The PMI Group, Inc. Reports First Quarter 2009 Financial Results

WALNUT CREEK, Calif., May 11 /PRNewswire-FirstCall/ -- The PMI Group, Inc.
(NYSE: PMI) (the "Company") today reported a loss from continuing operations
for the first quarter of 2009 of $115.3 million, or $1.41 per basic and
diluted(1) share, compared with a loss from continuing operations of $305.9
million, or $3.77 per basic and diluted(1) share, for the same period one year
ago. The loss from continuing operations for the first quarter of 2009 was
primarily driven by continued high losses and loss adjustment expenses (LAE)
in U.S. Mortgage Insurance Operations.

The PMI Group, Inc. First Quarter Results

Three Months Ended March 31,
(Dollars in thousands, except per share data) 2009 2008
Loss from continuing operations $(115,261) $(305,916)
(Loss) income from discontinued operations,
net of income taxes* (30) 31,952
---- ------
Net loss $(115,291) $(273,964)
========== ==========

Diluted loss from continuing operations per
share $(1.41) $(3.77)
Diluted income from discontinued operations
per share - 0.40
---- ----
Diluted net loss per share $(1.41) $(3.37)
======= =======

* Includes the results of PMI Australia, PMI Asia and PMI Guaranty.

Selected Consolidated Continuing Operating Results

Consolidated net premiums written for the first quarter totaled $184.8 million
compared with $212.7 million for the same period one year ago. The decrease
was due primarily to lower levels of new insurance written and higher refunded
premiums from rescissions of insurance previously written.

Consolidated premiums earned for the first quarter were $188.1 million
compared with $211.0 million for the same period one year ago. The decrease
was due primarily to lower levels of new insurance written and premium refunds
related to rescissions of insurance previously written, partially offset by
higher persistency in the U.S. Mortgage Insurance Operations.

Consolidated losses and LAE, which includes paid claims, loss adjustment
expenses and additions to reserve for losses, for the first quarter was $382.9
million compared with $556.1 million for the same period one year ago. The
decrease in the first quarter compared with the same period one year ago was
primarily due to lower net loss reserve additions $163.6 million, partially
offset by higher paid claims in U.S. Mortgage Insurance Operations and PMI
Europe.

Consolidated reserve for losses and LAE totaled $2.9 billion as of March 31,
2009 compared with $2.7 billion as of December 31, 2008 and $1.6 billion as of
March 31, 2008. Reserves for losses and LAE in the U.S. Mortgage Insurance
Operations increased in the first quarter of 2009 by a gross amount of $230.3
million to $2.9 billion and was partially offset by a $66.7 million credit
from reinsurance recoverables, primarily from captive reinsurance agreements.
The increase in this quarter for reserves for losses and LAE was primarily due
to increases in notices of default, and higher expected claim rates and claim
sizes in the U.S. Mortgage Insurance Operations.

Consolidated other underwriting and operating expenses for the first quarter
was $40.0 million compared with $47.6 million for the same period one year
ago. The decrease in other underwriting and operating expenses in the first
quarter compared to the corresponding period in 2008 was primarily due to a
decrease in employee share option expenses in the Corporate and Other Segment,
offset by an increase in deferred compensation expenses in U.S. Mortgage
Insurance Operations.

The PMI Group, Inc. First Quarter Results by Segment

First Quarter (Loss)
Income from
First Quarter Continuing
Total Revenues Operations
(Dollars in millions, except
per share data) 2009 2008 2009 2008
U.S. Mortgage Insurance
Operations(2) $209.1 $277.3 $(127.6) $(172.5)
International Operations(3) 13.3 8.6 6.7 (15.4)
Financial Guaranty(4) - (88.0) - (123.0)
Corporate and Other(5) 22.7 33.9 5.6 5.0
---- ---- --- ---
Total $245.1 $231.8 $(115.3) $(305.9)
====== ====== ======== ========
Diluted Loss from Continuing
Operations Per Share(1) $(1.41) $(3.77)

May not total due to rounding.

Supplemental Financial Information

-- The PMI Group, Inc.'s First Quarter 2009 Financial Supplement and
Net Operating Income (NOI) Reconciliation can all be found at
www.pmi-us.com under Investor Relations.

About The PMI Group, Inc.
The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA, provides
innovative credit, capital, and risk transfer solutions that expand
homeownership and fund essential services for our customers and the
communities they serve. Through its wholly owned subsidiaries, PMI offers
residential mortgage insurance and credit enhancement products. For more
information: www.pmi-us.com.

Cautionary Statement: Statements in this press release and supplements that
are not historical facts, or that relate to future plans, events or
performance are "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Readers are cautioned that
forward-looking statements by their nature involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in
the future. Many factors could cause actual results and developments to differ
materially from those expressed or implied by forward-looking statements.
Such factors include, among others:

-- Potential significant future losses as a result of changes in economic
and market conditions, such as a deepening of the current economic
recession; decreases in housing demand, mortgage originations or
housing
values; a further reduction in the liquidity in the capital markets or
further contraction of credit markets; further increases in
unemployment
rates; changes in interest rates or consumer confidence; and/or
changes
in credit spreads;
-- our expectation that, as a result of continued losses, we will need to
raise significant additional capital and that such additional capital
may be necessary in 2009;
-- the risk we are not able to timely satisfy certain conditions
precedent
under our credit facility and an event of default occurs;
-- the risk that we may be unable to maintain minimum regulatory
risk-to-capital and policyholders surplus requirements;
-- the limitations we have placed on new business writings and the
concentration of our business among a relatively small number of large
customers;
-- 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;
-- the potential that our actual losses may substantially exceed our
current loss reserve estimates or that our underwriting policies may
not
anticipate all risks and/or the magnitude of potential loss;
-- heightened regulatory and litigation risks faced by the financial
services industry, the mortgage insurance industry and PMI;
-- 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 loans, and adjustable
rate and interest-only loans, which have resulted in increased losses
in
2007 and 2008 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;
-- changes in persistency rates of our mortgage insurance policies caused
by, among other things, changes in refinancing activity and home
values;
-- 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;
-- 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

-- 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 pursuant to a
capital support agreement.

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,
2009, filed May 11, 2009, and of our Annual Report on Form 10-K for the year
ended December 31, 2008. We undertake no obligation to update forward-looking
statements.

THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,
2009 2008
(Unaudited)
(Dollars and shares in thousands,
except per share data)

Net premiums written $184,846 $212,694

Revenues
Premiums earned $188,094 $211,041
Net gain from credit default
swaps 7,756 800
Net investment income 34,437 34,709
Net realized investment (losses)
gains (5,883) 41,309
Change in fair value of certain
debt instruments 18,476 28,708
Impairment of unconsolidated
subsidiaries - (87,981)
Other income 2,184 3,195
Total revenues 245,064 231,781

Losses and expenses
Losses and loss adjustment
expenses 382,947 556,053
Amortization of deferred policy
acquisition costs 3,345 4,596
Other underwriting and operating
expenses 40,021 47,603
Interest expense 11,852 8,363
Total losses and expenses 438,165 616,615

Loss before equity in losses from
unconsolidated subsidiaries and
income taxes (193,101) (384,834)

Equity in losses from
unconsolidated subsidiaries (2,446) (33,477)

Loss from continuing operations
before income taxes (195,547) (418,311)
Income tax benefit from continuing
operations (80,286) (112,395)

Loss from continuing operations (115,261) (305,916)

(Loss) income from discontinued
operations, net of taxes (30) 31,952

Net loss $(115,291) $(273,964)

Diluted loss from continuing
operations per share $(1.41) $(3.77)
Diluted income (loss) from
discontinued operations per share - 0.40

Diluted net loss per share $(1.41) $(3.37)

THE PMI GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

March 31, March 31,
2009 2008
(Unaudited) (Unaudited)
(Dollars and shares in thousands,
except per share data)
Assets
Investments $2,297,195 $2,549,862
Cash and cash equivalents 1,328,269 394,439
Investments in unconsolidated
subsidiaries 149,816 175,155
Reinsurance recoverables 549,369 124,932
Deferred policy acquisition costs 39,061 24,598
Property, equipment and software,
net of accumulated depreciation
and amortization 126,806 154,698
Other assets 402,558 275,660
Assets - discontinued operations -
held for sale - 1,522,347
Total assets $4,893,074 $5,221,691

Liabilities
Reserve for losses and loss
adjustment expenses $2,915,862 $1,649,111
Unearned premiums 111,018 140,409
Debt 457,054 414,378
Other liabilities 246,127 201,243
Liabilities - discontinued
operations - held for sale - 576,681
Total liabilities 3,730,061 2,981,822

Shareholders' equity 1,163,013 2,239,869

Total liabilities and
shareholders' equity $4,893,074 $5,221,691

Basic shares issued and
outstanding 82,147 81,213

Book value per share $14.16 $27.58

Note: Please refer to The PMI Group, Inc. First Quarter 2009 Financial

Supplement for additional information.

(1) Due to the net loss in the quarter, 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.

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

(3) "International Operations" includes the results of PMI Europe and PMI
Canada.

(4) "Financial Guaranty" includes our equity investments in FGIC Corporation
(FGIC) and RAM Holdings Ltd. (RAM Re).

(5) The "Corporate and Other" segment primarily consists of the holding
company, contract underwriting operations and intercompany eliminations.

SOURCE The PMI Group, Inc.

Investors, Bill Horning of The PMI Group, Inc., +1-925-658-6193, or Media, Tom
Taggart of The PMI Group, Inc., +1-925-658-6511