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Fitch Assigns `AA-' Rating To PMI Debt Issue.

Business Editors

CHICAGO--(BUSINESS WIRE)--July 10, 2001

Fitch has assigned a 'AA-' rating to The PMI Group's (TPG) $300 million senior convertible debenture issue. The Rating Outlook is Stable.

TPG is a holding company whose primary operating company is PMI Mortgage Insurance Co. (PMI); an Arizona domiciled mortgage insurance company.

The rating reflects PMI's strong competitive position in the mortgage insurance market as well as TPG's moderate financial leverage. Partially offsetting these positive factors is TPG's modest cash-based fixed charge coverage.

Fitch estimates TPG's pro forma debt and preferred securities-to- capital ratio after the issue at approximately 23% (including the effect of the issue's $60 million over-allotment option) and its pro forma consolidated earnings-based fixed-charge coverage at a very strong 15-20 times (x). Excluding extraordinary dividends from PMI that would require regulatory approval, TPG's pro forma cash based fixed charge is significantly less at approximately 1 time.

The debentures are senior unsecured obligations of TPG that rank pari passu with TPG's outstanding senior notes. They are convertible into TPG common stock under pre-defined conditions and are non-callable for five years.

Holders of the debentures can exchange them for cash or TPG common stock at specified dates, the first of which is in three years. TPG determines whether the holders of the debentures will receive cash or common stock upon exercise of the put.

Fitch anticipates that TPG will use approximately $137 million of the proceeds to retire existing debt or capital securities, and the balance for general corporate purposes.

At March 31, 2001, TPG reported total assets of $2.5 billion and shareholders' equity of $1.6 billion. PMI reported insurance in force of $133 billion, risk-in-force of $22.5 billion, and a risk leverage ratio of 13.2:1 at March 31, 2001.

Entity/Type/Issue Action Rating/Outlook
The PMI Group, Inc.
--Convertible senior debentures
 Due 2021 Assigned `AA-`/Stable.
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Publication:Business Wire
Geographic Code:1USA
Date:Jul 10, 2001
Words:313
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