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 3, 2008

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 3, 2008, The PMI Group, Inc: (1) issued a press release announcing its consolidated financial results for the quarter ended September 30, 2008, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference; and (2) posted on its website (www.pmigroup.com under Investor Relations) supplemental portfolio information as of September 30, 2008, a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The information contained in this Current Report on Form 8-K (including the exhibits) is being furnished to, and shall not be deemed “filed” with, the Securities and Exchange Commission.

Item 8.01 Other Events.

See Item 2.02 above.

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 3, 2008.
99.2	The PMI Group, Inc. Supplemental Portfolio Information as of September 30, 2008.

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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 3, 2008	By:	/s/    Donald P. Lofe, Jr.
		Donald P. Lofe, Jr.
		Executive Vice President, Chief Financial Officer
Dated: November 3, 2008	By:	/s/    Thomas H. Jeter
		Thomas H. Jeter
		Senior Vice President, Chief Accounting Officer and Corporate Controller

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EX-99.1

Exhibit 99.1

NEWS RELEASE

Investors and Media Contacts:

Bill Horning / Tom Taggart

925.658.6193 / 925.658.6511

THE PMI GROUP, INC. REPORTS

THIRD QUARTER 2008 FINANCIAL RESULTS

Walnut Creek, CA, November 3, 2008 - The PMI Group, Inc. (NYSE: PMI) (the “Company”) today reported a loss from continuing operations for the third quarter of 2008 of $149.3 million, or $1.83 per basic and diluted¹ share, compared to a loss from continuing operations in the third quarter of 2007 of $110.6 million, or $1.32 per basic and diluted¹ share. The loss from continuing operations for the third quarter of 2008 was primarily due to losses and loss adjustment expenses (LAE) in the U.S. Mortgage Insurance Operations and PMI Europe, a decrease in premiums earned and net realized investment losses, primarily from impairments of corporate preferred equity securities in U.S. Mortgage Insurance Operations.

During the third quarter, the Company entered into definitive agreements to sell its Australian and Asian operations and classified both as discontinued operations.

The PMI Group, Inc. Third Quarter Results

	Three Months Ended September 30,
(Dollars in thousands, except per share data)	2008			2007
Loss from continuing operations	$	(149,309	)	$	(110,635	)
(Loss) income from discontinued operations, net of income taxes*		(80,104	)		23,862
Net loss	$	(229,413	)	$	(86,773	)
Diluted loss from continuing operations per share	$	(1.83	)	$	(1.32	)
Diluted (loss) income from discontinued operations per share		(0.98	)		0.28
Diluted net loss per share	$	(2.81	)	$	(1.04	)

* Includes the results of PMI Australia, PMI Asia and PMI Guaranty.

Third Quarter 2008 Update:

• The Company sold PMI Australia for approximately 100% of net tangible asset value, or approximately $920 million, plus certain adjustments for pre-completion interest and changes in the value of PMI Australia’s investment portfolio. The transaction closed on October 22, 2008 with the Company receiving approximately $746 million in cash and a note (“the Note”) in the

¹ Due to the net loss in the third quarter of 2008, dilutive components of shares outstanding such as stock options were not included in fully diluted shares outstanding as their inclusion would have been anti-dilutive.

principal amount of approximately $187 million. The amount owed under the Note could be reduced under certain conditions related to warranty claims and the post-sale performance of PMI Australia and PMI Asia. Due to the potential adjustments to the Note, it is not included as an asset on our consolidated financial statements under U.S. generally accepted accounting principles. Pursuant to the sale agreement, PMI funded premiums of approximately $46 million for a reinsurance cover for PMI Australia.

• The Company signed a definitive agreement to sell PMI Asia for approximately 100% of the net tangible asset value, or approximately $56 million, 80% of which is to be received in the form of cash and 20% in the form of a note.

• During the third quarter, PMI Guaranty paid approximately $152 million of its excess capital to our holding company, The PMI Group, of which $144 million was reinvested in U.S. Mortgage Insurance Operations. We expect to merge PMI Guaranty into our U.S. Mortgage Insurance Operations during the fourth quarter of 2008 pending regulatory approval.

Consolidated Continuing Operating Results

Consolidated net premiums written for the third quarter and year to date totaled $176.5 million and $591.4 million, respectively, compared with $218.8 million and $610.8 million for the same periods one year ago. The decreases were due primarily to lower levels of new insurance written and premium refunds related to rescissions of insurance previously written.

Consolidated premiums earned for the third quarter and year to date were $183.6 million and $602.0 million, respectively, compared with $209.2 million and $605.5 million for the same periods one year ago. The decreases were due primarily to lower levels of new insurance written and premium refunds related to rescissions of insurance previously written, partially offset by higher persistency in the U.S. Mortgage Insurance Operations.

Consolidated losses and LAE, which includes paid claims, loss adjustment expenses and additions to reserve for losses, for the third quarter and year to date were $382.7 million and $1,494.8 million, respectively, compared with $351.0 million and $580.2 million for the same periods one year ago. The increase in the third quarter compared with the same period one year ago was primarily due to higher claims paid in U.S. Mortgage Insurance Operations and loss reserve increases in PMI Europe while the increase year to date was primarily a result of higher losses and LAE in U.S. Mortgage Insurance Operations.

Consolidated reserve for losses and LAE totaled $2.5 billion as of September 30, 2008 compared with $2.3 billion as of June 30, 2008 and $718.9 million as of September 30, 2007. Reserves for losses and LAE in the U.S. Mortgage Insurance Operations increased in the third quarter of 2008 by a gross amount of $217.0 million and was partially offset by a $79.2 million credit from reinsurance recoverables, primarily from captive reinsurance agreements. The increase in this quarter for reserves for losses and LAE was primarily due to increases in notices of default and average claim sizes in the U.S.

Consolidated other underwriting and operating expenses for the third quarter and year to date were $59.4 million and $160.0 million, respectively, compared with $40.6 million and $145.9 million for the same periods one year ago. The increases in other underwriting and operating expenses in the third quarter and first nine months of 2008 compared to the corresponding periods in 2007 were primarily due to severance and disposal costs in the International Operations segment, certain software impairment charges in the Corporate and Other segment and, to a lesser extent, higher compensation expense.

The PMI Group, Inc. Third Quarter Results by Segment

	Third Quarter Total Revenues						Third Quarter (Loss) Income from Continuing Operations
(Dollars in millions, except per share data)	2008			2007			2008			2007
U.S. Mortgage Insurance Operations2	$	158.1		$	237.4		$	(137.1	)	$	(65.2	)
International Operations3		(0.4	)		(2.0	)		(46.0	)		(8.7	)
Financial Guaranty4		(2.9	)		0.0			6.5			(25.6	)
Corporate and Other5		70.4			4.6			27.4			(11.0	)
Consolidated Total	$	225.2		$	240.0		$	(149.3	)	$	(110.6	)
Diluted (Loss) Income from Continuing Operations Per Share1							$	(1.83	)	$	(1.32	)

May not total due to rounding.

The PMI Group, Inc. Year to Date Results by Segment

	Nine Months Ended September 30 Total Revenues					Nine Months Ended September 30 (Loss) Income from Continuing Operations
(Dollars in millions, except per share data)	2008			2007		2008			2007
U.S. Mortgage Insurance Operations2	$	655.3		$	684.0	$	(535.5	)	$	45.2
International Operations3		24.8			13.6		(56.8	)		(4.5	)
Financial Guaranty4		(90.9	)		0.0		(140.8	)		30.6
Corporate and Other5		125.9			14.9		26.9			(45.7	)
Consolidated Total	$	715.1		$	712.5	$	(706.2	)	$	25.6
Diluted (Loss) Income from Continuing Operations Per Share						$	(8.68	)	$	0.29

May not total due to rounding.

Segment Results

U.S. Mortgage Insurance Operations

• The net loss totaled $137.1 million for the third quarter of 2008 compared with a net loss of $65.2 million in the third quarter of 2007. The higher loss in the third quarter was due primarily to lower premiums earned, higher net realized investment losses and higher other underwriting and operating expenses.

• Total revenues were $158.1 million in the third quarter of 2008 compared with $237.4 million in the third quarter of 2007. The decrease in revenues was due to higher net realized investment losses, primarily from impairments of corporate preferred equity securities, and lower premiums earned due to lower levels of new insurance written and premium refunds related to rescissions of insurance previously written.

² “U.S. Mortgage Insurance Operations” includes the results of PMI Mortgage Insurance Co. (PMI), affiliated U.S. reinsurance companies and equity in earnings from CMG Mortgage Insurance Company (CMG MI).

³ “International Operations” includes the results of PMI Europe and PMI Canada.

⁴ “Financial Guaranty” includes our equity investments in FGIC Corporation (FGIC) and RAM Holdings Ltd. (RAM Re).

⁵ The “Corporate and Other” segment primarily consists of the holding company, contract underwriting operations and intercompany eliminations.

• Premiums earned in the third quarter of 2008 decreased 12.5% to $179.8 million from $205.5 million in the third quarter of 2007. The decrease was due primarily to lower new insurance written and premium refunds related to rescissions of insurance previously written partially offset by an increase in the primary persistency rate.

• In the third quarter of 2008, the primary persistency rate increased to 81.0% compared with 73.3% in the third quarter of 2007, largely as a result of lower levels of refinance activity.

• Losses and LAE in the third quarter of 2008 were $348.2 million compared with $348.3 million in the third quarter of 2007.

• Reserves for losses and LAE in the U.S. Mortgage Insurance Operations totaled $2.3 billion at September 30, 2008. The gross loss reserve increase in the quarter was $217.0 million, comprised of a $137.9 million change in net loss reserves and a $79.2 million credit from reinsurance recoverables, primarily from captive reinsurance agreements.

• Total claims paid increased to $200.1 million for the third quarter of 2008 compared with $92.6 million in the third quarter of 2007 driven by an increase in the number of claims paid, higher claim rates and larger average claim sizes.

• After tax equity in losses from CMG MI for the third quarter of 2008 were $0.1 million, compared with after tax equity in earnings of $2.7 million for the same period of 2007. The decline in equity in earnings was primarily driven by higher losses and LAE partially offset by higher premiums earned. In the third quarter of 2008, insurance in force grew to $21.4 billion, persistency increased to 84.1%, the loss ratio was 91.8% and the primary default rate was 2.03%.

International Operations

• PMI Europe reported a net loss of $44.5 million in the third quarter of 2008 compared with a net loss of $8.4 million for the same period a year ago. The increase was driven by higher losses and loss adjustment expenses and an increase in underwriting and operating expenses primarily driven by reconfiguration costs partly offset by higher net investment income.

• PMI Canada, which the Company previously announced would cease operations in the second half of 2008, reported a net loss of $1.5 million in the third quarter of 2008 compared with a net loss of $0.3 million for the same period one year ago. The increase was driven by costs associated with closing its operations.

Financial Guaranty

• After tax equity in earnings from RAM Re for the third quarter 2008 were $9.4 million compared with after tax equity in earnings of $1.4 million for the same period a year ago. At June 30, 2008, the carrying value of the Company’s investment in RAM Re had been reduced to zero due to equity in losses. The equity in earnings from the third quarter increased the carrying value to $9.4 million. However, the Company realized an other-than-temporary impairment charge of $2.9 million which reduced the carrying value of our investment in RAM Re to $6.5 million.

Corporate and Other

• The Corporate and Other segment reported net income of $27.4 million for the third quarter of 2008 compared with a net loss of $11.0 million for the same period a year ago. The increase in net income was due primarily to the reporting of certain debt instruments at fair value in accordance with SFAS No. 159⁶ partially offset by higher operating expenses related to increased legal fees, impairments of capitalized software projects and increased employee compensation costs, and an increase in interest expense related to a $200 million borrowing from the Company’s revolving credit facility.

Supplemental Financial Information

• The PMI Group, Inc.’s Third Quarter 2008 Financial Supplement, Net Operating Income (NOI) Reconciliation, and Sale of PMI Australia and PMI Asia Cash Proceeds and Loss from Discontinued Operations Reconciliation can all be found at www.pmigroup.com under Investor Relations.

ABOUT THE PMI GROUP, INC.

The PMI Group, Inc. (NYSE: PMI), headquartered in Walnut Creek, CA, provides innovative credit, capital, and risk transfer solutions that expand homeownership and fund essential services for our customers and the communities they serve. Through its wholly owned subsidiaries, PMI offers residential mortgage insurance and credit enhancement products. For more information: www.pmigroup.com.

Cautionary Statement: Statements in this press release that are not historical facts, or that relate to future plans, events or performance are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this release include our expectation that PMI Guaranty will merge into U.S. Mortgage Insurance Operations in the fourth quarter. 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 forward-looking statements. Such factors include, among others, national or regional recessions, and further deterioration in the housing, mortgage and related credit markets. In particular, declines in housing values and/or housing demand, deterioration of borrower credit, higher unemployment rates, changes in interest rates, higher levels of consumer credit, higher mortgage default and claim rates, lower cure rates, higher claim sizes, the aging of our mortgage insurance portfolios, adverse changes in liquidity in the capital markets, the inability of loans servicers to process higher volumes of delinquent loans, the further contraction of credit markets and the failure of conditions relating to any of these factors to improve, could negatively affect our losses. Also, with respect to the sale of PMI Asia, the parties are currently discussing certain post-closing operational issues and there can be no assurance that the sale of PMI Asia will be completed on the terms that have been announced, or at all. In addition, there can be no assurance that the note issued to PMI in connection with the sale of PMI Australia will not be reduced prior to its repayment. There can be no assurance that we will receive regulatory approval to merge PMI Guaranty into our U.S. Mortgage Insurance Operations. Other risks and uncertainties are discussed in our SEC filings, including our Annual Report Form 10-K for the year ended December 31, 2007 (in Item 1A) and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. We undertake no obligation to update forward-looking statements.

# # #

⁶ Effective January 1, 2008 the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB No. 115 (“SFAS No. 159”). SFAS No. 159 allows an entity the irrevocable option to elect fair value for the initial subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis.

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
	(Dollars and shares in thousands, except per share data)
Net premiums written	$	176,497		$	218,831		$	591,352		$	610,848
Revenues
Premiums earned	$	183,581		$	209,201		$	602,037		$	605,472
Net (losses) gains from credit default swaps		(9,911	)		(8,371	)		439			(4,964	)
Net investment income		36,098			33,587			105,119			98,093
Net realized investment (losses) gains		(49,920	)		712			(21,994	)		2,709
Change in fair value of certain debt instruments		66,283			—			111,948			—
Impairment of unconsolidated subsidiary		(2,887	)		—			(90,868	)		—
Other income		1,973			4,821			8,419			11,192
Total revenues		225,217			239,950			715,100			712,502
Losses and expenses
Losses and loss adjustment expenses		382,689			351,033			1,494,807			580,176
Amortization of deferred policy acquisition costs		4,955			13,150			13,773			38,853
Other underwriting and operating expenses		59,412			40,555			159,977			145,903
Interest expense		11,179			7,627			27,992			22,815
Total losses and expenses		458,235			412,365			1,696,549			787,747
Loss before equity in earnings (losses) from unconsolidated subsidiaries and income taxes		(233,018	)		(172,415	)		(981,449	)		(75,245	)
Equity in earnings (losses) from unconsolidated subsidiaries		9,103			(22,602	)		(45,830	)		49,655
Loss from continuing operations before income taxes		(223,915	)		(195,017	)		(1,027,279	)		(25,590	)
Income tax benefit from continuing operations		(74,606	)		(84,382	)		(321,084	)		(51,211	)
(Loss) income from continuing operations		(149,309	)		(110,635	)		(706,195	)		25,621
(Loss) income from discontinued operations, net of taxes		(80,104	)		23,862			(43,468	)		73,472
Net (loss) income	$	(229,413	)	$	(86,773	)	$	(749,663	)	$	99,093
Diluted (loss) income from continuing operations per share	$	(1.83	)	$	(1.32	)	$	(8.68	)	$	0.29
Diluted (loss) income from discontinued operations per share		(0.98	)		0.28			(0.54	)		0.85
Diluted net (loss) income per share	$	(2.81	)	$	(1.04	)	$	(9.22	)	$	1.14

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30, 2008		December 31, 2007		September 30, 2007
	(Unaudited)		(Unaudited)		(Unaudited)
	(Dollars and shares in thousands, except per share data)
Assets
Investments	$	2,243,908	$	2,437,280	$	2,500,489
Cash and cash equivalents		713,241		354,508		212,241
Investments in unconsolidated subsidiaries		154,397		309,800		1,126,781
Reinsurance recoverables		393,654		36,917		4,747
Deferred policy acquisition costs		31,036		18,305		52,592
Property, equipment and software, net of accumulated depreciation and amortization		138,845		157,308		161,995
Other assets		360,637		302,767		242,111
Assets - discontinued operations - held for sale		1,324,795		1,453,555		1,437,828
Total assets	$	5,360,513	$	5,070,440	$	5,738,784
Liabilities
Reserve for losses and loss adjustment expenses	$	2,463,407	$	1,177,309	$	718,872
Unearned premiums		117,324		136,921		142,750
Debt		532,177		496,593		496,593
Other liabilities		250,897		178,275		266,695
Liabilities - discontinued operations - held for sale		543,830		568,380		548,164
Total liabilities		3,907,635		2,557,478		2,173,074
Shareholders’ equity		1,452,878		2,512,962		3,565,710
Total liabilities and shareholders’ equity	$	5,360,513	$	5,070,440	$	5,738,784
Basic shares issued and outstanding		81,624		81,120		81,120
Book value per share	$	17.80	$	30.98	$	43.96

Note: Please refer to The PMI Group, Inc. Third Quarter 2008 Financial Supplement for additional information.

EX-99.2

Exhibit 99.2

The PMI Group, Inc.

Third Quarter 2008

Financial Supplement

THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2008

Table of Contents

	Page
Notes to Financial Results and Statistical Information	3
Consolidated Results
Consolidated Statements of Operations	4
Consolidated Balance Sheets	5
Business Segments Results of Operations - Three Months Ended September 30, 2008 and 2007	6
Business Segments Results of Operations - Nine Months Ended September 30, 2008 and 2007	7
Business Segments Balance Sheets	8
U.S. Mortgage Insurance Operations Segment Results
U.S. Mortgage Insurance Operations Segment Results of Operations and Balance Sheets	9
U.S. Mortgage Insurance Operations Portfolio Characteristics	10-12
U.S. Mortgage Insurance Operations Default Information	13
U.S. Mortgage Insurance Operations Analysis of Loss Reserves	14
CMG Mortgage Insurance Company Statistical Information	15
International Mortgage Insurance Operations Segment Results
International Operations Segment Results of Operations and Balance Sheets	16
PMI Europe Quarterly Financial Information	17
PMI Europe Statistical Information	18
Financial Guaranty Segment Results
Financial Guaranty Segment Results of Operations and Balance Sheets	19
Corporate and Other Segment Results
Corporate and Other Segment Results of Operations and Balance Sheets	20

Page 2

THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL RESULTS AND STATISTICAL INFORMATION FOR THE PERIOD ENDED SEPTEMBER 30, 2008

Notes to Financial Results and Statistical Information:

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

(2) International Operations segment includes PMI Europe and PMI Canada. PMI Australia and PMI Asia are reported as discontinued operations for all periods presented.

(3) Financial Guaranty segment represents our equity investments in FGIC Corporation and RAM Reinsurance Company, Ltd. (“RAM Re”). PMI Guaranty Co. (“PMI Guaranty”) is reported as discontinued operations for all periods presented. See note 14 below for discussion on impairment of The PMI Group, Inc’s (the “Company”) investments in RAM Re and FGIC.

(4) The Corporate and Other segment includes other income and related operating expenses of PMI Mortgage Services Co.; investment income, interest expense, intercompany eliminations and corporate expenses of the Company; the results of Commercial Loan Insurance Corporation, WMAC Credit Insurance Corporation and equity in earnings (losses) from certain limited partnerships.

(5) For the quarter and nine months ended September 30, 2008, the Company’s equity in earnings (losses) from unconsolidated subsidiaries include CMG Mortgage Insurance Company, CMG Mortgage Reinsurance Company and CMG Mortgage Assurance Company (collectively, “CMG MI”), RAM Re and certain limited partnership interests.

(6) Other underwriting and operating expenses from the International segment include severance costs related to the reconfiguration of PMI Europe and disposal costs related to PMI Canada.

(7) The loss ratio is expressed as a ratio of losses and loss adjustment expenses (“LAE”) from continuing operations to premiums earned from continuing operations. The expense ratio is expressed as a ratio of the sum of amortization of deferred policy acquisition costs and other underwriting and operating expenses from continuing operations to net premiums written from continuing operations.

(8) Pool insurance includes modified pool, GSE pool, old pool and all other pool insurance products for U.S. Mortgage Insurance Operations. As of June 30, 2008, we adjusted pool risk in force to appropriately reflect the effect of loan repayments on risk limits.

(9) The statutory risk-to-capital ratio is for PMI Mortgage Insurance Co. only.

(10) As of data, such as insurance in force, risk in force, policy in force and loans in default, are the same as recent period end in the total column.

(11) Due to the net loss in the quarter and nine months ended September 30, 2008, normally dilutive components of shares outstanding such as stock options were not included in fully diluted shares outstanding as their inclusion would have been anti-dilutive.

(12) Loss severity is, for a given period, initial claims paid as a percentage of the total risk in force of loans for which claims were paid. Initial claims paid does not include supplemental and other payments.

(13) PMI’s persistency rate was calculated based upon the percentage of primary insurance in force at the beginning of a 12-month period that remains in force at the end of that period.

(14) At June 30, 2008, the carrying value of our investment in RAM Re had been reduced to zero due to equity in losses in RAM Re. During the third quarter of 2008, we recognized equity in earnings from RAM Re of $9.4 million which increased our investment in RAM Re to $9.4 million; however, due to continuing deterioration of the credit market and declines in RAM Re’s share price we realized an other-than-temporary impairment charge of $2.9 million related to RAM Re thereby reducing the carrying value of our investment in RAM Re to $6.5 as of September 30, 2008. Additionally, the Company impaired its investment in FGIC in the first quarter and reduced the carrying value of its investment in FGIC to zero. This reduction resulted in an $88.0 million net realized investment loss in the consolidated statement of operations and $15.6 million loss in other comprehensive income in the first quarter. The Company did not recognize any equity in earnings (losses) from FGIC in 2008.

(15) Effective January 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”). The Company elected to adopt the fair value option for certain corporate debt on the adoption date. The Company’s net income included a $66.3 million and $111.9 million gain for the third quarter and nine months of 2008, respectively, related to the subsequent measurement of fair value for these debt instruments.

(16) Included in the Supplemental and other in the third quarter of 2008 is $25.8 million recovered from two captive trust accounts due to the termination of captive agreements. The recovered amount was excluded from the calculation of average claim size for the three and nine months ended September 30, 2008.

(17) Unaudited due to reclassification as a result of discontinued operations.

Note: The interim financial and statistical information contained in this material is unaudited. Certain prior periods’ information has been reclassified to conform to the current periods’ presentation.

The PMI Group, Inc.’s Investor Relations contacts:

Bill Horning	Kosta Karmaniolas
Vice President, Investor Relations	Manager, Investor Relations
(925) 658-6193	(925) 658-6137

Page 3

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
	(Dollars and shares in thousands, except per share data)
Net premiums written	$	176,497		$	218,831		$	591,352		$	610,848
Revenues
Premiums earned	$	183,581		$	209,201		$	602,037		$	605,472
Net (losses) gains from credit default swaps		(9,911	)		(8,371	)		439			(4,964	)
Net investment income		36,098			33,587			105,119			98,093
Net realized investment (losses) gains		(49,920	)		712			(21,994	)		2,709
Change in fair value of certain debt instruments (15)		66,283			—			111,948			—
Impairment of unconsolidated subsidiary (14)		(2,887	)		—			(90,868	)		—
Other income		1,973			4,821			8,419			11,192
Total revenues		225,217			239,950			715,100			712,502
Losses and expenses
Losses and loss adjustment expenses		382,689			351,033			1,494,807			580,176
Amortization of deferred policy acquisition costs		4,955			13,150			13,773			38,853
Other underwriting and operating expenses (6)		59,412			40,555			159,977			145,903
Interest expense		11,179			7,627			27,992			22,815
Total losses and expenses		458,235			412,365			1,696,549			787,747
Loss before equity in earnings (losses) from unconsolidated subsidiaries and income taxes		(233,018	)		(172,415	)		(981,449	)		(75,245	)
Equity in earnings (losses) from unconsolidated subsidiaries (5)		9,103			(22,602	)		(45,830	)		49,655
Loss from continuing operations before income taxes		(223,915	)		(195,017	)		(1,027,279	)		(25,590	)
Income tax benefit from continuing operations		(74,606	)		(84,382	)		(321,084	)		(51,211	)
(Loss) income from continuing operations		(149,309	)		(110,635	)		(706,195	)		25,621
(Loss) income from discontinued operations, net of taxes		(80,104	)		23,862			(43,468	)		73,472
Net (loss) income	$	(229,413	)	$	(86,773	)	$	(749,663	)	$	99,093
Diluted (loss) income from continuing operations per share	$	(1.83	)	$	(1.32	)	$	(8.68	)	$	0.29
Diluted (loss) income from discontinued operations per share		(0.98	)		0.28			(0.54	)		0.85
Diluted net (loss) income per share	$	(2.81	)	$	(1.04	)	$	(9.22	)	$	1.14
Share data:
Basic weighted average common shares outstanding		81,597			83,747			81,343			85,833
Stock options and other dilutive components (11)		—			—			—			881
Diluted weighted average common shares outstanding (11)		81,597			83,747			81,343			86,714

Page 4

THE PMI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30, 2008			December 31, 2007		September 30, 2007
	(Unaudited)			(Unaudited)(17)		(Unaudited)
	(Dollars and shares in thousands, except per share data)
Assets
Investments:
Fixed income securities	$	2,019,042		$	2,018,148	$	2,051,289
Equity securities:
Common		9,883			117,251		137,017
Preferred		212,703			299,630		309,931
Short term investments		2,280			2,251		2,252
Total investments	$	2,243,908		$	2,437,280	$	2,500,489
Cash and cash equivalents		713,241			354,508		212,241
Investments in unconsolidated subsidiaries		154,397			309,800		1,126,781
Reinsurance recoverables		393,654			36,917		4,747
Deferred policy acquisition costs		31,036			18,305		52,592
Property, equipment and software, net of accumulated depreciation and amortization		138,845			157,308		161,995
Other assets		360,637			302,767		242,111
Assets - discontinued operations - held for sale		1,324,795			1,453,555		1,437,828
Total assets	$	5,360,513		$	5,070,440	$	5,738,784
Liabilities
Reserve for losses and loss adjustment expenses	$	2,463,407		$	1,177,309	$	718,872
Unearned premiums		117,324			136,921		142,750
Debt		532,177			496,593		496,593
Other liabilities		250,897			178,275		266,695
Liabilities - discontinued operations - held for sale		543,830			568,380		548,164
Total liabilities		3,907,635			2,557,478		2,173,074
Shareholders’ equity
Common stock		1,193			1,193		1,193
Additional paid-in capital, treasury stock and retained earnings		1,491,384			2,196,692		3,211,860
Accumulated other comprehensive (loss) income, net of deferred taxes		(39,699	)		315,077		352,657
Total shareholders’ equity		1,452,878			2,512,962		3,565,710
Total liabilities and shareholders’ equity	$	5,360,513		$	5,070,440	$	5,738,784
Basic shares issued and outstanding		81,624			81,120		81,120
Book value per share	$	17.80		$	30.98	$	43.96

Page 5

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

	U.S. Mortgage Insurance Operations (1)			International Operations (2)			Financial Guaranty (3)			Corporate and Other (4)			Consolidated Total
	Three Months Ended September 30, 2008 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	173,908		$	2,577		$	—		$	12		$	176,497
Revenues
Premiums earned	$	179,795		$	3,776		$	—		$	10		$	183,581
Net loss from credit default swaps		—			(9,911	)		—			—			(9,911	)
Net investment income		29,331			3,875			—			2,892			36,098
Net realized investment (losses) gains		(50,800	)		1,868			—			(988	)		(49,920	)
Change in fair value of certain debt instruments (15)		—			—			—			66,283			66,283
Impairment of unconsolidated subsidiary(14)		—			—			(2,887	)		—			(2,887	)
Other (loss) income		(190	)		(23	)		—			2,186			1,973
Total revenues (expenses)		158,136			(415	)		(2,887	)		70,383			225,217
Losses and expenses
Losses and loss adjustment expenses		348,201			34,488			—			—			382,689
Amortization of deferred policy acquisition costs		3,387			1,568			—			—			4,955
Other underwriting and operating expenses		24,633			13,048			—			21,731			59,412
Interest expense		53			—			—			11,126			11,179
Total losses and expenses		376,274			49,104			—			32,857			458,235
(Loss) income before equity in (losses) earnings from unconsolidated subsidiaries and income taxes		(218,138	)		(49,519	)		(2,887	)		37,526			(233,018	)
Equity in (losses) earnings from unconsolidated subsidiaries (5)		(85	)		—			9,340			(152	)		9,103
(Loss) income from continuing operations before income taxes		(218,223	)		(49,519	)		6,453			37,374			(223,915	)
Income tax (benefit) expense from continuing operations		(81,108	)		(3,510	)		—			10,012			(74,606	)
(Loss) income from continuing operations		(137,115	)		(46,009	)		6,453			27,362			(149,309	)
(Loss) income from discontinued operations, net of taxes		—			(80,541	)		437			—			(80,104	)
Net (loss) income	$	(137,115	)	$	(126,550	)	$	6,890		$	27,362		$	(229,413	)
Loss ratio (7)		193.7	%
Expense ratio (7)		16.1	%
Combined ratio		209.8	%
	Three Months Ended September 30, 2007 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	214,398		$	4,419		$	—		$	14		$	218,831
Revenues
Premiums earned	$	205,539		$	3,644		$	—		$	18		$	209,201
Net loss from credit default swaps		—			(8,371	)		—			—			(8,371	)
Net investment income		28,786			2,866			—			1,935			33,587
Net realized investment gains (losses)		2,865			(267	)		—			(1,886	)		712
Other income		167			91			—			4,563			4,821
Total revenues (expenses)		237,357			(2,037	)		—			4,630			239,950
Losses and expenses
Losses and loss adjustment expenses		348,314			2,719			—			—			351,033
Amortization of deferred policy acquisition costs		12,809			341			—			—			13,150
Other underwriting and operating expenses		18,420			5,217			—			16,918			40,555
Interest expense		36			—			—			7,591			7,627
Total losses and expenses		379,579			8,277			—			24,509			412,365
Loss before equity in earnings (losses) from unconsolidated subsidiaries and income taxes		(142,222	)		(10,314	)		—			(19,879	)		(172,415	)
Equity in earnings (losses) from unconsolidated subsidiaries (5)		4,167			—			(26,741	)		(28	)		(22,602	)
Loss income from continuing operations before income taxes		(138,055	)		(10,314	)		(26,741	)		(19,907	)		(195,017	)
Income tax benefit from continuing operations		(72,833	)		(1,567	)		(1,113	)		(8,869	)		(84,382	)
Loss from continuing operations		(65,222	)		(8,747	)		(25,628	)		(11,038	)		(110,635	)
Income from discontinued operations, net of taxes		—			22,626			1,236			—			23,862
Net (loss) income	$	(65,222	)	$	13,879		$	(24,392	)	$	(11,038	)	$	(86,773	)
Loss ratio (7)		169.5	%
Expense ratio (7)		14.6	%
Combined ratio		184.1	%

Page 6

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

	U.S. Mortgage Insurance Operations (1)			International Operations (2)			Financial Guaranty (3)			Corporate and Other (4)			Consolidated Total
	Nine Months Ended September 30, 2008 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	574,969		$	16,358		$	—		$	25		$	591,352
Revenues
Premiums earned	$	591,254		$	10,750		$	—		$	33		$	602,037
Net gains from credit default swaps		—			439			—			—			439
Net investment income		86,586			12,404			—			6,129			105,119
Net realized investment (losses) gains		(22,149	)		1,157			—			(1,002	)		(21,994	)
Change in fair value of certain debt instruments (15)		—			—			—			111,948			111,948
Impairment of unconsolidated subsidiary (14)		—			—			(90,868	)		—			(90,868	)
Other (loss) income		(357	)		28			—			8,748			8,419
Total revenues (expenses)		655,334			24,778			(90,868	)		125,856			715,100
Losses and expenses
Losses and loss adjustment expenses		1,437,710			57,097			—			—			1,494,807
Amortization of deferred policy acquisition costs		11,457			2,316			—			—			13,773
Other underwriting and operating expenses		71,131			27,687			—			61,159			159,977
Interest expense		114			—			—			27,878			27,992
Total losses and expenses		1,520,412			87,100			—			89,037			1,696,549
(Loss) income before equity in earnings (losses) from unconsolidated subsidiaries and income taxes		(865,078	)		(62,322	)		(90,868	)		36,819			(981,449	)
Equity in earnings (losses) from unconsolidated subsidiaries (5)		5,781			—			(51,217	)		(394	)		(45,830	)
(Loss) income from continuing operations before income taxes		(859,297	)		(62,322	)		(142,085	)		36,425			(1,027,279	)
Income tax (benefit) expense from continuing operations		(323,846	)		(5,506	)		(1,244	)		9,512			(321,084	)
(Loss) income from continuing operations		(535,451	)		(56,816	)		(140,841	)		26,913			(706,195	)
Loss from discontinued operations, net of taxes		—			(20,855	)		(22,613	)		—			(43,468	)
Net (loss) income	$	(535,451	)	$	(77,671	)	$	(163,454	)	$	26,913		$	(749,663	)
Loss ratio (7)		243.2	%
Expense ratio (7)		14.4	%
Combined ratio		257.6	%
	Nine Months Ended September 30, 2007 (Unaudited)
	(Dollars in thousands)
Net premiums written	$	599,494		$	11,321		$	—		$	33		$	610,848
Revenues
Premiums earned	$	594,683		$	10,742		$	—		$	47		$	605,472
Net loss from credit default swaps		—			(4,964	)		—			—			(4,964	)
Net investment income		83,074			7,994			—			7,025			98,093
Net realized investment gains (losses)		6,113			(172	)		—			(3,232	)		2,709
Other income (loss)		171			(17	)		—			11,038			11,192
Total revenues		684,041			13,583			—			14,878			712,502
Losses and expenses
Losses and loss adjustment expenses		575,482			4,694			—			—			580,176
Amortization of deferred policy acquisition costs		38,001			852			—			—			38,853
Other underwriting and operating expenses		72,840			12,207			—			60,856			145,903
Interest expense		75			—			—			22,740			22,815
Total losses and expenses		686,398			17,753			—			83,596			787,747
Loss before equity in earnings from unconsolidated subsidiaries and income taxes		(2,357	)		(4,170	)		—			(68,718	)		(75,245	)
Equity in earnings from unconsolidated subsidiaries (5)		13,645			—			35,804			206			49,655
Income (loss) from continuing operations before income taxes		11,288			(4,170	)		35,804			(68,512	)		(25,590	)
Income tax (benefit) expense from continuing operations		(33,913	)		327			5,191			(22,816	)		(51,211	)
Income (loss) from continuing operations		45,201			(4,497	)		30,613			(45,696	)		25,621
Income from discontinued operations, net of taxes		—			69,599			3,873			—			73,472
Net income (loss)	$	45,201		$	65,102		$	34,486		$	(45,696	)	$	99,093
Loss ratio (7)		96.8	%
Expense ratio (7)		18.5	%
Combined ratio		115.3	%

Page 7

THE PMI GROUP, INC. AND SUBSIDIARIES

BUSINESS SEGMENTS BALANCE SHEETS

	U.S. Mortgage Insurance Operations (1)		International Operations (2)		Financial Guaranty (3)			Corporate and Other (4)			Consolidated Total
	September 30, 2008 (Unaudited)
	(Dollars in thousands)
Assets
Investments:
Fixed income securities	$	1,726,032	$	158,171	$	617		$	134,222		$	2,019,042
Equity securities:
Common		9,883		—		—			—			9,883
Preferred		212,703		—		—			—			212,703
Short term investments		980		—		—			1,300			2,280
Total investments	$	1,949,598	$	158,171	$	617		$	135,522		$	2,243,908
Cash and cash equivalents		400,086		164,276		30,220			118,659			713,241
Investments in unconsolidated subsidiaries		132,584		—		6,453			15,360			154,397
Reinsurance recoverables		392,701		953		—			—			393,654
Deferred policy acquisition costs		28,091		2,945		—			—			31,036
Property, equipment and software, net of accumulated depreciation and amortization		60,000		1,709		—			77,136			138,845
Other assets (liabilities)		298,908		18,596		60,414			(17,281	)		360,637
Assets - discontinued operations - held for sale		—		1,324,795		—			—			1,324,795
Total assets	$	3,261,968	$	1,671,445	$	97,704		$	329,396		$	5,360,513
Liabilities
Reserve for losses and loss adjustment expenses	$	2,349,651	$	90,856	$	22,900		$	—		$	2,463,407
Unearned premiums		90,007		27,296		—			21			117,324
Debt		—		—		—			532,177			532,177
Other liabilities (assets)		200,593		63,124		(2,000	)		(10,820	)		250,897
Liabilities - discontinued operations - held for sale		—		543,830		—			—			543,830
Total liabilities		2,640,251		725,106		20,900			521,378		$	3,907,635
Shareholders’ equity (deficit)		621,717		946,339		76,804			(191,982	)		1,452,878
Total liabilities and shareholders’ equity	$	3,261,968	$	1,671,445	$	97,704		$	329,396		$	5,360,513
	December 31, 2007 (Unaudited) (17)
	(Dollars in thousands)
Assets
Investments:
Fixed income securities	$	1,531,606	$	265,653	$	167,915		$	52,974		$	2,018,148
Equity securities:
Common		116,005		4		—			1,242			117,251
Preferred		277,165		—		22,465			—			299,630
Short term investments		951		—		—			1,300			2,251
Total investments	$	1,925,727	$	265,657	$	190,380		$	55,516		$	2,437,280
Cash and cash equivalents		229,446		62,298		11,252			51,512			354,508
Investments in unconsolidated subsidiaries		131,225		—		163,661			14,914			309,800
Reinsurance recoverables		35,930		987		—			—			36,917
Deferred policy acquisition costs		10,474		3,921		3,910			—			18,305
Property, equipment and software, net of accumulated depreciation and amortization		75,884		2,095		187			79,142			157,308
Other assets		188,018		12,174		52,918			49,657			302,767
Assets - discontinued operations - held for sale		—		1,453,555		—			—			1,453,555
Total assets	$	2,596,704	$	1,800,687	$	422,308		$	250,741		$	5,070,440
Liabilities
Reserve for losses and loss adjustment expenses	$	1,133,080	$	41,579	$	2,650		$	—		$	1,177,309
Unearned premiums		107,200		22,983		6,709			29			136,921
Debt		—		—		50,000			446,593			496,593
Other liabilities (assets)		129,246		46,652		2,892			(515	)		178,275
Liabilities - discontinued operations - held for sale		—		568,380		—			—			568,380
Total liabilities		1,369,526		679,594		62,251			446,107			2,557,478
Shareholders’ equity (deficit)		1,227,178		1,121,093		360,057			(195,366	)		2,512,962
Total liabilities and shareholders’ equity	$	2,596,704	$	1,800,687	$	422,308		$	250,741		$	5,070,440

Page 8

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS SEGMENT ⁽¹⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2008												2007
Income Statement Components - Quarter Ended	9/30/2008			6/30/2008			3/31/2008			Total			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total
	(Dollars in thousands)												(Dollars in thousands)
Revenues
Premiums written:
Gross premiums written	$	249,423		$	251,677		$	262,870		$	763,970		$	258,026		$	266,545		$	236,412		$	240,430		$	1,001,413
Ceded and refunded premiums, net of assumed premiums		(75,515	)		(55,614	)		(57,872	)		(189,001	)		(57,773	)		(52,147	)		(47,232	)		(44,514	)		(201,666	)
Net premiums written		173,908			196,063			204,998			574,969			200,253			214,398			189,180			195,916			799,747
Change in unearned premiums		5,887			7,572			2,826			16,285			6,001			(8,859	)		6,205			(2,157	)		1,190
Premiums earned	$	179,795		$	203,635		$	207,824		$	591,254		$	206,254		$	205,539		$	195,385		$	193,759		$	800,937
Net investment income		29,331			29,255			28,000			86,586			27,281			28,786			25,966			28,322			110,355
Net realized investment (losses) gains		(50,800	)		(12,900	)		41,551			(22,149	)		(1,526	)		2,865			981			2,267			4,587
Other (loss) income		(190	)		(91	)		(76	)		(357	)		(86	)		167			17			(13	)		85
Total revenues		158,136			219,899			277,299			655,334			231,923			237,357			222,349			224,335			915,964
Losses and expenses
Losses and loss adjustment expenses		348,201			552,476			537,033			1,437,710			520,611			348,314			134,384			92,784			1,096,093
Amortization of deferred policy acquisition costs		3,387			3,819			4,251			11,457			46,213			12,809			12,610			12,582			84,214
Other underwriting and operating expenses		24,633			24,159			22,339			71,131			22,717			18,420			26,759			27,661			95,557
Interest expense		53			29			32			114			33			36			39			—			108
Total losses and expenses		376,274			580,483			563,655			1,520,412			589,574			379,579			173,792			133,027			1,275,972
(Loss) income before equity in (losses) earnings from unconsolidated subsidiaries and income taxes		(218,138	)		(360,584	)		(286,356	)		(865,078	)		(357,651	)		(142,222	)		48,557			91,308			(360,008	)
Equity in (losses) earnings from unconsolidated subsidiaries		(85	)		2,986			2,880			5,781			3,474			4,167			4,617			4,861			17,119
(Loss) income before income taxes		(218,223	)		(357,598	)		(283,476	)		(859,297	)		(354,177	)		(138,055	)		53,174			96,169			(342,889	)
Income tax (benefit) expense		(81,108	)		(131,739	)		(110,999	)		(323,846	)		(118,160	)		(72,833	)		11,627			27,293			(152,073	)
Net (loss) income	$	(137,115	)	$	(225,859	)	$	(172,477	)	$	(535,451	)	$	(236,017	)	$	(65,222	)	$	41,547		$	68,876		$	(190,816	)
Loss ratio (7)		193.7	%		271.3	%		258.4	%		243.2	%		252.4	%		169.5	%		68.8	%		47.9	%		136.9	%
Expense ratio (7)		16.1	%		14.3	%		13.0	%		14.4	%		34.4	%		14.6	%		20.8	%		20.5	%		22.5	%
Combined ratio		209.8	%		285.6	%		271.4	%		257.6	%		286.8	%		184.1	%		89.6	%		68.4	%		159.4	%

Balance Sheet Components - As of Quarter End	9/30/2008		6/30/2008		3/31/2008		12/31/2007		9/30/2007		6/30/2007		3/31/2007
	(Dollars in thousands)						(Dollars in thousands)
Assets
Investments:
Fixed income securities	$	1,726,032	$	1,960,626	$	1,746,902	$	1,531,606	$	1,567,122	$	1,523,285	$	1,540,150
Equity securities:
Common		9,883		10,927		14,159		116,005		135,738		141,255		129,096
Preferred		212,703		243,459		260,646		277,165		283,051		236,403		229,948
Short term investments		980		977		951		951		951		947		930
Total investments	$	1,949,598	$	2,215,989	$	2,022,658	$	1,925,727	$	1,986,862	$	1,901,890	$	1,900,124
Cash and cash equivalents		400,086		106,317		285,074		229,446		91,460		165,114		262,327
Investments in unconsolidated subsidiaries		132,584		135,580		133,664		131,225		127,206		122,072		137,041
Reinsurance recoverables		392,701		313,549		123,864		35,930		3,782		2,554		2,669
Deferred policy acquisition costs		28,091		22,532		15,992		10,474		43,344		43,906		43,193
Property, equipment and software, net of accumulated depreciation and amortization		60,000		70,330		73,832		75,884		80,170		83,293		84,448
Other assets		298,908		264,577		242,679		188,018		186,915		139,745		124,958
Total assets	$	3,261,968	$	3,128,874	$	2,897,763	$	2,596,704	$	2,519,739	$	2,458,574	$	2,554,760
Liabilities
Reserve for losses and loss adjustment expenses	$	2,349,651	$	2,132,632	$	1,589,253	$	1,133,080	$	698,238	$	444,594	$	386,036
Unearned premiums		90,007		96,739		104,674		107,200		112,634		103,331		108,968
Other liabilities		200,593		115,973		185,738		129,246		205,749		265,268		347,720
Total liabilities		2,640,251		2,345,344		1,879,665		1,369,526		1,016,621		813,193		842,724
Shareholder’s equity		621,717		783,530		1,018,098		1,227,178		1,503,118		1,645,381		1,712,036
Total liabilities and shareholder’s equity	$	3,261,968	$	3,128,874	$	2,897,763	$	2,596,704	$	2,519,739	$	2,458,574	$	2,554,760

Page 9

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (1)

	2008												2007
	9/30/2008			6/30/2008			3/31/2008			Total			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total
	(Dollars in millions)												(Dollars in millions)
New Insurance Written
Flow insurance written	$	6,156		$	4,364		$	5,952		$	16,472		$	8,701		$	11,091		$	10,268		$	7,524		$	37,584
Structured insurance written		67			184			167			418			369			3,404			1,337			3,439			8,549
Primary new insurance written	$	6,223		$	4,548		$	6,119		$	16,890		$	9,070		$	14,495		$	11,605		$	10,963		$	46,133
Primary new risk written	$	1,413		$	985		$	1,417		$	3,815		$	2,215		$	3,533		$	2,806		$	2,920		$	11,474
Pool new insurance written (8)	$	—		$	—		$	274		$	274		$	968		$	1,953		$	5,270		$	6,188		$	14,379
Pool new risk written (8)	$	—		$	—		$	4		$	4		$	14		$	41		$	122		$	178		$	355
Product mix as a % of primary new insurance written:
High LTV (above 97% LTV’s)		0	%		4	%		15	%		6	%		21	%		31	%		35	%		36	%		32	%
95.01% to 97% LTV’s		4	%		5	%		2	%		4	%		2	%		2	%		3	%		3	%		3	%
90.01% to 95% LTV’s		26	%		22	%		23	%		24	%		26	%		26	%		21	%		22	%		24	%
85.01% to 90% LTV’s		55	%		49	%		44	%		49	%		40	%		30	%		31	%		27	%		31	%
85% and below		15	%		20	%		16	%		17	%		11	%		11	%		10	%		12	%		10	%
Less than A quality loans		0	%		1	%		4	%		2	%		8	%		12	%		10	%		9	%		10	%
Alt-A loans		1	%		8	%		13	%		7	%		15	%		22	%		32	%		38	%		27	%
Interest only loans		5	%		6	%		8	%		6	%		12	%		18	%		24	%		26	%		20	%
Payment option ARMS		0	%		0	%		0	%		0	%		1	%		2	%		3	%		3	%		3	%
ARMs		1	%		2	%		2	%		2	%		3	%		8	%		8	%		16	%		9	%
Monthlies		92	%		97	%		98	%		95	%		98	%		86	%		98	%		95	%		94	%
Refinances		22	%		41	%		45	%		35	%		36	%		31	%		38	%		47	%		37	%
Structured transactions		1	%		4	%		3	%		2	%		4	%		23	%		12	%		31	%		19	%

Page 10

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (2)

	2008									2007
	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007			3/31/2007
	(Dollars in millions, except loan size)
Primary Insurance and Risk in Force
Primary insurance in force
Flow	$	104,336		$	103,626		$	103,860		$	102,410		$	98,105		$	91,864		$	87,184
Structured transactions		18,806			19,525			20,403			21,213			21,864			19,803			19,701
Total	$	123,142		$	123,151		$	124,263		$	123,623		$	119,969		$	111,667		$	106,885
Primary risk in force
Flow	$	25,981		$	25,983		$	26,156		$	25,852		$	24,754		$	23,075		$	21,837
Structured transactions		4,458			4,650			4,896			5,115			5,324			5,016			5,138
Total	$	30,439		$	30,633		$	31,052		$	30,967		$	30,078		$	28,091		$	26,975
Pool risk in force (8)	$	2,762		$	2,812		$	3,443		$	3,464		$	3,476		$	3,461		$	3,373
Primary risk in force - credit score distribution
Flow
620 or above		93.7	%		93.4	%		93.2	%		93.1	%		93.1	%		93.6	%		93.8	%
619-575		4.9	%		5.1	%		5.3	%		5.3	%		5.3	%		5.0	%		4.9	%
574 or below		1.4	%		1.5	%		1.5	%		1.6	%		1.6	%		1.4	%		1.3	%
Structured transactions
620 or above		86.2	%		86.2	%		86.2	%		86.1	%		86.1	%		85.4	%		85.3	%
619-575		8.7	%		8.7	%		8.7	%		8.8	%		8.8	%		9.2	%		9.2	%
574 or below		5.1	%		5.1	%		5.1	%		5.1	%		5.1	%		5.4	%		5.5	%
Total
620 or above		92.6	%		92.4	%		92.1	%		91.9	%		91.9	%		92.1	%		92.2	%
619-575		5.5	%		5.6	%		5.8	%		5.9	%		5.9	%		5.8	%		5.7	%
574 or below		1.9	%		2.0	%		2.1	%		2.2	%		2.2	%		2.1	%		2.1	%
Primary average loan size (in thousands)
Flow	$	158.3		$	157.0		$	155.6		$	153.7		$	150.6		$	146.6		$	142.8
Structured transactions	$	159.9		$	160.3		$	160.8		$	161.7		$	162.0		$	159.6		$	159.2
Total	$	158.6		$	157.5		$	156.4		$	155.0		$	152.6		$	148.7		$	145.5
Loss severity (12) - primary (quarterly)
Flow		100.7	%		98.8	%		95.7	%		95.5	%		90.6	%		87.9	%		88.5	%
Structured transactions		98.9	%		98.2	%		98.9	%		94.6	%		92.0	%		92.5	%		90.3	%
Total		100.0	%		98.6	%		96.9	%		95.2	%		91.1	%		89.3	%		89.0	%
Persistency (13)
Primary persistency rate		81.0	%		79.6	%		77.6	%		75.5	%		73.3	%		71.7	%		70.7	%
Risk-to-capital ratio (9)		15.8 to 1			12.6 to 1			12.0 to 1			10.8 to 1			9.6 to 1			8.6 to 1			8.3 to 1

Page 11

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS PORTFOLIO CHARACTERISTICS (3)

			9/30/2008					12/31/2007					9/30/2007
Policy Year As a Percentage of Primary Risk in Force (RIF)			Primary Risk in Force			Percent of Total		Primary Risk in Force			Percent of Total		Primary Risk in Force			Percent of Total
			(In millions)					(In millions)					(In millions)
Prior to 1999			$	359		1.2	%	$	436		1.4	%	$	462		1.5	%
1999				279		0.9	%		312		1.0	%		324		1.1	%
2000				126		0.4	%		144		0.5	%		151		0.5	%
2001				457		1.5	%		539		1.7	%		569		1.9	%
2002				998		3.3	%		1,173		3.8	%		1,245		4.1	%
2003				2,691		8.8	%		3,174		10.2	%		3,346		11.1	%
2004				2,862		9.4	%		3,344		10.8	%		3,557		11.8	%
2005				4,189		13.8	%		4,829		15.6	%		5,092		16.9	%
2006				5,384		17.7	%		6,191		20.0	%		6,456		21.5	%
2007				9,435		31.0	%		10,825		35.0	%		8,876		29.5	%
2008				3,659		12.0	%		—		0.0	%		—		0.0	%
Total			$	30,439				$	30,967				$	30,078
			9/30/2008					12/31/2007					9/30/2007
			% of Primary RIF			Primary Default Rate		% of Primary RIF			Primary Default Rate		% of Primary RIF			Primary Default Rate
Top 10 States as a Percentage of Primary Risk in Force, (Ranking based on 9/30/08 RIF)
Florida				10.5	%	22.6	%		10.8	%	10.6	%		10.8	%	7.0	%
California				8.2	%	21.0	%		8.1	%	10.9	%		7.7	%	7.4	%
Texas				7.2	%	8.0	%		7.2	%	6.0	%		7.2	%	5.3	%
Illinois				5.1	%	12.6	%		5.0	%	8.2	%		5.1	%	6.5	%
Georgia				4.7	%	12.3	%		4.7	%	9.5	%		4.7	%	8.2	%
New York				3.8	%	9.6	%		3.6	%	6.8	%		3.6	%	6.2	%
Ohio				3.8	%	12.6	%		3.8	%	10.8	%		3.9	%	9.3	%
Pennsylvania				3.3	%	9.7	%		3.3	%	7.5	%		3.4	%	6.5	%
Washington				3.1	%	6.4	%		3.1	%	3.6	%		3.0	%	2.8	%
New Jersey				3.1	%	12.0	%		3.0	%	7.5	%		3.1	%	6.1	%
	2008							2007
	9/30/2008		6/30/2008			3/31/2008		12/31/2007			9/30/2007		6/30/2007			3/31/2007
As a Percentage of Primary Risk in Force - loan to value ratios
High LTV (above 97% LTV’s)	22.6	%		24.0	%	24.4	%		24.6	%	23.9	%		22.4	%	20.3	%
95.01% to 97% LTV’s	4.0	%		3.9	%	3.8	%		3.8	%	4.0	%		4.3	%	4.5	%
90.01% to 95% LTV’s	29.4	%		29.3	%	29.4	%		29.5	%	29.3	%		29.4	%	30.1	%
85.01% to 90% LTV’s	36.9	%		35.7	%	35.3	%		35.0	%	34.9	%		35.7	%	36.5	%
85% and below	7.1	%		7.1	%	7.1	%		7.1	%	7.9	%		8.2	%	8.6	%
As a Percentage of Primary Risk in Force:
Less-than-A quality (FICO scores below 620)	7.4	%		7.7	%	7.9	%		8.1	%	8.1	%		7.9	%	7.8	%
Less-than-A quality (FICO scores below 575) (A)	1.9	%		2.0	%	2.1	%		2.2	%	2.2	%		2.1	%	2.1	%
Alt-A Loans:
With FICO scores of 660 and above	17.4	%		19.0	%	19.4	%		19.6	%	20.0	%		19.3	%	18.3	%
With FICO scores below 660 and above 619	2.6	%		2.9	%	3.0	%		3.2	%	3.4	%		3.7	%	3.8	%
Total Alt-A Loans	20.0	%		21.9	%	22.4	%		22.8	%	23.4	%		23.0	%	22.1	%
ARMs (B)	11.0	%		11.6	%	12.1	%		12.8	%	14.1	%		16.0	%	17.7	%
Interest Only (C)	12.5	%		13.8	%	14.0	%		14.2	%	14.2	%		13.6	%	12.1	%
Payment Option ARMs	3.6	%		3.7	%	3.7	%		3.8	%	3.9	%		4.2	%	4.3	%

(A) Less-than-A quality loans with FICO scores below 575 is a subset of PMI’s less-than-A quality loan portfolio.

(B) Approximately 2.72% and 1.05% of RIF are subject to initial payment adjustment in 2008 and 2009, respectively.

(C) Approximately 97.83% and 95.45% of interest only loans written in 2007 and the first nine months of 2008, respectively, have an initial deferral period of 5 years or greater.

Page 12

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS DEFAULT INFORMATION

	2008												2007
	9/30/2008			6/30/2008			3/31/2008			Total (10)			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total (10)
	(Dollars in millions, except claim size)												(Dollars in millions, except claim size)
Primary loans, defaults and default rates
Primary policies in force		776,544			781,867			794,323			776,544			797,419			786,301			750,835			734,431			797,419
Primary loans in default		93,670			80,895			69,718			93,670			63,197			50,742			42,349			39,206			63,197
Primary default rate		12.06	%		10.35	%		8.78	%		12.06	%		7.93	%		6.45	%		5.64	%		5.34	%		7.93	%
Flow only default rate		10.93	%		9.26	%		7.57	%		10.93	%		6.74	%		5.38	%		4.70	%		4.54	%		6.74	%
Structured transactions only default rate		18.41	%		16.25	%		15.14	%		18.41	%		13.92	%		11.65	%		10.37	%		9.29	%		13.92	%
Pool default rate		12.74	%		10.76	%		9.20	%		12.74	%		7.76	%		6.18	%		5.17	%		4.82	%		7.76	%
Primary default rates by loan type
Alt-A loans		25.79	%		21.67	%		17.47	%		25.79	%		13.86	%		9.92	%		7.32	%		6.06	%		13.86	%
Less than A quality loans		27.25	%		23.27	%		20.74	%		27.25	%		20.21	%		17.27	%		16.83	%		16.94	%		20.21	%
Above 97s		15.23	%		12.39	%		10.18	%		15.23	%		9.11	%		6.98	%		6.02	%		5.74	%		9.11	%
ARMs (excluding 2/28 Hybrid ARMs)		27.40	%		23.41	%		19.03	%		27.40	%		15.48	%		11.74	%		9.72	%		8.43	%		15.48	%
2/28 Hybrid ARMs		47.38	%		45.38	%		42.95	%		47.38	%		38.62	%		31.00	%		22.06	%		18.08	%		38.62	%
Payment option ARMs		32.60	%		26.72	%		19.59	%		32.60	%		14.46	%		9.28	%		6.32	%		4.34	%		14.46	%
Interest Only		23.53	%		19.25	%		15.04	%		23.53	%		10.98	%		7.11	%		5.02	%		4.15	%		10.98	%
Claims paid
Primary claims paid - flow	$	130.1		$	117.2		$	93.0		$	340.3		$	71.0		$	57.7		$	46.7		$	46.9		$	222.3
Primary claims paid - structured transactions		76.9			71.8			59.9			208.6			34.7			29.4			21.6			18.4			104.1
Supplemental and other (16)		(24.6	)		0.9			1.8			(21.9	)		3.5			0.6			(0.5	)		(0.4	)		3.2
Total primary claims paid		182.4			189.9			154.7			527.0			109.2			87.7			67.8			64.9			329.6
Total pool and other		17.7			2.8			7.9			28.4			5.3			4.9			4.5			4.4			19.1
Total claims paid		200.1			192.7			162.6			555.4			114.5			92.6			72.3			69.3			348.7
Loss adjustment expenses		10.2			6.1			6.2			22.5			3.4			3.3			3.4			3.5			13.6
Total claims paid including loss adjustment expenses	$	210.3		$	198.8		$	168.8		$	577.9		$	117.9		$	95.9		$	75.7		$	72.8		$	362.3
Number of primary claims paid		4,371			4,329			3,722			12,422			2,889			2,675			2,336			2,362			10,262
Average primary claim size (in thousands) (16)	$	47.6		$	43.9		$	41.6		$	44.5		$	37.8		$	32.8		$	29.0		$	27.5		$	32.1
Captive reinsurance arrangements
Percentage of flow NIW subject to captive reinsurance arrangements		19.6	%		50.8	%		68.4	%		45.5	%		74.3	%		64.2	%		60.9	%		49.2	%		62.7	%
Percentage of primary NIW subject to captive reinsurance arrangements		19.4	%		48.7	%		66.5	%		44.4	%		71.3	%		49.1	%		53.9	%		34.0	%		51.1	%
Percentage of primary IIF subject to captive reinsurance arrangements		50.0	%		53.0	%		53.0	%		50.0	%		52.2	%		50.2	%		50.3	%		51.0	%		52.2	%
Percentage of primary RIF subject to captive reinsurance arrangements		50.4	%		53.1	%		53.1	%		50.4	%		52.3	%		50.2	%		50.2	%		50.8	%		52.3	%

Page 13

THE PMI GROUP, INC. AND SUBSIDIARIES

U.S. MORTGAGE INSURANCE OPERATIONS ANALYSIS OF LOSS RESERVES

Loss Reserve Analysis	2008									2007
	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007			3/31/2007
	(Dollars in millions)									(Dollars in millions)
Beginning reserves for losses and LAE,	$	2,132.6		$	1,589.3		$	1,133.1		$	698.2		$	444.6		$	386.0		$	366.2
Reinsurance recoverables		(313.5	)		(123.9	)		(35.9	)		(3.8	)		(2.6	)		(2.7	)		(2.9	)
Net balance at beginning of the period,		1,819.1			1,465.4			1,097.2			694.4			442.0			383.3			363.3
Loss and LAE incurred (principally with respect to defaults occuring in):
Current year		393.5			480.4			363.2			474.8			238.1			101.4			80.1
Prior years		(45.3	)		72.1			173.8			45.8			110.2			33.0			12.7
Total incurred		348.2			552.5			537.0			520.6			348.3			134.4			92.8
Loss and LAE payments (principally with respect to defaults occuring in):
Current year		(22.7	)		(5.4	)		(0.1	)		(31.3	)		(11.3	)		(0.9	)		(0.1	)
Prior years		(187.6	)		(193.4	)		(168.7	)		(86.5	)		(84.6	)		(74.8	)		(72.7	)
Total payments		(210.3	)		(198.8	)		(168.8	)		(117.8	)		(95.9	)		(75.7	)		(72.8	)
Net ending balance		1,957.0			1,819.1			1,465.4			1,097.2			694.4			442.0			383.3
Reinsurance recoverables (A)		392.7			313.5			123.9			35.9			3.8			2.6			2.7
Ending reserves for losses and LAE	$	2,349.7		$	2,132.6		$	1,589.3		$	1,133.1		$	698.2		$	444.6		$	386.0
Loss Reserves by Book Year				9/30/2008			6/30/2008			3/31/2008			12/31/2007			12/31/2006			12/31/2005
				(Dollars in thousands)									(Dollars in thousands)
2002 and prior				$	131,268		$	125,014		$	134,477		$	117,987		$	103,053		$	149,157
2003					111,493			101,505			95,622			87,713			65,107			80,443
2004					157,722			152,214			133,461			119,017			76,606			80,865
2005					382,756			371,433			298,904			238,077			83,339			35,071
2006					687,187			633,559			462,662			345,918			38,077			—
2007					821,026			725,815			461,633			224,368			—			—
2008					58,199			23,092			2,494			—			—			—
Total Loss Reserves				$	2,349,651		$	2,132,632		$	1,589,253		$	1,133,080		$	366,182		$	345,536

	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007
	Loans in Default	Reserve for Losses and LAE		Loans in Default	Reserve for Losses and LAE		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 millions)
Primary insurance	93,670	$	2,195.3	80,895	$	2,037.4	69,718	$	1,498.9	63,197	$	1,054.3	50,742	$	651.2
Pool insurance (8)	42,741		154.4	37,640		95.2	33,536		90.4	29,143		78.8	23,789		47.0
Total	136,411	$	2,349.7	118,535	$	2,132.6	103,254	$	1,589.3	92,340	$	1,133.1	74,531	$	698.2

(A) Reinsurance recoverables includes captive reinsurance agreements and other reinsurance recoverables.

Page 14

THE PMI GROUP, INC. AND SUBSIDIARIES

CMG MORTGAGE INSURANCE COMPANY STATISTICAL INFORMATION

	2008												2007
	9/30/2008			6/30/2008			3/31/2008			Total (10)			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total (10)
	(Dollars in millions, except claims paid and claim size)
Primary new insurance written	$	1,466		$	1,877		$	1,353		$	4,696		$	1,389		$	1,621		$	1,566		$	1,053		$	5,629
Primary insurance in force	$	21,446		$	20,627		$	19,530		$	21,446		$	18,942		$	18,265		$	17,415		$	16,670		$	18,942
Primary risk in force	$	5,334		$	5,137		$	4,871		$	5,334		$	4,721		$	4,532		$	4,292		$	4,085		$	4,721
Policies in force		137,979			134,451			129,032			137,979			126,342			123,164			118,933			115,224			126,342
Primary loans in default		2,795			2,157			1,832			2,795			1,796			1,516			1,259			1,130			1,796
Primary default rate		2.03	%		1.60	%		1.42	%		2.03	%		1.42	%		1.23	%		1.06	%		0.98	%		1.42	%
Persistency		84.1	%		82.6	%		81.6	%		84.1	%		81.6	%		80.7	%		79.2	%		78.5	%		81.6	%
Primary claims paid (in thousands)	$	5,929		$	6,051		$	4,033		$	16,013		$	3,726		$	3,235		$	2,392		$	2,131		$	11,484
Number of primary claims paid		169			173			118			460			112			116			83			75			386
Average primary claim size (in thousands)	$	35.1		$	35.0		$	34.2		$	34.8		$	33.3		$	27.9		$	28.8		$	28.4		$	29.8

Page 15

THE PMI GROUP, INC. AND SUBSIDIARIES

INTERNATIONAL OPERATIONS SEGMENT ⁽²⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2008												2007
Income Statement Components - Quarter Ended	9/30/2008			6/30/2008			3/31/2008			Total			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Net premiums written	$	2,577		$	6,093		$	7,688		$	16,358		$	2,802		$	4,419		$	3,497		$	3,405		$	14,123
Revenues
Premiums earned	$	3,776		$	3,769		$	3,205		$	10,750		$	3,704		$	3,644		$	3,519		$	3,579		$	14,446
Net (losses) gains from credit default swaps		(9,911	)		9,550			800			439			(9,483	)		(8,371	)		1,579			1,828			(14,447	)
Net investment income		3,875			3,762			4,767			12,404			2,854			2,866			2,719			2,409			10,848
Net realized investment gains (losses)		1,868			(480	)		(231	)		1,157			8			(267	)		(16	)		111			(164	)
Other (loss) income		(23	)		23			28			28			(97	)		91			(9	)		(99	)		(114	)
Total (expenses) revenues		(415	)		16,624			8,569			24,778			(3,014	)		(2,037	)		7,792			7,828			10,569
Losses and expenses
Losses and loss adjustment expenses		34,488			3,589			19,020			57,097			22,111			2,719			1,611			364			26,805
Amortization of deferred policy acquisition costs		1,568			403			345			2,316			2,617			341			284			227			3,469
Other underwriting and operating expenses (6)		13,048			7,658			6,981			27,687			5,897			5,217			4,110			2,880			18,104
Total losses and expenses		49,104			11,650			26,346			87,100			30,625			8,277			6,005			3,471			48,378
(Loss) income from continuing operations before income taxes		(49,519	)		4,974			(17,777	)		(62,322	)		(33,639	)		(10,314	)		1,787			4,357			(37,809	)
Income tax (benefits) expense from continuing operations		(3,510	)		340			(2,336	)		(5,506	)		(2,856	)		(1,567	)		446			1,448			(2,529	)
(Loss) income from continuing operations		(46,009	)		4,634			(15,441	)		(56,816	)		(30,783	)		(8,747	)		1,341			2,909			(35,280	)
(Loss) income from discontinued operations, net of taxes		(80,491	)		26,469			33,217			(20,855	)		20,671			22,626			26,756			20,217			90,270
Net income (loss)	$	(126,550	)	$	31,103		$	17,776		$	(77,671	)	$	(10,112	)	$	13,879		$	28,097		$	23,126		$	54,990
Loss ratio, expense ratio and combined ratio for the International Operations segment are not meaningful due to the sale of PMI Australia and PMI Asia, which were classified as discontinued operations.
Balance Sheet Components - As of Quarter End	9/30/2008			6/30/2008			3/31/2008						12/31/2007			9/30/2007			6/30/2007			3/31/2007
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Assets
Investments:
Fixed income and equity securities	$	158,171		$	285,814		$	288,047					$	265,657		$	263,807		$	197,165		$	198,445
Cash and cash equivalents		164,276			64,566			61,732						62,298			63,836			106,853			23,662
Reinsurance recoverables		953			1,066			1,068						987			965			916			904
Deferred policy acquisition costs		2,945			4,965			5,006						3,921			5,346			4,366			3,821
Property, equipment and software, net of accumulated depreciation and amortization		1,709			1,901			2,065						2,095			2,100			1,616			1,344
Other assets		18,596			15,815			16,837						12,174			11,457			9,585			14,809
Assets - discontinued operations - held for sale		1,324,795			1,618,497			1,522,347						1,453,555			1,437,828			1,353,067			1,261,338
Total assets	$	1,671,445		$	1,992,624		$	1,897,102					$	1,800,687		$	1,785,339		$	1,673,568		$	1,504,323
Liabilities
Reserve for losses and loss adjustment expenses	$	90,856		$	62,664		$	60,736					$	41,579		$	20,634		$	18,083		$	17,587
Unearned premiums		27,296			31,660			29,378						22,983			23,347			21,390			21,117
Other liabilities		63,124			48,915			52,694						46,652			39,436			25,304			26,793
Liabilities - discontinued operations - held for sale		543,830			615,441			576,681						568,380			548,164			521,888			484,030
Total liabilities		725,106			758,680			719,489						679,594			631,581			586,665			549,527
Shareholder’s equity		946,339			1,233,944			1,177,613						1,121,093			1,153,758			1,086,903			954,796
Total liabilities and shareholder’s equity	$	1,671,445		$	1,992,624		$	1,897,102					$	1,800,687		$	1,785,339		$	1,673,568		$	1,504,323

Page 16

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI EUROPE QUARTERLY FINANCIAL INFORMATION

	2008												2007
Income Statement Components - Quarter Ended	9/30/2008			6/30/2008			3/31/2008			Total			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total
	(U.S. dollars in thousands, unless otherwise noted)
Net premiums written	$	2,577		$	6,093		$	5,368		$	14,038		$	2,802		$	4,420		$	3,497		$	3,404		$	14,123
Revenues
Premiums earned	$	3,598		$	3,660		$	3,156		$	10,414		$	3,704		$	3,644		$	3,519		$	3,579		$	14,446
Net (losses) gains from credit default swaps		(9,911	)		9,550			800			439			(9,483	)		(8,371	)		1,579			1,828			(14,447	)
Net investment income		3,221			2,971			3,972			10,164			1,919			2,080			2,225			2,408			8,632
Net realized investment gains (losses)		874			(480	)		(231	)		163			6			(267	)		(15	)		112			(164	)
Other loss		—			—			—			—			—			(8	)		(26	)		(100	)		(134	)
Total (expenses) revenues		(2,218	)		15,701			7,697			21,180			(3,854	)		(2,922	)		7,282			7,827			8,333
Losses and expenses
Losses and loss adjustment expenses		34,386			3,589			18,975			56,950			22,111			2,719			1,611			364			26,805
Amortization of deferred policy acquisition costs		1,565			401			345			2,311			2,617			341			284			227			3,469
Other underwriting and operating expenses (6)		9,813			5,587			4,633			20,033			4,283			3,880			3,108			2,769			14,040
Total losses and expenses		45,764			9,577			23,953			79,294			29,011			6,940			5,003			3,360			44,314
(Loss) income before income taxes		(47,982	)		6,124			(16,256	)		(58,114	)		(32,865	)		(9,862	)		2,279			4,467			(35,981	)
Income tax (benefit) expense		(3,510	)		340			(2,336	)		(5,506	)		(3,281	)		(1,417	)		624			1,488			(2,586	)
Net (loss) income	$	(44,472	)	$	5,784		$	(13,920	)	$	(52,608	)	$	(29,584	)	$	(8,445	)	$	1,655		$	2,979		$	(33,395	)
Net (loss) income (Euros in thousands)	€	(29,410	)	€	3,704		€	(8,857	)	€	(34,563	)	€	(21,715	)	€	(6,144	)	€	1,227		€	2,272		€	(24,360	)
Loss ratio, expense ratio and combined ratio for PMI Europe are not meaningful.
Balance Sheet Components - As of Quarter End	9/30/2008			6/30/2008			3/31/2008						12/31/2007			9/30/2007			6/30/2007			3/31/2007
	(U.S. dollars in thousands)												(U.S. dollars in thousands)
Assets
Investments:
Fixed income securities	$	145,746		$	220,099		$	222,364					$	200,825		$	203,992		$	197,165		$	198,445
Cash and cash equivalents		109,440			58,256			53,765						53,335			47,715			36,316			23,662
Reinsurance recoverables		954			1,066			1,068						987			965			916			904
Deferred policy acquisition costs		2,580			4,581			4,623						3,921			5,346			4,366			3,821
Property, equipment and software, net of accumulated depreciation and amortization		1,165			1,269			1,372						1,323			1,317			1,293			1,344
Other assets		18,279			15,287			15,837						11,780			10,094			9,327			14,809
Total assets	$	278,164		$	300,558		$	299,029					$	272,171		$	269,429		$	249,383		$	242,985
Liabilities
Reserve for losses and loss adjustment expenses	$	90,715		$	62,620		$	60,692					$	41,579		$	20,634		$	18,083		$	17,587
Unearned premiums		25,417			29,521			27,140						22,983			23,347			21,390			21,117
Other liabilities		61,269			47,284			50,432						45,534			36,772			24,154			26,697
Total liabilities		177,401			139,425			138,264						110,096			80,753			63,627			65,401
Shareholder’s equity		100,763			161,133			160,765						162,075			188,676			185,756			177,584
Total liabilities and shareholder’s equity	$	278,164		$	300,558		$	299,029					$	272,171		$	269,429		$	249,383		$	242,985

Page 17

THE PMI GROUP, INC. AND SUBSIDIARIES

PMI EUROPE STATISTICAL INFORMATION

	2008								2007
	9/30//2008		6/30//2008		3/31/2008		Total (10)		12/31/2007		9/30/2007		6/30/2007		3/31/2007		Total (10)
	(U.S. dollars in millions, except claims paid)
New insurance written	$	90	$	129	$	95	$	314	$	236	$	132	$	141	$	136	$	645
New credit default swaps written	$	—	$	—	$	—	$	—	$	12,067	$	1,919	$	—	$	—	$	13,986
New reinsurance written	$	—	$	3,627	$	1,934	$	5,561	$	617	$	1,402	$	1,778	$	504	$	4,301
Insurance in force	$	55,143	$	62,422	$	63,103	$	55,143	$	62,929	$	51,707	$	48,120	$	48,121	$	62,929
Risk in force	$	7,972	$	9,182	$	9,628	$	7,972	$	9,420	$	5,711	$	3,813	$	3,824	$	9,420
Claims paid including credit default swaps (in thousands)	$	2,461	$	3,593	$	3,562	$	9,616	$	2,898	$	3,207	$	2,577	$	1,547	$	10,229

Page 18

THE PMI GROUP, INC. AND SUBSIDIARIES

FINANCIAL GUARANTY SEGMENT ⁽³⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2008												2007
Income Statement Components - Quarter Ended	9/30/2008			6/30/2008			3/31/2008			Total			12/31/2007			9/30/2007			6/30/2007		3/31/2007		Total
	(Dollars in thousands)												(Dollars in thousands)
Net premiums written	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	—
Revenues
Premiums earned	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	—
Net investment income		—			—			—			—			—			—			—		—		—
Net realized investment gains		—			—			—			—			—			—			—		—		—
Impairment of unconsolidated subsidiary (14)		(2,887	)		—			(87,981	)		(90,868	)		(38,499	)		—			—		—		(38,499	)
Total revenues		(2,887	)		—			(87,981	)		(90,868	)		(38,499	)		—			—		—		(38,499	)
Losses and expenses																								—
Losses and loss adjustment expenses		—			—			—			—			—			—			—		—		—
Amortization of deferred policy acquisition costs		—			—			—			—			—			—			—		—		—
Other underwriting and operating expenses		—			—			—			—			—			—			—		—		—
Total losses and expenses		—			—			—			—			—			—			—		—		—
Loss before equity in earnings (losses) from unconsolidated subsidiaries and income taxes		(2,887	)		—			(87,981	)		(90,868	)		(38,499	)		—			—		—		(38,499	)
Equity in earnings (losses) from unconsolidated subsidiaries		9,340			(24,321	)		(36,236	)		(51,217	)		(794,637	)		(26,741	)		30,842		31,703		(758,833	)
Income (loss) from continuing operations before income taxes		6,453			(24,321	)		(124,217	)		(142,085	)		(833,136	)		(26,741	)		30,842		31,703		(797,332	)
Income tax (benefit) expense from continuing operations		—			—			(1,244	)		(1,244	)		(67,767	)		(1,113	)		3,264		3,040		(62,576	)
Income (loss) from continuing operations	$	6,453		$	(24,321	)	$	(122,973	)	$	(140,841	)	$	(765,369	)	$	(25,628	)	$	27,578	$	28,663	$	(734,756	)
Income (loss) from discontinued operations, net of taxes		437			(21,785	)		(1,265	)		(22,613	)		(787	)		1,236			1,436		1,201		3,086
Net income (loss)	$	6,890		$	(46,106	)	$	(124,238	)	$	(163,454	)	$	(766,156	)	$	(24,392	)	$	29,014	$	29,864	$	(731,670	)
Balance Sheet Components -As of Quarter End	9/30/2008			6/30/2008			3/31/2008						12/31/2007			9/30/2007			6/30/2007		3/31/2007
	(Dollars in thousands)												(Dollars in thousands)
Assets
Investments:
Fixed income securities	$	617		$	117,607		$	163,534					$	167,915		$	167,276		$	165,422	$	133,461
Equity securities: preferred		—			20,097			21,102						22,465			26,880			25,131		24,459
Total investments	$	617		$	137,704		$	184,636					$	190,380		$	194,156		$	190,553	$	157,920
Cash and cash equivalents		30,220			29,276			7,419						11,252			11,610			15,414		56,260
Investments in unconsolidated subsidiaries		6,453			—			25,998						163,661			984,417			996,431		977,523
Deferred policy acquisition costs		—			—			3,600						3,910			3,902			3,312		2,182
Property, equipment and software, net of accumulated depreciation and amortization		—			162			174						187			131			132		133
Other assets		60,414			67,520			7,323						52,918			3,838			4,282		5,282
Total assets	$	97,704		$	234,662		$	229,150					$	422,308		$	1,198,054		$	1,210,124	$	1,199,300
Liabilities
Reserve for losses and loss adjustment expenses	$	22,900		$	7,241		$	(878	)				$	2,650		$	—		$	—	$	—
Unearned premiums		—			820			6,331						6,709			6,748			6,984		6,123
Long-term debt		—			50,000			50,000						50,000			50,000			50,000		50,000
Other (assets) liabilities		(2,000	)		2,897			(45,082	)					2,892			37,766			40,817		45,745
Total liabilities		20,900			60,958			10,371						62,251			94,514			97,801		101,868
Shareholder’s equity		76,804			173,704			218,779						360,057			1,103,540			1,112,323		1,097,432
Total liabilities and shareholder’s equity	$	97,704		$	234,662		$	229,150					$	422,308		$	1,198,054		$	1,210,124	$	1,199,300

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THE PMI GROUP, INC. AND SUBSIDIARIES

CORPORATE AND OTHER SEGMENT ⁽⁴⁾ RESULTS OF OPERATIONS AND BALANCE SHEETS

	2008												2007
Income Statement Components - Quarter Ended	9/30/2008			6/30/2008			3/31/2008			Total			12/31/2007			9/30/2007			6/30/2007			3/31/2007			Total
	(Dollars in thousands)												(Dollars in thousands)
Net premiums written	$	12		$	5		$	8		$	25		$	19		$	14		$	7		$	12		$	52
Revenues
Premiums earned	$	10		$	11		$	12		$	33		$	10		$	18		$	16		$	13		$	57
Net investment income		2,892			2,026			1,211			6,129			1,400			1,935			2,258			2,832			8,425
Net realized investment (losses) gains		(988	)		(3	)		(11	)		(1,002	)		12,669			(1,886	)		(620	)		(726	)		9,437
Change in fair value of certain debt instruments (15)		66,283			16,957			28,708			111,948			—			—			—			—			—
Other income		2,186			3,319			3,243			8,748			3,270			4,563			4,769			1,706			14,308
Total revenues		70,383			22,310			33,163			125,856			17,349			4,630			6,423			3,825			32,227
Losses and expenses
Losses and loss adjustment expenses		—			—			—			—			—			—			—			—			—
Other underwriting and operating expenses		21,731			21,145			18,283			61,159			18,400			16,918			19,925			24,013			79,256
Interest expense		11,126			9,152			7,600			27,878			7,619			7,591			7,627			7,522			30,359
Total losses and expenses		32,857			30,297			25,883			89,037			26,019			24,509			27,552			31,535			109,615
Income (loss) before equity in (losses) earnings from unconsolidated subsidiaries and income taxes		37,526			(7,987	)		7,280			36,819			(8,670	)		(19,879	)		(21,129	)		(27,710	)		(77,388	)
Equity in (losses) earnings from unconsolidated subsidiaries		(152	)		(121	)		(121	)		(394	)		8			(28	)		289			(55	)		214
Income (loss) before income taxes		37,374			(8,108	)		7,159			36,425			(8,662	)		(19,907	)		(20,840	)		(27,765	)		(77,174	)
Income tax (benefit) expense		10,012			(2,684	)		2,184			9,512			(6,528	)		(8,869	)		(6,015	)		(7,932	)		(29,344	)
Net income (loss)	$	27,362		$	(5,424	)	$	4,975		$	26,913		$	(2,134	)	$	(11,038	)	$	(14,825	)	$	(19,833	)	$	(47,830	)

Balance Sheet Components - As of Quarter End	9/30/2008			6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007			3/31/2007
	(Dollars in thousands)									(Dollars in thousands)
Assets
Investments:
Fixed income securities	$	134,222		$	50,080		$	51,979		$	52,974		$	53,088		$	53,120		$	53,849
Equity securities: common		—			987			1,242			1,242			1,275			3,477			4,250
Short term investments		1,300			1,300			1,300			1,300			1,301			1,300			1,300
Total investments	$	135,522		$	52,367		$	54,521		$	55,516		$	55,664		$	57,897		$	59,399
Cash and cash equivalents		118,659			224,779			40,214			51,512			45,335			163,700			100,574
Investments in unconsolidated subsidiaries		15,360			15,646			15,493			14,914			15,158			15,224			15,200
Property, equipment and software, net of accumulated depreciation and amortization		77,136			78,042			78,627			79,142			79,594			80,807			81,867
Other (liabilities) assets		(17,281	)		(5,837	)		8,821			49,657			39,901			42,165			14,222
Total assets	$	329,396		$	364,997		$	197,676		$	250,741		$	235,652		$	359,793		$	271,262
Liabilities
Unearned premiums	$	21		$	18		$	26		$	29		$	21		$	25		$	33
Debt		532,177			554,694			364,378			446,593			446,593			446,593			446,593
Other (assets) liabilities		(10,820	)		(7,122	)		7,893			(515	)		(16,256	)		(2,423	)		(76,061	)
Total liabilities		521,378			547,590			372,297			446,107			430,358			444,195			370,565
Shareholder’s deficit		(191,982	)		(182,593	)		(174,621	)		(195,366	)		(194,706	)		(84,402	)		(99,303	)
Total liabilities and shareholder’s deficit	$	329,396		$	364,997		$	197,676		$	250,741		$	235,652		$	359,793		$	271,262

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