The PMI Group, Inc. Reports First Quarter 2005 Net Income of $101.2 Million; Net Income Per Diluted Share of $1.00; Net Income Per Diluted Share from Continuing Operations up 20% over First Quarter 2004

Business Wire, May 5, 2005

WALNUT CREEK, Calif. -- The PMI Group, Inc. (NYSE:PMI) (the "Company") today announced that consolidated net income from continuing operations totaled $101.2 million, compared to $85.6 million for the same period a year ago, an increase of 18 percent. The significant improvement in net income from continuing operations in the first quarter was driven primarily by net income increases in the U.S. Mortgage Insurance Operations and Financial Guaranty segments. In the first quarter of 2005, net income per diluted share from continuing operations was $1.00, compared to net income of $0.83 per diluted share for the same period a year ago, an increase of 20 percent. The net income results for the first quarter of 2005 led to a book value per share of $33.93 at March 31, 2005, compared to a book value per share of $30.70 at March 31, 2004.

Consolidated net income and net income per share were $101.2 million, or $1.00 per diluted share, for the quarter ended March 31, 2005, compared to net income of $119.5 million, or $1.16 per diluted share, for the first quarter of 2004. Included in the consolidated net income for the first quarter of 2004 was a $30.1 million ($0.29 per share) after tax gain on the sale of American Pioneer Title Insurance Company ("APTIC").

RECONCILIATION OF EARNINGS PER SHARE
----------------------------------------------------------------------
(Dollars and shares, except per share amounts, in
 millions)                                          Q1 2005   Q1 2004
----------------------------------------------------------------------
Income from continuing operations after taxes        $101.2     $85.6
   Plus: Interest expense on contingently
    convertible debt, net of taxes                      1.9       1.9
                                                   --------- ---------
   Net income from continuing operations after
    assumed conversion of contingently convertible
    debt                                             $103.1     $87.5
                                                   ========= =========
   Diluted weighted average shares after assumed
    conversion of contingently convertible debt       103.5     105.0
                                                   ========= =========
Per Share Data:
   Diluted net income from continuing operations
    per share:                                        $1.00     $0.83
   Income from discontinued operations after taxes        -      0.04
   Gain on sale of discontinued operations, net of
    taxes                                                 -      0.29
                                                   --------- ---------
   Diluted net income per share                       $1.00     $1.16
                                                   ========= =========
----------------------------------------------------------------------

First Quarter 2005 Highlights

--Combined(1) insurance in force grew to $267.0 billion at March 31, 2005 from $244.0 billion at March 31, 2004;

--Net income for the U.S. Mortgage Insurance Operations(2) segment grew by approximately 24 percent to $66.3 million in the first quarter of 2005, compared to $53.6 million in the first quarter of 2004;

--The U.S. Mortgage Insurance Operations segment realized a 10 percent increase in earned premiums over the same period in 2004. Also, expense savings of approximately $1 million to $1.5 million were realized in the quarter attributable to the U.S. Mortgage Operations segment field restructuring undertaken in 2004. The Company continues to expect a pre-tax expense savings of $5 million to $6 million in 2005;

--U.S. credit trends: Delinquent loan inventory was down 9 percent from December 31, 2004; the primary default rate declined to 4.53 percent at March 31, 2005, compared to 4.86 percent at December 31, 2004;

--The International Operations(3) segment benefited from a continuation of favorable credit trends in Australia, the signing of our first mortgage insurance contract with an Italian bank and robust growth in written gross premiums in Hong Kong.

--The Company's investment in FGIC Corporation ("FGIC") yielded equity in earnings of $18.1 million (after tax) in the first quarter of 2005 compared to $12.7 million (after tax) in the same period last year.

Results for the Company include:

Mark-to-market losses related to the foreign currency put options purchased to mitigate the effects of a strengthening in the U.S. dollar spot rate at quarter end were $1.1 million in the first quarter of 2005. Net income was favorably impacted by $0.5 million for the quarter related to the translation gains from a change in the average foreign currency exchange rates compared to the same period a year ago.

The diluted weighted average common shares outstanding for the quarter were 103.5 million compared to 105.0 million for the same period a year ago. In the first quarter of 2005, approximately 832,200 common shares were repurchased at a cost of $33.3 million. The Company has $66.7 million in remaining capacity under its $100 million common stock repurchase program authorized on February 17, 2005.