The PMI Group, Inc. Reports Second Quarter 2006 Net Income of $109.6 Million, or $1.14 Per Diluted Share

Highlights in the second quarter of 2006 include:

-- U.S. Mortgage Insurance Operations(1)-- growth in premiums written, premiums earned and average premium rate as well as favorable credit performance with a sequential decline in delinquencies and claims paid;

-- International Operations(2) -- solid growth in PMI Australia's new insurance written, insurance in force and risk in force partially offset by credit performance trending towards historic norms;

-- Financial Guaranty(3)-- continued expansion of FGIC's operations, strong premium earnings and favorable credit performance;

-- Common Share Repurchases -- the Company repurchased approximately 3.2 million common shares in the second quarter of 2006 at a cost of $146.5 million.

Consolidated Operating Results

Consolidated net premiums written for the second quarter and yearto date totaled $211.8 million and $413.7 million, respectively,compared to $199.8 million and $393.5 million for the same periods ayear ago. The increases were due primarily to an increase in averagepremium rates and average insured loan balances in U.S. MortgageInsurance Operations and an increase in new insurance written in PMIAustralia.

Consolidated premiums earned for the second quarter and year todate were $213.6 million and $419.9 million, respectively, compared to$206.4 million and $406.0 million for the same periods a year ago. Theincreases were due to higher average premium rates and increasedpremiums from modified pool products in U.S. Mortgage InsuranceOperations, and higher premiums earned as a result of higher newinsurance written and higher insurance in force in PMI Australia.

Consolidated other underwriting and operating expenses for thesecond quarter and year to date were $52.9 million and $111.4 million,respectively, compared to $54.4 million and $100.1 million for thesame periods one year ago. The decrease in the second quarter of 2006was due primarily to declines in the fair value of certain deferredcompensation plans and was partially offset by stock option-relatedexpenses. The increase in the first half of 2006 compared to thecorresponding period in 2005 was primarily due to the requirement tobegin expensing stock options and Employee Stock Purchase Plan relatedexpenses in 2006 and higher operating expenses in InternationalOperations.

Consolidated losses and loss adjustment expenses for the secondquarter and six months to date were $71.9 million and $132.8 million,respectively, compared to $67.2 million and $131.7 million in the sameperiods last year. The increases in the second quarter and the firstsix months of 2006 were primarily a result of loss reserve additionsduring the six months ended June 30, 2006 in U.S. Mortgage InsuranceOperations and PMI Australia, partially offset by decreases in primaryclaims paid in U.S. Mortgage Insurance Operations in the secondquarter and first six months of 2006 compared to the same periods in2005.

Consolidated reserve for losses and loss adjustment expensestotaled $384.6 million as of June 30, 2006 compared to $369.9 millionas of March 31, 2006 and $364.4 million as of June 30, 2005. Lossreserves in U.S. Mortgage Insurance Operations increased by $9.2million in the second quarter of 2006 primarily due to higher expectedclaim rates and claim sizes. PMI Australia's reserve for lossesincreased by $3.6 million primarily due to an increase in delinquentloans, and higher expected average claim size and claim rates.
----------------------------------------------------------------------
The PMI Group, Inc. Second Quarter Results by Segment
----------------------------------------------------------------------
Second Quarter Second Quarter
Total Revenues Net Income
------------------ ------------------------- -------------------------
(Dollars in
millions, except
per share data) 2006 2005 % Change 2006 2005 % Change
------------------ ------- ------- --------- ------- ------- ---------
U.S. Mortgage
Insurance
Operations $200.9 $201.9 (0.5%) $72.2 $69.7 3.6%
International
Operations 61.9 53.1 16.6% 25.4 25.3 0.4%
Financial Guaranty 26.5 23.8 11.3% 24.0 21.5 11.6%
Other(4) 10.1 9.4 n.m. (12.0) (11.9) n.m.
------- ------- --------- ------- ------- ---------
Total $299.4 $288.2 3.9% $109.6 $104.6 4.8%
======= ======= ========= ======= ======= =========
Diluted Net Income
Per Share $1.14 $1.04 9.6%
Book Value Per
Share $38.11 $35.29 8.0%
----------------------------------------------------------------------

May not total due to rounding.
n.m. -- Not meaningful



----------------------------------------------------------------------
The PMI Group, Inc. Year to Date Results by Segment
----------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2006 June 30, 2006
Total Revenues Net Income
------------------ ------------------------- -------------------------
(Dollars in
millions, except
per share data) 2006 2005 % Change 2006 2005 % Change
------------------ ------- ------- --------- ------- ------- ---------
U.S. Mortgage
Insurance
Operations $398.9 $396.1 0.7% $142.3 $136.0 4.6%
International
Operations 118.5 102.5 15.6% 54.1 50.4 7.3%
Financial Guaranty 49.7 44.6 11.4% 45.1 40.4 11.6%
Other(4) 20.2 19.9 n.m. (26.5) (21.1) n.m.
------- ------- --------- ------- ------- ---------
Total $587.3 $563.0 4.3% $215.0 $205.7 4.5%
======= ======= ========= ======= ======= =========
Diluted Net Income
Per Share $2.23 $2.03 9.9%
----------------------------------------------------------------------

May not total due to rounding.
n.m. -- Not meaningful

Segment Highlights

U.S. Mortgage Insurance Operations

-- Net premiums written increased by 4.1% in the second quarter of 2006, growing to $158.9 million from $152.6 million in the second quarter of 2005. The increase was due primarily to an increase in average premium rates and average insured loan balances in 2006.

-- Total incurred losses were $64.2 million compared to $65.5 million in the second quarter of 2005 driven by a decrease in primary claims paid, partially offset by an increase in reserves for losses.

-- Primary claims paid decreased to $47.5 million for the second quarter of 2006 compared to $57.7 million in the second quarter of 2005 driven by a decline in the number of claims paid partially offset by an increase in average claim size.

-- Equity in earnings from CMG for the second quarter 2006 increased 16.3% year over year to $5.7 million compared to $4.9 million for the second quarter of 2005 as a result of release of loss reserves and increases in primary insurance and risk in force.

-- PMI Mortgage Insurance Co., Inc. has received approval from the Arizona Department of Insurance to pay a $250 million extraordinary dividend to The PMI Group, Inc.

International Operations

-- PMI Australia reported net income of $21.9 million for the second quarter of 2006 compared to $20.5 million for the second 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 LAE expenses and the weakening of the Australian Dollar relative to the U.S. dollar. In functional currency, PMI Australia's net income increased by 9.7% to AUD $29.3 million in the second quarter of 2006 from AUD $26.7 million in the second quarter of 2005.

-- PMI Europe reported that net income grew by 52.2% to $3.5 million in the second quarter of 2006 compared to $2.3 million for the same period a year ago. Net income in the second quarter of 2006 was positively impacted by changes in the fair value of credit default swap derivative contracts. In functional currency, net income from PMI Europe for the second quarter of 2006 was EUR 2.8 million compared to EUR 1.8 million for the same period a year ago.

-- PMI Asia is a new legal entity created in the second quarter of 2006 resulting from the restructuring of PMI Hong Kong. PMI Asia's net income in the second quarter of 2006 was negatively impacted by a one-time $1.1 million U.S. tax charge resulting from the transfer of the mortgage reinsurance portfolio from PMI Hong Kong. As a result of the restructuring, PMI Asia will realize the benefit of a lower tax rate of approximately 17.5% in future periods. PMI Asia's net income for the second quarter 2006 totaled $0.1 million compared to $2.4 million for the same period a year ago.

Financial Guaranty

-- Equity in earnings from FGIC for the second quarter and year to date totaled $22.9 million (after tax) and $43.2 million (after tax), respectively, compared to $20.5 million (after tax) and $38.6 million (after tax) for the same periods a year ago. The increases were attributable to premium growth and higher investment income, partially offset by decreases in refundings and higher underwriting expenses due to an increase in the number of employees.

-- Equity in earnings from RAM Re for the first quarter and year to date were $1.1 million (after tax) and $1.9 million (after tax), respectively, compared to $1.0 million (after tax) and $1.8 million (after tax) for the same periods a 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 thatpromote homeownership and facilitate mortgage transactions in thecapital markets. Through its wholly owned subsidiaries andunconsolidated strategic investments, the company offers residentialmortgage insurance and credit enhancement products domestically andinternationally, financial guaranty insurance, and financial guarantyreinsurance. Through its subsidiaries, The PMI Group, Inc. is one ofthe world's largest providers of private mortgage insurance withoperations in the United States, Australia, New Zealand, and theEuropean Union, as well as one of the largest providers of mortgageguaranty reinsurance in Hong Kong.

Cautionary Statement: Statements in this earnings release that arenot historical facts, and that relate to future plans, events orperformance are forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995. Readers arecautioned that forward-looking statements by their nature involve riskand uncertainty because they relate to events and depend oncircumstances that will occur in the future. Many factors could causeactual results and developments to differ materially from thoseexpressed or implied by these forward-looking statements. Risks anduncertainties that could affect the Company are discussed in our Form10-K for the year ended December 31, 2005 and Form 10-Q for thequarter ended March 31, 2006 and include changes in economicconditions such as interest rates, home values, employment rates andrefinance activity. We undertake no obligation to updateforward-looking statements.

(1) "U.S. Mortgage Insurance Operations" includes the results ofPMI Mortgage Insurance Co. (PMI) and affiliated U.S. reinsurancecompanies and equity in earnings from CMG Mortgage Insurance Company(CMG).

(2) "International Operations" includes the results of PMIAustralia, PMI Europe and PMI Asia.

(3) "Financial Guaranty" includes our equity earnings from ourinvestments in Financial Guaranty Insurance Company, Inc. (FGIC) andRAM 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.
THE PMI GROUP, INC. AND SUBSIDIARIES (the "Company")

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

----------------------------------------------------------------------
Contents
----------------------------------------------------------------------

Consolidated Statements of Operations and Balance Sheets

Business Segments Results of Operations -- Three Months Ended June 30,
2006 and 2005

Business Segments Results of Operations -- Six Months Ended June 30,
2006 and 2005

Business Segments Balance Sheets

U.S. Mortgage Insurance Operations Analysis of Reserve for Losses and
LAE and Financial and Statistical Information

U.S. Mortgage Insurance Operations Financial and Statistical
Information

CMG Mortgage Insurance Company, PMI Australia and PMI Europe Financial
and Statistical Information

Appendix A -- PMI Australia and PMI Europe Quarterly Financial
Information

Appendix B -- Business Segments Results of Operations by Quarter



Please refer to the following when noted:

(1) For the quarter and six months ended June 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) The "Other" segment includes charges of $1.9 million (after tax)
and $5.7 million (after tax) for stock option expenses and
related stock based compensation expenses in the second quarter
and in the six months ended June 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) Effective January 1, 2006, we refined our method of operating
cost allocation between our U.S. Mortgage Insurance Operations
segment and our Other segment. As a result of this refinement, we
allocated approximately $1.5 million of expenses in the second
quarter to our Other segment which previously would have been
allocated to our U.S. Mortgage Insurance Operations segment. Year
to date we have allocated $3.0 million of expenses to our Other
segment which previously would have been allocated to our U.S.
Mortgage Insurance Operations segment.

(12) 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.

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 Six Months Ended
June 30, June 30,
----------------------- ------------------------
2006 2005 2006 2005
----------- ----------- ------------ -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Dollars and shares, except per share data,
in thousands)

Net premiums written $ 211,815 $ 199,762 $ 413,719 $ 393,507
=========== =========== ============ ===========

Revenues
Premiums earned $ 213,643 $ 206,408 $ 419,883 $ 405,975
Net investment
income 49,015 45,747 95,882 89,537
Equity in earnings
from
unconsolidated
subsidiaries (1) 32,287 28,282 59,913 53,494
Net realized
investment gains 556 1,503 896 2,224
Other income 3,937 6,251 10,722 11,787
----------- ----------- ------------ -----------
Total revenues 299,438 288,191 587,296 563,017
----------- ----------- ------------ -----------

Losses and expenses
Losses and loss
adjustment
expenses 71,861 67,235 132,800 131,717
Amortization of
deferred policy
acquisition costs 17,794 18,809 34,781 39,252
Other underwriting
and operating
expenses (7) 52,873 54,417 111,437 100,062
Field office
restructuring (6) - - 1,955 -
Interest expense 8,067 8,472 16,246 18,025
----------- ----------- ------------ -----------
Total losses and
expenses 150,595 148,933 297,219 289,056
----------- ----------- ------------ -----------

Income before income
taxes 148,843 139,258 290,077 273,961
Income taxes 39,228 34,673 75,114 68,218
----------- ----------- ------------ -----------

Net income $ 109,615 $ 104,585 $ 214,963 $ 205,743
=========== =========== ============ ===========


Diluted net income
per share $ 1.14 $ 1.04 $ 2.23 $ 2.03
=========== =========== ============ ===========

----------------------------------------------------------------------
Reconciliation of
earnings per share
Net income $ 109,615 $ 104,585 $ 214,963 $ 205,743
Plus: Interest
expense on
contingently
convertible debt,
net of income
taxes 1,912 1,912 3,824 3,824
----------- ----------- ------------ -----------

Net income adjusted
for diluted earnings
per share
calculation $ 111,527 $ 106,497 $ 218,787 $ 209,567
=========== =========== ============ ===========

Share data:
Basic weighted
average common
shares outstanding 88,357 92,838 88,695 93,370
Stock options and
other dilutive
components 1,383 1,601 1,362 1,723
Common stock
equivalent shares
related to
contingently
convertible debt 8,153 8,153 8,153 8,153
----------- ----------- ------------ -----------

Diluted weighted
average common
shares outstanding 97,893 102,592 98,210 103,246
=========== =========== ============ ===========

Share repurchase
data:
Common shares
repurchased 3,221 1,776 3,302 2,609
=========== =========== ============ ===========

Average price paid
per common share
repurchased
(including
commissions) $ 45.49 $ 37.54 $ 45.43 $ 38.34
=========== =========== ============ ===========

----------------------------------------------------------------------

----------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------

June 30, December 31, June 30,
2006 2005 2005
----------- ------------ -----------
(Unaudited) (Unaudited)
(Dollars and shares, except per
share data, in thousands)
Assets
Cash and
investments, at
fair value $3,844,411 $ 3,789,432 $3,675,496
Investments in
unconsolidated
subsidiaries (1) 1,007,780 984,925 965,600
Equity investment
held for sale (1) - - 110,383
Related party
receivables 1,398 2,864 10,562
Reinsurance
receivables,
reinsurance
recoverables and
prepaid premiums 20,815 30,338 45,875
Deferred policy
acquisition costs 83,666 86,170 87,892
Other assets 355,396 360,407 345,499
----------- ------------ -----------
Total assets $5,313,466 $ 5,254,136 $5,241,307
=========== ============ ===========

Liabilities
Reserve for losses
and loss
adjustment
expenses $ 384,605 $ 368,841 $ 364,412
Unearned premiums 490,906 490,899 461,461
Long-term debt 819,529 819,529 819,529
Other liabilities 324,459 344,077 357,951
----------- ------------ -----------
Total liabilities 2,019,499 2,023,346 2,003,353

Shareholders' equity 3,293,967 3,230,790 3,237,954
----------- ------------ -----------

Total liabilities
and
shareholders'
equity $5,313,466 $ 5,254,136 $5,241,307
=========== ============ ===========

Basic shares issued
and outstanding 86,442 88,713 91,761
=========== ============ ===========

Book value per share $ 38.11 $ 36.42 $ 35.29
=========== ============ ===========



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
BUSINESS SEGMENTS RESULTS OF OPERATIONS
----------------------------------------------------------------------

U.S.
Mortgage Interna-
Insurance tional Financial
Operations Operations Guaranty Consolidated
(2) (3) (4) Other (5) Total
------------------------------------------------------

Three Months Ended June 30, 2006 (Unaudited)
------------------------------------------------------
(Dollars in thousands)

Net premiums
written $ 158,904 $ 52,900 $ - $ 11 $ 211,815
========== ========== ========= ========= ============

Revenues
Premiums
earned $ 167,826 $ 45,801 $ - $ 16 $ 213,643
Net investment
income 27,064 15,625 2 6,324 49,015
Equity in
earnings from
unconsoli-
dated
subsidiaries
(1) 5,729 - 26,476 82 32,287
Net realized
investment
gains
(losses) 305 252 - (1) 556
Other income 7 218 - 3,712 3,937
---------- ---------- --------- --------- ------------
Total
revenues 200,931 61,896 26,478 10,133 299,438
---------- ---------- --------- --------- ------------

Losses and
expenses
Losses and
loss
adjustment
expenses 64,153 7,708 - - 71,861
Amortization
of deferred
policy
acquisition
costs 13,162 4,632 - - 17,794
Other
underwriting
and operating
expenses (7),
(11) 22,970 10,461 - 19,442 52,873
Interest
expense 1 - - 8,066 8,067
---------- ---------- --------- --------- ------------
Total losses
and
expenses 100,286 22,801 - 27,508 150,595
---------- ---------- --------- --------- ------------

Income (loss)
before income
taxes 100,645 39,095 26,478 (17,375) 148,843
Income tax
(benefit) 28,480 13,598 2,469 (5,319) 39,228
---------- ---------- --------- --------- ------------

Net income
(loss) $ 72,165 $ 25,497 $ 24,009 $(12,056) $ 109,615
========== ========== ========= ========= ============

Expense ratio
(8) 22.7% 28.5%
Loss ratio (8) 38.2% 16.8%
Combined ratio 60.9% 45.3%

Three Months Ended June 30, 2005 (Unaudited)
------------------------------------------------------
(Dollars in thousands)

Net premiums
written $ 152,564 $ 47,185 $ - $ 13 $ 199,762
========== ========== ========= ========= ============

Revenues
Premiums
earned $ 168,248 $ 38,141 $ - $ 19 $ 206,408
Net investment
income 27,546 14,058 - 4,143 45,747
Equity in
earnings
(losses) from
unconsoli-
dated
subsidiaries
(1) 4,937 - 23,761 (416) 28,282
Net realized
investment
gains
(losses) 1,167 (18) - 354 1,503
Other (loss)
income (5) 873 - 5,383 6,251
---------- ---------- --------- --------- ------------
Total
revenues 201,893 53,054 23,761 9,483 288,191
---------- ---------- --------- --------- ------------

Losses and
expenses
Losses and
loss
adjustment
expenses 65,496 1,739 - - 67,235
Amortization
of deferred
policy
acquisition
costs 15,030 3,779 - - 18,809
Other
underwriting
and operating
expenses 25,278 10,539 - 18,600 54,417
Interest
expense - - - 8,472 8,472
---------- ---------- --------- --------- ------------
Total losses
and
expenses 105,804 16,057 - 27,072 148,933
---------- ---------- --------- --------- ------------

Income (loss)
before income
taxes 96,089 36,997 23,761 (17,589) 139,258
Income tax
(benefit) 26,400 11,747 2,254 (5,728) 34,673

Net income
(loss) $ 69,689 $ 25,250 $ 21,507 $(11,861) $ 104,585
========== ========== ========= ========= ============


Expense ratio
(8) 26.4% 30.3%
Loss ratio (8) 38.9% 4.6%
Combined ratio 65.3% 34.9%



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
BUSINESS SEGMENTS RESULTS OF OPERATIONS
----------------------------------------------------------------------

U.S.
Mortgage Interna-
Insurance tional Financial
Operations Operations Guaranty Consolidated
(2) (3) (4) Other (5) Total
------------------------------------------------------

Six Months Ended June 30, 2006 (Unaudited)
------------------------------------------------------
(Dollars in thousands)

Net premiums
written $ 322,377 $ 91,321 $ - $ 21 $ 413,719
========== ========== ========= ========= ============

Revenues
Premiums
earned $ 335,364 $ 84,486 $ - $ 33 $ 419,883
Net investment
income 52,740 30,410 2 12,730 95,882
Equity in
earnings
(losses) from
unconsoli-
dated
subsidiaries
(1) 10,221 - 49,712 (20) 59,913
Net realized
investment
gains
(losses) 542 394 - (40) 896
Other (loss)
income (17) 3,251 - 7,488 10,722
---------- ---------- --------- --------- ------------
Total
revenues 398,850 118,541 49,714 20,191 587,296
---------- ---------- --------- --------- ------------

Losses and
expenses
Losses and
loss
adjustment
expenses 123,300 9,500 - - 132,800
Amortization
of deferred
policy
acquisition
costs 26,604 8,177 - - 34,781
Other
underwriting
and operating
expenses (7),
(11) 48,880 20,250 - 42,307 111,437
Field office
restructuring
(6) 1,955 - - - 1,955
Interest
expense 1 - - 16,245 16,246
---------- ---------- --------- --------- ------------
Total losses
and
expenses 200,740 37,927 - 58,552 297,219
---------- ---------- --------- --------- ------------

Income (loss)
before income
taxes 198,110 80,614 49,714 (38,361) 290,077
Income tax
(benefit) 55,840 26,507 4,606 (11,839) 75,114
---------- ---------- --------- --------- ------------

Net income
(loss) $ 142,270 $ 54,107 $ 45,108 $(26,522) $ 214,963
========== ========== ========= ========= ============

Expense ratio
(8) 24.0% 31.1%
Loss ratio (8) 36.8% 11.2%
Combined ratio 60.8% 42.3%

Six Months Ended June 30, 2005 (Unaudited)
------------------------------------------------------
(Dollars in thousands)

Net premiums
written $ 307,103 $ 86,370 $ - $ 34 $ 393,507
========== ========== ========= ========= ============

Revenues
Premiums
earned $ 332,360 $ 73,576 $ - $ 39 $ 405,975
Net investment
income 53,125 27,813 - 8,599 89,537
Equity in
earnings
(losses) from
unconsoli-
dated
subsidiaries
(1) 9,011 - 44,608 (125) 53,494
Net realized
investment
gains 1,587 322 - 315 2,224
Other (loss)
income (1) 760 - 11,028 11,787
---------- ---------- --------- --------- ------------
Total
revenues 396,082 102,471 44,608 19,856 563,017
---------- ---------- --------- --------- ------------

Losses and
expenses
Losses and
loss
adjustment
expenses 128,614 3,103 - - 131,717
Amortization
of deferred
policy
acquisition
costs 31,056 8,196 - - 39,252
Other
underwriting
and operating
expenses 48,832 17,543 - 33,687 100,062
Interest
expense 1 - - 18,024 18,025
---------- ---------- --------- --------- ------------
Total losses
and
expenses 208,503 28,842 - 51,711 289,056
---------- ---------- --------- --------- ------------

Income (loss)
before income
taxes 187,579 73,629 44,608 (31,855) 273,961
Income tax
(benefit) 51,548 23,232 4,211 (10,773) 68,218
---------- ---------- --------- --------- ------------
Net income
(loss) $ 136,031 $ 50,397 $ 40,397 $(21,082) $ 205,743
========== ========== ========= ========= ============


Expense ratio
(8) 26.0% 29.8%
Loss ratio (8) 38.7% 4.2%
Combined ratio 64.7% 34.0%



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
BUSINESS SEGMENTS BALANCE SHEETS
----------------------------------------------------------------------

U.S.
Mortgage Interna-
Insurance tional Financial Consoli-
Operations Operations Guaranty dated
(2) (3) (4) Other (5) Total
-----------------------------------------------------

June 30, 2006 (Unaudited)
-----------------------------------------------------
(Dollars in thousands)
Assets
Cash and
investments, at
fair value $2,259,393 $1,156,454 $ 1,995 $ 426,569 $3,844,411
Investments in
unconsolidated
subsidiaries
(1) 120,574 - 867,923 19,283 1,007,780
Related party
receivables 1,291 - - 107 1,398
Reinsurance
receivables,
recoverables
and prepaid
premiums 14,977 5,838 - - 20,815
Deferred policy
acquisition
costs 45,769 37,897 - - 83,666
Other assets 204,724 33,293 3 117,376 355,396
---------- ---------- --------- ---------- ----------
Total assets $2,646,728 $1,233,482 $ 869,921 $ 563,335 $5,313,466
========== ========== ========= ========== ==========

Liabilities
Reserve for
losses and loss
adjustment
expenses $ 355,832 $ 28,773 $ - $ - $ 384,605
Unearned
premiums 147,739 343,136 - 31 490,906
Long-term debt - - - 819,529 819,529
Other
liabilities 284,851 59,597 23,421 (43,410) 324,459
---------- ---------- --------- ---------- ----------
Total
liabilities 788,422 431,506 23,421 776,150 2,019,499

Shareholders'
equity 1,858,306 801,976 846,500 (212,815) 3,293,967
---------- ---------- --------- ---------- ----------

Total
liabilities
and
shareholders'
equity $2,646,728 $1,233,482 $ 869,921 $ 563,335 $5,313,466
========== ========== ========= ========== ==========


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 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 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
========== ========== ========= ========== ==========


June 30, 2005 (Unaudited)
-----------------------------------------------------
(Dollars in thousands)
Assets
Cash and
investments, at
fair value $2,140,727 $1,048,992 $ - $ 485,777 $3,675,496
Investments in
unconsolidated
subsidiaries
(1) 121,558 - 821,308 22,734 965,600
Equity
investment held
for sale (1) - - - 110,383 110,383
Related party
receivables 1,507 - - 9,055 10,562
Reinsurance
receivables,
recoverables
and prepaid
premiums 23,903 21,972 - - 45,875
Deferred policy
acquisition
costs 48,738 39,154 - - 87,892
Other assets 208,219 24,800 - 112,480 345,499
---------- ---------- --------- ---------- ----------
Total assets $2,544,652 $1,134,918 $ 821,308 $ 740,429 $5,241,307
========== ========== ========= ========== ==========

Liabilities
Reserve for
losses and loss
adjustment
expenses $ 338,628 $ 25,781 $ - $ 3 $ 364,412
Unearned
premiums 132,809 328,618 - 34 461,461
Long-term debt - - - 819,529 819,529
Other
liabilities 245,481 71,727 16,248 24,495 357,951
---------- ---------- --------- ---------- ----------
Total
liabilities 716,918 426,126 16,248 844,061 2,003,353

Shareholders'
equity 1,827,734 708,792 805,060 (103,632) 3,237,954
---------- ---------- --------- ---------- ----------

Total
liabilities
and
shareholders'
equity $2,544,652 $1,134,918 $ 821,308 $ 740,429 $5,241,307
========== ========== ========= ========== ==========



THE PMI GROUP, INC. AND SUBSIDIARIES

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

June 30, 2006 March 31, 2006 June 30, 2005
------------------ ------------------- -------------------
Reserve Reserve Reserve
for for for
Loans in Losses Loans in Losses Loans in Losses
Default and LAE Default and LAE Default and LAE
-------- --------- --------- --------- --------- ---------
(Dollars in thousands)

Primary
insurance 37,102 $318,878 37,784 $308,843 35,030 $299,379
Pool
insurance 17,458 36,954 19,069 37,594 16,623 39,249
------- --------- --------- --------- --------- ---------
Total 54,560 $355,832 56,853 $346,437 51,653 $338,628
======= ========= ========= ========= ========= =========

Reconciliation of Reserve for Losses and LAE
--------------------------------------------

June 30, March 31, Reserve
2006 2006 Change
--------- --------- ---------
(Dollars in thousands)
Gross reserve for losses and
LAE:
Primary insurance $318,878 $308,843 $10,035
Pool insurance 36,954 37,594 (640)
--------- --------- ---------
Total gross reserve for
losses and LAE 355,832 346,437 9,395

Ceded reserve for losses:
Primary insurance (2,417) (2,213) (204)
Pool insurance (87) (71) (16)
--------- --------- ---------
Total ceded reserve for
losses (2,504) (2,284) (220)

Net reserve for losses and LAE $353,328 $344,153 $9,175
========= ========= =========


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

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------

Flow insurance
written (in
millions) $5,716 $7,442 $10,757 $13,745
Structured insurance
written (in
millions) 1,344 2,216 4,391 4,081
--------- --------- --------- ---------
Primary new
insurance written
(in millions) $7,060 $9,658 $15,148 $17,826
========= ========= ========= =========

Primary new risk
written (in
millions) $1,790 $2,551 $3,938 $4,621

Pool new insurance
written (in
millions) (7) $3,575 $3,228 $8,302 $4,534

Pool new risk
written (in
millions) (7) $108 $60 $212 $101

Product mix as a %
of new insurance
written:
Above 97% LTV's 17% 14% 15% 14%
90.01% to 95%
LTV's 22% 25% 22% 25%
85.01% to 90%
LTV's 46% 43% 46% 41%
90.01% to 95%
LTV's with
greater than or
equal to 30%
coverage 18% 21% 18% 21%
85.01% to 90%
LTV's with
greater than or
equal to 25%
coverage 40% 38% 40% 35%
ARMs 20% 35% 30% 34%
Monthlies 96% 97% 97% 98%
Refinances 32% 34% 36% 36%
Structured
transactions 19% 23% 29% 23%

Premiums written (in
thousands):
Gross premiums
written $203,426 $197,850 $411,562 $398,980
Ceded premiums, net
of assumed
premiums (41,402) (41,455) (83,058) (84,742)
Refunded premiums (3,120) (3,831) (6,127) (7,135)
--------- --------- --------- ---------
Net premiums
written 158,904 152,564 322,377 307,103
Change in unearned
premiums 8,922 15,684 12,987 25,257
--------- --------- --------- ---------
Net
premiums
earned $167,826 $168,248 $335,364 $332,360
========= ========= ========= =========



THE PMI GROUP, INC. AND SUBSIDIARIES

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

6/30/2006 3/31/2006 12/31/2005
---------- ----------- -----------

Primary insurance in force (in
millions)
Flow $84,644 $85,685 $86,991
Structured transactions 15,741 15,826 14,099
---------- ----------- -----------
Total $100,385 $101,511 $101,090
========== =========== ===========

Primary risk in force (in millions)
Flow $20,883 $21,102 $21,388
Structured transactions 4,127 4,147 3,583
---------- ----------- -----------
Total $25,010 $25,249 $24,971
========== =========== ===========

Pool risk in force (in millions) (9) $2,737 $2,666 $2,589

Primary risk in force - credit score
distribution
Flow 620 or above 93.3% 93.2% 93.0%
619-575 5.3% 5.4% 5.5%
574 or below 1.4% 1.4% 1.5%

Structured transactions 620 or above 80.7% 79.2% 76.9%
619-575 12.3% 13.2% 14.5%
574 or below 7.1% 7.6% 8.6%

Total 620 or above 91.3% 90.9% 90.7%
619-575 6.4% 6.6% 6.8%
574 or below 2.3% 2.5% 2.5%

Primary average loan size (in
thousands)
Flow $136.9 $135.6 $134.5
Structured transactions $150.7 $150.7 $145.4
Total $138.9 $137.8 $136.0

Loss severity - primary (quarterly)
Flow 83.2% 84.9% 85.9%
Structured transactions 86.8% 91.2% 94.3%
Total 84.1% 86.5% 87.7%

Persistency
Primary persistency rate 64.9% 63.1% 61.9%

Primary loans, defaults and default
rates
Primary policies in force 722,756 736,908 743,533

Primary loans in default 37,102 37,784 42,702

Primary default rate 5.13% 5.13% 5.74%
Structured transactions only default
rate 9.26% 8.59% 9.85%
Pool default rate 5.60% 6.17% 6.84%

Claims paid (year-to-date in
millions)
Primary claims paid - flow $73.5 $37.3 $165.8
Primary claims paid - structured
transactions 24.8 13.5 49.1
---------- ----------- -----------
Total primary claims paid 98.3 50.8 214.9
Total pool and other 8.9 4.3 20.1
---------- ----------- -----------
Total claims paid $107.2 $55.1 $235.0
========== =========== ===========


Number of primary claims paid (year-
to-date) 4,096 2,058 9,262

Average primary claim size (year-to-
date in thousands) $24.0 $24.7 $23.2

Captive reinsurance arrangements
(year-to-date)
Percentage of flow NIW subject to
captive reinsurance arrangements 71.6% 70.8% 69.0%
Percentage of primary NIW subject to
captive reinsurance arrangements 51.5% 44.8% 54.7%
Percentage of primary IIF subject to
captive reinsurance arrangements 53.3% 53.2% 53.4%
Percentage of primary RIF subject to
captive reinsurance arrangements 53.9% 53.9% 54.4%

Alt-A primary insurance in force
(in millions) (12)
With FICO scores of 660 and above $13,216 $12,575 $11,455
With FICO scores below 660 and above
619 2,934 2,783 2,564
---------- ----------- -----------
Total Alt-A primary insurance in
force $16,150 $15,358 $14,019
========== =========== ===========

Risk-to-capital ratio (10) 7.7 to 1 8.1 to 1 8.2 to 1



9/30/2005 6/30/2005 3/31/2005
---------- ----------- -----------

Primary insurance in force (in
millions)
Flow $88,433 $89,965 $91,399
Structured transactions 12,788 13,469 12,598
---------- ----------- -----------
Total $101,221 $103,434 $103,997
========== =========== ===========

Primary risk in force (in millions)
Flow $21,745 $22,067 $22,346
Structured transactions 3,167 3,296 2,966
---------- ----------- -----------
Total $24,912 $25,363 $25,312
========== =========== ===========

Pool risk in force (in millions) (9) $2,530 $2,445 $2,417

Primary risk in force - credit score
distribution
Flow 620 or above 92.7% 92.4% 92.1%
619-575 5.7% 5.9% 6.1%
574 or below 1.6% 1.7% 1.8%

Structured transactions 620 or above 73.9% 71.7% 66.9%
619-575 16.0% 17.4% 20.2%
574 or below 10.1% 10.9% 12.9%

Total 620 or above 90.3% 89.7% 89.2%
619-575 7.0% 7.4% 7.7%
574 or below 2.7% 2.9% 3.1%

Primary average loan size (in
thousands)
Flow $133.3 $132.2 $131.5
Structured transactions $139.5 $139.8 $134.1
Total $134.1 $133.2 $131.8

Loss severity - primary (quarterly)
Flow 84.0% 83.8% 85.6%
Structured transactions 89.6% 87.7% 90.9%
Total 85.2% 84.6% 86.8%

Persistency
Primary persistency rate 61.2% 62.0% 60.8%

Primary loans, defaults and default
rates
Primary policies in force 754,934 776,721 788,847

Primary loans in default 38,146 35,030 35,716

Primary default rate 5.05% 4.51% 4.53%
Structured transactions only default
rate 10.09% 8.54% 8.17%
Pool default rate 6.34% 5.65% 5.65%

Claims paid (year-to-date in
millions)
Primary claims paid - flow $126.6 $87.8 $41.7
Primary claims paid - structured
transactions 36.8 25.4 13.8
---------- ----------- -----------
Total primary claims paid 163.4 113.2 55.5
Total pool and other 15.0 9.6 4.7
---------- ----------- -----------
Total claims paid $178.4 $122.8 $60.2
========== =========== ===========


Number of primary claims paid (year-
to-date) 7,124 4,934 2,413

Average primary claim size (year-to-
date in thousands) $22.9 $22.9 $23.0

Captive reinsurance arrangements
(year-to-date)
Percentage of flow NIW subject to
captive reinsurance arrangements 68.0% 65.0% 60.4%
Percentage of primary NIW subject to
captive reinsurance arrangements 55.7% 50.7% 47.1%
Percentage of primary IIF subject to
captive reinsurance arrangements 53.2% 52.1% 52.4%
Percentage of primary RIF subject to
captive reinsurance arrangements 54.4% 53.4% 53.9%

Alt-A primary insurance in force
(in millions) (12)
With FICO scores of 660 and above $10,346 $9,731 $8,892
With FICO scores below 660 and above
619 2,327 2,325 2,135
---------- ----------- -----------
Total Alt-A primary insurance in
force $12,673 $12,056 $11,027
========== =========== ===========

Risk-to-capital ratio (10) 8.0 to 1 8.3 to 1 8.1 to 1



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
CMG MORTGAGE INSURANCE COMPANY FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------

June 30, March 31, June 30,
2006 2006 2005
---------- ---------- ----------

Primary new insurance written (year-
to-date in millions) $2,058 $891 $2,495

Primary insurance in force (in
millions) $15,774 $15,476 $14,694

Primary risk in force (in millions) $3,791 $3,686 $3,428

Insured primary loans 111,889 110,879 108,066

Persistency 73.6% 72.3% 70.3%

Primary loans in default 965 992 622

Primary default rate (year-to-date) 0.86% 0.89% 0.58%

Primary claims paid (year-to-date in
thousands) $2,712 $1,200 $1,981

Number of primary claims paid (year-
to-date) 123 55 100

Average primary claim size (year-to-
date in thousands) $22.0 $21.8 $19.8

----------------------------------------------------------------------
PMI AUSTRALIA FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------

June 30, March 31, June 30,
2006 2006 2005
---------- ---------- ----------


Net premiums written (year-to-date in
thousands) $83,243 $34,640 $71,775

Premiums earned (year-to-date in
thousands) $71,377 $32,267 $59,319

Flow insurance written (year-to-date
in millions) 9,214 4,152 8,685
RMBS insurance written (year-to-date
in millions) 13,035 5,291 6,478
---------- ---------- ----------
New insurance written (year-to-date in
millions) $22,249 $9,443 $15,163
========== ========== ==========

Insurance in force (in millions) $135,529 $123,050 $119,811

Risk in force (in millions) $124,139 $112,199 $109,025

Policies in force 1,074,618 1,026,260 973,820

Loans in default 1,731 1,520 1,322

Default rate 0.16% 0.15% 0.14%

Claims paid (year-to-date in
thousands) $4,405 $1,224 $1,090

Number of claims paid (year-to-date) 104 31 42

Average claim size (year-to-date in
thousands) $42.4 $39.5 $26.0

----------------------------------------------------------------------
PMI EUROPE FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------

June 30, March 31, June 30,
2006 2006 2005
---------- ---------- ----------


Net premiums written (year-to-date in
thousands) $4,863 $2,754 $3,027

Premiums earned (year-to-date in
thousands) $7,793 $3,888 $8,507

New insurance written (year-to-date in
millions) $56 $32 $-

New credit default swaps written
(year-to-date in millions) $629 $629 $-

New reinsurance written (year-to-date
in millions) $1,006 $627 $-

Insurance in force (in millions) $39,996 $39,254 $31,213

Risk in force (in millions) $2,836 $2,760 $2,450

Claims paid including credit default
swaps (year-to-date in thousands) $1,275 $644 $1,379



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
APPENDIX A - QUARTERLY FINANCIAL INFORMATION
----------------------------------------------------------------------

----------------------------------------------------------------------
PMI AUSTRALIA QUARTERLY FINANCIAL INFORMATION
----------------------------------------------------------------------

2006
---------------------------------
2nd Quarter 1st Quarter
----------------- ---------------
(Australian $ in thousands,
unless otherwise noted)

Income Statement Components -
Quarter Ended

Premiums earned $52,399 $43,644
Net investment income $17,267 $16,876
Change in fair value of foreign
currency put options $(2,640) $1,855
Total losses and expenses $24,843 $15,789
Net income $29,332 $32,546

Net income (U.S. $ in thousands) $21,923 $24,054

Balance Sheet Components

Assets

Cash and investments, at fair value $1,257,618 $1,219,179
Total assets $1,336,748 $1,302,982

Liabilities and Shareholder's Equity

Reserve for losses and LAE $16,150 $11,489
Unearned premiums $431,864 $419,207
Shareholder's equity $841,116 $822,918

----------------------------------------------------------------------
PMI EUROPE QUARTERLY FINANCIAL INFORMATION
----------------------------------------------------------------------

2006
---------------------------------
2nd Quarter 1st Quarter
----------------- ---------------
(Euro EUR in thousands, unless
otherwise noted)

Income Statement Components -
Quarter Ended

Premiums earned EUR 3,108 EUR 3,232
Net investment income EUR 2,157 EUR 1,915
Change in fair value of foreign
currency put options EUR (42) EUR (43)
Change in fair value of credit
default swaps EUR 1,691 EUR 1,356
Total losses and expenses EUR 2,635 EUR 2,692
Net income EUR 2,780 EUR 2,451

Net income (U.S. $ in thousands) $3,498 $2,949

Balance Sheet Components

Assets

Cash and investments, at fair value EUR 160,424 EUR 182,304
Total assets EUR 174,624 EUR 192,990

Liabilities and Shareholder's Equity

Reserve for losses and LAE EUR 12,521 EUR 12,581
Unearned premiums EUR 17,648 EUR 19,077
Shareholder's equity EUR 134,518 EUR 132,900



2005
------------------------------------------------
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ------------
(Australian $ in thousands, unless otherwise
noted)

Income Statement
Components - Quarter
Ended

Premiums earned $43,959 $41,815 $38,929 $37,840
Net investment income $16,257 $15,854 $14,966 $14,705
Change in fair value
of foreign currency
put options $(24) $(232) $(422) $(1,338)
Total losses and
expenses $17,226 $13,632 $15,104 $13,788
Net income $31,906 $31,079 $26,725 $26,487

Net income (U.S. $ in
thousands) $23,728 $23,623 $20,541 $20,584

Balance Sheet
Components

Assets

Cash and investments,
at fair value $1,197,016 $1,147,390 $1,090,399 $1,037,704
Total assets $1,275,573 $1,225,683 $1,188,574 $1,132,961

Liabilities and
Shareholder's Equity

Reserve for losses
and LAE $11,573 $11,156 $12,541 $12,549
Unearned premiums $415,885 $406,661 $395,113 $382,781
Shareholder's equity $793,045 $757,372 $730,113 $689,927

----------------------------------------------------------------------
PMI EUROPE QUARTERLY FINANCIAL INFORMATION
----------------------------------------------------------------------

2005
------------------------------------------------
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ------------
(Euro EUR in thousands, unless otherwise noted)

Income Statement
Components - Quarter
Ended

Premiums earned EUR 3,721 EUR 3,749 EUR 3,298 EUR 3,321
Net investment income EUR 1,730 EUR 2,188 EUR 1,951 EUR 2,002
Change in fair value
of foreign currency
put options EUR 55 EUR (3) EUR 342 EUR (33)
Change in fair value
of credit default
swaps EUR 409 EUR 811 EUR 390 EUR 320
Total losses and
expenses EUR 3,824 EUR 3,244 EUR 3,168 EUR 2,031
Net income EUR 1,362 EUR 2,276 EUR 1,828 EUR 2,326

Net income (U.S. $ in
thousands) $1,615 $2,774 $2,330 $3,049

Balance Sheet
Components

Assets

Cash and investments,
at fair value EUR 182,559 EUR 182,682 EUR 179,698 EUR 172,707
Total assets EUR 192,107 EUR 192,431 EUR 188,840 EUR 182,857

Liabilities and
Shareholder's Equity

Reserve for losses
and LAE EUR 12,508 EUR 13,019 EUR 13,395 EUR 12,807
Unearned premiums EUR 20,020 EUR 20,808 EUR 22,589 EUR 24,719
Shareholder's equity EUR 133,818 EUR 133,352 EUR 131,452 EUR 125,395



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
APPENDIX B- BUSINESS SEGMENTS RESULTS OF OPERATIONS BY QUARTER
----------------------------------------------------------------------

2006 2005
------------------- -----------------------------
2nd 1st 4th 3rd 2nd
Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- ---------
(Dollars in thousands)

U.S. Mortgage Insurance Operations (2)
----------------------------------------------------------------------

Net premiums written $158,904 $163,474 $201,160 $158,866 $152,564
========= ========= ========= ========= =========

Revenues
Premiums earned $167,826 $167,538 $166,778 $166,052 $168,248
Net investment
income 27,064 25,676 26,168 25,046 27,546
Equity in earnings
from
unconsolidated
subsidiaries (1) 5,729 4,492 4,583 5,217 4,937
Net realized
investment gains 305 237 378 2,597 1,167
Other income
(loss) 7 (23) (3) 3 (5)
--------- --------- --------- --------- ---------
Total revenues 200,931 197,920 197,904 198,915 201,893
--------- --------- --------- --------- ---------

Losses and expenses
Losses and loss
adjustment
expenses 64,153 59,147 63,159 61,667 65,496
Amortization of
deferred policy
acquisition costs 13,162 13,442 14,113 14,478 15,030
Other underwriting
expenses and
operating
expenses (7),(11) 22,970 25,911 29,057 25,260 25,278
Field office
restructuring (6) - 1,955 - - -
Interest expense 1 - 1 3 -
--------- --------- --------- --------- ---------
Total losses and
expenses 100,286 100,455 106,330 101,408 105,804
--------- --------- --------- --------- ---------

Income before income
taxes 100,645 97,465 91,574 97,507 96,089
Income taxes 28,480 27,360 21,696 27,977 26,400
--------- --------- --------- --------- ---------
Net income $72,165 $70,105 $69,878 $69,530 $69,689
========= ========= ========= ========= =========

International Operations (3)
----------------------------------------------------------------------

Net premiums written $52,900 $38,420 $44,913 $47,197 $47,185
========= ========= ========= ========= =========

Revenues
Premiums earned $45,801 $38,686 $39,781 $38,979 $38,141
Net investment
income 15,625 14,785 14,499 14,844 14,058
Net realized
investment gains
(losses) 252 142 (221) (27) (18)
Other income 218 3,031 778 1,287 873
--------- --------- --------- --------- ---------
Total revenues 61,896 56,644 54,837 55,083 53,054
--------- --------- --------- --------- ---------

Losses and expenses
Losses and loss
adjustment
expenses 7,708 1,792 1,601 (365) 1,739
Amortization of
deferred policy
acquisition costs 4,632 3,545 3,274 3,269 3,779
Other underwriting
and operating
expenses 10,461 9,789 12,663 11,648 10,539
Interest expense - - 9 - -
--------- --------- --------- --------- ---------
Total losses and
expenses 22,801 15,126 17,547 14,552 16,057
--------- --------- --------- --------- ---------

Income before income
taxes 39,095 41,518 37,290 40,531 36,997
Income taxes 13,598 12,909 10,251 12,514 11,747
--------- --------- --------- --------- ---------

Net income $25,497 $28,609 $27,039 $28,017 $25,250
========= ========= ========= ========= =========

Financial Guaranty (4)
----------------------------------------------------------------------

Equity in earnings
from unconsolidated
subsidiaries (1) $26,476 $23,235 $21,453 $13,691 $23,761
Interest and
dividends 2 - - - -
Income taxes 2,469 2,137 2,208 1,135 2,254
--------- --------- --------- --------- ---------
Net income $24,009 $21,098 $19,245 $12,556 $21,507
========= ========= ========= ========= =========

Other (5)
----------------------------------------------------------------------

Net premiums written $11 $10 $27 $19 $13
========= ========= ========= ========= =========

Revenues
Premiums earned $16 $17 $18 $19 $19
Net investment
income 6,324 6,406 4,832 4,537 4,143
Equity in earnings
(losses) from
unconsolidated
subsidiaries (1) 82 (102) (165) (388) (416)
Net realized
investment
(losses) gains (1) (39) (4) (2,897) 354
Other income 3,712 3,777 4,283 2,649 5,383
--------- --------- --------- --------- ---------
Total revenues 10,133 10,059 8,964 3,920 9,483
--------- --------- --------- --------- ---------

Losses and expenses
Other underwriting
expenses and
operating
expenses (11) 19,442 22,865 17,354 17,607 18,600
Interest expense 8,066 8,179 4,644 8,455 8,472
--------- --------- --------- --------- ---------
Total losses and
expenses 27,508 31,044 21,998 26,062 27,072
--------- --------- --------- --------- ---------

Loss before income
tax benefits (17,375) (20,985) (13,034) (22,142) (17,589)
Income tax benefits (5,319) (6,521) (4,587) (7,750) (5,728)
--------- --------- --------- --------- ---------

Net loss $(12,056) $(14,464) $(8,447) $(14,392) $(11,861)
========= ========= ========= ========= =========