 12 | $ | 176,497 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 179,795 | $ | 3,776 | $ | — | $ | 10 | $ | 183,581 | ||||||||||
Net loss from credit default swaps | — | (9,911 | ) | — | — | (9,911 | ) | |||||||||||||
Net investment income | 29,331 | 3,875 | — | 2,892 | 36,098 | |||||||||||||||
Net realized investment (losses) gains | (50,800 | ) | 1,868 | — | (988 | ) | (49,920 | ) | ||||||||||||
Change in fair value of certain debt instruments(15) | — | — | — | 66,283 | 66,283 | |||||||||||||||
Impairment of unconsolidated subsidiary(14) | — | — | (2,887 | ) | — | (2,887 | ) | |||||||||||||
Other (loss) income | (190 | ) | (23 | ) | — | 2,186 | 1,973 | |||||||||||||
Total revenues (expenses) | 158,136 | (415 | ) | (2,887 | ) | 70,383 | 225,217 | |||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 348,201 | 34,488 | — | — | 382,689 | |||||||||||||||
Amortization of deferred policy acquisition costs | 3,387 | 1,568 | — | — | 4,955 | |||||||||||||||
Other underwriting and operating expenses | 24,633 | 13,048 | — | 21,731 | 59,412 | |||||||||||||||
Interest expense | 53 | — | — | 11,126 | 11,179 | |||||||||||||||
Total losses and expenses | 376,274 | 49,104 | — | 32,857 | 458,235 | |||||||||||||||
(Loss) income before equity in (losses) earnings from unconsolidated | (218,138 | ) | (49,519 | ) | (2,887 | ) | 37,526 | (233,018 | ) | |||||||||||
Equity in (losses) earnings from unconsolidated subsidiaries (5) | (85 | ) | — | 9,340 | (152 | ) | 9,103 | |||||||||||||
(Loss) income from continuing operations before income taxes | (218,223 | ) | (49,519 | ) | 6,453 | 37,374 | (223,915 | ) | ||||||||||||
Income tax (benefit) expense from continuing operations | (81,108 | ) | (3,510 | ) | — | 10,012 | (74,606 | ) | ||||||||||||
(Loss) income from continuing operations | (137,115 | ) | (46,009 | ) | 6,453 | 27,362 | (149,309 | ) | ||||||||||||
(Loss) income from discontinued operations, net of taxes | — | (80,541 | ) | 437 | — | (80,104 | ) | |||||||||||||
Net (loss) income | $ | (137,115 | ) | $ | (126,550 | ) | $ | 6,890 | $ | 27,362 | $ | (229,413 | ) | |||||||
Loss ratio(7) | 193.7 | % | ||||||||||||||||||
Expense ratio(7) | 16.1 | % | ||||||||||||||||||
Combined ratio | 209.8 | % | ||||||||||||||||||
Three Months Ended September 30, 2007 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 214,398 | $ | 4,419 | $ | — | $ | 14 | $ | 218,831 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 205,539 | $ | 3,644 | $ | — | $ | 18 | $ | 209,201 | ||||||||||
Net loss from credit default swaps | — | (8,371 | ) | — | — | (8,371 | ) | |||||||||||||
Net investment income | 28,786 | 2,866 | — | 1,935 | 33,587 | |||||||||||||||
Net realized investment gains (losses) | 2,865 | (267 | ) | — | (1,886 | ) | 712 | |||||||||||||
Other income | 167 | 91 | — | 4,563 | 4,821 | |||||||||||||||
Total revenues (expenses) | 237,357 | (2,037 | ) | — | 4,630 | 239,950 | ||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 348,314 | 2,719 | — | — | 351,033 | |||||||||||||||
Amortization of deferred policy acquisition costs | 12,809 | 341 | — | — | 13,150 | |||||||||||||||
Other underwriting and operating expenses | 18,420 | 5,217 | — | 16,918 | 40,555 | |||||||||||||||
Interest expense | 36 | — | — | 7,591 | 7,627 | |||||||||||||||
Total losses and expenses | 379,579 | 8,277 | — | 24,509 | 412,365 | |||||||||||||||
Loss before equity in earnings (losses) from unconsolidated subsidiaries and | (142,222 | ) | (10,314 | ) | — | (19,879 | ) | (172,415 | ) | |||||||||||
Equity in earnings (losses) from unconsolidated subsidiaries(5) | 4,167 | — | (26,741 | ) | (28 | ) | (22,602 | ) | ||||||||||||
Loss income from continuing operations before income taxes | (138,055 | ) | (10,314 | ) | (26,741 | ) | (19,907 | ) | (195,017 | ) | ||||||||||
Income tax benefit from continuing operations | (72,833 | ) | (1,567 | ) | (1,113 | ) | (8,869 | ) | (84,382 | ) | ||||||||||
Loss from continuing operations | (65,222 | ) | (8,747 | ) | (25,628 | ) | (11,038 | ) | (110,635 | ) | ||||||||||
Income from discontinued operations, net of taxes | — | 22,626 | 1,236 | — | 23,862 | |||||||||||||||
Net (loss) income | $ | (65,222 | ) | $ | 13,879 | $ | (24,392 | ) | $ | (11,038 | ) | $ | (86,773 | ) | ||||||
Loss ratio(7) | 169.5 | % | ||||||||||||||||||
Expense ratio(7) | 14.6 | % | ||||||||||||||||||
Combined ratio | 184.1 | % |
Page 6
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
U.S. Mortgage Insurance Operations(1) | International Operations (2) | Financial Guaranty (3) | Corporate and Other (4) | Consolidated Total | ||||||||||||||||
Nine Months Ended September 30, 2008 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 574,969 | $ | 16,358 | $ | — | $ | 25 | $ | 591,352 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 591,254 | $ | 10,750 | $ | — | $ | 33 | $ | 602,037 | ||||||||||
Net gains from credit default swaps | — | 439 | — | — | 439 | |||||||||||||||
Net investment income | 86,586 | 12,404 | — | 6,129 | 105,119 | |||||||||||||||
Net realized investment (losses) gains | (22,149 | ) | 1,157 | — | (1,002 | ) | (21,994 | ) | ||||||||||||
Change in fair value of certain debt instruments(15) | — | — | — | 111,948 | 111,948 | |||||||||||||||
Impairment of unconsolidated subsidiary(14) | — | — | (90,868 | ) | — | (90,868 | ) | |||||||||||||
Other (loss) income | (357 | ) | 28 | — | 8,748 | 8,419 | ||||||||||||||
Total revenues (expenses) | 655,334 | 24,778 | (90,868 | ) | 125,856 | 715,100 | ||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 1,437,710 | 57,097 | — | — | 1,494,807 | |||||||||||||||
Amortization of deferred policy acquisition costs | 11,457 | 2,316 | — | — | 13,773 | |||||||||||||||
Other underwriting and operating expenses | 71,131 | 27,687 | — | 61,159 | 159,977 | |||||||||||||||
Interest expense | 114 | — | — | 27,878 | 27,992 | |||||||||||||||
Total losses and expenses | 1,520,412 | 87,100 | — | 89,037 | 1,696,549 | |||||||||||||||
(Loss) income before equity in earnings (losses) from unconsolidated | (865,078 | ) | (62,322 | ) | (90,868 | ) | 36,819 | (981,449 | ) | |||||||||||
Equity in earnings (losses) from unconsolidated subsidiaries(5) | 5,781 | — | (51,217 | ) | (394 | ) | (45,830 | ) | ||||||||||||
(Loss) income from continuing operations before income taxes | (859,297 | ) | (62,322 | ) | (142,085 | ) | 36,425 | (1,027,279 | ) | |||||||||||
Income tax (benefit) expense from continuing operations | (323,846 | ) | (5,506 | ) | (1,244 | ) | 9,512 | (321,084 | ) | |||||||||||
(Loss) income from continuing operations | (535,451 | ) | (56,816 | ) | (140,841 | ) | 26,913 | (706,195 | ) | |||||||||||
Loss from discontinued operations, net of taxes | — | (20,855 | ) | (22,613 | ) | — | (43,468 | ) | ||||||||||||
Net (loss) income | $ | (535,451 | ) | $ | (77,671 | ) | $ | (163,454 | ) | $ | 26,913 | $ | (749,663 | ) | ||||||
Loss ratio(7) | 243.2 | % | ||||||||||||||||||
Expense ratio(7) | 14.4 | % | ||||||||||||||||||
Combined ratio | 257.6 | % | ||||||||||||||||||
Nine Months Ended September 30, 2007 (Unaudited) | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net premiums written | $ | 599,494 | $ | 11,321 | $ | — | $ | 33 | $ | 610,848 | ||||||||||
Revenues | ||||||||||||||||||||
Premiums earned | $ | 594,683 | $ | 10,742 | $ | — | $ | 47 | $ | 605,472 | ||||||||||
Net loss from credit default swaps | — | (4,964 | ) | — | — | (4,964 | ) | |||||||||||||
Net investment income | 83,074 | 7,994 | — | 7,025 | 98,093 | |||||||||||||||
Net realized investment gains (losses) | 6,113 | (172 | ) | — | (3,232 | ) | 2,709 | |||||||||||||
Other income (loss) | 171 | (17 | ) | — | 11,038 | 11,192 | ||||||||||||||
Total revenues | 684,041 | 13,583 | — | 14,878 | 712,502 | |||||||||||||||
Losses and expenses | ||||||||||||||||||||
Losses and loss adjustment expenses | 575,482 | 4,694 | — | — | 580,176 | |||||||||||||||
Amortization of deferred policy acquisition costs | 38,001 | 852 | — | — | 38,853 | |||||||||||||||
Other underwriting and operating expenses | 72,840 | 12,207 | — | 60,856 | 145,903 | |||||||||||||||
Interest expense | 75 | — | — | 22,740 | 22,815 | |||||||||||||||
Total losses and expenses | 686,398 | 17,753 | — | 83,596 | 787,747 | |||||||||||||||
Loss before equity in earnings from unconsolidated subsidiaries and | (2,357 | ) | (4,170 | ) | — | (68,718 | ) | (75,245 | ) | |||||||||||
Equity in earnings from unconsolidated subsidiaries(5) | 13,645 | — | 35,804 | 206 | 49,655 | |||||||||||||||
Income (loss) from continuing operations before income taxes | 11,288 | (4,170 | ) | 35,804 | (68,512 | ) | (25,590 | ) | ||||||||||||
Income tax (benefit) expense from continuing operations | (33,913 | ) | 327 | 5,191 | (22,816 | ) | (51,211 | ) | ||||||||||||
Income (loss) from continuing operations | 45,201 | (4,497 | ) | 30,613 | (45,696 | ) | 25,621 | |||||||||||||
Income from discontinued operations, net of taxes | — | 69,599 | 3,873 | — | 73,472 | |||||||||||||||
Net income (loss) | $ | 45,201 | $ | 65,102 | $ | 34,486 | $ | (45,696 | ) | $ | 99,093 | |||||||||
Loss ratio(7) | 96.8 | % | ||||||||||||||||||
Expense ratio(7) | 18.5 | % | ||||||||||||||||||
Combined ratio | 115.3 | % |
Page 7
THE PMI GROUP, INC. AND SUBSIDIARIES
BUSINESS SEGMENTS BALANCE SHEETS
U.S. Mortgage Insurance Operations(1) | International Operations (2) | Financial Guaranty (3) | Corporate and Other (4) | Consolidated Total | |||||||||||||
September 30, 2008 (Unaudited) | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Investments: | |||||||||||||||||
Fixed income securities | $ | 1,726,032 | $ | 158,171 | $ | 617 | $ | 134,222 | $ | 2,019,042 | |||||||
Equity securities: | |||||||||||||||||
Common | 9,883 | — | — | — | 9,883 | ||||||||||||
Preferred | 212,703 | — | — | — | 212,703 | ||||||||||||
Short term investments | 980 | — | — | 1,300 | 2,280 | ||||||||||||
Total investments | $ | 1,949,598 | $ | 158,171 | $ | 617 | $ | 135,522 | $ | 2,243,908 | |||||||
Cash and cash equivalents | 400,086 | 164,276 | 30,220 | 118,659 | 713,241 | ||||||||||||
Investments in unconsolidated subsidiaries | 132,584 | — | 6,453 | 15,360 | 154,397 | ||||||||||||
Reinsurance recoverables | 392,701 | 953 | — | — | 393,654 | ||||||||||||
Deferred policy acquisition costs | 28,091 | 2,945 | — | — | 31,036 | ||||||||||||
Property, equipment and software, net of accumulated depreciation and | 60,000 | 1,709 | — | 77,136 | 138,845 | ||||||||||||
Other assets (liabilities) | 298,908 | 18,596 | 60,414 | (17,281 | ) | 360,637 | |||||||||||
Assets - discontinued operations - held for sale | — | 1,324,795 | — | — | 1,324,795 | ||||||||||||
Total assets | $ | 3,261,968 | $ | 1,671,445 | $ | 97,704 | $ | 329,396 | $ | 5,360,513 | |||||||
Liabilities | |||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 2,349,651 | $ | 90,856 | $ | 22,900 | $ | — | $ | 2,463,407 | |||||||
Unearned premiums | 90,007 | 27,296 | — | 21 | 117,324 | ||||||||||||
Debt | — | — | — | 532,177 | 532,177 | ||||||||||||
Other liabilities (assets) | 200,593 | 63,124 | (2,000 | ) | (10,820 | ) | 250,897 | ||||||||||
Liabilities - discontinued operations - held for sale | — | 543,830 | — | — | 543,830 | ||||||||||||
Total liabilities | 2,640,251 | 725,106 | 20,900 | 521,378 | $ | 3,907,635 | |||||||||||
Shareholders’ equity (deficit) | 621,717 | 946,339 | 76,804 | (191,982 | ) | 1,452,878 | |||||||||||
Total liabilities and shareholders’ equity | $ | 3,261,968 | $ | 1,671,445 | $ | 97,704 | $ | 329,396 | $ | 5,360,513 | |||||||
December 31, 2007 (Unaudited) (17) | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Investments: | |||||||||||||||||
Fixed income securities | $ | 1,531,606 | $ | 265,653 | $ | 167,915 | $ | 52,974 | $ | 2,018,148 | |||||||
Equity securities: | |||||||||||||||||
Common | 116,005 | 4 | — | 1,242 | 117,251 | ||||||||||||
Preferred | 277,165 | — | 22,465 | — | 299,630 | ||||||||||||
Short term investments | 951 | — | — | 1,300 | 2,251 | ||||||||||||
Total investments | $ | 1,925,727 | $ | 265,657 | $ | 190,380 | $ | 55,516 | $ | 2,437,280 | |||||||
Cash and cash equivalents | 229,446 | 62,298 | 11,252 | 51,512 | 354,508 | ||||||||||||
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 | 3,921 | 3,910 | — | 18,305 | ||||||||||||
Property, equipment and software, net of accumulated depreciation and | 75,884 | 2,095 | 187 | 79,142 | 157,308 | ||||||||||||
Other assets | 188,018 | 12,174 | 52,918 | 49,657 | 302,767 | ||||||||||||
Assets - discontinued operations - held for sale | — | 1,453,555 | — | — | 1,453,555 | ||||||||||||
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 | $ | 41,579 | $ | 2,650 | $ | — | $ | 1,177,309 | |||||||
Unearned premiums | 107,200 | 22,983 | 6,709 | 29 | 136,921 | ||||||||||||
Debt | — | — | 50,000 | 446,593 | 496,593 | ||||||||||||
Other liabilities (assets) | 129,246 | 46,652 | 2,892 | (515 | ) | 178,275 | |||||||||||
Liabilities - discontinued operations - held for sale | — | 568,380 | — | — | 568,380 | ||||||||||||
Total liabilities | 1,369,526 | 679,594 | 62,251 | 446,107 | 2,557,478 | ||||||||||||
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 | 9/30/2008 | 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 | $ | 249,423 | $ | 251,677 | $ | 262,870 | $ | 763,970 | $ | 258,026 | $ | 266,545 | $ | 236,412 | $ | 240,430 | $ | 1,001,413 | ||||||||||||||||||
Ceded and refunded premiums, net of assumed | (75,515 | ) | (55,614 | ) | (57,872 | ) | (189,001 | ) | (57,773 | ) | (52,147 | ) | (47,232 | ) | (44,514 | ) | (201,666 | ) | ||||||||||||||||||
Net premiums written | 173,908 | 196,063 | 204,998 | 574,969 | 200,253 | 214,398 | 189,180 | 195,916 | 799,747 | |||||||||||||||||||||||||||
Change in unearned premiums | 5,887 | 7,572 | 2,826 | 16,285 | 6,001 | (8,859 | ) | 6,205 | (2,157 | ) | 1,190 | |||||||||||||||||||||||||
Premiums earned | $ | 179,795 | $ | 203,635 | $ | 207,824 | $ | 591,254 | $ | 206,254 | $ | 205,539 | $ | 195,385 | $ | 193,759 | $ | 800,937 | ||||||||||||||||||
Net investment income | 29,331 | 29,255 | 28,000 | 86,586 | 27,281 | 28,786 | 25,966 | 28,322 | 110,355 | |||||||||||||||||||||||||||
Net realized investment (losses) gains | (50,800 | ) | (12,900 | ) | 41,551 | (22,149 | ) | (1,526 | ) | 2,865 | 981 | 2,267 | 4,587 | |||||||||||||||||||||||
Other (loss) income | (190 | ) | (91 | ) | (76 | ) | (357 | ) | (86 | ) | 167 | 17 | (13 | ) | 85 | |||||||||||||||||||||
Total revenues | 158,136 | 219,899 | 277,299 | 655,334 | 231,923 | 237,357 | 222,349 | 224,335 | 915,964 | |||||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 348,201 | 552,476 | 537,033 | 1,437,710 | 520,611 | 348,314 | 134,384 | 92,784 | 1,096,093 | |||||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 3,387 | 3,819 | 4,251 | 11,457 | 46,213 | 12,809 | 12,610 | 12,582 | 84,214 | |||||||||||||||||||||||||||
Other underwriting and operating expenses | 24,633 | 24,159 | 22,339 | 71,131 | 22,717 | 18,420 | 26,759 | 27,661 | 95,557 | |||||||||||||||||||||||||||
Interest expense | 53 | 29 | 32 | 114 | 33 | 36 | 39 | — | 108 | |||||||||||||||||||||||||||
Total losses and expenses | 376,274 | 580,483 | 563,655 | 1,520,412 | 589,574 | 379,579 | 173,792 | 133,027 | 1,275,972 | |||||||||||||||||||||||||||
(Loss) income before equity in (losses) earnings from | (218,138 | ) | (360,584 | ) | (286,356 | ) | (865,078 | ) | (357,651 | ) | (142,222 | ) | 48,557 | 91,308 | (360,008 | ) | ||||||||||||||||||||
Equity in (losses) earnings from unconsolidated | (85 | ) | 2,986 | 2,880 | 5,781 | 3,474 | 4,167 | 4,617 | 4,861 | 17,119 | ||||||||||||||||||||||||||
(Loss) income before income taxes | (218,223 | ) | (357,598 | ) | (283,476 | ) | (859,297 | ) | (354,177 | ) | (138,055 | ) | 53,174 | 96,169 | (342,889 | ) | ||||||||||||||||||||
Income tax (benefit) expense | (81,108 | ) | (131,739 | ) | (110,999 | ) | (323,846 | ) | (118,160 | ) | (72,833 | ) | 11,627 | 27,293 | (152,073 | ) | ||||||||||||||||||||
Net (loss) income | $ | (137,115 | ) | $ | (225,859 | ) | $ | (172,477 | ) | $ | (535,451 | ) | $ | (236,017 | ) | $ | (65,222 | ) | $ | 41,547 | $ | 68,876 | $ | (190,816 | ) | |||||||||||
Loss ratio(7) | 193.7 | % | 271.3 | % | 258.4 | % | 243.2 | % | 252.4 | % | 169.5 | % | 68.8 | % | 47.9 | % | 136.9 | % | ||||||||||||||||||
Expense ratio(7) | 16.1 | % | 14.3 | % | 13.0 | % | 14.4 | % | 34.4 | % | 14.6 | % | 20.8 | % | 20.5 | % | 22.5 | % | ||||||||||||||||||
Combined ratio | 209.8 | % | 285.6 | % | 271.4 | % | 257.6 | % | 286.8 | % | 184.1 | % | 89.6 | % | 68.4 | % | 159.4 | % |
Balance Sheet Components - As of Quarter End | 9/30/2008 | 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 | $ | 1,726,032 | $ | 1,960,626 | $ | 1,746,902 | $ | 1,531,606 | $ | 1,567,122 | $ | 1,523,285 | $ | 1,540,150 | |||||||||||
Equity securities: | |||||||||||||||||||||||||
Common | 9,883 | 10,927 | 14,159 | 116,005 | 135,738 | 141,255 | 129,096 | ||||||||||||||||||
Preferred | 212,703 | 243,459 | 260,646 | 277,165 | 283,051 | 236,403 | 229,948 | ||||||||||||||||||
Short term investments | 980 | 977 | 951 | 951 | 951 | 947 | 930 | ||||||||||||||||||
Total investments | $ | 1,949,598 | $ | 2,215,989 | $ | 2,022,658 | $ | 1,925,727 | $ | 1,986,862 | $ | 1,901,890 | $ | 1,900,124 | |||||||||||
Cash and cash equivalents | 400,086 | 106,317 | 285,074 | 229,446 | 91,460 | 165,114 | 262,327 | ||||||||||||||||||
Investments in unconsolidated subsidiaries | 132,584 | 135,580 | 133,664 | 131,225 | 127,206 | 122,072 | 137,041 | ||||||||||||||||||
Reinsurance recoverables | 392,701 | 313,549 | 123,864 | 35,930 | 3,782 | 2,554 | 2,669 | ||||||||||||||||||
Deferred policy acquisition costs | 28,091 | 22,532 | 15,992 | 10,474 | 43,344 | 43,906 | 43,193 | ||||||||||||||||||
Property, equipment and software, net of accumulated depreciation | 60,000 | 70,330 | 73,832 | 75,884 | 80,170 | 83,293 | 84,448 | ||||||||||||||||||
Other assets | 298,908 | 264,577 | 242,679 | 188,018 | 186,915 | 139,745 | 124,958 | ||||||||||||||||||
Total assets | $ | 3,261,968 | $ | 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 | $ | 2,349,651 | $ | 2,132,632 | $ | 1,589,253 | $ | 1,133,080 | $ | 698,238 | $ | 444,594 | $ | 386,036 | |||||||||||
Unearned premiums | 90,007 | 96,739 | 104,674 | 107,200 | 112,634 | 103,331 | 108,968 | ||||||||||||||||||
Other liabilities | 200,593 | 115,973 | 185,738 | 129,246 | 205,749 | 265,268 | 347,720 | ||||||||||||||||||
Total liabilities | 2,640,251 | 2,345,344 | 1,879,665 | 1,369,526 | 1,016,621 | 813,193 | 842,724 | ||||||||||||||||||
Shareholder’s equity | 621,717 | 783,530 | 1,018,098 | 1,227,178 | 1,503,118 | 1,645,381 | 1,712,036 | ||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 3,261,968 | $ | 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 | |||||||||||||||||||||||||||||||||||
9/30/2008 | 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 | $ | 6,156 | $ | 4,364 | $ | 5,952 | $ | 16,472 | $ | 8,701 | $ | 11,091 | $ | 10,268 | $ | 7,524 | $ | 37,584 | ||||||||||||||||||
Structured insurance written | 67 | 184 | 167 | 418 | 369 | 3,404 | 1,337 | 3,439 | 8,549 | |||||||||||||||||||||||||||
Primary new insurance written | $ | 6,223 | $ | 4,548 | $ | 6,119 | $ | 16,890 | $ | 9,070 | $ | 14,495 | $ | 11,605 | $ | 10,963 | $ | 46,133 | ||||||||||||||||||
Primary new risk written | $ | 1,413 | $ | 985 | $ | 1,417 | $ | 3,815 | $ | 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) | 0 | % | 4 | % | 15 | % | 6 | % | 21 | % | 31 | % | 35 | % | 36 | % | 32 | % | ||||||||||||||||||
95.01% to 97% LTV’s | 4 | % | 5 | % | 2 | % | 4 | % | 2 | % | 2 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||||
90.01% to 95% LTV’s | 26 | % | 22 | % | 23 | % | 24 | % | 26 | % | 26 | % | 21 | % | 22 | % | 24 | % | ||||||||||||||||||
85.01% to 90% LTV’s | 55 | % | 49 | % | 44 | % | 49 | % | 40 | % | 30 | % | 31 | % | 27 | % | 31 | % | ||||||||||||||||||
85% and below | 15 | % | 20 | % | 16 | % | 17 | % | 11 | % | 11 | % | 10 | % | 12 | % | 10 | % | ||||||||||||||||||
Less than A quality loans | 0 | % | 1 | % | 4 | % | 2 | % | 8 | % | 12 | % | 10 | % | 9 | % | 10 | % | ||||||||||||||||||
Alt-A loans | 1 | % | 8 | % | 13 | % | 7 | % | 15 | % | 22 | % | 32 | % | 38 | % | 27 | % | ||||||||||||||||||
Interest only loans | 5 | % | 6 | % | 8 | % | 6 | % | 12 | % | 18 | % | 24 | % | 26 | % | 20 | % | ||||||||||||||||||
Payment option ARMS | 0 | % | 0 | % | 0 | % | 0 | % | 1 | % | 2 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||||
ARMs | 1 | % | 2 | % | 2 | % | 2 | % | 3 | % | 8 | % | 8 | % | 16 | % | 9 | % | ||||||||||||||||||
Monthlies | 92 | % | 97 | % | 98 | % | 95 | % | 98 | % | 86 | % | 98 | % | 95 | % | 94 | % | ||||||||||||||||||
Refinances | 22 | % | 41 | % | 45 | % | 35 | % | 36 | % | 31 | % | 38 | % | 47 | % | 37 | % | ||||||||||||||||||
Structured transactions | 1 | % | 4 | % | 3 | % | 2 | % | 4 | % | 23 | % | 12 | % | 31 | % | 19 | % |
Page 10
THE PMI GROUP, INC. AND SUBSIDIARIES
U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (2)
2008 | 2007 | |||||||||||||||||||||||||||
9/30/2008 | 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 | $ | 104,336 | $ | 103,626 | $ | 103,860 | $ | 102,410 | $ | 98,105 | $ | 91,864 | $ | 87,184 | ||||||||||||||
Structured transactions | 18,806 | 19,525 | 20,403 | 21,213 | 21,864 | 19,803 | 19,701 | |||||||||||||||||||||
Total | $ | 123,142 | $ | 123,151 | $ | 124,263 | $ | 123,623 | $ | 119,969 | $ | 111,667 | $ | 106,885 | ||||||||||||||
Primary risk in force | ||||||||||||||||||||||||||||
Flow | $ | 25,981 | $ | 25,983 | $ | 26,156 | $ | 25,852 | $ | 24,754 | $ | 23,075 | $ | 21,837 | ||||||||||||||
Structured transactions | 4,458 | 4,650 | 4,896 | 5,115 | 5,324 | 5,016 | 5,138 | |||||||||||||||||||||
Total | $ | 30,439 | $ | 30,633 | $ | 31,052 | $ | 30,967 | $ | 30,078 | $ | 28,091 | $ | 26,975 | ||||||||||||||
Pool risk in force(8) | $ | 2,762 | $ | 2,812 | $ | 3,443 | $ | 3,464 | $ | 3,476 | $ | 3,461 | $ | 3,373 | ||||||||||||||
Primary risk in force - credit score distribution | ||||||||||||||||||||||||||||
Flow | ||||||||||||||||||||||||||||
620 or above | 93.7 | % | 93.4 | % | 93.2 | % | 93.1 | % | 93.1 | % | 93.6 | % | 93.8 | % | ||||||||||||||
619-575 | 4.9 | % | 5.1 | % | 5.3 | % | 5.3 | % | 5.3 | % | 5.0 | % | 4.9 | % | ||||||||||||||
574 or below | 1.4 | % | 1.5 | % | 1.5 | % | 1.6 | % | 1.6 | % | 1.4 | % | 1.3 | % | ||||||||||||||
Structured transactions | ||||||||||||||||||||||||||||
620 or above | 86.2 | % | 86.2 | % | 86.2 | % | 86.1 | % | 86.1 | % | 85.4 | % | 85.3 | % | ||||||||||||||
619-575 | 8.7 | % | 8.7 | % | 8.7 | % | 8.8 | % | 8.8 | % | 9.2 | % | 9.2 | % | ||||||||||||||
574 or below | 5.1 | % | 5.1 | % | 5.1 | % | 5.1 | % | 5.1 | % | 5.4 | % | 5.5 | % | ||||||||||||||
Total | ||||||||||||||||||||||||||||
620 or above | 92.6 | % | 92.4 | % | 92.1 | % | 91.9 | % | 91.9 | % | 92.1 | % | 92.2 | % | ||||||||||||||
619-575 | 5.5 | % | 5.6 | % | 5.8 | % | 5.9 | % | 5.9 | % | 5.8 | % | 5.7 | % | ||||||||||||||
574 or below | 1.9 | % | 2.0 | % | 2.1 | % | 2.2 | % | 2.2 | % | 2.1 | % | 2.1 | % | ||||||||||||||
Primary average loan size(in thousands) | ||||||||||||||||||||||||||||
Flow | $ | 158.3 | $ | 157.0 | $ | 155.6 | $ | 153.7 | $ | 150.6 | $ | 146.6 | $ | 142.8 | ||||||||||||||
Structured transactions | $ | 159.9 | $ | 160.3 | $ | 160.8 | $ | 161.7 | $ | 162.0 | $ | 159.6 | $ | 159.2 | ||||||||||||||
Total | $ | 158.6 | $ | 157.5 | $ | 156.4 | $ | 155.0 | $ | 152.6 | $ | 148.7 | $ | 145.5 | ||||||||||||||
Loss severity(12) - primary(quarterly) | ||||||||||||||||||||||||||||
Flow | 100.7 | % | 98.8 | % | 95.7 | % | 95.5 | % | 90.6 | % | 87.9 | % | 88.5 | % | ||||||||||||||
Structured transactions | 98.9 | % | 98.2 | % | 98.9 | % | 94.6 | % | 92.0 | % | 92.5 | % | 90.3 | % | ||||||||||||||
Total | 100.0 | % | 98.6 | % | 96.9 | % | 95.2 | % | 91.1 | % | 89.3 | % | 89.0 | % | ||||||||||||||
Persistency (13) | ||||||||||||||||||||||||||||
Primary persistency rate | 81.0 | % | 79.6 | % | 77.6 | % | 75.5 | % | 73.3 | % | 71.7 | % | 70.7 | % | ||||||||||||||
Risk-to-capital ratio(9) | 15.8 to 1 | 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)
9/30/2008 | 12/31/2007 | 9/30/2007 | ||||||||||||||||||||||
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 | $ | 359 | 1.2 | % | $ | 436 | 1.4 | % | $ | 462 | 1.5 | % | ||||||||||||
1999 | 279 | 0.9 | % | 312 | 1.0 | % | 324 | 1.1 | % | |||||||||||||||
2000 | 126 | 0.4 | % | 144 | 0.5 | % | 151 | 0.5 | % | |||||||||||||||
2001 | 457 | 1.5 | % | 539 | 1.7 | % | 569 | 1.9 | % | |||||||||||||||
2002 | 998 | 3.3 | % | 1,173 | 3.8 | % | 1,245 | 4.1 | % | |||||||||||||||
2003 | 2,691 | 8.8 | % | 3,174 | 10.2 | % | 3,346 | 11.1 | % | |||||||||||||||
2004 | 2,862 | 9.4 | % | 3,344 | 10.8 | % | 3,557 | 11.8 | % | |||||||||||||||
2005 | 4,189 | 13.8 | % | 4,829 | 15.6 | % | 5,092 | 16.9 | % | |||||||||||||||
2006 | 5,384 | 17.7 | % | 6,191 | 20.0 | % | 6,456 | 21.5 | % | |||||||||||||||
2007 | 9,435 | 31.0 | % | 10,825 | 35.0 | % | 8,876 | 29.5 | % | |||||||||||||||
2008 | 3,659 | 12.0 | % | — | 0.0 | % | — | 0.0 | % | |||||||||||||||
Total | $ | 30,439 | $ | 30,967 | $ | 30,078 | ||||||||||||||||||
9/30/2008 | 12/31/2007 | 9/30/2007 | ||||||||||||||||||||||
% 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 9/30/08 RIF) |
| |||||||||||||||||||||||
Florida | 10.5 | % | 22.6 | % | 10.8 | % | 10.6 | % | 10.8 | % | 7.0 | % | ||||||||||||
California | 8.2 | % | 21.0 | % | 8.1 | % | 10.9 | % | 7.7 | % | 7.4 | % | ||||||||||||
Texas | 7.2 | % | 8.0 | % | 7.2 | % | 6.0 | % | 7.2 | % | 5.3 | % | ||||||||||||
Illinois | 5.1 | % | 12.6 | % | 5.0 | % | 8.2 | % | 5.1 | % | 6.5 | % | ||||||||||||
Georgia | 4.7 | % | 12.3 | % | 4.7 | % | 9.5 | % | 4.7 | % | 8.2 | % | ||||||||||||
New York | 3.8 | % | 9.6 | % | 3.6 | % | 6.8 | % | 3.6 | % | 6.2 | % | ||||||||||||
Ohio | 3.8 | % | 12.6 | % | 3.8 | % | 10.8 | % | 3.9 | % | 9.3 | % | ||||||||||||
Pennsylvania | 3.3 | % | 9.7 | % | 3.3 | % | 7.5 | % | 3.4 | % | 6.5 | % | ||||||||||||
Washington | 3.1 | % | 6.4 | % | 3.1 | % | 3.6 | % | 3.0 | % | 2.8 | % | ||||||||||||
New Jersey | 3.1 | % | 12.0 | % | 3.0 | % | 7.5 | % | 3.1 | % | 6.1 | % | ||||||||||||
2008 | 2007 | |||||||||||||||||||||||
9/30/2008 | 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) | 22.6 | % | 24.0 | % | 24.4 | % | 24.6 | % | 23.9 | % | 22.4 | % | 20.3 | % | ||||||||||
95.01% to 97% LTV’s | 4.0 | % | 3.9 | % | 3.8 | % | 3.8 | % | 4.0 | % | 4.3 | % | 4.5 | % | ||||||||||
90.01% to 95% LTV’s | 29.4 | % | 29.3 | % | 29.4 | % | 29.5 | % | 29.3 | % | 29.4 | % | 30.1 | % | ||||||||||
85.01% to 90% LTV’s | 36.9 | % | 35.7 | % | 35.3 | % | 35.0 | % | 34.9 | % | 35.7 | % | 36.5 | % | ||||||||||
85% and below | 7.1 | % | 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) | 7.4 | % | 7.7 | % | 7.9 | % | 8.1 | % | 8.1 | % | 7.9 | % | 7.8 | % | ||||||||||
Less-than-A quality (FICO scores below 575)(A) | 1.9 | % | 2.0 | % | 2.1 | % | 2.2 | % | 2.2 | % | 2.1 | % | 2.1 | % | ||||||||||
Alt-A Loans: | ||||||||||||||||||||||||
With FICO scores of 660 and above | 17.4 | % | 19.0 | % | 19.4 | % | 19.6 | % | 20.0 | % | 19.3 | % | 18.3 | % | ||||||||||
With FICO scores below 660 and above 619 | 2.6 | % | 2.9 | % | 3.0 | % | 3.2 | % | 3.4 | % | 3.7 | % | 3.8 | % | ||||||||||
Total Alt-A Loans | 20.0 | % | 21.9 | % | 22.4 | % | 22.8 | % | 23.4 | % | 23.0 | % | 22.1 | % | ||||||||||
ARMs(B) | 11.0 | % | 11.6 | % | 12.1 | % | 12.8 | % | 14.1 | % | 16.0 | % | 17.7 | % | ||||||||||
Interest Only(C) | 12.5 | % | 13.8 | % | 14.0 | % | 14.2 | % | 14.2 | % | 13.6 | % | 12.1 | % | ||||||||||
Payment Option ARMs | 3.6 | % | 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 2.72% and 1.05% of RIF are subject to initial payment adjustment in 2008 and 2009, respectively. |
(C) | Approximately 97.83% and 95.45% of interest only loans written in 2007 and the first nine 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 | |||||||||||||||||||||||||||||||||||
9/30/2008 | 6/30/2008 | 3/31/2008 | Total(10) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total(10) | ||||||||||||||||||||||||||||
(Dollars in millions, except claim size) | (Dollars in millions, except claim size) | |||||||||||||||||||||||||||||||||||
Primary loans, defaults and default rates | ||||||||||||||||||||||||||||||||||||
Primary policies in force | 776,544 | 781,867 | 794,323 | 776,544 | 797,419 | 786,301 | 750,835 | 734,431 | 797,419 | |||||||||||||||||||||||||||
Primary loans in default | 93,670 | 80,895 | 69,718 | 93,670 | 63,197 | 50,742 | 42,349 | 39,206 | 63,197 | |||||||||||||||||||||||||||
Primary default rate | 12.06 | % | 10.35 | % | 8.78 | % | 12.06 | % | 7.93 | % | 6.45 | % | 5.64 | % | 5.34 | % | 7.93 | % | ||||||||||||||||||
Flow only default rate | 10.93 | % | 9.26 | % | 7.57 | % | 10.93 | % | 6.74 | % | 5.38 | % | 4.70 | % | 4.54 | % | 6.74 | % | ||||||||||||||||||
Structured transactions only default rate | 18.41 | % | 16.25 | % | 15.14 | % | 18.41 | % | 13.92 | % | 11.65 | % | 10.37 | % | 9.29 | % | 13.92 | % | ||||||||||||||||||
Pool default rate | 12.74 | % | 10.76 | % | 9.20 | % | 12.74 | % | 7.76 | % | 6.18 | % | 5.17 | % | 4.82 | % | 7.76 | % | ||||||||||||||||||
Primary default rates by loan type | ||||||||||||||||||||||||||||||||||||
Alt-A loans | 25.79 | % | 21.67 | % | 17.47 | % | 25.79 | % | 13.86 | % | 9.92 | % | 7.32 | % | 6.06 | % | 13.86 | % | ||||||||||||||||||
Less than A quality loans | 27.25 | % | 23.27 | % | 20.74 | % | 27.25 | % | 20.21 | % | 17.27 | % | 16.83 | % | 16.94 | % | 20.21 | % | ||||||||||||||||||
Above 97s | 15.23 | % | 12.39 | % | 10.18 | % | 15.23 | % | 9.11 | % | 6.98 | % | 6.02 | % | 5.74 | % | 9.11 | % | ||||||||||||||||||
ARMs (excluding 2/28 Hybrid ARMs) | 27.40 | % | 23.41 | % | 19.03 | % | 27.40 | % | 15.48 | % | 11.74 | % | 9.72 | % | 8.43 | % | 15.48 | % | ||||||||||||||||||
2/28 Hybrid ARMs | 47.38 | % | 45.38 | % | 42.95 | % | 47.38 | % | 38.62 | % | 31.00 | % | 22.06 | % | 18.08 | % | 38.62 | % | ||||||||||||||||||
Payment option ARMs | 32.60 | % | 26.72 | % | 19.59 | % | 32.60 | % | 14.46 | % | 9.28 | % | 6.32 | % | 4.34 | % | 14.46 | % | ||||||||||||||||||
Interest Only | 23.53 | % | 19.25 | % | 15.04 | % | 23.53 | % | 10.98 | % | 7.11 | % | 5.02 | % | 4.15 | % | 10.98 | % | ||||||||||||||||||
Claims paid | ||||||||||||||||||||||||||||||||||||
Primary claims paid - flow | $ | 130.1 | $ | 117.2 | $ | 93.0 | $ | 340.3 | $ | 71.0 | $ | 57.7 | $ | 46.7 | $ | 46.9 | $ | 222.3 | ||||||||||||||||||
Primary claims paid - structured transactions | 76.9 | 71.8 | 59.9 | 208.6 | 34.7 | 29.4 | 21.6 | 18.4 | 104.1 | |||||||||||||||||||||||||||
Supplemental and other(16) | (24.6 | ) | 0.9 | 1.8 | (21.9 | ) | 3.5 | 0.6 | (0.5 | ) | (0.4 | ) | 3.2 | |||||||||||||||||||||||
Total primary claims paid | 182.4 | 189.9 | 154.7 | 527.0 | 109.2 | 87.7 | 67.8 | 64.9 | 329.6 | |||||||||||||||||||||||||||
Total pool and other | 17.7 | 2.8 | 7.9 | 28.4 | 5.3 | 4.9 | 4.5 | 4.4 | 19.1 | |||||||||||||||||||||||||||
Total claims paid | 200.1 | 192.7 | 162.6 | 555.4 | 114.5 | 92.6 | 72.3 | 69.3 | 348.7 | |||||||||||||||||||||||||||
Loss adjustment expenses | 10.2 | 6.1 | 6.2 | 22.5 | 3.4 | 3.3 | 3.4 | 3.5 | 13.6 | |||||||||||||||||||||||||||
Total claims paid including loss adjustment | $ | 210.3 | $ | 198.8 | $ | 168.8 | $ | 577.9 | $ | 117.9 | $ | 95.9 | $ | 75.7 | $ | 72.8 | $ | 362.3 | ||||||||||||||||||
Number of primary claims paid | 4,371 | 4,329 | 3,722 | 12,422 | 2,889 | 2,675 | 2,336 | 2,362 | 10,262 | |||||||||||||||||||||||||||
Average primary claim size(in thousands)(16) | $ | 47.6 | $ | 43.9 | $ | 41.6 | $ | 44.5 | $ | 37.8 | $ | 32.8 | $ | 29.0 | $ | 27.5 | $ | 32.1 | ||||||||||||||||||
Captive reinsurance arrangements | ||||||||||||||||||||||||||||||||||||
Percentage of flow NIW subject to captive | 19.6 | % | 50.8 | % | 68.4 | % | 45.5 | % | 74.3 | % | 64.2 | % | 60.9 | % | 49.2 | % | 62.7 | % | ||||||||||||||||||
Percentage of primary NIW subject to captive | 19.4 | % | 48.7 | % | 66.5 | % | 44.4 | % | 71.3 | % | 49.1 | % | 53.9 | % | 34.0 | % | 51.1 | % | ||||||||||||||||||
Percentage of primary IIF subject to captive | 50.0 | % | 53.0 | % | 53.0 | % | 50.0 | % | 52.2 | % | 50.2 | % | 50.3 | % | 51.0 | % | 52.2 | % | ||||||||||||||||||
Percentage of primary RIF subject to captive | 50.4 | % | 53.1 | % | 53.1 | % | 50.4 | % | 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 | ||||||||||||||||||||||||||
9/30/2008 | 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, | $ | 2,132.6 | $ | 1,589.3 | $ | 1,133.1 | $ | 698.2 | $ | 444.6 | $ | 386.0 | $ | 366.2 | ||||||||||||||
Reinsurance recoverables | (313.5 | ) | (123.9 | ) | (35.9 | ) | (3.8 | ) | (2.6 | ) | (2.7 | ) | (2.9 | ) | ||||||||||||||
Net balance at beginning of the period, | 1,819.1 | 1,465.4 | 1,097.2 | 694.4 | 442.0 | 383.3 | 363.3 | |||||||||||||||||||||
Loss and LAE incurred (principally with respect to defaults occuring in): | ||||||||||||||||||||||||||||
Current year | 393.5 | 480.4 | 363.2 | 474.8 | 238.1 | 101.4 | 80.1 | |||||||||||||||||||||
Prior years | (45.3 | ) | 72.1 | 173.8 | 45.8 | 110.2 | 33.0 | 12.7 | ||||||||||||||||||||
Total incurred | 348.2 | 552.5 | 537.0 | 520.6 | 348.3 | 134.4 | 92.8 | |||||||||||||||||||||
Loss and LAE payments (principally with respect to defaults occuring in): | ||||||||||||||||||||||||||||
Current year | (22.7 | ) | (5.4 | ) | (0.1 | ) | (31.3 | ) | (11.3 | ) | (0.9 | ) | (0.1 | ) | ||||||||||||||
Prior years | (187.6 | ) | (193.4 | ) | (168.7 | ) | (86.5 | ) | (84.6 | ) | (74.8 | ) | (72.7 | ) | ||||||||||||||
Total payments | (210.3 | ) | (198.8 | ) | (168.8 | ) | (117.8 | ) | (95.9 | ) | (75.7 | ) | (72.8 | ) | ||||||||||||||
Net ending balance | 1,957.0 | 1,819.1 | 1,465.4 | 1,097.2 | 694.4 | 442.0 | 383.3 | |||||||||||||||||||||
Reinsurance recoverables(A) | 392.7 | 313.5 | 123.9 | 35.9 | 3.8 | 2.6 | 2.7 | |||||||||||||||||||||
Ending reserves for losses and LAE | $ | 2,349.7 | $ | 2,132.6 | $ | 1,589.3 | $ | 1,133.1 | $ | 698.2 | $ | 444.6 | $ | 386.0 | ||||||||||||||
Loss Reserves by Book Year | 9/30/2008 | 6/30/2008 | 3/31/2008 | 12/31/2007 | 12/31/2006 | 12/31/2005 | ||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||
2002 and prior |
| $ | 131,268 | $ | 125,014 | $ | 134,477 | $ | 117,987 | $ | 103,053 | $ | 149,157 | |||||||||||||||
2003 |
| 111,493 | 101,505 | 95,622 | 87,713 | 65,107 | 80,443 | |||||||||||||||||||||
2004 |
| 157,722 | 152,214 | 133,461 | 119,017 | 76,606 | 80,865 | |||||||||||||||||||||
2005 |
| 382,756 | 371,433 | 298,904 | 238,077 | 83,339 | 35,071 | |||||||||||||||||||||
2006 |
| 687,187 | 633,559 | 462,662 | 345,918 | 38,077 | — | |||||||||||||||||||||
2007 |
| 821,026 | 725,815 | 461,633 | 224,368 | — | — | |||||||||||||||||||||
2008 |
| 58,199 | 23,092 | 2,494 | — | — | — | |||||||||||||||||||||
Total Loss Reserves |
| $ | 2,349,651 | $ | 2,132,632 | $ | 1,589,253 | $ | 1,133,080 | $ | 366,182 | $ | 345,536 | |||||||||||||||
9/30/2008 | 6/30/2008 | 3/31/2008 | 12/31/2007 | 9/30/2007 | |||||||||||||||||||||
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 | 93,670 | $ | 2,195.3 | 80,895 | $ | 2,037.4 | 69,718 | $ | 1,498.9 | 63,197 | $ | 1,054.3 | 50,742 | $ | 651.2 | ||||||||||
Pool insurance(8) | 42,741 | 154.4 | 37,640 | 95.2 | 33,536 | 90.4 | 29,143 | 78.8 | 23,789 | 47.0 | |||||||||||||||
Total | 136,411 | $ | 2,349.7 | 118,535 | $ | 2,132.6 | 103,254 | $ | 1,589.3 | 92,340 | $ | 1,133.1 | 74,531 | $ | 698.2 | ||||||||||
(A) | Reinsurance recoverables includes captive reinsurance agreements and other reinsurance recoverables. |
Page 14
THE PMI GROUP, INC. AND SUBSIDIARIES
CMG MORTGAGE INSURANCE COMPANY STATISTICAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||||||
9/30/2008 | 6/30/2008 | 3/31/2008 | Total (10) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total (10) | ||||||||||||||||||||||||||||
(Dollars in millions, except claims paid and claim size) | ||||||||||||||||||||||||||||||||||||
Primary new insurance written | $ | 1,466 | $ | 1,877 | $ | 1,353 | $ | 4,696 | $ | 1,389 | $ | 1,621 | $ | 1,566 | $ | 1,053 | $ | 5,629 | ||||||||||||||||||
Primary insurance in force | $ | 21,446 | $ | 20,627 | $ | 19,530 | $ | 21,446 | $ | 18,942 | $ | 18,265 | $ | 17,415 | $ | 16,670 | $ | 18,942 | ||||||||||||||||||
Primary risk in force | $ | 5,334 | $ | 5,137 | $ | 4,871 | $ | 5,334 | $ | 4,721 | $ | 4,532 | $ | 4,292 | $ | 4,085 | $ | 4,721 | ||||||||||||||||||
Policies in force | 137,979 | 134,451 | 129,032 | 137,979 | 126,342 | 123,164 | 118,933 | 115,224 | 126,342 | |||||||||||||||||||||||||||
Primary loans in default | 2,795 | 2,157 | 1,832 | 2,795 | 1,796 | 1,516 | 1,259 | 1,130 | 1,796 | |||||||||||||||||||||||||||
Primary default rate | 2.03 | % | 1.60 | % | 1.42 | % | 2.03 | % | 1.42 | % | 1.23 | % | 1.06 | % | 0.98 | % | 1.42 | % | ||||||||||||||||||
Persistency | 84.1 | % | 82.6 | % | 81.6 | % | 84.1 | % | 81.6 | % | 80.7 | % | 79.2 | % | 78.5 | % | 81.6 | % | ||||||||||||||||||
Primary claims paid (in thousands) | $ | 5,929 | $ | 6,051 | $ | 4,033 | $ | 16,013 | $ | 3,726 | $ | 3,235 | $ | 2,392 | $ | 2,131 | $ | 11,484 | ||||||||||||||||||
Number of primary claims paid | 169 | 173 | 118 | 460 | 112 | 116 | 83 | 75 | 386 | |||||||||||||||||||||||||||
Average primary claim size (in thousands) | $ | 35.1 | $ | 35.0 | $ | 34.2 | $ | 34.8 | $ | 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 | 9/30/2008 | 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 | $ | 2,577 | $ | 6,093 | $ | 7,688 | $ | 16,358 | $ | 2,802 | $ | 4,419 | $ | 3,497 | $ | 3,405 | $ | 14,123 | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums earned | $ | 3,776 | $ | 3,769 | $ | 3,205 | $ | 10,750 | $ | 3,704 | $ | 3,644 | $ | 3,519 | $ | 3,579 | $ | 14,446 | ||||||||||||||||||
Net (losses) gains from credit default swaps | (9,911 | ) | 9,550 | 800 | 439 | (9,483 | ) | (8,371 | ) | 1,579 | 1,828 | (14,447 | ) | |||||||||||||||||||||||
Net investment income | 3,875 | 3,762 | 4,767 | 12,404 | 2,854 | 2,866 | 2,719 | 2,409 | 10,848 | |||||||||||||||||||||||||||
Net realized investment gains (losses) | 1,868 | (480 | ) | (231 | ) | 1,157 | 8 | (267 | ) | (16 | ) | 111 | (164 | ) | ||||||||||||||||||||||
Other (loss) income | (23 | ) | 23 | 28 | 28 | (97 | ) | 91 | (9 | ) | (99 | ) | (114 | ) | ||||||||||||||||||||||
Total (expenses) revenues | (415 | ) | 16,624 | 8,569 | 24,778 | (3,014 | ) | (2,037 | ) | 7,792 | 7,828 | 10,569 | ||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 34,488 | 3,589 | 19,020 | 57,097 | 22,111 | 2,719 | 1,611 | 364 | 26,805 | |||||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 1,568 | 403 | 345 | 2,316 | 2,617 | 341 | 284 | 227 | 3,469 | |||||||||||||||||||||||||||
Other underwriting and operating expenses(6) | 13,048 | 7,658 | 6,981 | 27,687 | 5,897 | 5,217 | 4,110 | 2,880 | 18,104 | |||||||||||||||||||||||||||
Total losses and expenses | 49,104 | 11,650 | 26,346 | 87,100 | 30,625 | 8,277 | 6,005 | 3,471 | 48,378 | |||||||||||||||||||||||||||
(Loss) income from continuing operations before | (49,519 | ) | 4,974 | (17,777 | ) | (62,322 | ) | (33,639 | ) | (10,314 | ) | 1,787 | 4,357 | (37,809 | ) | |||||||||||||||||||||
Income tax (benefits) expense from continuing operations | (3,510 | ) | 340 | (2,336 | ) | (5,506 | ) | (2,856 | ) | (1,567 | ) | 446 | 1,448 | (2,529 | ) | |||||||||||||||||||||
(Loss) income from continuing operations | (46,009 | ) | 4,634 | (15,441 | ) | (56,816 | ) | (30,783 | ) | (8,747 | ) | 1,341 | 2,909 | (35,280 | ) | |||||||||||||||||||||
(Loss) income from discontinued operations, net of taxes | (80,491 | ) | 26,469 | 33,217 | (20,855 | ) | 20,671 | 22,626 | 26,756 | 20,217 | 90,270 | |||||||||||||||||||||||||
Net income (loss) | $ | (126,550 | ) | $ | 31,103 | $ | 17,776 | $ | (77,671 | ) | $ | (10,112 | ) | $ | 13,879 | $ | 28,097 | $ | 23,126 | $ | 54,990 | |||||||||||||||
Loss ratio, expense ratio and combined ratio for the International Operations segment are not meaningful due to the sale of PMI Australia and PMI Asia, which were classified as discontinued operations. |
| |||||||||||||||||||||||||||||||||||
Balance Sheet Components - As of Quarter End | 9/30/2008 | 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 and equity securities | $ | 158,171 | $ | 285,814 | $ | 288,047 | $ | 265,657 | $ | 263,807 | $ | 197,165 | $ | 198,445 | ||||||||||||||||||||||
Cash and cash equivalents | 164,276 | 64,566 | 61,732 | 62,298 | 63,836 | 106,853 | 23,662 | |||||||||||||||||||||||||||||
Reinsurance recoverables | 953 | 1,066 | 1,068 | 987 | 965 | 916 | 904 | |||||||||||||||||||||||||||||
Deferred policy acquisition costs | 2,945 | 4,965 | 5,006 | 3,921 | 5,346 | 4,366 | 3,821 | |||||||||||||||||||||||||||||
Property, equipment and software, net of accumulated | 1,709 | 1,901 | 2,065 | 2,095 | 2,100 | 1,616 | 1,344 | |||||||||||||||||||||||||||||
Other assets | 18,596 | 15,815 | 16,837 | 12,174 | 11,457 | 9,585 | 14,809 | |||||||||||||||||||||||||||||
Assets - discontinued operations - held for sale | 1,324,795 | 1,618,497 | 1,522,347 | 1,453,555 | 1,437,828 | 1,353,067 | 1,261,338 | |||||||||||||||||||||||||||||
Total assets | $ | 1,671,445 | $ | 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 | $ | 90,856 | $ | 62,664 | $ | 60,736 | $ | 41,579 | $ | 20,634 | $ | 18,083 | $ | 17,587 | ||||||||||||||||||||||
Unearned premiums | 27,296 | 31,660 | 29,378 | 22,983 | 23,347 | 21,390 | 21,117 | |||||||||||||||||||||||||||||
Other liabilities | 63,124 | 48,915 | 52,694 | 46,652 | 39,436 | 25,304 | 26,793 | |||||||||||||||||||||||||||||
Liabilities - discontinued operations - held for sale | 543,830 | 615,441 | 576,681 | 568,380 | 548,164 | 521,888 | 484,030 | |||||||||||||||||||||||||||||
Total liabilities | 725,106 | 758,680 | 719,489 | 679,594 | 631,581 | 586,665 | 549,527 | |||||||||||||||||||||||||||||
Shareholder’s equity | 946,339 | 1,233,944 | 1,177,613 | 1,121,093 | 1,153,758 | 1,086,903 | 954,796 | |||||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 1,671,445 | $ | 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 EUROPE QUARTERLY FINANCIAL INFORMATION
2008 | 2007 | |||||||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 9/30/2008 | 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 | $ | 2,577 | $ | 6,093 | $ | 5,368 | $ | 14,038 | $ | 2,802 | $ | 4,420 | $ | 3,497 | $ | 3,404 | $ | 14,123 | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Premiums earned | $ | 3,598 | $ | 3,660 | $ | 3,156 | $ | 10,414 | $ | 3,704 | $ | 3,644 | $ | 3,519 | $ | 3,579 | $ | 14,446 | ||||||||||||||||||
Net (losses) gains from credit default swaps | (9,911 | ) | 9,550 | 800 | 439 | (9,483 | ) | (8,371 | ) | 1,579 | 1,828 | (14,447 | ) | |||||||||||||||||||||||
Net investment income | 3,221 | 2,971 | 3,972 | 10,164 | 1,919 | 2,080 | 2,225 | 2,408 | 8,632 | |||||||||||||||||||||||||||
Net realized investment gains (losses) | 874 | (480 | ) | (231 | ) | 163 | 6 | (267 | ) | (15 | ) | 112 | (164 | ) | ||||||||||||||||||||||
Other loss | — | — | — | — | — | (8 | ) | (26 | ) | (100 | ) | (134 | ) | |||||||||||||||||||||||
Total (expenses) revenues | (2,218 | ) | 15,701 | 7,697 | 21,180 | (3,854 | ) | (2,922 | ) | 7,282 | 7,827 | 8,333 | ||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | 34,386 | 3,589 | 18,975 | 56,950 | 22,111 | 2,719 | 1,611 | 364 | 26,805 | |||||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | 1,565 | 401 | 345 | 2,311 | 2,617 | 341 | 284 | 227 | 3,469 | |||||||||||||||||||||||||||
Other underwriting and operating expenses(6) | 9,813 | 5,587 | 4,633 | 20,033 | 4,283 | 3,880 | 3,108 | 2,769 | 14,040 | |||||||||||||||||||||||||||
Total losses and expenses | 45,764 | 9,577 | 23,953 | 79,294 | 29,011 | 6,940 | 5,003 | 3,360 | 44,314 | |||||||||||||||||||||||||||
(Loss) income before income taxes | (47,982 | ) | 6,124 | (16,256 | ) | (58,114 | ) | (32,865 | ) | (9,862 | ) | 2,279 | 4,467 | (35,981 | ) | |||||||||||||||||||||
Income tax (benefit) expense | (3,510 | ) | 340 | (2,336 | ) | (5,506 | ) | (3,281 | ) | (1,417 | ) | 624 | 1,488 | (2,586 | ) | |||||||||||||||||||||
Net (loss) income | $ | (44,472 | ) | $ | 5,784 | $ | (13,920 | ) | $ | (52,608 | ) | $ | (29,584 | ) | $ | (8,445 | ) | $ | 1,655 | $ | 2,979 | $ | (33,395 | ) | ||||||||||||
Net (loss) income(Euros in thousands) | € | (29,410 | ) | € | 3,704 | € | (8,857 | ) | € | (34,563 | ) | € | (21,715 | ) | € | (6,144 | ) | € | 1,227 | € | 2,272 | € | (24,360 | ) | ||||||||||||
Loss ratio, expense ratio and combined ratio for PMI Europe are not meaningful. | ||||||||||||||||||||||||||||||||||||
Balance Sheet Components - As of Quarter End | 9/30/2008 | 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 | $ | 145,746 | $ | 220,099 | $ | 222,364 | $ | 200,825 | $ | 203,992 | $ | 197,165 | $ | 198,445 | ||||||||||||||||||||||
Cash and cash equivalents | 109,440 | 58,256 | 53,765 | 53,335 | 47,715 | 36,316 | 23,662 | |||||||||||||||||||||||||||||
Reinsurance recoverables | 954 | 1,066 | 1,068 | 987 | 965 | 916 | 904 | |||||||||||||||||||||||||||||
Deferred policy acquisition costs | 2,580 | 4,581 | 4,623 | 3,921 | 5,346 | 4,366 | 3,821 | |||||||||||||||||||||||||||||
Property, equipment and software, net of accumulated | 1,165 | 1,269 | 1,372 | 1,323 | 1,317 | 1,293 | 1,344 | |||||||||||||||||||||||||||||
Other assets | 18,279 | 15,287 | 15,837 | 11,780 | 10,094 | 9,327 | 14,809 | |||||||||||||||||||||||||||||
Total assets | $ | 278,164 | $ | 300,558 | $ | 299,029 | $ | 272,171 | $ | 269,429 | $ | 249,383 | $ | 242,985 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 90,715 | $ | 62,620 | $ | 60,692 | $ | 41,579 | $ | 20,634 | $ | 18,083 | $ | 17,587 | ||||||||||||||||||||||
Unearned premiums | 25,417 | 29,521 | 27,140 | 22,983 | 23,347 | 21,390 | 21,117 | |||||||||||||||||||||||||||||
Other liabilities | 61,269 | 47,284 | 50,432 | 45,534 | 36,772 | 24,154 | 26,697 | |||||||||||||||||||||||||||||
Total liabilities | 177,401 | 139,425 | 138,264 | 110,096 | 80,753 | 63,627 | 65,401 | |||||||||||||||||||||||||||||
Shareholder’s equity | 100,763 | 161,133 | 160,765 | 162,075 | 188,676 | 185,756 | 177,584 | |||||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 278,164 | $ | 300,558 | $ | 299,029 | $ | 272,171 | $ | 269,429 | $ | 249,383 | $ | 242,985 | ||||||||||||||||||||||
Page 17
THE PMI GROUP, INC. AND SUBSIDIARIES
PMI EUROPE STATISTICAL INFORMATION
2008 | 2007 | ||||||||||||||||||||||||||
9/30//2008 | 6/30//2008 | 3/31/2008 | Total (10) | 12/31/2007 | 9/30/2007 | 6/30/2007 | 3/31/2007 | Total (10) | |||||||||||||||||||
(U.S. dollars in millions, except claims paid) | |||||||||||||||||||||||||||
New insurance written | $ | 90 | $ | 129 | $ | 95 | $ | 314 | $ | 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 | $ | 55,143 | $ | 62,422 | $ | 63,103 | $ | 55,143 | $ | 62,929 | $ | 51,707 | $ | 48,120 | $ | 48,121 | $ | 62,929 | |||||||||
Risk in force | $ | 7,972 | $ | 9,182 | $ | 9,628 | $ | 7,972 | $ | 9,420 | $ | 5,711 | $ | 3,813 | $ | 3,824 | $ | 9,420 | |||||||||
Claims paid including credit default swaps(in thousands) | $ | 2,461 | $ | 3,593 | $ | 3,562 | $ | 9,616 | $ | 2,898 | $ | 3,207 | $ | 2,577 | $ | 1,547 | $ | 10,229 |
Page 18
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL GUARANTY SEGMENT(3) RESULTS OF OPERATIONS AND BALANCE SHEETS
2008 | 2007 | |||||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 9/30/2008 | 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) | |||||||||||||||||||||||||||||||||
Net premiums written | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||
Premiums earned | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Net investment income | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Net realized investment gains | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Impairment of unconsolidated subsidiary (14) | (2,887 | ) | — | (87,981 | ) | (90,868 | ) | (38,499 | ) | — | — | — | (38,499 | ) | ||||||||||||||||||||
Total revenues | (2,887 | ) | — | (87,981 | ) | (90,868 | ) | (38,499 | ) | — | — | — | (38,499 | ) | ||||||||||||||||||||
Losses and expenses | — | |||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Amortization of deferred policy acquisition costs | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Other underwriting and operating expenses | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total losses and expenses | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Loss before equity in earnings (losses) from unconsolidated | (2,887 | ) | — | (87,981 | ) | (90,868 | ) | (38,499 | ) | — | — | — | (38,499 | ) | ||||||||||||||||||||
Equity in earnings (losses) from unconsolidated subsidiaries | 9,340 | (24,321 | ) | (36,236 | ) | (51,217 | ) | (794,637 | ) | (26,741 | ) | 30,842 | 31,703 | (758,833 | ) | |||||||||||||||||||
Income (loss) from continuing operations before income taxes | 6,453 | (24,321 | ) | (124,217 | ) | (142,085 | ) | (833,136 | ) | (26,741 | ) | 30,842 | 31,703 | (797,332 | ) | |||||||||||||||||||
Income tax (benefit) expense from continuing operations | — | — | (1,244 | ) | (1,244 | ) | (67,767 | ) | (1,113 | ) | 3,264 | 3,040 | (62,576 | ) | ||||||||||||||||||||
Income (loss) from continuing operations | $ | 6,453 | $ | (24,321 | ) | $ | (122,973 | ) | $ | (140,841 | ) | $ | (765,369 | ) | $ | (25,628 | ) | $ | 27,578 | $ | 28,663 | $ | (734,756 | ) | ||||||||||
Income (loss) from discontinued operations, net of taxes | 437 | (21,785 | ) | (1,265 | ) | (22,613 | ) | (787 | ) | 1,236 | 1,436 | 1,201 | 3,086 | |||||||||||||||||||||
Net income (loss) | $ | 6,890 | $ | (46,106 | ) | $ | (124,238 | ) | $ | (163,454 | ) | $ | (766,156 | ) | $ | (24,392 | ) | $ | 29,014 | $ | 29,864 | $ | (731,670 | ) | ||||||||||
Balance Sheet Components -As of Quarter End | 9/30/2008 | 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 | $ | 617 | $ | 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 | $ | 617 | $ | 137,704 | $ | 184,636 | $ | 190,380 | $ | 194,156 | $ | 190,553 | $ | 157,920 | ||||||||||||||||||||
Cash and cash equivalents | 30,220 | 29,276 | 7,419 | 11,252 | 11,610 | 15,414 | 56,260 | |||||||||||||||||||||||||||
Investments in unconsolidated subsidiaries | 6,453 | — | 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 | — | 162 | 174 | 187 | 131 | 132 | 133 | |||||||||||||||||||||||||||
Other assets | 60,414 | 67,520 | 7,323 | 52,918 | 3,838 | 4,282 | 5,282 | |||||||||||||||||||||||||||
Total assets | $ | 97,704 | $ | 234,662 | $ | 229,150 | $ | 422,308 | $ | 1,198,054 | $ | 1,210,124 | $ | 1,199,300 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Reserve for losses and loss adjustment expenses | $ | 22,900 | $ | 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 (assets) liabilities | (2,000 | ) | 2,897 | (45,082 | ) | 2,892 | 37,766 | 40,817 | 45,745 | |||||||||||||||||||||||||
Total liabilities | 20,900 | 60,958 | 10,371 | 62,251 | 94,514 | 97,801 | 101,868 | |||||||||||||||||||||||||||
Shareholder’s equity | 76,804 | 173,704 | 218,779 | 360,057 | 1,103,540 | 1,112,323 | 1,097,432 | |||||||||||||||||||||||||||
Total liabilities and shareholder’s equity | $ | 97,704 | $ | 234,662 | $ | 229,150 | $ | 422,308 | $ | 1,198,054 | $ | 1,210,124 | $ | 1,199,300 | ||||||||||||||||||||
Page 19
THE PMI GROUP, INC. AND SUBSIDIARIES
CORPORATE AND OTHER SEGMENT(4) RESULTS OF OPERATIONS AND BALANCE SHEETS
2008 | 2007 | |||||||||||||||||||||||||||||||||||||
Income Statement Components - Quarter Ended | 9/30/2008 | 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) | |||||||||||||||||||||||||||||||||||||
Net premiums written | $ | 12 | $ | 5 | $ | 8 | $ | 25 | $ | 19 | $ | 14 | $ | 7 | $ | 12 | $ | 52 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||
Premiums earned | $ | 10 | $ | 11 | $ | 12 | $ | 33 | $ | 10 | $ | 18 | $ | 16 | $ | 13 | $ | 57 | ||||||||||||||||||||
Net investment income | 2,892 | 2,026 | 1,211 | 6,129 | 1,400 | 1,935 | 2,258 | 2,832 | 8,425 | |||||||||||||||||||||||||||||
Net realized investment (losses) gains | (988 | ) | (3 | ) | (11 | ) | (1,002 | ) | 12,669 | (1,886 | ) | (620 | ) | (726 | ) | 9,437 | ||||||||||||||||||||||
Change in fair value of certain debt instruments (15) | 66,283 | 16,957 | 28,708 | 111,948 | — | — | — | — | — | |||||||||||||||||||||||||||||
Other income | 2,186 | 3,319 | 3,243 | 8,748 | 3,270 | 4,563 | 4,769 | 1,706 | 14,308 | |||||||||||||||||||||||||||||
Total revenues | 70,383 | 22,310 | 33,163 | 125,856 | 17,349 | 4,630 | 6,423 | 3,825 | 32,227 | |||||||||||||||||||||||||||||
Losses and expenses | ||||||||||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Other underwriting and operating expenses | 21,731 | 21,145 | 18,283 | 61,159 | 18,400 | 16,918 | 19,925 | 24,013 | 79,256 | |||||||||||||||||||||||||||||
Interest expense | 11,126 | 9,152 | 7,600 | 27,878 | 7,619 | 7,591 | 7,627 | 7,522 | 30,359 | |||||||||||||||||||||||||||||
Total losses and expenses | 32,857 | 30,297 | 25,883 | 89,037 | 26,019 | 24,509 | 27,552 | 31,535 | 109,615 | |||||||||||||||||||||||||||||
Income (loss) before equity in (losses) earnings from unconsolidated | 37,526 | (7,987 | ) | 7,280 | 36,819 | (8,670 | ) | (19,879 | ) | (21,129 | ) | (27,710 | ) | (77,388 | ) | |||||||||||||||||||||||
Equity in (losses) earnings from unconsolidated subsidiaries | (152 | ) | (121 | ) | (121 | ) | (394 | ) | 8 | (28 | ) | 289 | (55 | ) | 214 | |||||||||||||||||||||||
Income (loss) before income taxes | 37,374 | (8,108 | ) | 7,159 | 36,425 | (8,662 | ) | (19,907 | ) | (20,840 | ) | (27,765 | ) | (77,174 | ) | |||||||||||||||||||||||
Income tax (benefit) expense | 10,012 | (2,684 | ) | 2,184 | 9,512 | (6,528 | ) | (8,869 | ) | (6,015 | ) | (7,932 | ) | (29,344 | ) | |||||||||||||||||||||||
Net income (loss) | $ | 27,362 | $ | (5,424 | ) | $ | 4,975 | $ | 26,913 | $ | (2,134 | ) | $ | (11,038 | ) | $ | (14,825 | ) | $ | (19,833 | ) | $ | (47,830 | ) | ||||||||||||||
Balance Sheet Components - As of Quarter End | 9/30/2008 | 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 | $ | 134,222 | $ | 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 | 1,300 | 1,301 | 1,300 | 1,300 | |||||||||||||||||||||
Total investments | $ | 135,522 | $ | 52,367 | $ | 54,521 | $ | 55,516 | $ | 55,664 | $ | 57,897 | $ | 59,399 | ||||||||||||||
Cash and cash equivalents | 118,659 | 224,779 | 40,214 | 51,512 | 45,335 | 163,700 | 100,574 | |||||||||||||||||||||
Investments in unconsolidated subsidiaries | 15,360 | 15,646 | 15,493 | 14,914 | 15,158 | 15,224 | 15,200 | |||||||||||||||||||||
Property, equipment and software, net of accumulated | 77,136 | 78,042 | 78,627 | 79,142 | 79,594 | 80,807 | 81,867 | |||||||||||||||||||||
Other (liabilities) assets | (17,281 | ) | (5,837 | ) | 8,821 | 49,657 | 39,901 | 42,165 | 14,222 | |||||||||||||||||||
Total assets | $ | 329,396 | $ | 364,997 | $ | 197,676 | $ | 250,741 | $ | 235,652 | $ | 359,793 | $ | 271,262 | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Unearned premiums | $ | 21 | $ | 18 | $ | 26 | $ | 29 | $ | 21 | $ | 25 | $ | 33 | ||||||||||||||
Debt | 532,177 | 554,694 | 364,378 | 446,593 | 446,593 | 446,593 | 446,593 | |||||||||||||||||||||
Other (assets) liabilities | (10,820 | ) | (7,122 | ) | 7,893 | (515 | ) | (16,256 | ) | (2,423 | ) | (76,061 | ) | |||||||||||||||
Total liabilities | 521,378 | 547,590 | 372,297 | 446,107 | 430,358 | 444,195 | 370,565 | |||||||||||||||||||||
Shareholder’s deficit | (191,982 | ) | (182,593 | ) | (174,621 | ) | (195,366 | ) | (194,706 | ) | (84,402 | ) | (99,303 | ) | ||||||||||||||
Total liabilities and shareholder’s deficit | $ | 329,396 | $ | 364,997 | $ | 197,676 | $ | 250,741 | $ | 235,652 | $ | 359,793 | $ | 271,262 | ||||||||||||||
Page 20