The PMI Group, Inc. Reports Third Quarter 2005 Net Income of $95.7 Million; Hurricane Katrina Related Charges Reduce Quarterly Net Income by $8.9 Million

Business Wire, Nov 3, 2005

WALNUT CREEK, Calif. -- The PMI Group, Inc. (NYSE:PMI) (the "Company") today reported net income for the third quarter of 2005 and the first nine months of 2005. The Company's quarterly results were reduced by $8.9 million in after tax charges and reserves related to Hurricane Katrina.

Consolidated net income for the third quarter totaled $95.7 million compared to $102.6 million for the same period a year ago. Consolidated net income per diluted share was $0.97 in the third quarter of 2005, compared to $0.99 for the same period a year ago. The net income results combined with the common share repurchase activity for the third quarter of 2005 resulted in a book value per share of $35.69 at September 30, 2005, compared to a book value per share of $32.05 at September 30, 2004, representing an increase of 11.4 percent.

Consolidated net income from continuing operations for the first nine months of 2005 totaled $301.5 million compared to $284.9 million for the same period a year ago. Consolidated net income from continuing operations per diluted share was $3.00 for the first nine months of 2005 compared to $2.75 per diluted share for the first nine months of 2004, representing an increase of 9.1 percent. Consolidated net income from continuing operations for the first nine months of 2004 does not include the financial results from American Pioneer Title Insurance Company, which was designated as a discontinued operation in the fourth quarter of 2003 and sold in the first quarter of 2004.

"The PMI Group posted a fundamentally solid third quarter which included several charges and increases in loss reserves related to Hurricane Katrina that reduced consolidated net income and equity in earnings from unconsolidated subsidiaries. These items were the result of the devastating natural disaster that severely affected areas of Louisiana, Mississippi and Alabama," said Roger Haughton, Chairman and Chief Executive Officer of The PMI Group, Inc. "Recovery from the hurricane poses a long-term challenge and The PMI Group stands ready to help. Additionally, through the PMI Foundation, the company and its employees are doing all they can to help alleviate the hardships and suffering of those in the Gulf Coast region."

Impact from Hurricane Katrina in the Third Quarter 2005

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Description of Increase or Charge                 After-Tax Impact to
($ in millions)                                    The PMI Group, Inc.
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Financial Guaranty Insurance Company's (FGIC) -
results were negatively affected by a pre-tax
loss provision in the amount of $20.8 million
related to its exposure to municipal finance
obligations impacted by Hurricane Katrina                        $5.3

Select Portfolio Servicing, Inc. - was adversely
impacted by a pre-tax reserve provision in the
amount of $6.6 million related to force placed
hazard and flood reinsurance for the Katrina
impacted areas                                                    1.8

U.S. Mortgage Insurance Operations(1) - increased
reserves for losses as a result of increased
loans in default within the Katrina impacted
areas                                                             1.0

Hurricane Katrina Donation - The PMI Group, Inc.
announced a disaster relief response package for
victims of Hurricane Katrina, including an in-
kind donation of single family homes                              0.8
                                                                ------
Total Increases or Charges                                       $8.9
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Third Quarter 2005 Highlights

--Combined(2) insurance in force grew to $275.1 billion at September 30, 2005 from $254.3 billion at September 30, 2004;

--Consolidated premiums earned grew $10 million to $205.1 million in the third quarter of 2005, compared to $195.1 million in the third quarter of 2004;

--U.S. Mortgage Insurance Operations realized a 10.6 percent increase in net premiums written in the third quarter of 2005 to $158.9 million compared to $143.7 million in the same period for 2004;

--U.S. Mortgage Insurance Operations primary claims paid decreased to $50.3 million in the third quarter of 2005 compared to $57.7 in the second quarter of 2005 and $52.1 million in the third quarter of 2004;

--International Operations(3) realized an 18.1 percent increase in net income in the third quarter 2005 to $28.0 million compared to $23.7 at September 30, 2004;

--Equity in earnings from CMG for the quarter totaled $5.2 million compared to $3.7 million for the same period a year ago representing an increase of 41 percent;

--At September 30, 2005, the Company had repurchased $105.5 million of the $150 million common share repurchase program authorized on July 27, 2005. Repurchases of common shares for the nine months ended September 30 totaled $205.5 million. The Company paid approximately $4.7 million in quarterly dividends under its increased annual dividend rate of $0.21 per common share.