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.WALNUT CREEK Walnut Creek, residential city (1990 pop. 60,569), Contra Costa co., W Calif., in the San Francisco Bay area; inc. 1914. It is the trade and shipping center of an extensive agricultural area where walnuts are among the major product. , Calif. -- The PMI Group The PMI Group (NYSE: PMI) is a provider of credit enhancement products that promote homeownership and the provision of services essential to the building of strong communities. , Inc. (NYSE NYSE See: New York Stock Exchange :PMI See Private Mortgage Insurance. ) (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  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. .Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. activity for the third quarter of 2005 resulted in a book value per share of $35.69 at September September: see month. 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 continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the 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 American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Pioneer Title Insurance Company, which was designated as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. 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 dev·as·tate tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates 1. To lay waste; destroy. 2. To overwhelm; confound; stun: was devastated by the rude remark. natural disaster that severely affected areas of Louisiana CODE, OF LOUISIANA. In 1822, Peter Derbigny, Edward Livingston, and Moreau Lislet, were selected by the legislature to revise and amend the civil code, and to add to it such laws still in force as were not included therein. , Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by and Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). ," said Roger Haughton The name Haughton (pronounced 'hawton') could refer to many things or people: Places In the United Kingdom
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-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 Alleviate To make something easier to be endured. Mentioned in: Kinesiology, Applied 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 CMG Coastal & Marine Geology (USGS) CMG Chipotle Mexican Grill, Inc. (stock symbol) CMG Companion (of the Order Of) St Michael and St George CMG Computer Measurement Group 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 au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: on July July: see month. 27, 2005. Repurchases of common shares for the nine months ended September 30 totaled $205.5 million. The Company paid approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4.7 million in quarterly dividends under its increased annual dividend rate of $0.21 per common share. Consolidated Operating Results Consolidated net premiums written for the quarter and year to date totaled $206.1 million and $599.6 million, respectively, compared to $187.0 million and $571.3 million for the same periods a year ago. The increases were due primarily to an increase in average premium rates in U.S. Mortgage Insurance Operations and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency exchange rates in International Operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . Consolidated premiums earned for the quarter and year to date were $205.1 million and $611.0 million, respectively, compared to $195.1 million and $568.1 million for the same periods a year ago. The increases were due primarily to increases in premiums earned by U.S. Mortgage Insurance Operations and International Operations. Consolidated losses and loss adjustment expenses for the quarter and year to date totaled $61.3 million and $193.0 million, respectively, compared to $60.8 million and $177.2 million for the third quarter 2004. The year to date increases were due primarily to higher claims paid in U.S. Mortgage Insurance Operations. Consolidated other underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the quarter and year to date totaled $54.5 million and $154.6 million, respectively, compared to $47.0 million and $146.9 million for the same periods a year ago. The increase in the third quarter of 2005 was primarily due to an increase in expenses in International Operations driven by higher PMI Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of commission accruals AccrualsAccounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. related to the U.K. lenders' mortgage insurance portfolio acquired in 2004 and by increases in PMI Australia's payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. and payroll related expenses as a result of increased employee headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. . Consolidated reserve for losses and loss adjustment expenses totaled $366.3 million at September 30, 2005 compared to $364.4 million at June June: see month. 30, 2005. The increase was a result of an increase in loss reserves for the U.S. Mortgage Insurance Operations partially offset by a decrease in loss reserves for International Operations. U.S. Mortgage Insurance Operations Net income for U.S. Mortgage Insurance Operations for the quarter and year to date totaled $69.5 million and $205.6 million, respectively, compared to $67.8 million and $184.7 million for the same periods a year ago. The increases were due primarily to higher premiums earned partially offset by higher losses and loss adjustment expenses. Net premiums written for the quarter and year to date totaled $158.9 million and $466.0 million, respectively, compared to $143.7 million and $444.2 million for the same periods in 2004. The increases were due primarily to an increase in average premium rates. Premiums earned for the quarter and year to date totaled $166.1 million and $498.4 million, respectively, compared to $162.3 million and $465.7 million for the same periods a year ago. The increases were due primarily to increases in average premium rates. Equity in earnings from CMG for the quarter and year to date totaled $5.2 million and $14.2 million, respectively, compared to $3.7 million and $10.7 million for the same periods a year ago. The increases compared to the corresponding periods in 2004 were primarily a result of increases in CMG's primary insurance in force and risk in force. Losses and loss adjustment expenses for the quarter and year to date totaled $61.7 million and $190.3 million, respectively, compared to $60.1 million and $174.8 million for the same periods a year ago. The increase in losses and loss adjustment expenses in the first nine months of 2005 as compared to the corresponding period in 2004 was primarily a result of the seasoning of PMI's insurance portfolio and business mix. Amortization of deferred policy acquisition costs for the quarter and year to date totaled $14.5 million and $45.5 million, respectively, compared to $18.0 million and $55.5 million for the same periods a year ago. The decreases were primarily the result of lower levels of new insurance written. Other underwriting and operating expenses for the quarter and year to date totaled $25.3 million and $74.1 million, respectively, compared to $23.1 million and $74.1 million for the same periods a year ago. The increase in other underwriting and operating expenses for the third quarter of 2005 compared to the corresponding period in 2004 was due primarily to higher compensation expenses.
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NEW INSURANCE WRITTEN
Q3 YTD Q3 YTD
(Dollars in billions) 2005 2005 2004 2004
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Domestic(4) primary new insurance written $10.5 $30.8 $12.0 $34.8
Excluding CMG $8.7 $26.6 $10.5 $30.7
Bulk new insurance written $0.9 $5.0 $1.4 $2.7
Domestic pool new insurance written $5.2 $9.7 $1.0 $7.4
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Domestic primary new insurance written for the quarter and year to date totaled $10.5 billion and $30.8 billion, respectively, compared to $12.0 billion and $34.8 billion for the same periods a year ago. The decreases were driven primarily by decreases in the size of the private mortgage insurance market.
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PRIMARY INSURANCE AND RISK IN FORCE
As of As of As of
(Dollars in billions) 9/30/05 6/30/05 9/30/04
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Domestic primary insurance in force $116.6 $118.1 $118.8
Excluding CMG $101.2 $103.4 $104.8
Domestic primary risk in force $28.8 $29.0 $28.4
Excluding CMG $25.1 $25.6 $25.3
Domestic annual primary persistency rate 62.3% 62.9% 60.6%
Excluding CMG 61.2% 62.0% 59.5%
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Domestic primary insurance in force totaled $116.6 billion at September 30, 2005, compared to $118.8 billion a year ago. Domestic primary risk in force totaled $28.8 billion at September 30, 2005, compared to $28.4 billion at the end of the third quarter of 2004 and was driven primarily by a greater number of high LTV LTV See: Loan-to-value ratio loans with deeper coverage and higher average loan balances. The domestic annual persistency rate increased to 62.3% as of September 30, 2005 from 60.6% as of September 30, 2004.
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PRIMARY DEFAULT RATES
As of As of As of
9/30/05 6/30/05 9/30/04
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Domestic primary mortgage insurance 4.48% 4.03% 4.14%
Excluding bulk 3.81% 3.48% 3.62%
Excluding CMG 5.05% 4.51% 4.61%
Excluding CMG and bulk transactions 4.36% 3.94% 4.07%
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At September 30, 2005, U.S. Mortgage Insurance Operations primary default rate was 5.05 percent compared to 4.61 percent at September 30, 2004. The increase in the primary default rate at September 30, 2005 compared to the corresponding date in 2004 was due primarily to a decline in the number of primary insurance policies in force and an increase in primary loans in default.
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CLAIMS PAID
(Dollars in millions) Q3 2005 YTD 2005 Q3 2004 YTD 2004
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Primary - flow $38.8 $126.6 $37.2 $104.3
Primary - bulk 11.4 36.8 14.8 41.2
---- ---- ---- -----
Total primary 50.3 163.4 52.1 145.4
Total pool and other 5.3 14.9 6.4 14.6
--- ---- --- -----
Total claims paid $55.5 $178.4 $58.5 $160.0
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May not total due to rounding
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Primary claims paid for the quarter and year to date totaled $50.3 million and $163.4 million, respectively, compared to $52.1 million and $145.4 million for the same periods a year ago. The increase in the first nine months year to date as compared to the same period in 2004 was due to a number of factors, including the seasoning of PMI's primary insurance portfolio's largest book years, an increased number of claims paid that were previously delayed by bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most protection and higher claim rates associated with the portion of PMI's portfolio that contains ARMs, high LTV, Alt-A An Alt-A mortgage is a type of U.S. mortgage that, for various reasons, is considered riskier than "prime" and less risky than "subprime," the riskiest category. Alt-A interest rates, which are determined by credit risk, therefore tend to be between that of prime and subprime home and less-than-A quality loans. The level of primary claims paid in the third quarter of 2005 reflects a return to a more normalized quarterly level of claims involving bankruptcy proceedings bankruptcy proceedings n. the bankruptcy procedure is: a) filing a petition (voluntary or involuntary) to declare a debtor person or business bankrupt, or, under Chapter 11 or 13, to allow reorganization or refinancing under a plan to meet the debts of the party . International Operations Net income from International Operations for the quarter and year to date totaled $28.0 million and $78.4 million, respectively, compared to $23.7 million and $75.7 million for the same periods a year ago. The change in the average foreign currency exchange rates from the third quarter and the first nine months of 2005 compared to the corresponding periods in 2004 favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted International Operations' net income, primarily due to the appreciation of the Australian dollar Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents , offset by the amortization and decline in value of the Australian dollar and average rate foreign currency put options. PMI Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. Net income for PMI Australia for the quarter and year to date totaled $23.6 million and $64.7 million, respectively, compared to $17.6 million and $57.0 million for the same periods a year ago. The increases were due primarily to increases in premiums earned and net investment income and the appreciation of the Australian dollar relative to the U.S. dollar. In functional currency, net income for PMI Australia for the quarter and year to date totaled $31.1 million and $84.3 million Australian Dollars (AUD AUD In currencies, this is the abbreviation for the Australian Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ), respectively, compared to $24.7 million and $78.0 million AUD for the same periods a year ago. Premiums earned for PMI Australia for the quarter and year to date totaled $31.8 million and $91.1 million, respectively, compared to $26.3 million and $81.9 million for the same periods a year ago. The increases were due to insurance in force growth and to the strengthening of the Australian dollar relative to the U.S. dollar. Net investment income for PMI Australia for the quarter and year to date totaled $12.0 million and $37.0 million, respectively, compared to $9.5 million. The increases in net investment income in the third quarter and first nine months of 2005 compared to the corresponding periods in 2004 were due to the growth of PMI Australia's investment portfolio. Primary insurance in force for PMI Australia was $124.0 billion at September 30, 2005, compared to $102.5 billion at September 30, 2004. The increases as of September 30, 2005, compared to September 30, 2004, were also attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a longer average policy life and to the strengthening of the Australian dollar relative to the U.S. dollar. Primary risk in force for PMI Australia was $113.0 billion at September 30, 2005, compared to $93.0 billion at September 30, 2004. The increases as of September 30, 2005, compared to September 30, 2004, were also attributable to a longer average policy life and to the strengthening of the Australian dollar relative to the U.S. dollar. Losses and loss adjustment expenses for PMI Australia continued to experience favorable levels of claim payments and default rates. PMI Australia's default rate at September 30, 2005 was 0.13% compared to 0.12% at September 30, 2004. PMI Europe Net income for PMI Europe for the quarter and year to date totaled $2.7 million and $8.2 million, respectively, compared to $4.8 million and $13.8 million for the same periods a year ago. The decreases in the third quarter and first nine months of 2005 were due primarily to increases in underwriting and operating expenses driven by the Royal & Sun Alliance (R&SA) profit sharing accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. , increases in costs associated with expansion efforts and decreases in premiums earned. In functional currency, net income from PMI Europe for the quarter and year to date totaled EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 2.3 million and EUR 6.4 million, respectively, compared to EUR 3.9 million and EUR 11.3, respectively, for the same periods a year ago. Net premiums written for PMI Europe for the third quarter and nine months year to date 2005 totaled $2.4 million and $5.4 million, respectively, compared to $2.3 million and $7.4 million for the same periods a year ago. Premiums earned for PMI Europe for the third quarter were $4.6 and $13.1 million for the nine months year to date, compared to $5.2 million and $15.6 million for the same periods a year ago. The decreases for the quarter and the year to date were due primarily to decreases in premiums earned associated with the R&SA portfolio acquired by PMI Europe in 2004. PMI Europe's net investment income was $2.7 million for the quarter and $7.7 million for the first nine months compared to $2.3 million and $6.7 million for the same periods a year ago. Net investment income increased in the first nine months of 2005 compared to the corresponding period in 2004 as a result of growth of the investment portfolio. Other Underwriting and operating expenses for PMI Europe for the quarter and year to date totaled $4.0 million and $8.5 million, respectively, compared to $1.4 million and $4.1 million for the same periods a year ago. The increases in the third quarter and first nine months of 2005 were due to the profit sharing accrual for R&SA performance related obligations and increases in costs associated with expansion efforts. PMI Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. PMI's Hong Kong gross reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. premiums written for the third quarter and year to date totaled $4.2 million and $15.8 million, respectively, compared to $2.3 and $6.8 million for the same periods a year ago. The increases were due primarily to increases in mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real activity in Hong Kong combined with product expansion. PMI's Hong Kong reinsurance premiums earned for the quarter and year to date totaled $2.6 million and $8.4 million, respectively, compared to $1.3 and $4.8 million for the same periods a year ago. The increase in the third quarter of 2005 was due to increases in mortgage origination activity and product expansion. Financial Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Financial Guaranty, which includes equity in earnings from the Company's investments in FGIC FGIC See Financial Guaranty Insurance Corporation (FGIC). and RAM Re, reported net income for the quarter and year to date of $12.6 million and $53.0 million, respectively, compared to $15.2 million and $46.2 million for the same periods a year ago. Equity in earnings from FGIC in the third quarter and year to date totaled $13.6 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) and $55.4 million (pre-tax), respectively, compared to $15.4 million (pre-tax) and $46.9 million (pre-tax) in the same periods a year ago. The decrease in equity in earnings from FGIC in the third quarter of 2005 compared to the corresponding period in 2004 was primarily due to an increase in reserves related to Hurricane Katrina. The increase for the first nine months year to date compared to the corresponding period in 2004 was due primarily to increases in premiums earned and higher investment income due to growth in its investment portfolio. Losses and LAE for FGIC increased for the third quarter and nine months of 2005 compared to the same periods in 2004 due to estimated losses established in the reserve for losses and LAE related to obligations in areas impacted by Hurricane Katrina. The reserve for losses and LAE was $52.2 million at September 30, 2005 compared to $39.2 million at December December: see month. 31, 2004 and $41.5 million at September 30, 2004. Equity in earnings from RAM Re for the quarter and year to date were $0.1 million (pre-tax) and $2.9 million (pre-tax), respectively, compared to $1.7 million (pre-tax) and $4.8 million (pre-tax) for the same periods a year ago. The Company reports equity in earnings from RAM Re on a one-quarter lag. The decreases in equity in earnings from RAM Re for the third quarter and first nine months of 2005 compared to the corresponding periods in 2004 were due primarily to unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. resulting from the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of certain credit derivatives Credit Derivative Privately held negotiable bilateral contracts that allow users to manage their exposure to credit risk. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private and increases in operating expenses. Other The Other segment consists of revenues and expenses of the holding company, PMI Mortgage Services Co. and SPS (Standby Power System) A UPS system that switches to battery backup upon detection of power failure. See UPS. SPS - Symbolic Programming System. Assembly language for IBM 1620. . On October October: see month. 4, 2005, The PMI Group, Inc. completed the sale of all outstanding stock of SPS to Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. (USA). Equity in losses from SPS for the third quarter and nine months ended September 30, 2005 was $2.6 million and $1.7 million respectively, compared to equity in earnings of $0.2 million and $0.6 million for the corresponding periods in 2004. Due to the Company's decision to enter into a Summary of Terms with CSFB CSFB Credit Suisse First Boston CSFB Cyclically Shifted Filter Bank , the Company reclassified its equity investment in SPS to an equity investment held for sale. Beginning January January: see month. 1, 2005, equity in earnings or losses from SPS is included in other income. The Company recorded $1.8 million after tax of the SPS-related losses in the third quarter and nine months ended September 30, 2005 due to a $6.6 million reserve recorded by SPS related to expected Katrina-related losses on force placed hazard hazard a risk. hazard analysis critical control points a systematic procedure used to identify specific hazards (for example in food production) and establish control systems that focus on preventive measures rather than rely on and flood flood, in hydrology flood, inundation of land by the rise and overflow of a body of water. Floods occur most commonly when water from heavy rainfall, from melting ice and snow, or from a combination of these exceeds the carrying capacity of the river reinsurance. (1) "U.S. Mortgage Insurance Operations" includes the results of PMI Mortgage Insurance Co. and affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: U.S. reinsurance companies ("PMI") and equity in earnings from CMG. (2) "Combined" includes the results from U.S. Mortgage Insurance Operations, CMG Mortgage Insurance Company and its affiliates ("CMG"), PMI Australia and PMI Europe's primary insurance and credit default swap Credit Default Swap A swap designed to transfer the credit exposure of fixed income products between parties. Notes: The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. transactions. (3) "International Operations" includes the results of PMI Australia, PMI Europe and the results of operations from the Hong Kong branch operations. (4) "Domestic" includes results from U.S. Mortgage Insurance Operations and CMG. ABOUT THE PMI GROUP, INC. The PMI Group, Inc. (NYSE:PMI) headquartered in Walnut Creek, California Walnut Creek is a largely affluent suburb several miles east of Oakland in Contra Costa County, California, USA, in the East Bay region of the San Francisco Bay Area. While not as large as the neighboring Concord, Walnut Creek serves as the business and entertainment hub for the is an international provider of credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing products that promote homeownership and facilitate mortgage transactions in the capital markets. Through its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. and unconsolidated strategic investments, the Company offers residential mortgage insurance and credit enhancement products domestically and internationally as well as financial guaranty insurance and reinsurance. The Company is an advocate advocate: see attorney. of affordable housing and supports a number of organizations that foster greater access to affordable housing. The Company's approach to affordable housing lending is to develop products and services that assist responsible borrowers who may not qualify for mortgage loans under traditional underwriting practices. Cautionary Statement: Statements in this earnings release that are not historical facts, and that relate to future plans, events or performance are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by these forward-looking statements. Risks and uncertainties that could affect the Company are discussed in our Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 and include changes in economic conditions such as interest rates, home values, employment rates and refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. activity. We undertake no obligation to update forward-looking statements.
THE PMI GROUP, INC. AND SUBSIDIARIES
FINANCIAL RESULTS AND STATISTICAL INFORMATION
FOR THE PERIOD ENDED SEPTEMBER 30, 2005
----------------------------------------------------------------------
Contents
----------------------------------------------------------------------
Consolidated Statements of Operations and Balance Sheets
Business Segments Results of Operations - Three Months Ended September
30, 2005 and 2004
Business Segments Results of Operations - Nine Months Ended September
30, 2005 and 2004
Business Segments Balance Sheets
U.S. Mortgage Insurance Operations Analysis of Reserve for Losses and
LAE and Financial and Statistical Information
U.S. Mortgage Insurance Operations and CMG Mortgage Insurance Company
Financial and Statistical Information
PMI Australia and PMI Europe Financial Statistical Information
Appendix A - U.S. Mortgage Insurance Operations Supplemental
Statistical Information
Appendix B - PMI Australia and PMI Europe Quarterly Financial
Information
Appendix C - Business Segments Results of Operations by Quarter
Please refer to the following when noted:
(1) For the quarter and nine months ended September 30, 2005, the
Company's equity in earnings from unconsolidated subsidiaries
include FGIC Corporation, CMG Mortgage Insurance Company ("CMG"),
RAM Reinsurance Company, Ltd. ("RAM Re"), other limited
partnership interests and the trust subsidiary that issued the
Company's preferred securities. As of December 31, 2004, the
equity investment in SPS Holding Corp. ("SPS") was reclassified
from investments in unconsolidated subsidiaries to an equity
investment held for sale. Effective January 1, 2005, SPS's equity
earnings are reported in other income.
(2) The $2.6 million refund relates to the settlement in 2001 of the
Baynham class action litigation.
(3) The operating results, assets and liabilities of American Pioneer
Title Insurance Company ("APTIC") were reflected as discontinued
operations in the fourth quarter of 2003 with prior period
financial information reclassified accordingly. The Company
completed its sale of APTIC in March 2004 and recorded a gain on
sale of discontinued operations of $30.1 million, net of $17.1
million of income tax expense.
(4) In January 2005, the Company signed a Summary of Terms with
Credit Suisse First Boston (USA), Inc. ("CSFB") pursuant to which
CSFB has an option to acquire 100% of the Company's outstanding
stock of SPS. In the fourth quarter of 2004, the Company recorded
a write-down of its equity investment in SPS for $20.4 million
(pre-tax). The write-down was recorded as a realized loss of
discontinued operations of equity investment due to the Company's
decision to sell SPS. According to Statement of Financial
Accounting Standards No. 144, Accounting for the Impairment and
Disposal of Long-Lived Assets, we are not permitted to present
the disposal of equity method investments as discontinued
operations.
(5) U.S. Mortgage Insurance Operations include the operating results
of PMI Mortgage Insurance Co. and affiliated U.S. mortgage
insurance and reinsurance companies ("PMI"). CMG and its
affiliates are included under the equity method of accounting in
equity in earnings from unconsolidated subsidiaries.
(6) International Operations include PMI Australia, PMI Europe and
the Company's Hong Kong branch's results of operations.
(7) Financial Guaranty represents our equity investments in FGIC
Corporation and RAM Re.
(8) The "Other" segment includes other income and related operating
expenses of PMI Mortgage Services Co.; investment income,
interest expense and corporate overhead of The PMI Group, Inc.;
the results of Commercial Loans Insurance Co. and WMAC Credit
Insurance Corporation; equity in earnings from SPS and certain
limited partnerships; and the results from discontinued
operations of APTIC.
(9) The expense ratio is the ratio, expressed as a percentage, of the
sum of amortization of deferred policy acquisition costs and
other underwriting expenses to net premiums written. The loss
ratio is the ratio, expressed as a percentage, of the sum of
losses and loss adjustment expenses to premiums earned.
(10) Pool insurance includes modified pool, GSE pool, old pool and all
other pool insurance products for U.S. Mortgage Insurance
Operations.
(11) Statutory risk-to-capital ratio is for PMI Mortgage Insurance Co.
Note: The interim financial and statistical information contained in
this material is unaudited. Certain prior year information has
been reclassified to conform to the current periods'
presentation.
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Dollars and shares, except per share data,
in thousands)
Net premiums written $206,082 $186,979 $599,589 $571,259
=========== =========== =========== ===========
Revenues
Premiums earned $205,050 $195,123 $611,025 $568,088
Net investment
income 44,427 41,955 133,964 125,618
Equity in earnings
from unconsolidated
subsidiaries(1) 18,520 21,121 72,014 63,804
Net realized
investment gains
(losses) (327) 1,554 1,897 2,896
Other income 3,939 6,418 15,725 25,068
----------- ----------- ----------- -----------
Total revenues 271,609 266,171 834,625 785,474
----------- ----------- ----------- -----------
Losses and expenses
Losses and loss
adjustment expenses 61,302 60,838 193,019 177,190
Amortization of
deferred policy
acquisition costs 17,747 21,228 57,000 65,566
Other underwriting
and operating
expenses 54,515 46,991 154,575 146,930
Legal settlement
refund(2) - (2,574) - (2,574)
Interest expense 8,458 8,637 26,483 25,974
----------- ----------- ----------- -----------
Total losses
and expenses 142,022 135,120 431,077 413,086
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes $129,587 $131,051 $403,548 $372,388
Income taxes from
continuing
operations 33,876 28,408 102,094 87,508
----------- ----------- ----------- -----------
Income from continuing
operations after
income taxes $95,711 $102,643 $301,454 $284,880
----------- ----------- ----------- -----------
Income from
discontinued
operations before
income taxes(3) - - - 5,756
Income taxes from
discontinued
operations(3) - - - 1,958
----------- ----------- ----------- -----------
Income from
discontinued
operations after
income taxes(3) - - - 3,798
----------- ----------- ----------- -----------
Gain on sale of
discontinued
operations, net of
income taxes of
$17,131(3) - - - 30,108
----------- ----------- ----------- -----------
Net income $95,711 $102,643 $301,454 $318,786
=========== =========== =========== ===========
Diluted weighted
average common
shares outstanding
(shares in
thousands) 101,007 105,465 102,507 105,373
=========== =========== =========== ===========
Diluted net income
per share $0.97 $0.99 $3.00 $3.08
=========== =========== =========== ===========
Reconciliation of
earnings per share
Net income $95,711 $102,643 $301,454 $318,786
Plus: Interest
expense on
contingently
convertible debt,
net of income taxes 1,912 1,912 5,736 5,766
----------- ----------- ----------- -----------
Net income adjusted
for diluted earnings
per share calculation $97,623 $104,555 $307,190 $324,552
=========== =========== =========== ===========
Share data:
Basic weighted
average common
shares outstanding 91,019 95,831 92,577 95,658
Stock options and
other dilutive
components 1,835 1,481 1,777 1,562
Common stock
equivalent shares
related to
contingently
convertible debt 8,153 8,153 8,153 8,153
----------- ----------- ----------- -----------
Diluted weighted
average common
shares outstanding 101,007 105,465 102,507 105,373
=========== =========== =========== ===========
Per share data:
Diluted net income
from continuing
operations per
share $0.97 $0.99 $3.00 $2.75
Income from
discontinued
operations after
income taxes - - - 0.04
Gain on sale of
discontinued
operations, net of
income taxes - - - 0.29
----------- ----------- ----------- -----------
Diluted net income
per share $0.97 $0.99 $3.00 $3.08
=========== =========== =========== ===========
----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
September December September
30, 31, 30,
2005 2004 2004
----------- ----------- -----------
(Unaudited) (Unaudited)
(Dollars in thousands, except per
share data)
Assets
Cash and
investments, at
fair value $3,638,112 $3,621,550 $3,489,568
Investments in
unconsolidated
subsidiaries(1) 967,735 911,604 1,021,227
Equity investment
held for sale(4) 108,469 109,519 -
Related party
receivables 7,060 18,439 20,371
Reinsurance
receivables,
reinsurance
recoverables and
prepaid premiums 28,493 49,657 45,754
Deferred policy
acquisition costs 87,049 92,438 90,023
Other assets 343,241 342,760 364,823
----------- ----------- -----------
Total assets $5,180,159 $5,145,967 $5,031,766
=========== =========== ===========
Liabilities
Reserve for losses
and loss adjustment
expenses $366,335 $364,847 $357,965
Unearned premiums 462,424 484,815 463,786
Long-term debt 819,529 819,529 819,529
Other liabilities 335,520 339,021 336,945
----------- ----------- -----------
Total
liabilities 1,983,808 2,008,212 1,978,225
Shareholders' equity 3,196,351 3,137,755 3,053,541
----------- ----------- -----------
Total
liabilities
and
shareholders'
equity $5,180,159 $5,145,967 $5,031,766
=========== =========== ===========
Basic shares issued
and outstanding
(shares in thousands) 89,550 94,025 95,263
=========== =========== ===========
Book value per share $35.69 $33.37 $32.05
=========== =========== ===========
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
BUSINESS SEGMENTS RESULTS OF OPERATIONS
----------------------------------------------------------------------
U.S.
Mortgage Interna-
Insurance tional Financial Consol-
Operations Operations Guaranty Other idated
(5) (6) (7) (8) Total
------------------------------------------------------
Three Months Ended September 30, 2005 (Unaudited)
------------------------------------------------------
(Dollars in thousands)
Net premiums
written $158,866 $47,197 $- $19 $206,082
========== ========== ========= ========== ===========
Revenues
Premiums earned $166,052 $38,979 $- $19 $205,050
Net investment
income 25,046 14,844 - 4,537 44,427
Equity in
earnings
(losses) from
unconsolidated
subsidiaries
(1) 5,217 - 13,691 (388) 18,520
Net realized
investment
gains (losses) 2,597 (27) - (2,897) (327)
Other income 3 1,287 - 2,649 3,939
---------- -------------------- ---------- -----------
Total revenues 198,915 55,083 13,691 3,920 271,609
---------- -------------------- ---------- -----------
Losses and
expenses
Losses and loss
adjustment
expenses
(reversals) 61,667 (365) - - 61,302
Amortization of
deferred
policy
acquisition
costs 14,478 3,269 - - 17,747
Other
underwriting
and operating
expenses 25,260 11,648 - 17,607 54,515
Interest
expense 3 - - 8,455 8,458
---------- ---------- --------- ---------- -----------
Total losses
and expenses 101,408 14,552 - 26,062 142,022
---------- ---------- --------- ---------- -----------
Income (loss)
before income
taxes 97,507 40,531 13,691 (22,142) 129,587
Income tax
(benefit) 27,977 12,514 1,135 (7,750) 33,876
---------- ---------- --------- ---------- -----------
Net income
(loss) $69,530 $28,017 $12,556 $(14,392) $95,711
========== ========== ========= ========== ===========
Expense ratio
(9) 25.0% 31.6%
Loss ratio(9) 37.1% (0.9)%
Combined ratio 62.1% 30.7%
Three Months Ended September 30, 2004 (Unaudited)
------------------------------------------------------
(Dollars in thousands)
Net premiums
written $143,732 $43,238 $- $9 $186,979
========== ========== ========= ========== ===========
Revenues
Premiums earned $162,276 $32,829 $- $18 $195,123
Net investment
income 24,332 11,848 - 5,775 41,955
Equity in
earnings from
unconsolidated
subsidiaries
(1) 3,707 - 17,061 353 21,121
Net realized
investment
gains (losses) 1,672 256 - (374) 1,554
Other income
(loss) (24) 296 - 6,146 6,418
---------- ---------- --------- ---------- -----------
Total revenues 191,963 45,229 17,061 11,918 266,171
---------- ---------- --------- ---------- -----------
Losses and
expenses
Losses and loss
adjustment
expenses 60,092 746 - - 60,838
Amortization of
deferred
policy
acquisition
costs 18,003 3,225 - - 21,228
Other
underwriting
and operating
expenses 23,100 7,346 - 16,545 46,991
Legal
settlement
refund(2) (2,574) - - - (2,574)
Interest
expense 13 12 - 8,612 8,637
---------- ---------- --------- ---------- -----------
Total losses
and expenses 98,634 11,329 - 25,157 135,120
---------- ---------- --------- ---------- -----------
Income (loss)
before income
taxes 93,329 33,900 17,061 (13,239) 131,051
Income tax
(benefit) 25,528 10,218 1,820 (9,158) 28,408
---------- ---------- --------- ---------- -----------
Net Income
(loss) $67,801 $23,682 $15,241 $(4,081) $102,643
========== ========== ========= ========== ===========
Expense ratio
(9) 26.8% 24.4%
Loss ratio(9) 37.0% 2.3%
Combined ratio 63.8% 26.7%
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
BUSINESS SEGMENTS RESULTS OF OPERATIONS
----------------------------------------------------------------------
U.S.
Mortgage Interna-
Insurance tional Financial Consol-
Operations Operations Guaranty Other idated
(5) (6) (7) (8) Total
--------------------------------------------------
Nine Months Ended September 30, 2005 (Unaudited)
--------------------------------------------------
(Dollars in thousands)
Net premiums written $465,968 $133,567 $- $54 $599,589
========== ========== ======== ========= =========
Revenues
Premiums earned $498,412 $112,555 $- $58 $611,025
Net investment
income 78,171 42,657 - 13,136 133,964
Equity in earnings
(losses) from
unconsolidated
subsidiaries(1) 14,228 - 58,299 (513) 72,014
Net realized
investment gains
(losses) 4,184 296 - (2,583) 1,897
Other income 2 2,047 - 13,676 15,725
---------- ------------------- --------- ---------
Total revenues 594,997 157,555 58,299 23,774 834,625
---------- ------------------- --------- ---------
Losses and expenses
Losses and loss
adjustment
expenses 190,281 2,738 - - 193,019
Amortization of
deferred policy
acquisition costs 45,534 11,466 - - 57,000
Other underwriting
and operating
expenses 74,092 29,191 - 51,292 154,575
Interest expense 4 - - 26,479 26,483
---------- ---------- -------- --------- ---------
Total losses and
expenses 309,911 43,395 - 77,771 431,077
---------- ---------- -------- --------- ---------
Income (loss) before
income taxes 285,086 114,160 58,299 (53,997) 403,548
Income tax (benefit) 79,525 35,746 5,346 (18,523) 102,094
---------- ---------- -------- --------- ---------
Net income (loss) $205,561 $78,414 $52,953 $(35,474) $301,454
========== ========== ======== ========= =========
Expense ratio(9) 25.7% 30.4%
Loss ratio(9) 38.2% 2.4%
Combined ratio 63.9% 32.8%
Nine Months Ended September 30, 2004 (Unaudited)
--------------------------------------------------
(Dollars in thousands)
Net premiums written $444,203 $127,021 $- $35 $571,259
========== ========== ======== ========= =========
Revenues
Premiums earned $465,692 $102,343 $- $53 $568,088
Net investment
income 76,734 34,301 - 14,583 125,618
Equity in earnings
from
unconsolidated
subsidiaries(1) 10,710 - 51,688 1,406 63,804
Net realized
investment gains
(losses) 2,594 858 - (556) 2,896
Other income 31 4,298 - 20,739 25,068
---------- ---------- -------- --------- ---------
Total revenues 555,761 141,800 51,688 36,225 785,474
---------- ---------- -------- --------- ---------
Losses and expenses
Losses and loss
adjustment
expenses 174,802 2,388 - - 177,190
Amortization of
deferred policy
acquisition costs 55,544 10,022 - - 65,566
Other underwriting
and operating
expenses 74,128 21,153 - 51,649 146,930
Legal settlement
refund(2) (2,574) - - - (2,574)
Interest expense 51 73 - 25,850 25,974
---------- ---------- -------- --------- ---------
Total losses and
expenses 301,951 33,636 - 77,499 413,086
---------- ---------- -------- --------- ---------
Income (loss) from
continuing
operations before
income taxes 253,810 108,164 51,688 (41,274) 372,388
Income tax (benefit)
from continuing
operations 69,138 32,488 5,453 (19,571) 87,508
---------- ---------- -------- --------- ---------
Income (loss) from
continuing
operations after
income taxes 184,672 75,676 46,235 (21,703) 284,880
---------- ---------- -------- --------- ---------
Income from
discontinued
operations before
taxes(3) - - - 5,756 5,756
Income taxes from
discontinued
operations(3) - - - 1,958 1,958
---------- ---------- -------- --------- ---------
Income from
discontinued
operations after
income taxes(3) - - - 3,798 3,798
---------- ---------- -------- --------- ---------
Gain on sale of
discontinued
operations, net of
income taxes(3) - - - 30,108 30,108
---------- ---------- -------- --------- ---------
Net income $184,672 $75,676 $46,235 $12,203 $318,786
========== ========== ======== ========= =========
Expense ratio(9) 28.6% 24.5%
Loss ratio(9) 37.5% 2.3%
Combined ratio 66.1% 26.9%
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
BUSINESS SEGMENTS BALANCE SHEETS
----------------------------------------------------------------------
U.S.
Mortgage Interna-
Insurance tional Financial Consol-
Operations Operations Guaranty Other idated
(5) (6) (7) (8) Total
-------------------------------------------------------
September 30, 2005
-------------------------------------------------------
(Dollars in thousands)
Assets
Cash and
investments,
at fair
value $2,170,214 $1,094,028 $- $373,870 $3,638,112
Investments in
unconsol-
idated
subsid-
iaries(1) 125,376 - 823,287 19,072 967,735
Equity
investment
held for sale
(4) - - - 108,469 108,469
Related party
receivables 1,877 - - 5,183 7,060
Reinsurance
receivables,
recoverables
and prepaid
premiums 24,307 4,186 - - 28,493
Deferred
policy
acquisition
costs 47,480 39,569 - - 87,049
Other assets 206,092 27,806 - 109,343 343,241
----------- ----------- --------- --------- -----------
Total assets $2,575,346 $1,165,589 $823,287 $615,937 $5,180,159
=========== =========== ========= ========= ===========
Liabilities
Reserve for
losses and
loss
adjustment
expenses $342,174 $24,158 $- $3 $366,335
Unearned
premiums 127,481 334,908 - 35 462,424
Long-term debt - - - 819,529 819,529
Other
liabilities 234,778 76,994 17,189 6,559 335,520
----------- ----------- --------- --------- -----------
Total
liabilities 704,433 436,060 17,189 826,126 1,983,808
Shareholders'
equity 1,870,913 729,529 806,098 (210,189) 3,196,351
----------- ----------- --------- --------- -----------
Total
liabilities
and share-
holders'
equity $2,575,346 $1,165,589 $823,287 $615,937 $5,180,159
=========== =========== ========= ========= ===========
December 31, 2004
-------------------------------------------------------
(Dollars in thousands)
Assets
Cash and
investments,
at fair
value $2,132,300 $1,030,751 $- $458,499 $3,621,550
Investments in
unconsol-
idated
subsid-
iaries (1) 112,456 - 774,880 24,268 911,604
Equity
investment
held for sale
(4) - - - 109,519 109,519
Related party
receivables 1,633 - - 16,806 18,439
Reinsurance
receivables,
recoverables
and prepaid
premiums 31,110 18,547 - - 49,657
Deferred
policy
acquisition
costs 53,998 38,440 - - 92,438
Other assets 208,806 26,460 - 107,494 342,760
----------- ----------- --------- --------- -----------
Total assets $2,540,303 $1,114,198 $774,880 $716,586 $5,145,967
=========== =========== ========= ========= ===========
Liabilities
Reserve for
losses and
loss
adjustment
expenses $338,620 $26,224 $- $3 $364,847
Unearned
premiums 152,685 332,091 - 39 484,815
Long-term debt - - - 819,529 819,529
Other
liabilities 237,431 71,740 12,424 17,426 339,021
----------- ----------- --------- --------- -----------
Total
liabilities 728,736 430,055 12,424 836,997 2,008,212
Shareholders'
equity 1,811,567 684,143 762,456 (120,411) 3,137,755
----------- ----------- --------- --------- -----------
Total
liabilities
and share-
holders'
equity $2,540,303 $1,114,198 $774,880 $716,586 $5,145,967
=========== =========== ========= ========= ===========
September 30, 2004
-------------------------------------------------------
(Dollars in thousands)
Assets
Cash and
investments,
at fair
value $2,086,519 $912,938 $- $490,111 $3,489,568
Investments in
unconsol-
idated
subsidiaries
(1) 108,190 - 756,226 156,811 1,021,227
Related party
receivables 1,170 - - 19,201 20,371
Reinsurance
receivables,
recoverables
and prepaid
premiums 29,928 15,826 - - 45,754
Deferred
policy
acquisition
costs 55,856 34,167 - - 90,023
Other assets 204,098 32,733 - 127,992 364,823
----------- ----------- --------- --------- -----------
Total assets $2,485,761 $995,664 $756,226 $794,115 $5,031,766
=========== =========== ========= ========= ===========
Liabilities
Reserve for
losses and
loss
adjustment
expenses $334,749 $23,213 $- $3 $357,965
Unearned
premiums 162,312 301,445 - 29 463,786
Long-term debt - - - 819,529 819,529
Other
liabilities 154,211 62,280 10,928 109,526 336,945
----------- ----------- --------- --------- -----------
Total
liabilities 651,272 386,938 10,928 929,087 1,978,225
Shareholders'
equity 1,834,489 608,726 745,298 (134,972) 3,053,541
----------- ----------- --------- --------- -----------
Total
liabilities
and share-
holders'
equity $2,485,761 $995,664 $756,226 $794,115 $5,031,766
=========== =========== ========= ========= ===========
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
U.S. MORTGAGE INSURANCE OPERATIONS(5) ANALYSIS OF RESERVE
FOR LOSSES AND LAE
----------------------------------------------------------------------
September 30, June 30, September 30,
2005 2005 2004
----------------- ------------------- --------------------
Reserve Reserve Reserve
Loans for Loans for Loans for
in Losses in Losses in Losses
Default and LAE Default and LAE Default and LAE
------- --------- --------- --------- ---------- ---------
(Dollars in thousands)
Primary
insur-
ance 38,146 $302,925 35,030 $299,379 37,111 $301,844
Pool
insur-
ance 19,037 39,249 16,623 39,249 16,890 32,905
------- --------- --------- --------- ---------- ---------
Total 57,183 $342,174 51,653 $338,628 54,001 $334,749
======= ========= ========= ========= ========== =========
Reconciliation of Reserve for Losses and LAE
----------------------------------------------------------------------
September June
30, 30, Reserve
2005 2005 Change
--------- ---------- ---------
(Dollars in thousands)
Gross reserve for losses and LAE:
Primary insurance $302,925 $299,379 $3,546
Pool insurance 39,249 39,249 -
--------- ---------- ---------
Total gross reserve for
losses and LAE 342,174 338,628 3,546
Ceded reserve for losses:
Primary insurance (2,595) (2,299) (296)
Pool insurance (89) (89) -
--------- ---------- ---------
Total ceded reserve for losses (2,684) (2,388) (296)
--------- ---------- ---------
Net reserve for losses and LAE $339,490 $336,240 $3,250
========= ========== =========
----------------------------------------------------------------------
U.S. MORTGAGE INSURANCE OPERATIONS(5) FINANCIAL AND STATISTICAL
INFORMATION
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
2005 2004 2005 2004
--------- --------- ---------- ---------
Flow insurance
written (in
millions) $7,824 $9,135 $21,568 $27,999
Bulk insurance
written (in
millions) 908 1,354 4,989 2,696
--------- --------- ---------- ---------
Primary new
insurance written
(in millions) $8,732 $10,489 $26,557 $30,695
========= ========= ========== =========
Primary new risk
written (in
millions) $2,224 $2,782 $6,844 $7,938
Pool new insurance
written (in
millions)(10) $5,159 $958 $9,693 $7,411
Pool new risk
written (in
millions)(10) $124 $29 $225 $168
Product mix as a %
of new insurance
written:
Above 97% LTV's 13% 12% 13% 10%
90.01% to 95%
LTV's 24% 30% 24% 31%
85.01% to 90%
LTV's 48% 36% 43% 38%
90.01% to 95%
LTV's with
greater than/=
30% coverage 19% 26% 20% 26%
85.01% to 90%
LTV's with
greater than/=
25% coverage 41% 31% 37% 32%
ARMs 27% 29% 32% 22%
Monthlies 97% 98% 97% 98%
Refinances 34% 28% 35% 32%
Bulk transactions 10% 13% 19% 9%
Premiums written
(in thousands):
Gross premiums
written $203,797 $187,859 $602,776 $569,446
Ceded premiums,
net of assumed
premiums (41,585) (40,651) (126,327) (114,661)
Refunded premiums (3,346) (3,476) (10,481) (10,582)
--------- --------- ---------- ---------
Net premiums
written 158,866 143,732 465,968 444,203
Change in
unearned
premiums 7,186 18,544 32,444 21,489
--------- --------- ---------- ---------
Net premiums
earned $166,052 $162,276 $498,412 $465,692
========= ========= ========== =========
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
U.S. MORTGAGE INSURANCE OPERATIONS(5) FINANCIAL AND STATISTICAL
INFORMATION
----------------------------------------------------------------------
September June September
30, 30, 30,
2005 2005 2004
--------- --------- ----------
Primary insurance in force (in
millions) $101,221 $103,434 $104,782
Primary risk in force (in millions) $25,148 $25,592 $25,259
Pool risk in force (in
millions)(10) $2,530 $2,445 $2,389
Risk-to-capital ratio(11) 8.1 to 1 8.4 to 1 8.6 to 1
Insured primary loans 754,934 776,721 805,859
Persistency 61.2% 62.0% 59.5%
Primary loans in default 38,146 35,030 37,111
Primary default rate 5.05% 4.51% 4.61%
Bulk transactions only default rate 10.09% 8.54% 8.97%
Pool default rate 6.34% 5.65% 4.97%
Primary claims paid (year-to-date in
thousands) $163,438 $113,180 $145,434
Number of primary claims paid (year-
to-date) 7,124 4,934 6,354
Average primary claim size (year-to-
date in thousands) $22.9 $22.9 $22.9
Percentage of flow NIW subject to
captive reinsurance arrangements
(year-to-date) 68.0% 65.7% 61.5%
Percentage of primary NIW subject to
captive reinsurance arrangements
(year-to-date) 55.7% 50.7% 56.1%
Percentage of primary IIF subject to
captive reinsurance arrangements
(year-to-date) 53.2% 52.1% 51.2%
Percentage of primary RIF subject to
captive reinsurance arrangements
(year-to-date) 53.9% 52.9% 52.5%
----------------------------------------------------------------------
CMG MORTGAGE INSURANCE COMPANY FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------
September June September
30, 30, 30,
2005 2005 2004
--------- --------- ----------
Primary new insurance written (year-
to-date in millions) $4,234 $2,495 $4,074
Primary insurance in force (in
millions) $15,358 $14,694 $14,018
Primary risk in force (in millions) $3,607 $3,428 $3,176
Insured primary loans 111,217 108,066 105,390
Persistency 70.2% 70.3% 70.3%
Primary loans in default 632 622 625
Primary default rate (year-to-date) 0.57% 0.58% 0.59%
Primary claims paid (year-to-date in
thousands) $3,152 $1,981 $3,751
Number of primary claims paid (year-
to-date) 149 100 174
Average primary claim size (year-to-
date in thousands) $21.2 $19.8 $21.6
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
PMI AUSTRALIA FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------
September June September
30, 30, 30,
2005 2005 2004
--------- --------- ----------
Net premiums written (year-to-date in
thousands) $112,320 $71,775 $112,801
Premiums earned (year-to-date in
thousands) $91,096 $59,319 $81,937
Flow insurance written (year-to-date
in millions) $13,648 $8,685 $14,960
RMBS insurance written (year-to-date
in millions) 9,484 6,478 11,916
--------- --------- ----------
New insurance written (year-to-date
in millions) $23,132 $15,163 $26,876
========= ========= ==========
Insurance in force (in millions) $124,014 $119,811 $102,527
Risk in force (in millions) $113,028 $109,025 $92,979
Policies in force 994,330 973,820 916,070
Loans in default 1,329 1,322 1,101
Default rate 0.13% 0.14% 0.12%
Claims paid (year-to-date in
thousands) $1,807 $1,090 $723
Number of claims paid (year-to-date) 56 42 45
Average claim size (year-to-date in
thousands) $32.3 $26.0 $16.1
----------------------------------------------------------------------
PMI EUROPE FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------
September June September
30, 30, 30,
2005 2005 2004
--------- --------- ----------
Net premiums written (year-to-date in
thousands) $5,444 $3,027 $7,426
Premiums earned (year-to-date in
thousands) $13,083 $8,507 $15,575
New credit default swaps written
(year-to-date in millions) $514 $- $2,603
New reinsurance written (year-to-date
in millions) $2,992 $- $-
Insurance in force (in millions) $34,501 $31,213 $32,950
Risk in force (in millions) $2,894 $2,450 $3,244
Claims paid including credit default
swaps (year-to-date in thousands) $1,685 $1,379 $899
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
APPENDIX A - U.S. MORTGAGE INSURANCE OPERATIONS(5) SUPPLEMENTAL
STATISTICAL INFORMATION
----------------------------------------------------------------------
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
---------- ---------- ---------- ----------- ----------
Primary
insurance in
force (in
millions)
Flow $88,433 $89,965 $91,399 $93,263 $93,601
Bulk 12,788 13,469 12,598 12,058 11,181
---------- ---------- ---------- ----------- ----------
Total $101,221 $103,434 $103,997 $105,321 $104,782
========== ========== ========== =========== ==========
Primary risk
in force (in
millions)
Flow $21,981 $22,296 $22,541 $22,885 $22,741
Bulk 3,167 3,296 2,966 2,773 2,518
---------- ---------- ---------- ----------- ----------
Total $25,148 $25,592 $25,507 $25,658 $25,259
========== ========== ========== =========== ==========
Primary
policies in
force 754,934 776,721 788,847 803,236 805,859
Primary risk
in force -
credit score
distribution
Flow 619-575 5.7% 5.9% 6.1% 6.2% 6.4%
574 or
below 1.6% 1.7% 1.7% 1.8% 1.9%
Bulk 619-575 16.0% 17.4% 20.2% 21.1% 21.6%
574 or
below 10.1% 10.9% 12.9% 13.0% 12.7%
Total 619-575 7.0% 7.4% 7.7% 7.8% 7.9%
574 or
below 2.7% 2.9% 3.0% 3.0% 3.0%
Primary
average loan
size (in
thousands)
Flow $133.3 $132.2 $131.5 $131.3 $130.5
Bulk $139.5 $139.8 $134.1 $129.8 $127.1
Total $134.1 $133.2 $131.8 $131.1 $130.1
Loss severity
- primary
(quarterly)
Flow 84.0% 83.8% 85.6% 84.9% 77.4%
Bulk 89.6% 87.7% 90.9% 84.6% 78.8%
Total 85.2% 84.6% 86.8% 84.8% 77.8%
Alt-A primary
insurance in
force (in
millions)
With FICO
scores of 660
and above $12,548 $11,800 $10,892 $10,250 $9,421
With FICO
scores below
660 and above
619 2,329 2,326 2,136 2,029 1,836
---------- ---------- ---------- ----------- ----------
Total Alt-A
primary
insurance in
force $14,877 $14,126 $13,028 $12,279 $11,257
========== ========== ========== =========== ==========
----------------------------------------------------------------------
NEW INSURANCE WRITTEN AND INSURANCE IN FORCE ANALYSIS
----------------------------------------------------------------------
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
---------- ---------- ---------- ----------- ----------
FICO greater
than 700 and
LTV greater
than 80 (in
millions)
Primary new
insurance
written
(year-to-
date) $10,993 $6,981 $3,049 $16,643 $12,788
Primary
insurance in
force $42,419 $42,829 $42,974 $43,801 $43,862
Total
portfolio (in
millions)
Primary new
insurance
written
(year-to-
date) $26,557 $17,826 $8,168 $41,213 $30,695
Primary
insurance in
force $101,221 $103,434 $103,997 $105,321 $104,782
FICO greater
than 700 and
LTV greater
than 80 as a
percentage of
total
portfolio
Primary new
insurance
written
(year-to-
date) 41.4% 39.2% 37.3% 40.4% 41.7%
Primary
insurance in
force 41.9% 41.4% 41.3% 41.6% 41.9%
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
APPENDIX B - PMI AUSTRALIA AND PMI EUROPE QUARTERLY FINANCIAL
INFORMATION
----------------------------------------------------------------------
----------------------------------------------------------------------
PMI AUSTRALIA
----------------------------------------------------------------------
9/30/05 6/30/05 3/31/05 12/31/04
----------- ----------- ----------- -----------
(Australian $ in thousands, unless otherwise
noted)
Income Statement
Components - Quarter
Ended
Premiums earned $41,815 $38,929 $37,840 $35,819
Net investment income $15,854 $14,966 $14,705 $14,087
Change in fair value
of put options $(232) $(422) $(1,338) $(228)
Total expenses $13,632 $15,104 $13,788 $13,624
Net income $31,079 $26,725 $26,487 $25,447
Net income (US$ in
thousands) $23,623 $20,541 $20,584 $19,272
Balance Sheet
Components
Assets
Cash and investments,
at fair value $1,147,390 $1,090,399 $1,037,704 $1,027,236
Total assets $1,225,683 $1,188,574 $1,132,961 $1,116,874
Liabilities and
Shareholders' Equity
Loss reserves $11,156 $12,541 $12,549 $12,547
Unearned premiums $406,661 $395,113 $382,781 $378,981
Shareholders' equity $757,372 $730,113 $689,927 $673,124
-----------------------------------------------
9/30/04 6/30/04 3/31/04 12/31/03
----------- ----------- ----------- -----------
(Australian $ in thousands, unless otherwise
noted)
Income Statement
Components - Quarter
Ended
Premiums earned $37,109 $37,308 $37,790 $36,766
Net investment income $13,098 $12,677 $12,139 $9,235
Change in fair value
of put options $(1,890) $1,311 $- $-
Total expenses $13,413 $12,799 $12,030 $12,160
Net income $24,725 $26,832 $26,518 $21,441
Net income (US$ in
thousands) $17,554 $19,219 $20,265 $15,511
Balance Sheet
Components
Assets
Cash and investments,
at fair value $973,479 $924,330 $892,864 $853,920
Total assets $1,068,080 $1,013,102 $976,723 $935,904
Liabilities and
Shareholders' Equity
Loss reserves $13,692 $13,556 $13,537 $13,536
Unearned premiums $364,120 $346,748 $330,477 $321,441
Shareholders' equity $642,585 $607,781 $586,842 $556,329
----------------------------------------------------------------------
PMI EUROPE
----------------------------------------------------------------------
9/30/05 6/30/05 3/31/05 12/31/04
----------- ----------- ----------- -----------
(Euro EUR in thousands, unless otherwise noted)
Income Statement
Components - Quarter
Ended
Premiums earned EUR 3,749 EUR 3,298 EUR 3,321 EUR 4,140
Net investment income EUR 2,188 EUR 1,951 EUR 2,002 EUR 1,435
Change in fair value
of put options EUR (3) EUR 342 EUR (33) EUR (6)
Total expenses EUR 3,244 EUR 3,168 EUR 2,031 EUR 3,679
Net income EUR 2,276 EUR 1,828 EUR 2,326 EUR 2,703
Net income (US$ in
thousands) $2,774 $2,330 $3,049 $3,489
Balance Sheet
Components
Assets
Cash and investments,
at fair value EUR 182,682 EUR 179,698 EUR 172,707 EUR 169,165
Total assets EUR 192,431 EUR 188,840 EUR 182,857 EUR 179,134
Liabilities and
Shareholders' Equity
Loss reserves EUR 13,019 EUR 13,395 EUR 12,807 EUR 12,126
Unearned premiums EUR 20,808 EUR 22,589 EUR 24,719 EUR 26,859
Shareholders' equity EUR 133,352 EUR 131,452 EUR 125,395 EUR 121,494
----------- ----------- ----------- -----------
9/30/04 6/30/04 3/31/04 12/31/03
----------- ----------- ----------- -----------
(Euro EUR in thousands, unless otherwise noted)
Income Statement
Components - Quarter
Ended
Premiums earned EUR 4,233 EUR 4,172 EUR 4,295 EUR 7,765
Net investment income EUR 2,294 EUR 1,642 EUR 2,198 EUR 1,199
Change in fair value
of put options EUR (96) EUR (18) EUR - EUR -
Total expenses EUR 1,476 EUR 1,462 EUR 1,768 EUR 1,723
Net income EUR 3,942 EUR 3,535 EUR 3,781 EUR 5,955
Net income (US$ in
thousands) $4,822 $4,260 $4,726 $7,089
Balance Sheet
Components
Assets
Cash and investments,
at fair value EUR 164,558 EUR 161,129 EUR 162,621 EUR 154,369
Total assets EUR 175,731 EUR 172,402 EUR 170,600 EUR 160,891
Liabilities and
Shareholders' Equity
Loss reserves EUR 10,656 EUR 10,497 EUR 10,031 EUR 9,624
Unearned premiums EUR 29,363 EUR 31,748 EUR 33,903 EUR 36,029
Shareholders' equity EUR 117,142 EUR 111,691 EUR 109,386 EUR 100,524
THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
APPENDIX C - BUSINESS SEGMENTS RESULTS OF OPERATIONS BY QUARTER
----------------------------------------------------------------------
2005
-----------------------------
3rd 2nd 1st
Quarter Quarter Quarter
--------- --------- ---------
(Dollars in thousands)
U.S. Mortgage Insurance
Operations (5)
------------------------------- -----------------------------
Net premiums written $158,866 $152,564 $154,538
========= ========= =========
Revenues
Premiums earned $166,052 $168,248 $164,112
Net investment income 25,046 27,546 25,579
Equity in earnings from
unconsolidated subsidiaries
(1) 5,217 4,937 4,074
Net realized investment gains
(losses) 2,597 1,167 420
Other income (loss) 3 (5) 4
--------- --------- ---------
Total revenues 198,915 201,893 194,189
--------- --------- ---------
Losses and expenses
Losses and loss adjustment
expenses 61,667 65,496 63,118
Amortization of deferred
policy acquisition costs 14,478 15,030 16,026
Other underwriting and
operating expenses 25,260 25,278 23,554
Legal settlement refund (2) - - -
Interest expense 3 - 1
--------- --------- ---------
Total losses and expenses 101,408 105,804 102,699
--------- --------- ---------
Income before income taxes 97,507 96,089 91,490
Income taxes 27,977 26,400 25,149
--------- --------- ---------
Net income $69,530 $69,689 $66,341
========= ========= =========
International Operations (6)
------------------------------- -----------------------------
Net premiums written $47,197 $47,185 $39,185
========= ========= =========
Revenues
Premiums earned $38,979 $38,141 $35,435
Net investment income 14,844 14,058 13,756
Net realized investment gains
(losses) (27) (18) 340
Other income (loss) 1,287 873 (113)
--------- --------- ---------
Total revenues 55,083 53,054 49,418
--------- --------- ---------
Losses and expenses
Losses and loss adjustment
expenses (365) 1,739 1,363
Amortization of deferred
policy acquisition costs 3,269 3,779 4,417
Other underwriting and
operating expenses 11,648 10,539 7,005
Interest expense - - -
--------- --------- ---------
Total losses and expenses 14,552 16,057 12,785
--------- --------- ---------
Income before income taxes 40,531 36,997 36,633
Income taxes 12,514 11,747 11,485
--------- --------- ---------
Net income $28,017 $25,250 $25,148
========= ========= =========
Financial Guaranty (7)
------------------------------- -----------------------------
Equity in earnings from
unconsolidated subsidiaries
(1) $13,691 $23,761 $20,846
Income taxes 1,135 2,254 1,956
--------- --------- ---------
Net income $12,556 $21,507 $18,890
========= ========= =========
Other (8)
------------------------------- -----------------------------
Net premiums written $19 $13 $23
========= ========= =========
Revenues
Premiums earned $19 $19 $20
Net investment income 4,537 4,143 4,455
Equity in earnings (losses)
from unconsolidated
subsidiaries (1) (388) (416) 292
Net realized investment gains
(losses) (2,897) 354 (39)
Realized loss from
discontinued operations of
equity investment (4) - - -
Other income 2,649 5,383 5,644
--------- --------- ---------
Total revenues 3,920 9,483 10,372
--------- --------- ---------
Losses and expenses
Other underwriting and
operating expenses 17,607 18,600 15,086
Interest expense 8,455 8,472 9,552
--------- --------- ---------
Total losses and expenses 26,062 27,072 24,638
--------- --------- ---------
Loss from continuing operations
before income tax benefit (22,142) (17,589) (14,266)
Income tax benefit from
continuing operations (7,750) (5,728) (5,045)
--------- --------- ---------
Loss from continuing operations
after income tax benefit (14,392) (11,861) (9,221)
--------- --------- ---------
Income from discontinued
operations before income taxes
(3) - - -
Income taxes from discontinued
operations (3) - - -
--------- --------- ---------
Income from discontinued
operations after income taxes
(3) - - -
--------- --------- ---------
Gain on sale of discontinued
operations, net of income
taxes (3) - - -
--------- --------- ---------
Net income (loss) $(14,392) $(11,861) $(9,221)
========= ========= =========
2004
---------------------------------------
4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter
--------- --------- --------- ---------
(Dollars in thousands)
U.S. Mortgage Insurance
Operations (5)
----------------------------------------------------------------------
Net premiums written $153,916 $143,732 $147,407 $153,064
========= ========= ========= =========
Revenues
Premiums earned $168,313 $162,276 $154,392 $149,023
Net investment income 25,496 24,332 27,944 24,458
Equity in earnings from
unconsolidated subsidiaries
(1) 4,569 3,707 3,676 3,328
Net realized investment gains
(losses) (12) 1,672 (166) 1,087
Other income (loss) 15 (24) (25) 81
------------------- --------- ---------
Total revenues 198,381 191,963 185,821 177,977
------------------- --------- ---------
Losses and expenses
Losses and loss adjustment
expenses 58,355 60,092 55,755 58,956
Amortization of deferred
policy acquisition costs 16,585 18,003 18,109 19,433
Other underwriting and
operating expenses 27,258 23,100 24,888 26,137
Legal settlement refund (2) - (2,574) - -
Interest expense 12 13 17 21
--------- --------- --------- ---------
Total losses and expenses 102,210 98,634 98,769 104,547
--------- --------- --------- ---------
Income before income taxes 96,171 93,329 87,052 73,430
Income taxes 26,328 25,528 23,790 19,822
--------- --------- --------- ---------
Net income $69,843 $67,801 $63,262 $53,608
========= ========= ========= =========
International Operations (6)
----------------------------------------------------------------------
Net premiums written $46,156 $43,238 $43,460 $40,323
========= ========= ========= =========
Revenues
Premiums earned $33,979 $32,829 $33,255 $36,259
Net investment income 12,789 11,848 10,646 11,807
Net realized investment gains
(losses) (263) 256 377 225
Other income (loss) 3,044 296 2,399 1,602
------------------- --------- ---------
Total revenues 49,549 45,229 46,677 49,893
------------------- --------- ---------
Losses and expenses
Losses and loss adjustment
expenses 1,737 746 777 864
Amortization of deferred
policy acquisition costs 3,065 3,225 3,135 3,662
Other underwriting and
operating expenses 10,235 7,346 6,940 6,867
Interest expense - 12 60 1
--------- --------- --------- ---------
Total losses and expenses 15,037 11,329 10,912 11,394
--------- --------- --------- ---------
Income before income taxes 34,512 33,900 35,765 38,499
Income taxes 10,274 10,218 10,799 11,470
--------- --------- --------- ---------
Net income $24,238 $23,682 $24,966 $27,029
========= ========= ========= =========
Financial Guaranty (7)
----------------------------------------------------------------------
Equity in earnings from
unconsolidated subsidiaries
(1) $16,156 $17,061 $19,699 $14,928
Income taxes 1,689 1,820 2,220 1,413
--------- --------- --------- ---------
Net income $14,467 $15,241 $17,479 $13,515
========= ========= ========= =========
Other (8)
----------------------------------------------------------------------
Net premiums written $31 $9 $9 $17
========= ========= ========= =========
Revenues
Premiums earned $20 $18 $16 $20
Net investment income 4,706 5,775 5,032 3,776
Equity in earnings (losses)
from unconsolidated
subsidiaries (1) (975) 353 210 842
Net realized investment gains
(losses) - (374) (143) (37)
Realized loss from
discontinued operations of
equity investment (4) (20,420) - - -
Other income 5,345 6,146 7,424 7,168
------------------- --------- ---------
Total revenues (11,324) 11,918 12,539 11,769
------------------- --------- ---------
Losses and expenses
Other underwriting and
operating expenses 20,272 16,545 17,790 17,316
Interest expense 8,640 8,612 8,745 8,493
--------- --------- --------- ---------
Total losses and expenses 28,912 25,157 26,535 25,809
--------- --------- --------- ---------
Loss from continuing operations
before income tax benefit (40,236) (13,239) (13,996) (14,040)
Income tax benefit from
continuing operations (13,339) (9,158) (4,964) (5,451)
--------- --------- --------- ---------
Loss from continuing operations
after income tax benefit (26,897) (4,081) (9,032) (8,589)
--------- --------- --------- ---------
Income from discontinued
operations before income taxes
(3) - - - 5,756
Income taxes from discontinued
operations (3) - - - 1,958
--------- --------- --------- ---------
Income from discontinued
operations after income taxes
(3) - - - 3,798
--------- --------- --------- ---------
Gain on sale of discontinued
operations, net of income
taxes (3) (1,105) - - 30,108
--------- --------- --------- ---------
Net income (loss) $(28,002) $(4,081) $(9,032) $25,317
========= ========= ========= =========
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