8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 2, 2006

THE PMI GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-13664	94-3199675
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

PMI Plaza, 3003 Oak Road

Walnut Creek, California 94597

(Address of principal executive offices, including zip code)

(925) 658-7878

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 2, 2006, The PMI Group, Inc. (the “Company”) announced via press release its consolidated financial results for the quarter ended September 30, 2006. A copy of the Company’s press release is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are furnished to, but not filed with, the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

The following material is furnished as an exhibit to this Current Report on Form 8-K:

Exhibit No.	Description
99.1	The PMI Group, Inc. Press Release dated November 2, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	THE PMI GROUP, INC.
Dated: November 2, 2006	By:	/s/ Donald P. Lofe, Jr.
		Donald P. Lofe, Jr.
		Executive Vice President, Chief Financial Officer
Dated: November 2, 2006	By:	/s/ Thomas H. Jeter
		Thomas H. Jeter
		Vice President, Corporate Controller

-2-

EX-99.1

Exhibit 99.1   NEWS RELEASE   Investors and Media Contacts: Bill Horning / Beth Haiken 925.658.6193 / 925.658.6192

THE PMI GROUP, INC. REPORTS THIRD QUARTER 2006 NET

INCOME OF $104.2 MILLION, OR $1.16 PER DILUTED SHARE

Walnut Creek, CA, November 2, 2006 - The PMI Group, Inc. (NYSE: PMI) (the “Company”) today reported net income of $104.2 million for the third quarter of 2006 compared to net income of $95.7 million for the third quarter of 2005. Net income per diluted share grew by approximately 20 percent to $1.16 for the third quarter of 2006 compared to $0.97 for the third quarter of 2005. The increase was due to improved performance in all business segments of the Company’s operations, a reduced number of common shares outstanding and a favorable comparison with the third quarter of 2005 when the Company’s equity earnings from FGIC were adversely impacted by Hurricane Katrina.

Highlights in the third quarter of 2006 include:

• U.S. Mortgage Insurance Operations¹ — solid growth in premiums written, premiums earned, average premium rate and net investment income as well as increased persistency and continued expense reductions from field office restructurings;

• International Operations² — PMI Australia reported record net income along with solid growth in premiums earned and net investment income while also strengthening loss reserves. PMI Europe grew net premiums written, new insurance written and insurance in force as well as continued expansion of PMI’s European presence;

• Financial Guaranty³ — FGIC reported strong premium earnings, increased net investment income and favorable credit performance;

• Common Share Repurchases — the Company entered into an accelerated stock buyback program pursuant to which it will purchase common stock for an aggregate purchase price of $345 million. The maximum number of shares to be repurchased under the program has been set at 8.2 million common shares and the minimum number has been set at 7.2 million

¹ “U.S. Mortgage Insurance Operations” includes the results of PMI Mortgage Insurance Co. (PMI) and affiliated U.S. reinsurance companies and equity in earnings from CMG Mortgage Insurance Company (CMG).

² “International Operations” includes the results of PMI Australia, PMI Europe and PMI Asia.

³ “Financial Guaranty” includes our equity earnings from our investments in Financial Guaranty Insurance Company, Inc. (FGIC) and RAM Reinsurance Company Ltd. (RAM Re).

⁴ The “Other” segment primarily consists of the holding company, contract underwriting operations and Select Portfolio Servicing, Inc. (SPS) prior to its disposition on October 4, 2005.

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representing a purchase price range per common share from $41.88 to $47.99, respectively. The actual number of shares received and the average per share cost will depend on the weighted average share price of common stock over the period of the program which will terminate no later than April 2007. In the third quarter of 2006, the Company received the minimum allotment of approximately 7.2 million common shares. The Company will receive additional common shares at the program’s expiration to the extent the Company’s weighted average common share net price does not exceed $47.99 during the program. During the third quarter of 2006, the Company also entered into a Rule 10b5-1 Plan for the purchase of up to $40 million of additional common shares.

• New Revolving Credit Facility – the Company entered into a new five-year $400 million revolving credit facility with a consortium of lenders. The facility may be expanded up to $500 million with the approval of the lenders.

• Book value per share ended the third quarter at $39.14, an increase of approximately 10% from third quarter of 2005.

Consolidated Operating Results

Consolidated net premiums written for the third quarter and year to date totaled $212.4 million and $626.1 million, respectively, compared to $206.1 million and $599.6 million for the same periods one year ago. The increases, on a year over year comparison, were due primarily to an increase in average premium rates and average insured loan balances in U.S. Mortgage Insurance Operations and higher new insurance written in PMI Australia.

Consolidated premiums earned for the third quarter and year to date were $214.9 million and $634.8 million, respectively, compared to $205.1 million and $611.0 million for the same periods one year ago. The increases, on a year over year comparison, were due to higher average premium rates, higher new insurance written, insurance in force growth and a release of unearned premiums on terminated policies in PMI Australia, and higher average premium rates and loan sizes in U.S. Mortgage Insurance Operations.

Consolidated other underwriting and operating expenses for the third quarter and year to date were $56.2 million and $169.6 million, respectively, compared to $54.5 million and $154.6 million for the same periods one year ago. The increases in the third quarter and first nine months of 2006, compared to the same periods in 2005, were due primarily to stock option and employee stock purchase plan related expenses, partially offset by savings from field office restructurings in U.S. Mortgage Insurance Operations.

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Consolidated losses and loss adjustment expenses for the third quarter and year to date were $79.6 million and $212.4 million, respectively, compared to $61.3 million and $193.0 million in the same periods last year. The increase in the third quarter of 2006, compared to the same period in 2005, was primarily a result of loss reserve additions and an increase in claims paid in U.S. Mortgage Insurance Operations, PMI Australia and, to a lesser extent, PMI Europe. The increase in the first nine months of 2006 compared to the same period in 2005 was due primarily to reserve additions and an increase in paid claims in PMI Australia and PMI Europe.

Consolidated reserve for losses and loss adjustment expenses totaled $394.2 million as of September 30, 2006 compared to $384.6 million as of June 30, 2006 and $366.3 million as of September 30, 2005. Loss reserves in U.S. Mortgage Insurance Operations increased $3.0 million in the third quarter of 2006, compared to second quarter of 2006, primarily due to higher expected claim rates and claim sizes. PMI Australia’s reserve for losses increased $6.1 million in the third quarter, compared to the second quarter of 2006, primarily due to an increase in delinquent loans, and higher expected average claim sizes and claim rates.

The PMI Group, Inc. Third Quarter Results by Segment
	Third Quarter Total Revenues						Third Quarter Net Income
(Dollars in millions, except per share data)	2006		2005		% Change		2006			2005			% Change
U.S. Mortgage Insurance Operations	$	201.8	$	198.9	1.5	%	$	70.8		$	69.5		1.9	%
International Operations		68.6		55.1	24.5	%		29.4			28.0		5.0	%
Financial Guaranty		26.5		13.7	93.4	%		23.7			12.6		88.1	%
Other4		4.0		3.9	2.6	%		(19.8	)		(14.4	)	n.m.
Total	$	300.9	$	271.6	10.8	%	$	104.2		$	95.7		8.9	%
Diluted Net Income Per Share							$	1.16		$	0.97		19.6	%
Book Value Per Share							$	39.14		$	35.69		9.6	%

May not total due to rounding.

n.m. – Not meaningful

The PMI Group, Inc. Year to Date Results by Segment
	Nine Months Ended September 30 Total Revenues						Nine Months Ended September 30 Net Income
(Dollars in millions, except per share data)	2006		2005		% Change		2006			2005			% Change
U.S. Mortgage Insurance Operations	$	600.7	$	595.0	1.0	%	$	213.1		$	205.6		3.6	%
International Operations		187.1		157.6	18.7	%		83.5			78.4		6.5	%
Financial Guaranty		76.3		58.3	30.9	%		68.8			53.0		29.8	%
Other4		24.2		23.8	n.m.			(46.3	)		(35.5	)	n.m.
Total	$	888.2	$	834.6	6.4	%	$	319.2		$	301.5		5.9	%
Diluted Net Income Per Share							$	3.38		$	3.00		12.7	%

May not total due to rounding.

n.m. – Not meaningful

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Segment Highlights

U.S. Mortgage Insurance Operations

• Net premiums earned increased to $168.1 million from $166.1 million in the third quarter of 2005. The increase was due primarily to increases in average premium rates and average insured loan balances in 2006.

• Total incurred losses in the third quarter of 2006 were $67.7 million compared to $61.7 million in the third quarter of 2005 driven by increases in primary claims paid, average claim size, average claim rate and loss reserves.

• Primary claims paid increased to $57.3 million for the third quarter of 2006 compared to $50.2 million in the third quarter of 2005 driven by an increase in the number of claims paid and an increase in average claim size.

• Equity in earnings from CMG for the third quarter 2006 was $5.0 million, compared to $5.2 million for the same period in 2005. The decline was due to increases in both losses and underwriting and operations expense. CMG’s portfolio remains strong as insurance in force grew to $16.1 billion, persistency increased to 75.6% and the primary default rate was less than one percent.

International Operations

• PMI Australia reported quarterly net income of $24.7 million for the third quarter of 2006 compared to $23.6 million for the third quarter of 2005. The increase in net income was due primarily to an increase in premiums earned and net investment income, partially offset by an increase in losses and loss adjusted expenses. In functional currency, PMI Australia’s net income increased by 5.1% to AUD $32.7 million in the third quarter of 2006 from AUD $31.1 million in the third quarter of 2005.

• PMI Europe reported that net income was $2.0 million in the third quarter of 2006 compared to $2.8 million for the same period a year ago. Net income in the third quarter of 2006 was impacted by increased expenses associated with additions to the loss reserve and operations expansion. In functional currency, net income from PMI Europe for the third quarter of 2006 was €1.6 million compared to €2.3 million for the same period a year ago.

• PMI Asia’s net income in the third quarter of 2006 totaled $2.7 million compared to $1.6 million for the same period a year ago. The increase in net income was due primarily to an increase in reinsurance premiums earned and net investment income. As a result of the previous period ending restructuring, the tax rate for PMI Asia decreased to 17.5% beginning in July 2006.

Financial Guaranty

• After-tax equity in earnings from FGIC for the third quarter and year to date totaled $21.9 million and $65.1 million, respectively, compared to $12.5 million and $51.1 million for the same periods a year ago. FGIC’s third quarter and year to date 2005 financial results were adversely impacted by $5.3

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million in after-tax charges and reserves related to Hurricane Katrina. The increases in 2006 results were attributable to premiums earned growth, notwithstanding the lower levels of refundings, higher net investment income and decreases in losses and loss adjustment expenses.

• After-tax equity in earnings from RAM Re for quarter and year to date were $1.9 million and $3.8 million, respectively, compared to $50 thousand and $1.9 million for the same periods one year ago.

ABOUT THE PMI GROUP, INC.

The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA, is an international provider of credit enhancement products that promote homeownership and facilitate mortgage transactions in the capital markets. Through its wholly owned subsidiaries and unconsolidated strategic investments, the company offers residential mortgage insurance and credit enhancement products domestically and internationally, financial guaranty insurance, and financial guaranty reinsurance. Through its subsidiaries, The PMI Group, Inc. is one of the world’s largest providers of private mortgage insurance with operations in the United States, Australia, New Zealand, and the European Union, as well as one of the largest providers of mortgage guaranty reinsurance in Hong Kong.

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 within the meaning of the Private Securities Litigation Reform Act 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 that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. Risks and uncertainties that could affect the Company are discussed in our Form 10-K for the year ended December 31, 2005 and Form 10-Q for the quarter ended June 30, 2006 and include changes in economic conditions such as interest rates, home values, employment rates and refinance activity. We undertake no obligation to update forward-looking statements.

# # #

Page 5

THE PMI GROUP, INC. AND SUBSIDIARIES (the “Company”)

FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2006

Contents

Consolidated Statements of Operations and Balance Sheets	Page 2
Business Segments Results of Operations - Three Months Ended September 30, 2006 and 2005	Page 3
Business Segments Results of Operations - Nine Months Ended September 30, 2006 and 2005	Page 4
Business Segments Balance Sheets	Page 5
U.S. Mortgage Insurance Operations Analysis of Reserve for Losses and LAE and Financial and Statistical Information	Page 6
U.S. Mortgage Insurance Operations Financial and Statistical Information	Page 7
CMG Mortgage Insurance Company, PMI Australia and PMI Europe Financial and Statistical Information	Page 8
Appendix A - PMI Australia and PMI Europe Quarterly Financial Information	Page 9
Appendix B - Business Segments Results of Operations by Quarter	Page 10
Appendix C - PMI Australia Financial and Statistical Information	Page 11

Please refer to the following when noted:

(1) For the quarter and nine months ended September 30, 2006, 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. On October 4, 2005, PMI sold its equity ownership interest in SPS.

(2) U.S. Mortgage Insurance Operations include the operating results of PMI Mortgage Insurance Co. (“PMI”) and affiliated U.S. mortgage insurance and reinsurance companies. CMG and its affiliates are included under the equity method of accounting in equity in earnings from unconsolidated subsidiaries.

(3) International Operations include PMI Australia, PMI Europe and PMI Asia. In June 2006, PMI Asia received its insurance authorization from the Hong Kong Insurance Authority. Subsequent to its receipt of authorization, the Company transferred the Hong Kong branch’s entire mortgage reinsurance portfolio to PMI Asia. In connection with this restructuring, our International Operations incurred a $1.1 million federal tax charge during the second quarter of 2006.

(4) Financial Guaranty represents our equity investments in FGIC Corporation and RAM Re.

(5) The “Other” segment includes other income and related operating expenses of PMI Mortgage Services Co.; investment income, interest expense and corporate expenses of The PMI Group, Inc.; the results of Commercial Loan Insurance Corporation and WMAC Credit Insurance Corporation and equity in earnings from SPS and certain limited partnerships.

(6) U.S. Mortgage Insurance Operations include a $1.3 million charge (after tax), or $0.01 per diluted share in the first quarter of 2006 relating to the reduction and restructuring of field offices.

(7) Other underwriting and operating expenses from the “Other” segment includes charges of $1.9 million (after tax) and $7.6 million (after tax) for stock option expenses and related stock based compensation expenses in the third quarter and in the nine months ended September 30, 2006, respectively.

(8) The expense ratio is the ratio, expressed as a percentage, of the sum of amortization of deferred policy acquisition costs and other underwriting and operating 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.

(9) Pool insurance includes modified pool, GSE pool, old pool and all other pool insurance products for U.S. Mortgage Insurance Operations.

(10) Statutory risk-to-capital ratio is for PMI Mortgage Insurance Co. only.

(11) During the second quarter of 2006, we refined our methodology for classification of Alt-A and full documentation loans. As a result, we reclassified for all periods presented herein certain loans previously designated as Alt-A loans as full documentation loans.

(12) The $1.0 million reversal relates to the settlement in 2001 of the Baynham class action litigation.

(13) In the third quarter of 2006, we remarketed $345 million of our 3.0% senior notes related to the Hybrid Income Term Security Units (HITS). Subsequent to the remarketing, we purchased $300 million of the 3.0% senior notes for approximately $299 million. As a result of remarketing, the interest rate of the remaining $45 million in senior notes was reset from 3.0% to 5.568%. Also during the third quarter of 2006, we issued $250 million 6.0% senior notes, which will mature on September 15, 2016 and $150 million 6.625% senior notes, which will mature on September 15, 2036. Lastly, during the third quarter of 2006, we exchanged our $360 million senior convertible debentures (CoCos) to include a net share settlement feature.

(14) In the third quarter of 2006, we entered into an accelerated stock buyback program pursuant to which we will purchase common stock for an aggregate purchase price of $345 million. The maximum number of shares to be repurchased under the program has been set at 8.2 million common shares and the minimum number has been set at 7.2 million representing a purchase price range per common share from $41.88 to $47.99, respectively. The actual number of shares received and the average per share cost will depend on the weighted average share price of common stock over the period of the program which will terminate no later than April 2007. In the third quarter of 2006, we received the minimum allotment of approximately 7.2 million common shares. We will receive additional common shares at the program’s expiration to the extent our weighted average common share net price does not exceed $47.99 during the program. We entered into a $345 million bridge loan in connection with the accelerated share repurchase program.

(15) Following the completion of the exchange offer in August 2006, approximately $341 million, or 95% of the CoCos were exchanged. The addition of the net share settlement feature to the exchanged debentures decreased the dilutive effect of the CoCos for the purpose of calculating diluted EPS for the three months and nine months ended September 30, 2006.

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 September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(Dollars and shares, except per share data, in thousands)
Net premiums written	$	212,426		$	206,082		$	626,145		$	599,589
Revenues
Premiums earned	$	214,903		$	205,050		$	634,787		$	611,025
Net investment income		49,680			44,427			145,561			133,964
Equity in earnings from unconsolidated subsidiaries (1)		31,491			18,520			91,404			72,014
Net realized investment gains (losses)		726			(327	)		1,621			1,897
Other income		4,120			3,939			14,843			15,725
Total revenues		300,920			271,609			888,216			834,625
Losses and expenses
Losses and loss adjustment expenses		79,603			61,302			212,403			193,019
Amortization of deferred policy acquisition costs		16,701			17,747			51,482			57,000
Other underwriting and operating expenses (7)		56,307			54,515			167,744			154,575
Field office restructuring (6)		—			—			1,955			—
Net costs to exchange and extinguish long-term debt (13)		875			—			875			—
Litigation settlement charge reversal (12)		(999	)		—			(999	)		—
Interest expense		9,486			8,458			25,732			26,483
Total losses and expenses		161,973			142,022			459,192			431,077
Income before income taxes		138,947			129,587			429,024			403,548
Income taxes		34,709			33,876			109,823			102,094
Net income	$	104,238		$	95,711		$	319,201		$	301,454
Diluted net income per share	$	1.16		$	0.97		$	3.38		$	3.00
Reconciliation of earnings per share
Net income	$	104,238		$	95,711		$	319,201		$	301,454
Plus: Interest expense on contingently convertible debt, net of income taxes (15)		799			1,912			3,513			5,736
Net income adjusted for diluted earnings per share calculation	$	105,037		$	97,623		$	322,714		$	307,190
Share data:
Basic weighted average common shares outstanding		85,319			91,019			87,557			92,577
Stock options and other dilutive components		1,029			1,835			1,125			1,777
Common stock equivalent shares related to contingently convertible debt		4,453			8,153			6,906			8,153
Diluted weighted average common shares outstanding		90,801			101,007			95,588			102,507
Share repurchase data:
Common shares repurchased(14)		7,189			2,583			10,491			5,192
Average price paid per common share repurchased (including commissions)		*		$	40.83			*		$	39.58

* Refer to Note 14

CONSOLIDATED BALANCE SHEETS

	September 30,     2006		December 31,     2005		September 30,     2005
	(Unaudited)				(Unaudited)
	(Dollars and shares, except per share data, in thousands)
Assets
Cash and investments, at fair value	$	4,049,505	$	3,789,432	$	3,638,112
Investments in unconsolidated subsidiaries (1)		1,062,897		984,925		967,735
Equity investment held for sale (1)		—		—		108,469
Related party receivables		614		2,864		7,060
Reinsurance receivables, reinsurance recoverables and prepaid premiums		21,371		30,338		28,493
Deferred policy acquisition costs		82,630		86,170		87,049
Other assets		367,567		360,407		343,241
Total assets	$	5,584,584	$	5,254,136	$	5,180,159
Liabilities
Reserve for losses and loss adjustment expenses	$	394,210	$	368,841	$	366,335
Unearned premiums		489,838		490,899		462,424
Bridge loan (14)		345,000		—		—
Long-term debt(13)		919,435		819,529		819,529
Other liabilities		327,949		344,077		335,520
Total liabilities		2,476,432		2,023,346		1,983,808
Shareholders’ equity		3,108,152		3,230,790		3,196,351
Total liabilities and shareholders’ equity	$	5,584,584	$	5,254,136	$	5,180,159
Basic shares issued and outstanding		79,421		88,713		89,550
Book value per share	$	39.14	$	36.42	$	35.69

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THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS

	U.S. Mortgage Insurance Operations (2)			International Operations (3)			Financial Guaranty (4)			Other (5)			Consolidated Total
	Three Months Ended September 30, 2006 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	160,468		$	51,942		$	—		$	16		$	212,426
Revenues
Premiums earned	$	168,118		$	46,766		$	—		$	19		$	214,903
Net investment income		27,082			17,442			(1	)		5,157			49,680
Equity in earnings from unconsolidated subsidiaries (1)		5,010			—			26,549			(68	)		31,491
Net realized investment gains (losses)		1,620			3,452			—			(4,346	)		726
Other income (loss)		(22	)		938			—			3,204			4,120
Total revenues		201,808			68,598			26,548			3,966			300,920
Losses and expenses
Losses and loss adjustment expenses		67,699			11,907			—			(3	)		79,603
Amortization of deferred policy acquisition costs		12,830			3,871			—			—			16,701
Other underwriting and operating expenses (7)		23,618			11,205			—			21,484			56,307
Net costs to exchange and extinguish long-term debt(13)		—			—			—			875			875
Litigation settlement charge reversal(12)		(999	)		—						—			(999	)
Interest expense		1			124			—			9,361			9,486
Total losses and expenses		103,149			27,107			—			31,717			161,973
Income (loss) before income taxes		98,659			41,491			26,548			(27,751	)		138,947
Income tax (benefit)		27,819			12,048			2,820			(7,978	)		34,709
Net income (loss)	$	70,840		$	29,443		$	23,728		$	(19,773	)	$	104,238
Expense ratio (8)		22.1	%		29.0	%
Loss ratio (8)		40.3	%		25.5	%
Combined ratio		62.4	%		54.5	%
	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 from unconsolidated subsidiaries (1)		5,217			—			13,691			(388	)		18,520
Net realized investment gains (losses)		2,597			(27	)		—			(2,897	)		(327	)
Other income (loss)		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		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 (8)		25.0	%		31.6	%
Loss ratio (8)		37.1	%		(0.9	)%
Combined ratio		62.1	%		30.7	%

Page 3

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS

	U.S. Mortgage Insurance Operations (2)			International Operations (3)			Financial Guaranty (4)		Other (5)			Consolidated Total
	Nine Months Ended September 30, 2006 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	482,846		$	143,263		$	—	$	36		$	626,145
Revenues
Premiums earned	$	503,482		$	131,252		$	—	$	53		$	634,787
Net investment income		79,823			47,852			1		17,885			145,561
Equity in earnings (loss) from unconsolidated subsidiaries (1)		15,231			—			76,260		(87	)		91,404
Net realized investment gains (losses)		2,162			3,846			—		(4,387	)		1,621
Other (loss) income		(38	)		4,185			—		10,696			14,843
Total revenues		600,660			187,135			76,261		24,160			888,216
Losses and expenses
Losses and loss adjustment expenses		190,999			21,407			—		(3	)		212,403
Amortization of deferred policy acquisition costs		39,434			12,048			—		—			51,482
Other underwriting and operating expenses (7)		72,499			31,454			—		63,791			167,744
Field office restructuring (6)		1,955			—			—		—			1,955
Net costs to exchange and extinguish long-term debt (13)		—			—			—		875			875
Litigation settlement charge reversal (12)		(999	)		—			—		—			(999	)
Interest expense		2			124			—		25,606			25,732
Total losses and expenses		303,890			65,033			—		90,269			459,192
Income (loss) before income taxes		296,770			122,102			76,261		(66,109	)		429,024
Income tax (benefit)		83,660			38,554			7,426		(19,817	)		109,823
Net income (loss)	$	213,110		$	83,548		$	68,835	$	(46,292	)	$	319,201
Expense ratio (8)		23.4	%		30.4	%
Loss ratio (8)		37.9	%		16.3	%
Combined ratio		61.3	%		46.7	%
	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 (8)		25.7	%		30.4	%
Loss ratio (8)		38.2	%		2.4	%
Combined ratio		63.9	%		32.8	%

Page 4

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS BALANCE SHEETS

	U.S. Mortgage Insurance Operations (2)		International Operations (3)		Financial Guaranty (4)		Other (5)			Consolidated Total
	September 30, 2006
	(Dollars in thousands)
Assets
Cash and investments, at fair value	$	2,064,571	$	1,247,144	$	2,003	$	735,787		$	4,049,505
Investments in unconsolidated subsidiaries (1)		127,424		—		916,659		18,814			1,062,897
Related party receivables		699		—		—		(85	)		614
Reinsurance receivables, recoverables and prepaid premiums		15,895		5,476		—		—			21,371
Deferred policy acquisition costs		43,159		39,471		—		—			82,630
Other assets		214,834		43,974		1		108,758			367,567
Total assets	$	2,466,582	$	1,336,065	$	918,663	$	863,274		$	5,584,584
Liabilities
Reserve for losses and loss adjustment expenses	$	358,784	$	35,426	$	—	$	—		$	394,210
Unearned premiums		114,720		375,091		—		27			489,838
Bridge loan (14)		—		—		—		345,000			345,000
Long-term debt (13)		—		—		—		919,435			919,435
Other liabilities (assets)		257,035		71,050		26,051		(26,187	)		327,949
Total liabilities		730,539		481,567		26,051		1,238,275			2,476,432
Shareholders’ equity (deficit)		1,736,043		854,498		892,612		(375,001	)		3,108,152
Total liabilities and shareholders’ equity	$	2,466,582	$	1,336,065	$	918,663	$	863,274		$	5,584,584
	December 31, 2005
	(Dollars in thousands)
Assets
Cash and investments, at fair value	$	2,108,853	$	1,093,505	$	—	$	587,074		$	3,789,432
Investments in unconsolidated subsidiaries (1)		129,600		—		836,752		18,573			984,925
Related party receivables		2,700		—		—		164			2,864
Reinsurance receivables, recoverables and prepaid premiums		24,576		5,762		—		—			30,338
Deferred policy acquisition costs		48,310		37,860		—		—			86,170
Other assets		207,436		25,260		—		127,711			360,407
Total assets	$	2,521,475	$	1,162,387	$	836,752	$	733,522		$	5,254,136
Liabilities
Reserve for losses and loss adjustment expenses	$	345,536	$	23,302	$	—	$	3		$	368,841
Unearned premiums		162,368		328,489		—		42			490,899
Long-term debt		—		—		—		819,529			819,529
Other liabilities (assets)		248,343		79,610		19,204		(3,080	)		344,077
Total liabilities		756,247		431,401		19,204		816,494			2,023,346
Shareholders’ equity (deficit)		1,765,228		730,986		817,548		(82,972	)		3,230,790
Total liabilities and shareholders’ equity	$	2,521,475	$	1,162,387	$	836,752	$	733,522		$	5,254,136
		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 unconsolidated subsidiaries (1)		125,376		—		823,287		19,072			967,735
Equity investment held for sale (1)		—		—		—		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 and 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 (deficit)		1,870,913		729,529		806,098		(210,189	)		3,196,351
Total liabilities and shareholders’ equity	$	2,575,346	$	1,165,589	$	823,287	$	615,937		$	5,180,159

Page 5

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS ⁽²⁾ ANALYSIS OF RESERVE FOR LOSSES AND LAE

	September 30, 2006			June 30, 2006			September 30, 2005
	Loans in Default	Reserve for Losses and LAE		Loans in Default	Reserve for Losses and LAE		Loans in Default	Reserve for Losses and LAE
				(Dollars in thousands)
Primary insurance	38,573	$	325,502	37,102	$	318,878	38,146	$	302,925
Pool insurance (9)	15,253		33,282	17,458		36,954	19,037		39,249
Total	53,826	$	358,784	54,560	$	355,832	57,183	$	342,174

Reconciliation of Reserve for Losses and LAE

	September 30, 2006			June 30, 2006			Reserve Change
	(Dollars in thousands)
Gross reserve for losses and LAE:
Primary insurance	$	325,502		$	318,878		$	6,624
Pool insurance (9)		33,282			36,954			(3,672	)
Total gross reserve for losses and LAE		358,784			355,832			2,952
Ceded reserve for losses:
Primary insurance		(2,719	)		(2,417	)		(302	)
Pool insurance (9)		(79	)		(87	)		8
Total ceded reserve for losses		(2,798	)		(2,504	)		(294	)
Net reserve for losses and LAE	$	355,986		$	353,328		$	2,658

U.S. MORTGAGE INSURANCE OPERATIONS ⁽²⁾ FINANCIAL AND STATISTICAL INFORMATION

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2005			2006			2005
Flow insurance written (in millions)	$	6,015		$	7,824		$	16,773		$	21,568
Structured insurance written (in millions)		1,641			908			6,031			4,989
Primary new insurance written (in millions)	$	7,656		$	8,732		$	22,804		$	26,557
Primary new risk written (in millions)	$	1,980		$	2,224		$	5,917		$	6,844
Pool new insurance written (in millions) (9)	$	3,924		$	5,159		$	12,225		$	9,693
Pool new risk written (in millions) (9)	$	84		$	124		$	297		$	225
Product mix as a % of new insurance written:
Above 97% LTV’s		19	%		13	%		16	%		13	%
90.01% to 95% LTV’s		22	%		24	%		22	%		24	%
85.01% to 90% LTV’s		44	%		48	%		45	%		43	%
90.01% to 95% LTV’s with >= 30% coverage		18	%		19	%		18	%		20	%
85.01% to 90% LTV’s with >= 25% coverage		39	%		41	%		40	%		37	%
ARMs		19	%		27	%		26	%		32	%
Monthlies		96	%		97	%		96	%		97	%
Refinances		34	%		34	%		35	%		35	%
Structured transactions		21	%		10	%		26	%		19	%
Premiums written (in thousands):
Gross premiums written	$	205,848		$	203,797		$	617,410		$	602,776
Ceded premiums, net of assumed premiums		(42,108	)		(41,585	)		(125,165	)		(126,327	)
Refunded premiums		(3,272	)		(3,346	)		(9,399	)		(10,481	)
Net premiums written		160,468			158,866			482,846			465,968
Change in unearned premiums		7,650			7,186			20,636			32,444
Net premiums earned	$	168,118		$	166,052		$	503,482		$	498,412

Page 6

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS ⁽²⁾ FINANCIAL AND STATISTICAL INFORMATION

		9/30/2006			6/30/2006			3/31/2006			12/31/2005			9/30/2005			6/30/2005			3/31/2005
Primary insurance in force (in millions)
Flow		$	84,405		$	84,644		$	85,685		$	86,991		$	88,433		$	89,965		$	91,399
Structured transactions			15,877			15,741			15,826			14,099			12,788			13,469			12,598
Total		$	100,282		$	100,385		$	101,511		$	101,090		$	101,221		$	103,434		$	103,997
Primary risk in force (in millions)
Flow		$	20,855		$	20,883		$	21,102		$	21,388		$	21,745		$	22,067		$	22,346
Structured transactions			4,193			4,127			4,147			3,583			3,167			3,296			2,966
Total		$	25,048		$	25,010		$	25,249		$	24,971		$	24,912		$	25,363		$	25,312
Pool risk in force (in millions) (9)		$	2,773		$	2,737		$	2,666		$	2,589		$	2,530		$	2,445		$	2,417
Primary risk in force—credit score distribution
Flow	620 or above		93.5	%		93.3	%		93.2	%		93.0	%		92.7	%		92.4	%		92.1	%
	619-575		5.2	%		5.3	%		5.4	%		5.5	%		5.7	%		5.9	%		6.1	%
	574 or below		1.3	%		1.4	%		1.4	%		1.5	%		1.6	%		1.7	%		1.8	%
Structured transactions	620 or above		82.8	%		80.7	%		79.2	%		76.9	%		73.9	%		71.7	%		66.9	%
	619-575		10.8	%		12.3	%		13.2	%		14.5	%		16.0	%		17.4	%		20.2	%
	574 or below		6.4	%		7.1	%		7.6	%		8.6	%		10.1	%		10.9	%		12.9	%
Total	620 or above		91.7	%		91.3	%		90.9	%		90.7	%		90.3	%		89.7	%		89.2	%
	619-575		6.1	%		6.4	%		6.6	%		6.8	%		7.0	%		7.4	%		7.7	%
	574 or below		2.2	%		2.3	%		2.5	%		2.5	%		2.7	%		2.9	%		3.1	%
Primary average loan size (in thousands)
Flow		$	138.3		$	136.9		$	135.6		$	134.5		$	133.3		$	132.2		$	131.5
Structured transactions		$	151.8		$	150.7		$	150.7		$	145.4		$	139.5		$	139.8		$	134.1
Total		$	140.3		$	138.9		$	137.8		$	136.0		$	134.1		$	133.2		$	131.8
Loss severity—primary (quarterly)
Flow			83.1	%		83.2	%		84.9	%		85.9	%		84.0	%		83.8	%		85.6	%
Structured transactions			86.7	%		86.8	%		91.2	%		94.3	%		89.6	%		87.7	%		90.9	%
Total			84.0	%		84.1	%		86.5	%		87.7	%		85.2	%		84.6	%		86.8	%
Persistency
Primary persistency rate			67.3	%		64.9	%		63.1	%		61.9	%		61.2	%		62.0	%		60.8	%
Primary loans, defaults and default rates
Primary policies in force			714,742			722,756			736,908			743,533			754,934			776,721			788,847
Primary loans in default			38,573			37,102			37,784			42,702			38,146			35,030			35,716
Primary default rate			5.40	%		5.13	%		5.13	%		5.74	%		5.05	%		4.51	%		4.53	%
Structured transactions only default rate			9.96	%		9.26	%		8.59	%		9.85	%		10.09	%		8.54	%		8.17	%
Pool default rate			4.81	%		5.60	%		6.17	%		6.84	%		6.34	%		5.65	%		5.65	%
Claims paid (quarter-to-date in millions)
Primary claims paid—flow		$	42.6		$	36.2		$	37.3		$	39.2		$	38.8		$	46.1		$	41.7
Primary claims paid—structured transactions			14.7			11.3			13.5			12.3			11.4			11.6			13.8
Total primary claims paid			57.3			47.5			50.8			51.5			50.2			57.7			55.5
Total pool and other			4.7			4.6			4.3			5.1			5.4			4.9			4.7
Total claims paid		$	62.0		$	52.1		$	55.1		$	56.6		$	55.6		$	62.6		$	60.2
Number of primary claims paid (quarter-to-date)			2,346			2,038			2,058			2,138			2,190			2,521			2,413
Average primary claim size (quarter-to-date in thousands)		$	24.4		$	23.3		$	24.7		$	24.1		$	22.9		$	22.9		$	23.0
Captive reinsurance arrangements (year-to-date)
Percentage of flow NIW subject to captive reinsurance arrangements			71.6	%		71.3	%		69.6	%		69.0	%		68.0	%		65.0	%		60.4	%
Percentage of primary NIW subject to captive reinsurance arrangements			53.5	%		51.5	%		44.8	%		54.7	%		55.7	%		50.7	%		47.1	%
Percentage of primary IIF subject to captive reinsurance arrangements			53.9	%		53.3	%		53.2	%		53.4	%		53.2	%		52.1	%		52.4	%
Percentage of primary RIF subject to captive reinsurance arrangements			54.4	%		53.9	%		53.9	%		54.4	%		54.4	%		53.4	%		53.9	%
Alt-A primary insurance in force (in millions) (11)
With FICO scores of 660 and above		$	14,203		$	13,216		$	12,575		$	11,455		$	10,346		$	9,731		$	8,892
With FICO scores below 660 and above 619			3,178			2,934			2,783			2,564			2,327			2,325			2,135
Total Alt-A primary insurance in force		$	17,381		$	16,150		$	15,358		$	14,019		$	12,673		$	12,056		$	11,027
Risk-to-capital ratio (10)			8.2 to 1			7.7 to 1			8.1 to 1			8.2 to 1			8.0 to 1			8.3 to 1			8.1 to 1

Page 7

THE PMI GROUP, INC. AND SUBSIDIARIES

CMG MORTGAGE INSURANCE COMPANY FINANCIAL AND STATISTICAL INFORMATION

	September 30, 2006			June 30, 2006			September 30, 2005
Primary new insurance written (quarter-to-date in millions)	$	1,238		$	1,167		$	1,740
Primary insurance in force (in millions)	$	16,063		$	15,774		$	15,358
Primary risk in force (in millions)	$	3,897		$	3,791		$	3,607
Insured primary loans		113,004			111,889			111,217
Persistency		75.6	%		73.6	%		70.2	%
Primary loans in default		974			965			632
Primary default rate		0.86	%		0.86	%		0.57	%
Primary claims paid (quarter-to-date in thousands)	$	2,268		$	1,512		$	1,172
Number of primary claims paid (quarter-to-date)		98			68			49
Average primary claim size (quarter-to-date in thousands)	$	23.1		$	22.2		$	23.9

PMI AUSTRALIA FINANCIAL AND STATISTICAL INFORMATION

	September 30, 2006			June 30, 2006			September 30, 2005
Net premiums written (quarter-to-date in thousands)	$	47,472		$	48,603		$	40,544
Premiums earned (quarter-to-date in thousands)	$	39,849		$	39,110		$	31,777
Flow insurance written (quarter-to-date in millions)	$	5,376		$	5,062		$	4,963
RMBS insurance written (quarter-to-date in millions)		3,899			7,744			3,006
New insurance written (quarter-to-date in millions)	$	9,275		$	12,806		$	7,969
Insurance in force (in millions)	$	135,001		$	135,529		$	124,014
Risk in force (in millions)	$	123,159		$	124,139		$	113,028
Policies in force		1,026,990			1,074,618			994,330
Loans in default		2,099			1,731			1,007
Default rate		0.20	%		0.16	%		0.10	%
Claims paid (quarter-to-date in thousands)	$	4,534		$	3,181		$	717
Number of claims paid (quarter-to-date)		80			73			14
Average claim size (quarter-to-date in thousands)	$	56.7		$	43.6		$	51.2

PMI EUROPE FINANCIAL AND STATISTICAL INFORMATION

	September 30, 2006		June 30, 2006		September 30, 2005
Net premiums written (quarter-to-date in thousands)	$	2,948	$	2,109	$	2,417
Premiums earned (quarter-to-date in thousands)	$	4,153	$	3,905	$	4,576
New insurance written (quarter-to-date in millions)	$	62	$	24	$	—
New credit default swaps written (quarter-to-date in millions)	$	7,910	$	—	$	514
New reinsurance written (quarter-to-date in millions)	$	2,248	$	379	$	2,992
Insurance in force (in millions)	$	49,976	$	39,996	$	34,501
Risk in force (in millions)	$	4,441	$	2,836	$	2,894
Claims paid including credit default swaps (quarter-to-date in thousands)	$	1,228	$	919	$	306

Page 8

THE PMI GROUP, INC. AND SUBSIDIARIES

APPENDIX A—QUARTERLY FINANCIAL INFORMATION

PMI AUSTRALIA QUARTERLY FINANCIAL INFORMATION

	2006								2005
	3rd Quarter			2nd Quarter			1st Quarter		4th Quarter			3rd Quarter			2nd Quarter			1st Quarter
	(Australian $ in thousands, unless otherwise noted)
Income Statement Components—Quarter Ended
Premiums earned	$	52,634		$	52,399		$	43,644	$	43,959		$	41,815		$	38,929		$	37,840
Net investment income	$	22,594		$	17,267		$	16,876	$	16,257		$	15,854		$	14,966		$	14,705
Change in fair value of foreign currency put options	$	(638	)	$	(2,640	)	$	1,855	$	(24	)	$	(232	)	$	(422	)	$	(1,338	)
Total losses and expenses	$	28,610		$	24,843		$	15,789	$	17,226		$	13,632		$	15,104		$	13,788
Net income	$	32,688		$	29,332		$	32,546	$	31,906		$	31,079		$	26,725		$	26,487
Net income (U.S. $ in thousands)	$	24,732		$	21,923		$	24,054	$	23,728		$	23,623		$	20,541		$	20,584
Balance Sheet Components
Assets
Cash and investments, at fair value	$	1,314,487		$	1,257,618		$	1,219,179	$	1,197,016		$	1,147,390		$	1,090,399		$	1,037,704
Total assets	$	1,396,072		$	1,336,748		$	1,302,982	$	1,275,573		$	1,225,683		$	1,188,574		$	1,132,961
Liabilities and Shareholder’s Equity
Reserve for losses and LAE	$	24,185		$	16,150		$	11,489	$	11,573		$	11,156		$	12,541		$	12,549
Unearned premiums	$	441,936		$	431,864		$	419,207	$	415,885		$	406,661		$	395,113		$	382,781
Shareholder’s equity	$	874,975		$	841,116		$	822,918	$	793,045		$	757,372		$	730,113		$	689,927

PMI EUROPE QUARTERLY FINANCIAL INFORMATION

	2006									2005
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter		3rd Quarter			2nd Quarter		1st Quarter
	(Euro € in thousands, unless otherwise noted)
Income Statement Components—Quarter Ended
Premiums earned	€	3,258		€	3,108		€	3,232		€	3,721	€	3,749		€	3,298	€	3,321
Net investment income	€	2,402		€	2,157		€	1,915		€	1,730	€	2,188		€	1,951	€	2,002
Change in fair value of foreign currency put options	€	(2	)	€	(42	)	€	(43	)	€	55	€	(3	)	€	342	€	(33	)
Change in fair value of credit default swaps	€	769		€	1,691		€	1,356		€	409	€	811		€	390	€	320
Total losses and expenses	€	4,026		€	2,635		€	2,692		€	3,824	€	3,244		€	3,168	€	2,031
Net income	€	1,559		€	2,780		€	2,451		€	1,362	€	2,276		€	1,828	€	2,326
Net income (U.S. $ in thousands)	$	1,987		$	3,498		$	2,949		$	1,615	$	2,774		$	2,330	$	3,049
Balance Sheet Components
Assets
Cash and investments, at fair value	€	162,858		€	160,424		€	182,304		€	182,559	€	182,682		€	179,698	€	172,707
Total assets	€	182,503		€	174,624		€	192,990		€	192,107	€	192,431		€	188,840	€	182,857
Liabilities and Shareholder’s Equity
Reserve for losses and LAE	€	13,340		€	12,521		€	12,581		€	12,508	€	13,019		€	13,395	€	12,807
Unearned premiums	€	16,703		€	17,648		€	19,077		€	20,020	€	20,808		€	22,589	€	24,719
Shareholder’s equity	€	138,766		€	134,518		€	132,900		€	133,818	€	133,352		€	131,452	€	125,395

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THE PMI GROUP, INC. AND SUBSIDIARIES

APPENDIX B- BUSINESS SEGMENTS RESULTS OF OPERATIONS BY QUARTER

	2006									2005
	3rd Quarter			2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
	(Dollars in thousands)
U.S. Mortgage Insurance Operations (2)
Net premiums written	$	160,468		$	158,904		$	163,474		$	201,160		$	158,866		$	152,564
Revenues
Premiums earned	$	168,118		$	167,826		$	167,538		$	166,778		$	166,052		$	168,248
Net investment income		27,082			27,064			25,676			26,168			25,046			27,546
Equity in earnings from unconsolidated subsidiaries (1)		5,010			5,729			4,492			4,583			5,217			4,937
Net realized investment gains		1,620			305			237			378			2,597			1,167
Other (loss) income		(22	)		7			(23	)		(3	)		3			(5	)
Total revenues		201,808			200,931			197,920			197,904			198,915			201,893
Losses and expenses
Losses and loss adjustment expenses		67,699			64,153			59,147			63,159			61,667			65,496
Amortization of deferred policy acquisition costs		12,830			13,162			13,442			14,113			14,478			15,030
Other underwriting expenses and operating expenses		23,618			22,970			27,866			29,057			25,260			25,278
Litigation settlement charge reversal (12)		(999	)		—			—			—			—			—
Interest expense		1			1			—			1			3			—
Total losses and expenses		103,149			100,286			100,455			106,330			101,408			105,804
Income before income taxes		98,659			100,645			97,465			91,574			97,507			96,089
Income taxes		27,819			28,480			27,360			21,696			27,977			26,400
		—			—			—			—			—			—
Net income	$	70,840		$	72,165		$	70,105		$	69,878		$	69,530		$	69,689
International Operations (3)
Net premiums written	$	51,942		$	52,900		$	38,420		$	44,913		$	47,197		$	47,185
Revenues
Premiums earned	$	46,766		$	45,801		$	38,686		$	39,781		$	38,979		$	38,141
Net investment income		17,442			15,625			14,785			14,499			14,844			14,058
Net realized investment gains (losses)		3,452			252			142			(221	)		(27	)		(18	)
Other income		938			218			3,031			778			1,287			873
Total revenues		68,598			61,896			56,644			54,837			55,083			53,054
Losses and expenses
Losses and loss adjustment expenses		11,907			7,708			1,792			1,601			(365	)		1,739
Amortization of deferred policy acquisition costs		3,871			4,632			3,545			3,274			3,269			3,779
Other underwriting and operating expenses		11,205			10,461			9,789			12,663			11,648			10,539
Interest expense		124			—			—			9			—			—
Total losses and expenses		27,107			22,801			15,126			17,547			14,552			16,057
Income before income taxes		41,491			39,095			41,518			37,290			40,531			36,997
Income taxes		12,048			13,598			12,909			10,251			12,514			11,747
Net income	$	29,443		$	25,497		$	28,609		$	27,039		$	28,017		$	25,250
Financial Guaranty (4)
Equity in earnings from unconsolidated subsidiaries (1)	$	26,549		$	26,476		$	23,235		$	21,453		$	13,691		$	23,761
Interest and dividends		(1	)		2			—			—			—			—
Income taxes		2,820			2,469			2,137			2,208			1,135			2,254
Net income	$	23,728		$	24,009		$	21,098		$	19,245		$	12,556		$	21,507
Other (5)
Net premiums written	$	16		$	11		$	10		$	27		$	19		$	13
Revenues
Premiums earned	$	19		$	16		$	17		$	18		$	19		$	19
Net investment income		5,157			6,324			6,406			4,832			4,537			4,143
Equity in (losses) earnings from unconsolidated subsidiaries (1)		(68	)		82			(102	)		(165	)		(388	)		(416	)
Net realized investment (losses) gains		(4,346	)		(1	)		(39	)		(4	)		(2,897	)		354
Other income		3,204			3,712			3,777			4,283			2,649			5,383
Total revenues		3,966			10,133			10,059			8,964			3,920			9,483
Losses and expenses
Losses and loss adjustment expenses		(3	)		—			—			—			—			—
Other underwriting expenses and operating expenses (7)		21,484			19,442			22,865			17,354			17,607			18,600
Net costs to exchange and extinguish long-term debt (13)		875			—			—			—			—			—
Interest expense		9,361			8,066			8,179			4,644			8,455			8,472
Total losses and expenses		31,717			27,508			31,044			21,998			26,062			27,072
Loss before income tax benefits		(27,751	)		(17,375	)		(20,985	)		(13,034	)		(22,142	)		(17,589	)
Income tax benefits		(7,978	)		(5,319	)		(6,521	)		(4,587	)		(7,750	)		(5,728	)
Net loss	$	(19,773	)	$	(12,056	)	$	(14,464	)	$	(8,447	)	$	(14,392	)	$	(11,861	)

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THE PMI GROUP, INC. AND SUBSIDIARIES

APPENDIX C—PMI AUSTRALIA FINANCIAL AND STATISTICAL INFORMATION

	9/30/2006			6/30/2006			3/31/2006			12/31/2005			9/30/2005			6/30/2005			3/31/2005
Insurance in Force (U.S. $ in millions)
Flow	$	86,026		$	86,215		$	81,503		$	82,236		$	83,286		$	81,025		$	80,099
RMBS		48,975			49,314			41,547			37,679			40,728			38,786			37,340
Total	$	135,001		$	135,529		$	123,050		$	119,915		$	124,014		$	119,811		$	117,439
Risk in Force (U.S. $ in millions)
Flow	$	74,328		$	74,956		$	70,773		$	71,160		$	72,393		$	70,320		$	69,461
RMBS		48,831			49,183			41,426			37,591			40,635			38,705			37,263
Total	$	123,159		$	124,139		$	112,199		$	108,751		$	113,028		$	109,025		$	106,724
Average loan size (U.S. $ in thousands)
Flow	$	134.8		$	128.2		$	122.5		$	125.0		$	127.6		$	125.8		$	125.7
RMBS	$	125.9		$	122.6		$	115.1		$	116.3		$	119.2		$	117.5		$	117.1
Total	$	131.5		$	126.1		$	119.9		$	122.1		$	124.7		$	123.0		$	122.9
Loss severity (quarterly)
Flow		21.87	%		18.24	%		15.77	%		15.72	%		21.55	%		13.18	%		11.52	%
RMBS		21.73	%		1.64	%		3.89	%		11.27	%		0.00	%		0.00	%		17.42	%
Total		21.86	%		18.16	%		15.25	%		15.58	%		21.55	%		13.18	%		11.84	%
Primary loans, defaults and default rates
Policies in force—Flow		638,139			672,347			665,336			657,713			652,750			643,835			637,040
Policies in force—RMBS		388,851			402,271			360,924			324,019			341,580			329,985			318,882
Policies in force—Total		1,026,990			1,074,618			1,026,260			981,732			994,330			973,820			955,922
Loans in default—Flow		1,826			1,478			1,314			1,094			909			1,032			784
Loans in default —RMBS		273			253			206			170			98			130			93
Loans in default —Total		2,099			1,731			1,520			1,264			1,007			1,162			877
Default rate —Flow		0.29	%		0.22	%		0.20	%		0.17	%		0.14	%		0.16	%		0.12	%
Default rate —RMBS		0.07	%		0.06	%		0.06	%		0.05	%		0.03	%		0.04	%		0.03	%
Default rate —Total		0.20	%		0.16	%		0.15	%		0.13	%		0.10	%		0.12	%		0.09	%
Net claims paid (quarter to date in U.S. $ in thousands)
Net claims paid—Flow	$	4,123.2		$	3,179.2		$	1,210.6		$	1,420.9		$	716.5		$	734.8		$	326.8
Net claims paid—RMBS		411.3			1.5			13.6			33.4			—			—			28.4
Net claims paid—Total		4,534.5			3,180.7			1,224.2			1,454.3			716.5			734.8			355.2
Number of claims paid—Flow		72			72			30			36			14			24			17
Number of claims paid—RMBS		8			1			1			1			—			—			1
Number of claims paid—Total		80			73			31			37			14			24			18
Average claim size- Flow	$	57.3		$	44.2		$	40.4		$	39.5		$	51.2		$	30.6		$	19.2
Average claim size- RMBS	$	51.4		$	1.5		$	13.6		$	33.4		$	—		$	—		$	28.4
Average claim size- Total	$	56.7		$	43.6		$	39.5		$	39.3		$	51.2		$	30.6		$	19.7
Combined Ratio
Loss Ratio		26.41	%		17.26	%		3.79	%		5.33	%		(1.07	)%		2.47	%		1.21	%
Expense Ratio		23.60	%		24.25	%		30.14	%		27.95	%		26.37	%		27.60	%		31.99	%
Combined Ratio		50.01	%		41.51	%		33.93	%		33.28	%		25.30	%		30.07	%		33.20	%

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