Full Description

The PMI Group, Inc. (TPG) provides residential mortgage insurance products designed to promote homeownership. During the year ended December 31, 2008, the Company operated in four segments: United States Mortgage Insurance Operations, International Operations, Financial Guaranty, and Corporate and Other. The Company’s United States customers are primarily mortgage lenders, depository institutions, commercial banks and investors, including Fannie Mae and Freddie Mac (collectively, the GSEs). On October 22, 2008, the Company completed the sale of PMI Mortgage Insurance Ltd. and its holding company, PMI Mortgage Insurance Australia (Holdings) Pty Limited (collectively PMI Australia). On December 17, 2008, the Company completed the sale of PMI Mortgage Insurance Asia Ltd. (PMI Asia).

United States Mortgage Insurance Operations

TPG’s United States subsidiary, PMI Mortgage Insurance Co., including its affiliated United States companies, is a United States residential mortgage insurer. PMI Mortgage Insurance Co. and its affiliated United States mortgage insurance and reinsurance companies (collectively PMI) offers a variety of mortgage insurance products to meet the capital and credit risk mitigation needs of its customers. The Company also owns 50% of CMG Mortgage Insurance Company (CMG MI), a joint venture that provides mortgage insurance to credit unions. Through PMI, the Company provides residential mortgage insurance products to mortgage lenders and investors throughout the United States. Under its monoline insurance licenses, PMI may offer mortgage insurance covering first lien, one-to-four family residential mortgages.

PMI’s residential mortgage insurance products provide first loss protection on loans originated by residential mortgage lenders. The Company’s primary mortgage insurance business is offered on a loan-by-loan basis to lenders through its flow channel. PMI’s primary insurance in force and primary risk in force, as of December 31, 2008, were $124.3 billion and $30.6 billion, respectively.

As of December 31, 2008, PMI had $2.2 billion of modified pool risk in force. As of December 31, 2008, other pool insurance represented 1.5% of PMI’s total risk in force and 18.4% of PMI’s total pool risk in force (including modified pool). The Company offers other risk-sharing products, including layered co-insurance, a primary insurance program, under which the insured retains liability for losses between certain levels of aggregate losses. Layered co-insurance was primarily targeted to affordable housing programs.

International Operations

The Company’s International Operations segment consists of the operations of PMI Mortgage Insurance Company Limited (collectively with the other European subsidiaries referred to as PMI Europe) and PMI Mortgage Insurance Company Canada and its holding company, PMI Mortgage Insurance Holdings Canada Inc. (collectively PMI Canada). PMI Europe offered mortgage insurance and mortgage credit enhancement products, including primary mortgage insurance, structured portfolio products and reinsurance products, tailored primarily to the European mortgage markets.

Financial Guaranty

TPG’s Financial Guaranty segment includes its investment in RAM Holdings Ltd., the parent company of RAM Reinsurance Company Ltd. (RAM Re), a Bermuda-based financial guaranty reinsurance company, and its investment in FGIC Corporation, whose wholly owned subsidiary, Financial Guaranty Insurance Company (FGIC), is a financial guarantor of public finance and structured finance obligations. Effective December 31, 2008, its wholly owned surety company, PMI Guaranty Co.’s (PMI Guaranty) remaining assets and liabilities were merged into PMI.

The Company competes with Mortgage Guaranty Insurance Corporation, Genworth Financial, Inc., American International Group, Inc., Radian Guaranty Inc., Assured Guaranty Ltd. and Old Republic International.