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

The PMI Group, Inc.

Supplemental Portfolio Information

As of June 30, 2010

Exhibit 99.3

2

The PMI Group, Inc.

Definition of Terms

2/28s

–

refers to loans with interest rates that are fixed for two years and reset to a new interest rate at the end of year two

for the remaining term of the loan. 

ARMs

–

refers to loans with adjustable interest rates.  We consider a loan an ARM if its interest rate may be adjusted prior

to the loan’s fifth anniversary.��

A Quality Loans

–

we define A quality to include loans with credit scores of 620 and greater. 

Alt-A Loans

–

we consider a loan Alt-A if it has a credit score of 620 or greater and the borrower requests and is given the

option of providing reduced documentation verifying income, assets, deposit information and/or employment.

Captive Reinsurance

–

refers to agreements in which a portion of risk insured by PMI is reinsured by a captive reinsurance

company affiliated with the mortgage originator or investor.  

Defaults

–

our

primary

mortgage

insurance

master

policy

defines

“default”

as

the

borrower’s

failure

to

pay

when

due

an

amount

equal

to

the

scheduled

monthly

mortgage

payment

under

the

terms

of

the

mortgage.

Generally,

the

master

policies require an insured to notify PMI of a default no later than the last business day of the month following the month

in

which

the

borrower

becomes

three

monthly

payments

in

default.

For

reporting

purposes

and

internal

tracking

purposes, we do not consider a loan to be in default until the borrower has missed two consecutive payments. 

Depending

upon

its

scheduled

payment

date,

a

loan

delinquent

for

two

consecutive

monthly

payments

could

be

reported

to PMI between the 31   and the 60   day after the first missed payment.  

Flow

–

generally refers to mortgage insurance offered on a loan-by-loan basis to lenders. 

GSE Pool –

refers to a traditional pool product for mortgage loans sold by PMI’s customers to the GSEs.  This product was

available from 1997 to 2001.

Interest Only Loans

–

refers to loans that do not reduce principal during the initial

deferral period (usually between two and

ten years) and therefore do not accumulate equity through loan amortization during the initial deferral period. 

Insurance in Force (IIF)

–

refers to the current principal balance of all outstanding mortgage loans with insurance coverage

as of a given date.

Less-than-A Quality Loans

–

we define less-than-A credit quality loans to include loans with credit scores of 619 or below.

The majority of our less-than-A-quality loans have credit scores above 575.

st

th

3

The PMI Group, Inc.

Definition of Terms

Modified Pool Insurance

–

modified pool insurance may be used in addition to primary mortgage insurance or may be

placed

on

loans

that

do

not

require

primary

insurance.

Coverage

of

modified

pool

products

varies.

Some

products

provide first loss protection by covering a percentage of the losses on individual loans held within the pool of insured

loans up to a stated aggregate loss limit (“stop loss limit”) for the entire pool.  Some modified pool products offer

mezzanine-level coverage by providing for claims payments only after a predetermined cumulative claims level, or

deductible, is reached.

New Insurance Written (NIW)

–

refers to the original principal balance of all loans that receive new primary mortgage

insurance coverage during a given period. 

New Risk Written (NRW)

–

refers to the aggregate dollar amount of each insured mortgage loan’s current principal balance

multiplied

by

the

insurance

coverage

percentage

specified

in

the

policy

for

all

loans

that

receive

new

primary

mortgage

insurance coverage during a given period.

Old Pool –

refers to a traditional pool product for mortgage loans sold by PMI’s customers to capital market participants.

Payment Option ARMs

–

generally refers to loans that provide the borrower an option every month to make a payment

consisting of principal and interest, interest only, or an amount established by the lender that may be less than the

interest owed.  

Primary

Insurance

–

refers

to

mortgage

insurance

placed

on

a

loan-by-loan

basis

through

our

“flow”

channel

and

mortgage

insurance

issued

for

mortgage-backed

securities

and

portfolio

investors

through

our

“structured

transactions”

channel.  

Primary insurance does not include pool or modified pool information.

Primary Risk in Force

–

refers to the aggregate dollar amount of each insured mortgage loan’s current principal balance

multiplied

by

the

insurance

coverage

percentage

specified

in

the

policy

for

insurance

policies

issued

through

our

“flow”

and

“structured

transactions”

channels

only.

Risk in Force (RIF) –

refers to the aggregate dollar amount of each insured mortgage loan’s current principal balance

multiplied

by

the

insurance

coverage

percentage

specified

in

the

policy.

Structured

–

generally refers to mortgage insurance offered by PMI that covers large portfolios of mortgage loans and is

provided to issuers of mortgage backed securities (“MBS”) and portfolio investors. 

Traditional Pool

–

covers the entire loss on a defaulted mortgage loan that exceeds the claim payment under any primary

insurance

coverage,

up

to

a

stated

aggregate

loss

limit,

or

stop

loss,

for

all

of

the

loans

in

a

pool.

PMI

is

not

currently

offering traditional pool insurance to its customers.

4

The PMI Group, Inc.

Contents of Presentation

Focus on Particular                             

Primary Portfolio Segments

Part 3 

Primary Portfolio Characteristics

Part 2

Portfolio Categories

Part 1

Primary Portfolio Vintage Development

Part 5

Primary Portfolio Characteristics by Vintage

Part 4

Modified Pool Characteristics by Vintage

Part 6

Captive Reinsurance

Part 7

Portfolio Categories

6

The PMI Group, Inc.

$26.3 Billion Primary Risk in Force

and $0.8 Billion Pool Risk in Force*

Primary Flow

83%

Primary

Structured

13%

Modified Pool

3%

General Portfolio Categories

Primary Flow Insurance

$23.0 billion of risk in force 

Primary mortgage insurance offered to lenders

on a loan-by-loan basis

Primary Structured Insurance

$3.3 billion of risk in force 

Credit enhancement solutions offered across the

credit spectrum to agency and non-agency MBS

issuers as well as portfolio investors

Modified Pool Risk in Force

$0.5 billion of remaining risk in force¹

Insurance offered to agency and non-agency MBS

issuers and investors

Other Pool

$0.3 billion of remaining risk in force¹

Prior to 2002, PMI offered certain pool insurance

products, referred to principally as GSE or Old Pool,

to lenders, the GSEs and non-agency market

Other Pool

1%

* At June 30, 2010

Note: Due to rounding, the sum of percentages may not total 100%

1

Remaining risk in force for modified and other pool excludes non-performing risk exposures, for which loss reserves have been established. 

7

The PMI Group, Inc.

$26.3 Billion Primary Risk in Force*

Legacy: Performing

59%

New writings

17%

General Portfolio Categories

Legacy: Performing

$15.5 billion of risk in force

Performing risk in force from 1H 2008 and prior

Continues to perform through the housing

downturn and generates strong annual

revenues

Legacy: Non-performing

$6.3 billion of risk in force

Non-performing risk in force from 1H 2008 and prior 

Key focus of PMI’s loss mitigation efforts

PMI’s Homeownership Preservation Initiatives

Home Affordable Modification Program (HAMP)

Other loan modification programs

New writings

$4.4 billion of risk in force

Risk in force originated in 2H 2008, 2009 and 2010

High quality business originated under new

guidelines and higher premium rates

* At June 30, 2010

Note: Due to rounding, the sum of percentages may not total 100%

Legacy: Non-performing

24%

8

The PMI Group, Inc.

New Writings*

New writings

$4.4 billion of risk in force from $21.0 billion of new insurance written in 2H 2008, 2009 and 2010

High

quality

business

originated

under

new

guidelines

and

higher

premium

rates

* At June 30, 2010

1 Condominium includes Townhouses and Cooperatives

New writings characteristics as percentage of risk in force

Loan Type

100% Fixed Rate

Property Type

82% Single Family

17%

Condominium

¹

Occupancy

95% Owner Occupied

3% Second Home

Average FICO of 742

92% FICO 680 and above

72% FICO 720 and above

Average Loan to Value of 90%

97% at 95% LTV and below

61% at 90% LTV and below

Average loan size of $215,000

Primary Portfolio

Characteristics

10

The PMI Group, Inc.

2.9%

2.5%

7.1%

7.5%

11.6%

14.6%

27.7%

16.0%

7.6%

2.3%

0%

10%

20%

30%

40%

50%

Prior to 2002

2002

2003

2004

2005

2006

2007

2008

2009

2010

$107.6 Billion Primary IIF

$26.3 Billion Primary RIF

U.S. Portfolio Age Distribution

Average

Rate  (1)

(1)

Average loan fixed annual mortgage interest rate

3.0%

2.7%

7.3%

8.2%

12.1%

15.1%

27.8%

15.0%

6.7%

2.2%

0%

10%

20%

30%

40%

50%

Prior to 2002

2002

2003

2004

2005

2006

2007

2008

2009

2010

5.14%

6.24%

6.86%

6.89%

6.16%

6.10%

6.01%

6.85%

7.69%

Note: Due to rounding, the sum of percentages may not total 100%

5.00%

11

The PMI Group, Inc.

Primary Risk in Force by FICO Score

1.7%

7.8%

6.8%

5.9%

5.9%

4.9%

33.8%

34.6%

34.7%

33.1%

29.0%

23.4%

24.1%

24.6%

24.3%

30.3%

30.7%

31.5%

32.7%

36.1%

39.2%

1.7%

3.0%

2.5%

2.1%

1.8%

2.2%

5.0%

5.2%

29.6%

30.8%

24.6%

25.1%

25.1%

38.2%

0%

25%

50%

75%

100%

2004

2005

2006

2007

2008

2009

2010

Less than 575

720 and above

680 -

719

620 -

679

575 -

619

U.S. Portfolio Credit Score Distribution

Excludes unreported FICO scores

12

The PMI Group, Inc.

LTVs between 85.01% and 90%

Primary Risk in Force by Loan to Value

9.2%

9.3%

7.0%

7.0%

7.0%

38.1%

38.2%

36.4%

33.7%

31.0%

29.5%

30.5%

30.6%

6.6%

5.3%

4.6%

3.8%

4.0%

4.0%

11.9%

14.3%

17.6%

20.4%

20.1%

8.9%

7.1%

35.0%

37.5%

37.9%

37.4%

35.9%

29.9%

4.1%

21.5%

24.6%

0%

25%

50%

75%

100%

2004

2005

2006

2007

2008

2009

2010

LTVs above 97%

LTVs between 95.01% and 97%

LTVs between 90.01% and 95%

LTVs of 85% and below

U.S. Portfolio Loan to Value Distribution

Note: Due to rounding, the sum of percentages may not total 100%

13

The PMI Group, Inc.

U.S. Portfolio Geographic Distribution

1

Top ten states as determined by primary RIF on June 30, 2010

2

Default rates as of June 30, 2010, December 31, 2009 and June 30, 2009

9.9%

7.7%

7.6%

5.2%

3.9%

3.4%

4.0%

3.3%

4.7%

3.3%

Florida

9.9%

40.75%

41.14%

34.14%

Texas

7.7%

11.88%

12.97%

9.84%

California

7.6%

33.82%

36.68%

30.84%

Illinois

5.2%

24.92%

24.96%

18.86%

Georgia

4.7%

22.19%

23.15%

17.57%

% of RIF

Jun 2010

Dec 2009

Jun 2009

New York

4.0%

19.55%

18.50%

13.70%

Ohio

3.9%

17.03%

18.04%

14.84%

Pennsylvania

3.4%

15.05%

15.46%

12.27%

New Jersey

3.3%

24.88%

24.06%

18.36%

Washington

3.3%

17.12%

16.50%

11.88%

% of RIF

Jun 2010

Dec 2009

Jun 2009

Top Ten States –

Percent of Primary Risk in Force and Default Rates

Primary Default Rates

Primary Default Rates

2

1

1

2

Focus on Particular  

Primary Portfolio Segments

15

The PMI Group, Inc.

0.31%

0.04%

0.06%

0.07%

0.07%

0.0%

0.3%

0.5%

0.8%

1.0%

2010

2011

2012

`

U.S. Portfolio Interest Rate Adjustments

0.21%

0.06%

0.33%

0.0%

0.3%

0.5%

0.8%

1.0%

2010

2011

2012

Rate Adjustments                    

by Credit Quality

Rate Adjustments of         

Hybrid Loans and Other ARMs

Rate Adjustments in

Distressed Geographic

Regions

0.29%

0.06%

0.11%

0.14%

0.0%

0.3%

0.5%

0.8%

1.0%

2010

2011

2012

Other ARMs

3/27s

Prime

Alt-A

Less than A Quality

Note: 2/28s resets in 2010 and 2011 are 0.01% and 0.00%, respectively

California

All Other

Florida

Auto States

Note: Auto states include Michigan, Ohio, Illinois and Indiana

Note: Percentages are of total Primary RIF at June 30, 2010

2010

2011

2012

Total interest rate adjustments as a percentage of primary risk in force:

0.54%

0.06%

0.00%

0.01%

0.01%

0.01%

16

The PMI Group, Inc.

California

at June 30, 2010

1 Condominium includes Townhouses and Cooperatives

2 Excludes unreported FICO scores

% of 

CA RIF

% of

Total RIF

% of

Total RIF

Note: Due to rounding, the sum of percentages may not total 100%

% of 

CA RIF

$2.0 Billion of Total Risk in Force

7.6% of PMI’s Primary Risk in Force

$292,891 Average Loan Size

MSA Distribution of Total Primary RIF

Oakland-Fremont-Hayward,

CA

–

0.4%

San

Diego-Carlsbad-San

Marcos

–

0.6%

Sacramento--Arden-Arcade—Roseville

–

0.7%

Riverside-San

Bernardino-Ontario

–

1.4%

Los

Angeles-Long

Beach-Glendale

–

1.6%

FICO Scores²

720 and above 

42.6%

3.2%

680-719

26.8%

2.0%

620-679

27.4%

2.1%

575-619

2.4%

0.2%

Less than 575

0.6%

0.0%

Loan to Value

Above 97.00%

12.6%

1.0%

95.01% to 97.00%

2.0%

0.2%

90.01% to 95.00%

19.9%

1.5%

85.01% to 90.00%

51.9%

3.9%

85.00% and below

13.5%

1.0%

Loan Type

Fixed Rate

79.0%

6.0%

ARM

21.0%

1.6%

Property Type¹

Single Family

80.7%

6.1%

Condominium

15.8%

1.2%

Multi-Family and other

3.5%

0.3%

Occupancy

Primary Residence

93.8%

7.1%

Second Home

2.6%

0.2%

Non-owner occupied

3.6%

0.3%

Alt-A

28.6%

2.2%

17

The PMI Group, Inc.

Florida

at June 30, 2010

1 Condominium includes Townhouses and Cooperatives

2 Excludes unreported FICO scores

% of 

FL RIF

% of

Total RIF

% of 

FL RIF

% of

Total RIF

$2.6 Billion of Total Risk in Force

9.9% of PMI’s Primary Risk in Force

$174,284 Average Loan Size

Note: Due to rounding, the sum of percentages may not total 100%

Loan Type

Fixed Rate

84.8%

8.4%

ARM

15.2%

1.5%

Property Type¹

Single Family

72.0%

7.1%

Condominium

26.0%

2.6%

Multi-Family and other

2.0%

0.2%

Occupancy

Primary Residence

80.0%

7.9%

Second Home

11.8%

1.2%

Non-owner occupied

8.2%

0.8%

Alt-A

32.6%

3.2%

Tampa-St. Petersburg-Clearwater, FL–

1.4%

MSA Distribution of Total Primary RIF

Jacksonville, FL–

0.7%

Fort Lauderdale-Deerfield Beach, FL–

1.0%

Miami-Miami Beach-Kendall, FL–

1.6%

Orlando-Kissimmee, FL–

1.5%

FICO Scores²

720 and above 

36.1%

3.6%

680-719

27.2%

2.7%

620-679

30.9%

3.1%

575-619

4.2%

0.4%

Less than 575

1.2%

0.1%

Loan to Value

Above 97.00%

20.1%

2.0%

95.01% to 97.00%

2.7%

0.3%

90.01% to 95.00%

29.6%

2.9%

85.01% to 90.00%

40.9%

4.1%

85.00% and below

6.6%

0.7%

18

The PMI Group, Inc.

Loan Type

Fixed Rate

90.1%         2.3%

ARM

9.9%

0.3%

Property Type¹

Single Family

85.2%         2.2%

Condominium

11.7%

0.3%

Multi-Family and other

3.2%

0.1%

Occupancy

Primary Residence

86.5%         2.2%

Second Home

8.0%

0.2%

Non-owner occupied

5.4%

0.1%

Alt-A

20.2%

0.5%

Arizona

at

June 30, 2010

1 Condominium includes Townhouses and Cooperatives

2 Excludes unreported FICO scores

% of            % of

AZ RIF

Total RIF

% of      

AZ RIF

% of

Total RIF

FICO Scores²

720 and above 

38.9%

1.0%

680-719

25.8%

0.7%

620-679

29.4%

0.8%

575-619

3.7%

0.1%

Less than 575

1.0%

0.0%

Loan to Value

Above  97.00%

26.8%

0.7%

95.01% to 97.00%

2.7%

0.1%

90.01% to 95.00%

24.3%

0.6%

85.01% to 90.00%

39.3%

1.0%

85.00% and below

7.0%

0.2%

$0.7 Billion of Total Risk in Force

2.6% of PMI’s Primary Risk in Force

$186,077 Average Loan Size

Note: Due to rounding, the sum of percentages may not total 100%

Lake Havasu City-Kingman, AZ-0.1%

Yuma, AZ –

0.1%

Prescott, AZ-0.1%

Tucson, AZ-0.4%

Phoenix-Mesa, AZ –

1.8%

MSA Distribution of Total Primary RIF

19

The PMI Group, Inc.

Loan Type

Fixed Rate

83.1%         1.3%

ARM

16.9%

0.3%

Property

Type

¹

Single Family

79.2%         1.2%

Condominium

19.1%

0.3%

Multi-Family and other

1.7%

0.0%

Occupancy

Primary Residence

83.1%         1.3%

Second Home

12.2%

0.2%

Non-owner occupied

4.8%

0.1%

Alt-A

27.8%

0.4%

Nevada

at

June 30, 2010

1 Condominium includes Townhouses and Cooperatives

2 Excludes unreported FICO scores

% of            % of

NV RIF

Total RIF

% of      

NV RIF

% of

Total RIF

FICO

Scores

²

720 and above 

40.9%

0.6%

680-719

26.8%

0.4%

620-679

28.6%

0.4%

575-619

2.6%

0.0%

Less than 575

0.5%

0.0%

Loan to Value

Above  97.00%

18.4%

0.3%

95.01% to 97.00%

1.7%

0.0%

90.01% to 95.00%

27.4%

0.4%

85.01% to 90.00%

45.0%

0.7%

85.00% and below

7.5%

0.1%

Note: Due to rounding, the sum of percentages may not total 100%

Las Vegas-Paradise, NV-1.3%

Reno-Sparks, NV-0.2%

Carson City, NV-0.01%

MSA Distribution of Total Primary RIF

$0.4 Billion of Total Risk in Force

1.6% of PMI’s Primary Risk in Force

$228,584 Average Loan Size

20

The PMI Group, Inc.

Alt-A

at June 30, 2010

1 Condominium includes Townhouses and Cooperatives

2 Excludes unreported FICO scores

% of 

Alt-A RIF

% of

Total RIF

% of

Total RIF

$4.3 Billion of Total Risk in Force

16.3% of PMI’s Primary Risk in Force

$206,880 Average Loan Size

Guideline Changes

% of 

Alt-A RIF

Note: Due to rounding, the sum of percentages may not total 100%

FICO Scores²

720 and above 

37.8%

6.2%

680-719

35.1%

5.7%

620-679

27.1%

4.4%

575-619

0.0%

0.0%

Less than 575

0.0%

0.0%

Loan to Value

Above 97.00%

12.7%

2.1%

95.01% to 97.00%

0.2%

0.0%

90.01% to 95.00%

27.1%

4.4%

85.01% to 90.00%

49.9%

8.1%

85.00% and below

10.1%

1.6%

With the exception of previously issued

commitments, effective June 1, 2008,

PMI no longer insures Alt-A

Loan Type

Fixed Rate

77.1%       12.6%

ARM

22.9%

3.7%

Property Type¹

Single Family

77.7%       12.7%

Condominium

15.2%

2.5%

Multi-Family and other

7.1%

1.2%

Occupancy

Primary Residence

81.7%       13.3%

Second Home

6.7%

1.1%

Non-owner occupied

11.6%

1.9%

State Distribution of Alt-A RIF

0.00% to 1.00%

1.00% to 2.00%

2.00% to 5.00%

5.00% to 10.00%

>10.00%

Primary Portfolio Characteristics

by Vintage

22

The PMI Group, Inc.

$3,543

$426

$454

$2,774

$1,870

$2,605

$1,990

$4,289

$5,297

$1,300

$26,304

$10,320

$7,635

$6,402

$24,008

43.3%

21.3%

19.5%

40.8%

34.6%

42.4%

26.9%

42.8%

50.1%

35.2%

20.8%

11.4%

20.9%

27.5%

42.0%

Total

720 and

above

680 -

719

620 -

679

575 -

619

Less

than 575

Fixed

Rate

ARMs

2/28s

Interest

Only

LTV>97

Alt-A

Calif.

Florida

Auto

States

Risk Characteristics

Risk Characteristics: Total Primary Portfolio

Risk in Force (dollars in millions)

Default Rate (as measured by policies)

Credit Score

Total

Loan Type

Total Primary Portfolio:

PMI’s total primary book is primarily driven by the flow channel

Loans are primarily fixed rate and owner occupied with FICO scores greater than 620

Certain geographies and select products have exhibited heightened levels of defaults

Total Primary Risk in Force as of June 30, 2010

23

The PMI Group, Inc.

Portfolio Characteristics –

Primary RIF as of June 30, 2010

All $  in Millions, except for Average Loan Size

Specific Portfolio Characteristics

Interest Only

LTV > 97%

Alt-A

California

Florida

Auto States

Avg Loan Size

Avg LTV

Avg FICO

Total

Credit Score

Loan Type

Less than 575

575 -

619

720 and above

ARM

Total

2/28s

1

Excludes unreported FICO scores   

At

origination

Note:  Categories are not mutually exclusive except for Credit Score and Loan Type.  Vintage refers to the year that the insurance was issued.

Total Portfolio

$26,303.9

$454.1

$1,299.7

$7,635.5

$6,402.2

$10,320.3

$24,008.0

$1,869.9

$426.0

Default Rate

20.8%

43.3%

35.2%

27.5%

20.9%

11.4%

19.5%

42.0%

50.1%

2010 Vintage

$577.6

$0.1

$0.0

$0.4

$91.3

$485.5

$576.9

$0.7

$0.0

Default Rate

0.1%

0.0%

0.0%

0.0%

0.2%

0.1%

0.1%

0.0%

0.0%

2009 Vintage

$1,753.7

$0.2

$0.3

$65.1

$309.2

$1,376.1

$1,749.9

$3.8

$0.0

Default Rate

1.1%

0.0%

25.0%

6.8%

2.1%

0.6%

1.1%

5.8%

0.0%

2008 Vintage

$3,933.9

$4.8

$46.2

$722.3

$1,028.7

$2,128.1

$3,884.8

$49.2

$0.0

Default Rate

12.9%

43.1%

34.2%

23.0%

14.8%

7.6%

12.8%

25.0%

0.0%

2007 Vintage

$7,299.6

$180.0

$487.5

$2,290.0

$1,853.9

$2,468.6

$6,805.2

$457.6

$36.9

Default Rate

30.2%

49.5%

41.1%

34.0%

30.0%

20.8%

29.3%

42.5%

57.8%

2006 Vintage

$3,979.5

$52.2

$175.4

$1,423.7

$1,032.7

$1,275.1

$3,239.1

$536.8

$203.6

Default Rate

30.0%

48.0%

38.3%

35.0%

30.5%

21.2%

26.2%

53.7%

59.7%

2005 Vintage

$3,195.6

$42.4

$144.3

$1,177.9

$818.5

$988.0

$2,558.6

$481.6

$155.4

Default Rate

22.9%

40.6%

33.0%

27.7%

23.0%

14.4%

19.3%

45.2%

41.0%

2004 Vintage and Prior

$5,563.9

$174.4

$446.1

$1,955.9

$1,268.1

$1,598.9

$5,193.6

$340.2

$30.1

Default Rate

16.4%

37.8%

29.8%

20.3%

13.2%

7.7%

15.6%

29.7%

39.5%

Total Portfolio

$2,773.6

$5,296.9

$4,289.1

$1,989.9

$2,605.2

$3,542.7

$161,469

93%

697

Default Rate

42.8%

26.9%

42.4%

34.6%

40.8%

21.3%

2010 Vintage

$0.1

$0.0

$0.0

$38.8

$7.8

$68.3

$214,238

90%

757

Default Rate

0.0%

0.0%

0.0%

0.0%

0.6%

0.0%

2009 Vintage

$2.7

$0.0

$1.9

$57.3

$33.6

$211.0

$212,837

90%

751

Default Rate

5.6%

0.0%

30.0%

0.9%

2.4%

1.1%

2008 Vintage

$213.4

$235.7

$197.1

$399.6

$200.4

$483.1

$203,215

91%

721

Default Rate

25.4%

22.2%

37.1%

19.9%

29.8%

13.3%

2007 Vintage

$1,366.2

$2,523.0

$1,751.4

$696.8

$814.7

$813.8

$186,151

94%

686

Default Rate

47.1%

31.9%

47.7%

49.1%

53.2%

28.3%

2006 Vintage

$701.8

$1,058.5

$1,242.4

$317.5

$612.8

$525.1

$170,696

93%

691

Default Rate

45.3%

26.8%

47.7%

57.5%

56.9%

27.3%

2005 Vintage

$417.5

$613.7

$665.9

$266.9

$466.2

$481.8

$154,660

92%

692

Default Rate

36.8%

22.5%

39.2%

42.0%

43.5%

21.6%

2004 Vintage and Prior

$72.0

$866.0

$430.4

$213.2

$469.6

$959.6

$109,107

93%

684

Default Rate

32.3%

19.8%

25.2%

15.2%

21.6%

19.8%

2

Fixed Rate

620 -

679

680 -

719

1

2

24

The PMI Group, Inc.

$21,582

$5,699

$6,493

$9,391

$22,999

$991

$4,353

$3,376

$1,618

$2,260

$1,417

$2,176

$270

$0

$3,098

42.3%

26.4%

20.4%

11.1%

19.7%

34.7%

43.6%

27.1%

43.2%

33.5%

40.7%

19.0%

19.9%

46.5%

Total

720 and

above

680 -

719

620 -

679

575 -

619

Less

than 575

Fixed

Rate

ARMs

2/28s

Interest

Only

LTV>97

Alt-A

Calif.

Florida

Auto

States

Flow Risk in Force as of June 30, 2010

Risk Characteristics: Flow

Risk in Force (dollars in millions)

Default Rate (as measured by policies)

Credit Score

Total

Loan Type

Risk Characteristics

Primary Flow Portfolio:

PMI’s primary flow book represents 87% of primary insurance and is primarily owner occupied, fixed

rate loans with FICO scores greater than 620

Approximately 93% of flow risk in force is within conforming loan limits

Approximately 52% of flow risk in force is in captive reinsurance agreements

25

The PMI Group, Inc.

Portfolio Characteristics –

Flow RIF as of June 30, 2010

All $  in Millions, except for Average Loan Size

Credit Score

Loan Type

Less than 575

575 -

619

720 and above

ARM

Total

2/28s

1

Excludes unreported FICO scores  ²

At origination

Note:  Categories are not mutually exclusive except for Credit Score and Loan Type. Vintage refers to the year that the insurance was issued.

Interest Only

LTV > 97%

Alt-A

California

Florida

Auto States

Avg Loan Size

Avg LTV

Avg FICO

Specific Portfolio Characteristics

Total Portfolio

$22,999.1

$269.9

$990.6

$6,492.8

$5,699.0

$9,390.5

$21,581.9

$1,417.2

n/a

Default Rate

19.7%

46.5%

34.7%

26.4%

20.4%

11.1%

19.0%

42.3%

n/a

2010 Vintage

$577.6

$0.1

$0.0

$0.4

$91.3

$485.5

$576.9

$0.7

n/a

Default Rate

0.1%

0.0%

0.0%

0.0%

0.2%

0.1%

0.1%

0.0%

n/a

2009 Vintage

$1,753.6

$0.2

$0.3

$65.1

$309.2

$1,376.1

$1,749.8

$3.8

n/a

Default Rate

1.1%

0.0%

25.0%

6.9%

2.1%

0.6%

1.1%

5.8%

n/a

2008 Vintage

$3,879.2

$3.9

$43.7

$706.7

$1,014.3

$2,106.7

$3,835.3

$43.9

n/a

Default Rate

12.8%

40.4%

33.8%

22.9%

14.7%

7.6%

12.7%

26.1%

n/a

2007 Vintage

$6,080.9

$126.3

$392.8

$1,976.3

$1,580.1

$1,985.8

$5,795.8

$285.1

n/a

Default Rate

31.3%

56.8%

42.7%

34.5%

31.5%

22.4%

30.7%

51.5%

n/a

2006 Vintage

$2,999.7

$22.2

$121.2

$1,013.1

$807.8

$1,015.1

$2,576.0

$423.8

n/a

Default Rate

28.0%

50.7%

36.6%

31.7%

29.3%

20.8%

25.3%

55.9%

n/a

2005 Vintage

$2,723.0

$19.1

$102.7

$957.4

$711.9

$907.4

$2,344.5

$378.5

n/a

Default Rate

21.5%

43.5%

31.1%

25.8%

22.2%

14.4%

19.1%

44.2%

n/a

2004 Vintage and Prior

$4,985.0

$98.0

$330.0

$1,773.8

$1,184.5

$1,513.9

$4,703.6

$281.4

n/a

Default Rate

15.6%

37.3%

28.3%

19.9%

13.1%

7.8%

15.1%

26.7%

n/a

Total Portfolio

$2,175.8

$4,353.1

$3,375.5

$1,617.9

$2,260.2

$3,097.8

$161,952

93%

701

Default Rate

43.6%

27.1%

43.2%

33.5%

40.7%

19.9%

2010 Vintage

$0.1

n/a

n/a

$38.8

$7.8

$68.3

$214,238

90%

757

Default Rate

0.0%

n/a

n/a

0.0%

0.6%

0.0%

2009 Vintage

$2.7

$0.0

$1.9

$57.3

$33.6

$211.0

$212,840

90%

751

Default Rate

5.6%

0.0%

30.0%

0.9%

2.4%

1.1%

2008 Vintage

$212.4

$216.3

$195.5

$398.2

$198.7

$478.2

$203,341

91%

722

Default Rate

25.3%

22.4%

37.5%

19.9%

29.6%

13.1%

2007 Vintage

$1,191.1

$2,136.2

$1,527.7

$596.6

$676.5

$681.7

$187,483

94%

688

Default Rate

48.6%

32.9%

48.9%

51.4%

56.9%

28.1%

2006 Vintage

$445.1

$806.0

$799.0

$186.9

$493.4

$381.8

$170,213

93%

695

Default Rate

46.7%

26.6%

50.5%

58.4%

56.3%

24.5%

2005 Vintage

$260.8

$547.5

$492.0

$158.5

$430.8

$400.3

$152,342

93%

696

Default Rate

36.6%

21.3%

39.7%

43.9%

43.1%

20.5%

2004 Vintage and Prior

$63.4

$647.0

$359.3

$181.6

$419.3

$876.5

$109,314

93%

689

Default Rate

30.5%

18.6%

24.9%

14.4%

21.4%

18.9%

2

Fixed Rate

680 -

719

620 -

679

1

26

The PMI Group, Inc.

Risk Characteristics: Structured Transactions

$184

$598

$944

$426

$445

$2,426

$345

$372

$914

$309

$3,305

$930

$1,143

$703

$453

50.1%

39.4%

41.3%

30.0%

23.1%

41.5%

40.2%

39.6%

26.0%

39.7%

36.5%

28.0%

15.1%

25.2%

34.2%

Total

720 and

above

680 -

719

620 -

679

575 -

619

Less

than 575

Fixed

Rate

ARMs

2/28s

Interest

Only

LTV>97

Alt-A

Calif.

Florida

Auto

States

`

Risk in Force (dollars in millions)

Default Rate (as measured by policies)

Credit Score

Total

Loan Type

Risk Characteristics

Primary Structured Portfolio:

PMI’s primary structured book represents approximately 13% of total primary insurance

Highest defaults are reported in the 2/28 hybrid ARMs product, in which:

All of the 2/28 hybrid ARM risk in force has passed the interest rate reset date

Monthly reporting of notices of default began to decline in August 2007

Structured Transactions Risk in Force as of June 30, 2010

27

The PMI Group, Inc.

Portfolio Characteristics –

Structured RIF at June 30, 2010

All $  in Millions, except for Average Loan Size

1

Excludes unreported FICO scores     At origination

Note:  Categories are not mutually exclusive except for Credit Score and Loan Type. Vintage refers to the year that the insurance was issued.

Credit Score

Loan Type

Less than 575

575 -

619

720 and above

ARM

Total

2/28s

Interest Only

LTV > 97%

Alt-A

California

Florida

Auto States

Avg Loan Size

Avg LTV

Avg FICO

Specific Portfolio Characteristics

Total Portfolio

$3,304.8

$184.3

$309.1

$1,142.7

$703.2

$929.9

$2,426.2

$452.7

$426.0

Default Rate

28.0%

39.4%

36.5%

34.2%

25.2%

15.1%

23.1%

41.3%

50.1%

2010 Vintage

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Default Rate

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

2009 Vintage

$0.1

$0.0

$0.0

$0.1

$0.0

$0.0

$0.1

$0.0

$0.0

Default Rate

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

2008 Vintage

$54.7

$0.9

$2.4

$15.6

$14.4

$21.4

$49.4

$5.3

$0.0

Default Rate

17.2%

50.0%

39.3%

25.6%

16.7%

5.7%

17.2%

17.6%

#DIV/0!

2007 Vintage

$1,218.7

$53.7

$94.7

$313.7

$273.8

$482.8

$1,009.4

$172.4

$36.9

Default Rate

26.0%

38.9%

37.1%

31.7%

22.6%

14.3%

22.7%

36.8%

57.8%

2006 Vintage

$979.8

$30.0

$54.2

$410.7

$224.9

$260.1

$663.2

$113.0

$203.6

Default Rate

36.7%

45.8%

42.0%

44.5%

35.1%

23.0%

29.8%

47.9%

59.7%

2005 Vintage

$472.6

$23.3

$41.6

$220.5

$106.6

$80.5

$214.1

$103.1

$155.4

Default Rate

31.6%

37.8%

38.3%

38.0%

30.0%

14.3%

21.6%

48.8%

41.0%

2004 Vintage and Prior

$578.9

$76.4

$116.2

$182.1

$83.6

$85.0

$490.0

$58.8

$30.1

Default Rate

22.3%

38.4%

33.6%

23.3%

14.4%

7.1%

19.6%

41.0%

39.5%

Total Portfolio

$597.8

$943.8

$913.7

$372.1

$345.1

$444.9

$158,340

92%

669

Default Rate

39.7%

26.0%

39.6%

40.2%

41.5%

30.0%

2010 Vintage

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Default Rate

n/a

n/a

n/a

n/a

n/a

n/a

2009 Vintage

n/a

n/a

n/a

n/a

n/a

n/a

$186,111

88%

722

Default Rate

n/a

n/a

n/a

n/a

n/a

n/a

2008 Vintage

$1.0

$19.4

$1.7

$1.3

$1.7

$4.8

$197,507

93%

698

Default Rate

30.8%

20.9%

7.8%

27.6%

41.9%

27.4%

2007 Vintage

$175.1

$386.8

$223.7

$100.2

$138.2

$132.2

$180,791

94%

677

Default Rate

37.6%

27.3%

40.5%

37.8%

39.0%

29.4%

2006 Vintage

$256.6

$252.5

$443.3

$130.5

$119.4

$143.4

$172,317

91%

679

Default Rate

42.4%

27.6%

43.5%

55.9%

59.5%

35.0%

2005 Vintage

$156.6

$66.1

$173.8

$108.4

$35.4

$81.5

$170,091

89%

667

Default Rate

37.4%

34.9%

37.6%

38.4%

48.6%

26.4%

2004 Vintage and Prior

$8.5

$219.0

$71.1

$31.6

$50.3

$83.1

$107,588

91%

645

Default Rate

44.3%

22.4%

26.2%

20.6%

23.1%

27.5%

Fixed Rate

680 -

719

620 -

679

2

2

1

Primary Portfolio            

Vintage Development

29

The PMI Group, Inc.

Primary Portfolio Vintage Development

1

13

25

37

49

Time Since Policy Issue Date (Years)

2005

2006

2007

2008

2009

Notice of Default Received by Vintage

Note: Vintage refers to the origination year.

1

2

3

4

5

Modified Pool Characteristics

by Vintage

31

The PMI Group, Inc.

Modified Pool Portfolio Characteristics at June 30, 2010

All $ in Millions

Modified Pool:

Data shown in this exhibit is an aggregation of unique pools by book years

Remaining

risk

in

force

³

for

modified

pool

was

approximately

$550

million

at

June

30,

2010

Modified

Pool

with

Deductibles

remaining

risk

in

force

³

was

approximately

$116

million

Modified

Pool

without

Deductibles

remaining

risk

in

force

³

was

approximately

$434

million

Modified Pool with Deductibles

Modified Pool without Deductibles

All $ in Millions

1

PMI’s claims paid to date relates to the modified pool contracts in force as of June 30, 2010 and therefore excludes any payments made as part of restructurings.

2

Established loss reserves for non-performing (i.e. delinquent) modified pool loans, which represents PMI’s estimate of losses for those loans at June 30, 2010.

3

Remaining risk in force excludes non-performing risk exposures, for which loss reserves have been established. 

2004 and Prior

2005

2006

2007

2008 / 2009

Insurance in Force

$3,528

$290

$111

$1,087

n/a

Stop Loss Amount

$137

$33

$12

$44

n/a

Losses Applicable to Deductible

$19

$8

$2

$5

n/a

Deductible Balance

$39

$7

$1

$16

n/a

PMI's

Claims

Paid

to

Date

¹

$0

$0

$0

$0

n/a

Reserves

for

Losses

²

$6

$4

$1

$2

n/a

Remaining

Risk

In

Force

³

$73

$13

$8

$22

n/a

2004 and Prior

2005

2006

2007

2008 / 2009

Insurance in Force

$2,011

$685

$3,571

n/a

n/a

Stop Loss Amount

$483

$28

$305

n/a

n/a

PMI's

Claims

Paid

to

Date

¹

$54

$8

$66

n/a

n/a

Reserves

for

Losses

²

$38

$11

$56

n/a

n/a

Remaining

Risk

In

Force

³

$242

$8

$184

n/a

n/a

32

The PMI Group, Inc.

Modified Pool Portfolio Characteristics at June 30, 2010

Excludes unreported FICO scores

Excludes Balloon, Buy Down, and Other 

At origination

Note:  PMI did not insure any modified pool contracts with deductibles in 2008 or 2009 and did not insure any modified pool contracts without deductibles in 2007, 2008 or 2009 

Categories are not mutually exclusive except for Credit Score and Loan Type. Vintage refers to the year that the insurance was issued.

All $  in Millions, except for Average Loan Size

Specific Portfolio Characteristics

Specific Portfolio Characteristics

Credit Score

Loan Type

Credit Score

Loan Type

Total

Total

Fixed Rate

ARM

2/28s

Fixed Rate

ARM

2/28s

Deductible

Non Deductible

Less than 575

575 -

619

620 -

679

680 -

719

720 and above

Less than 575

575 -

619

620 -

679

680 -

719

720 and above

Interest Only

LTV > 97%

Alt-A

California

Florida

Auto States

Avg Loan Size

Avg LTV

Avg FICO

Interest Only

LTV > 97%

Alt-A

California

Florida

Auto States

Avg Loan Size

Avg LTV

Avg FICO

Total Portfolio

$5,016

$186

$381

$1,331

$1,032

$2,084

$4,505

$510

$0

2007 Vintage

$1,087

$115

$253

$454

$187

$78

$684

$403

$0

2006 Vintage

$111

$36

$38

$32

$3

$0

$111

$0

$0

2005 Vintage

$290

$0

$1

$95

$82

$111

$211

$77

$0

2004 Vintage and Prior

$3,528

$35

$89

$749

$759

$1,895

$3,499

$30

$0

Total Portfolio

$110

$594

$1,760

$706

$316

$655

$135,675

74

705

2007 Vintage

$0

$578

$0

$110

$87

$138

$171,696

95

640

2006 Vintage

$0

$14

$0

$6

$9

$15

$138,656

82

595

2005 Vintage

$0

$0

$236

$52

$29

$24

$172,519

77

704

2004 Vintage and Prior

$110

$1

$1,524

$539

$192

$478

$125,292

69

722

Total Portfolio

$6,266

$309

$698

$2,444

$1,463

$1,178

$3,777

$2,444

$0

2006 Vintage

$3,571

$300

$660

$1,595

$696

$319

$1,300

$2,270

$0

2005 Vintage

$685

$0

$4

$169

$219

$279

$680

$5

$0

2004 Vintage and Prior

$2,011

$10

$34

$680

$548

$579

$1,797

$169

$0

Total Portfolio

$356

$1,383

$2,167

$981

$549

$756

$143,411

86

669

2006 Vintage

$115

$1,322

$158

$396

$359

$596

$151,834

94

647

2005 Vintage

$106

$0

$527

$164

$35

$31

$187,573

74

713

2004 Vintage and Prior

$134

$61

$1,482

$420

$154

$129

$121,667

78

693

Modified Pool Portfolio Insurance in Force

2

1

3

1

3

1

2

3

2

Captive Reinsurance

34

The PMI Group, Inc.

$82

$174

$350

$491

$34

2007

2008

2009

2010

2011

Captive reinsurers are wholly-owned, bankruptcy remote subsidiaries of originators that provide mezzanine level reinsurance

for loans for which PMI has provided primary mortgage insurance coverage.

PMI is the named beneficiary on captive trust balances totaling approximately $900 million as of June 30, 2010.

At June 30, 2010, approximately 52.0% of flow risk in force was covered by captive reinsurance agreements, including:

Based on current expectations of defaults, PMI forecasts the following approximate reductions to total incurred losses as a

result of captive reinsurance agreements in 2010 and 2011:

Benefit from Captive Reinsurance Agreements

PMI’s Captive Reinsurance Agreements

(Dollars in Millions)

Flow Risk in Force Covered by Captives

~ 55% of LTVs >97%*

~ 60% of less-than-A quality

~ 50% of Alt-A

~ 52% of prime

*

Captive coverage for LTVs greater than 97% may overlap with other listed categories

Actual

Projected

35

The PMI Group, Inc.

PMI’s Captive Reinsurance Agreements

PMI Mortgage Insurance Co.

Captive Reinsurance Agreements Analysis

(Dollars in Millions)

Note: Due to rounding, the totals may not equal the sum of each category

Note:

For

the

combined

captive

trust

arrangements,

the

weighted

average

entry

point

is

4.06%

and

the weighted

average

exit

point

is

11.80%.

Original RIF has been recalculated for the impact of rescissions.

The cumulative captive benefit on this page is for excess-of-loss (XOL) captive reinsurance agreements only.

Original

Progression to

Book Year

RIF

Attachment Point

2004 & Prior Total

$12,018

0 - 50%

$645

$183.1

5,912

50 - 75%

605

165.0

2,044

75 - 99%

336

70.0

7,069

Attached

1,251

308.4

$27,043

$2,838

$726.5

$59.6

$4.4

2005 Total

$24

0 - 50%

$8

$0.3

32

50 - 75%

21

0.8

8

75 - 99%

4

0.4

4,502

Attached

1,916

525.4

$4,566

$1,949

$526.9

$242.5

$125.6

2006 Total

$4

0 - 50%

$2

$0.1

27

50 - 75%

15

0.7

22

75 - 99%

12

0.9

3,266

Attached

1,892

558.6

$3,319

$1,921

$560.3

$246.1

$124.1

2007 Total

$35

0 - 50%

$22

$0.6

0

50 - 75%

0

0.0

9

75 - 99%

7

0.4

4,818

Attached

3,653

756.1

$4,862

$3,681

$757.1

$327.1

$41.8

2008 Total

$167

0 - 50%

$123

$2.3

212

50 - 75%

167

6.8

98

75 - 99%

79

3.8

1,259

Attached

1,038

89.0

$1,736

$1,408

$101.9

$30.0

$0.0

Cumulative Captive Benefit (MM)

$905.3

$295.9

Total Captive Trust Balances (MM)

$900.2

Captive

Benefit

Current

Ever to Date

Captive

RIF

Incurred Losses

Benefit

Cumulative

June 30, 2010

Incurred Loss

Cumulative

Paid Loss

$802

$184.9

640

161.1

534

82.4

1,154

259.0

$3,129

$687.4

$44.1

$2.8

$32

$1.0

0

0.0

22

2.4

2,037

456.8

$2,091

$460.1

$212.4

$74.6

$19

$0.8

4

0.2

11

0.9

2,052

488.6

$2,087

$490.5

$235.3

$56.7

$24

$0.5

0

0.0

8

0.5

3,911

667.8

$3,943

$668.8

$318.2

$0.0

$245

$4.7

366

13.1

8

0.4

874

66.8

$1,493

$85.0

$23.8

$0.0

$833.8

$134.2

$940.7

Benefit

Captive

Benefit

Cumulative

Cumulative

December 31, 2009

Paid Loss

Incurred Loss

Captive

Current

RIF

Ever to Date

Incurred Losses

$1,055

$190.1

809

154.4

624

88.5

959

185.8

$3,446

$618.8

$19.7

$1.7

$34

$0.8

4

0.3

34

2.6

2,175

371.9

$2,248

$375.6

$173.5

$36.6

$25

$0.5

16

0.8

0

0.0

2,203

396.1

$2,244

$397.4

$196.4

$14.1

$28

$0.4

0

0.0

8

0.4

4,188

511.9

$4,224

$512.7

$253.1

$0.0

$652

$8.9

355

13.2

148

6.3

437

26.8

$1,593

$55.2

$10.5

$0.0

$653.3

$52.4

$898.0

Incurred Losses

Ever to Date

Benefit

Benefit

Incurred Loss

Paid  Loss

Captive

Captive

Cumulative

Cumulative

June 30, 2009

RIF

Current

36

The PMI Group, Inc.

Forward-Looking Statement

Cautionary Statement:

Statements

in

this

supplement

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.

Such

statements

include

our

expectations

regarding

the

quality

of

new

insurance

writings

in

the

second

half

of

2008,

2009

and

2010

and

reductions

to

incurred

losses

provided

by

captive

reinsurance

agreements.

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:

Potential significant future losses as a result of a variety of factors that are outside our control and difficult to predict.  Among other factors

affecting future losses and that could cause losses to increase more rapidly or to higher levels than expected are the following:

Future economic conditions, including unemployment rates, interest rates and home prices.

The level of new delinquencies, the cure and claim rates of delinquencies (including the level of future modifications of delinquent

loans) and the claim severity within MIC’s mortgage insurance portfolio.

The level of future rescissions and claim denials and future reversals of rescission and claim denials.

The timing of future claims paid; and

Future

levels

of

new

insurance

written

(and

the

profitability

of

such

business),

which

will

impact

future

premiums

written

and

earned

and future losses.

Even with our improved capital position following our recent capital raise, increased losses or an acceleration of expected losses could

cause

MIC

to

be

out

of

compliance

with

applicable

regulatory

requirements

and

could

require

MIC

to

cease

writing

new

business

in

the

future;

In

sixteen

states,

so

long

as

a

mortgage

insurer

does

not

meet

a

required

minimum

policyholders’

position

or

exceeds

a

maximum

permitted risk-to-capital ratio (generally 25 to 1), it may be prohibited from writing new business.   In some states, including Arizona,

MIC’s state of domicile, the applicable regulator has discretion as to whether the mortgage insurer may continue to write new

business.

In the event that we are unable to write new mortgage insurance in a limited number of states for the reasons discussed above, we

have a plan to enable us to write new mortgage insurance in those states out of an existing subsidiary, PMI Mortgage

Assurance

Co.

There

can

be

no

assurance

that

we

will

be

able

to

effectuate

this

plan.

Our

expectation

that,

because

our

loss

reserves

are

not

intended

to

be

an

estimate

of

total

future

losses,

our

ultimate

actual

losses

will

be

higher than, and could substantially exceed, our loss reserve estimates;

37

The PMI Group, Inc.

Forward-Looking Statement

The risk that our underwriting policies may not anticipate all risks and/or the magnitude of potential loss;

The potential litigation risk associated with our rescission activity and, in the event that we are unsuccessful in defending our rescission

decisions, the need to establish loss reserves for, and reassume

risk on, delinquent rescinded loans;

The risk that we overestimate the number of loans that ultimately cure as a result of loan modifications, which management factors in when

establishing loss reserve estimates, and which could result in loss reserves that are insufficient to cover our losses on existing delinquent

loans;

The aging of our mortgage insurance portfolio and changes in severity or frequency of losses associated with our mortgage insurance

policies;

The performance of our insured portfolio of higher risk loans, such as Alternative-A (“Alt-A”) and less than-A quality loans, and adjustable

rate and interest-only loans, which have resulted in increased losses in prior periods and are expected to result in further losses;

The risk that Fannie Mae and/or Freddie Mac (collectively, the “GSEs”) determine that we are no longer an eligible provider of mortgage

insurance;

The risk that the value of the contingent note we received in connection with the sale of PMI Australia is reduced and, therefore, reduces or

eliminates the commitments of the lenders under our credit facility and requires us to repay amounts borrowed under the credit facility;

Further

downgrades

or

other

ratings

actions

with

respect

to

our

credit

ratings

or

insurer

financial

strength

ratings

assigned

by

the

major

rating agencies;

Heightened

competition

from

the

Federal

Housing

Administration

and

the

Veterans’

Administration

or

other

private

mortgage

insurers;

Potential changes in the charters or business practices of the GSEs, the largest purchasers of mortgages;

The potential future impairment of the value of certain securities held in our investment portfolios as a result of the significant volatility in the

capital markets;

Volatility in our earnings caused by changes in the fair value of our derivative contracts and our need to reevaluate the premium deficiencies

in our mortgage insurance business on a quarterly basis; and

Heightened regulatory and litigation risks faced by the financial services industry, the mortgage insurance industry and the Company and

MIC;

Potential additional losses in our European operations as a result of deteriorating economic conditions and the potential that we must make

additional

capital

contributions

to

those

operations,

and/or

CMG

Mortgage

Insurance

Company,

pursuant

to

capital

support

agreements.

Other

risks

and

uncertainties

are

discussed

in

our

SEC

filings,

including

in

Item

1A

of

our

Quarterly

Report

on

Form

10-Q

for

the

quarter

ended

March

31,

2010,

and

our

Annual

Report

on

Form

10-K

for

the

year

ended

December

31,

2009.

We

undertake

no

obligation

to

update

forward-looking

statements.