The PMI Group, Inc. Announces Completed Sale of Australian Operations to QBE
Insurance Group Limited
WALNUT CREEK, Calif., Oct. 22 /PRNewswire-FirstCall/ -- The PMI Group,
Inc. (NYSE: PMI) (the Company) today announced the completed sale of its
Australian mortgage insurance subsidiary and related Australian holding
company to QBE Insurance Group Limited ("QBE"). The aggregate sale price is
U.S. $920 million, 80% payable in cash and 20% payable in the form of a note*
issued by QBE. This transaction enhances PMI's overall liquidity and supports
its U.S. mortgage insurance operations.
For the quarter ended September 30, 2008, PMI expects to classify PMI
Australia as a held for sale entity. Accordingly, the Company expects to
recognize all sale expenses, any SFAS 115** unrealized gains or losses and
accumulated currency translation gains and losses in other comprehensive
income in the third quarter of 2008. Additionally, net income from PMI
Australia for the third quarter and prior reported periods will be
reclassified as discontinued operations in the financial results reported for
the period ended September 30, 2008.
Credit Suisse and Caliburn Partnership acted as financial co-advisors to
The PMI Group, Inc. Allens Arthur Robinson and Sullivan & Cromwell LLP
provided legal advice to The PMI Group, Inc.
* The note matures and is payable in September 2011, and the actual
amount payable on the note could be reduced to the extent that the performance
of PMI Australia's existing insurance portfolio as of June 30, 2008 does not
achieve specified targets. In connection with the transaction, PMI has also
funded premiums of approximately $46.5 million to assist in procuring an
excess of loss reinsurance cover for PMI Australia. The agreement provides for
reinsurance profit-sharing for one-half of the reinsurance premiums at the end
of the three-year policy life, subject to certain conditions.
** SFAS 115 refers to Statement of Financial Accounting Standards ("SFAS")
No. 115, Accounting for Certain Investments in Debt and Equity Securities.
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 and partially owned subsidiaries,
PMI offers residential mortgage insurance and credit enhancement products. For
more information: http://www.pmigroup.com.
About QBE Insurance Group Limited
QBE Insurance Group Limited is Australia's largest international general
insurance and reinsurance group, and one of the top 25 insurers and reinsurers
worldwide.
Cautionary Statement: Statements in this press release that are not
historical facts, or that relate to future plans, events or performance are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include our
beliefs with respect to our financial strength and claims-paying ability.
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. For example, there can be no assurance that the
note issued to PMI in connection with the sale of PMI Australia will not be
reduced as a result of adverse loss developments affecting PMI Australia's
business after closing. Other risks and uncertainties are discussed in our SEC
filings, including our Annual Report Form 10-K for the year ended December 31,
2007 (in Item 1A) and Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2008 and June 30, 2008. We undertake no obligation to update
forward-looking statements.
SOURCE PMI Group, Inc.
Investors, Bill Horning of PMI Group, Inc., +1-925-658-6193, or Media, Tom
Taggart of PMI Group, Inc., +1-925-658-6511
