The PMI Group, Inc. Reports Fourth Quarter 2005 Net Income of $107.7 Million, or $1.11 Per Diluted Share

For the full year, the Company reported record income fromcontinuing operations after income taxes of $409.2 million in 2005compared to $366.5 million in 2004, an increase of 11.7%. Dilutedearnings per share from continuing operations after income taxes were$4.10 per share in 2005 compared to $3.55 per share in 2004, anincrease of 15.5%.

Highlights for the fourth quarter of 2005 and the full year 2005included strong growth in U.S. Mortgage Insurance Operations(1) netpremiums written and full year incurred losses at the low end of theCompany's guidance, growth in the International Operations(2) netincome driven by results from PMI Australia and positive results fromthe Financial Guaranty(3) segment led by equity in earnings from FGIC.

The Company's book value per share as of December 31, 2005 was$36.42 compared to $33.37 at December 31, 2004, representing anincrease of 9.1%.

The PMI Group, Inc. Fourth Quarter Results by Segment
----------------------------------------------------------------------
Fourth Quarter Total Fourth Quarter Net
Revenues Income
--------------------------------------------- ------------------------
(Dollars in millions,
except per share
data) 2005 2004 % Change 2005 2004 % Change
--------------------------------------------- ------------------------
U.S. Mortgage
Insurance Operations $197.9 $198.4 (0.3%) $69.9 $69.8 0.1%
International
Operations 54.8 49.5 10.7% 27.0 24.2 11.6%
Financial Guaranty 21.5 16.2 32.7% 19.2 14.5 32.4%
Other(4) 9.0 (11.3) n.m. (8.4) (28.0) n.m.
--- ------ ---- ----- ------ ----
Total $283.2 $252.8 12.0% $107.7 $80.5 33.8%
====== ====== ===== ====== ===== =====
Diluted Net Income
Per Share $1.11 $0.79 40.5%
Book Value Per Share $36.42 $33.37 9.1%
----------------------------------------------------------------------
May not total due to rounding.
n.m. - Not meaningful



The PMI Group, Inc. Full Year Results by Segment
----------------------------------------------------------------------
Full Year Total Revenues Full Year Net Income
--------------------------------------------- ------------------------
(Dollars in
millions, except
per share data) 2005 2004 % Change 2005 2004 % Change
--------------------------------------------- ------------------------
U.S. Mortgage
Insurance
Operations $792.9 $754.1 5.1% $275.4 $254.5 8.2%
International
Operations 212.4 191.3 11.0% 105.5 99.9 5.6%
Financial Guaranty 79.8 67.8 17.7% 72.2 60.7 18.9%
Other 32.7 24.9 31.3% (43.9) (15.8) n.m.
---- ---- ----- ------ ------ -----
Total $1,117.8 $1,038.2 7.7% $409.2 $399.3 2.5%
======== ======== ==== ====== ====== ====
Diluted Net Income
Per Share $4.10 $3.87 5.9%
Diluted Net Income
from Continuing
Operations Per
Share $4.10 $3.55 15.5%
----------------------------------------------------------------------
May not total due to rounding.
n.m. - Not meaningful

Consolidated Operating Results

Consolidated net premiums written for the fourth quarter and fullyear 2005 totaled $246.1 million and $845.7 million, respectively,compared to $200.1 million and $771.4 million for the same periods ayear ago. The increases were due primarily to an increase in premiumswritten in U.S. Mortgage Insurance Operations.

Consolidated premiums earned for the fourth quarter and full year2005 were $206.6 million and $817.6 million, respectively, compared to$202.3 million and $770.4 million for the same periods a year ago. Theincreases were due primarily to increases in premiums earned in theU.S. Mortgage Insurance Operations and International Operations.

Consolidated losses and loss adjustment expenses for the fourthquarter and full year 2005 totaled $64.8 million and $257.8 million,respectively, compared to $60.1 million and $237.3 million for thesame periods a year ago. The increases were due primarily to higherpaid claims in the fourth quarter and full year 2005 in the U.S.Mortgage Insurance Operations.

Consolidated other underwriting and operating expenses for thefourth quarter and full year 2005 totaled $59.1 million and $213.6million, respectively, compared to $57.8 million and $204.7 millionfor the same periods a year ago. The increases were due primarily fromInternational Operations, principally from higher profit sharingcommissions in PMI Europe related to the continued favorable creditperformance of the Royal & Sun Alliance (R&SA) portfolio and anincrease in expenses related to implementing new regulatoryrequirements in PMI Australia.

Consolidated reserve for losses and loss adjustment expensestotaled $368.8 million as of December 31, 2005 compared to $366.3million as of September 30, 2005 and $364.8 million as of December 31,2004. The increase for the fourth quarter of 2005 was attributable toan increase in U.S. Mortgage Insurance Operations claim rates due tothe portfolio composition and seasoning of the insurance portfolio andto loss reserve increases due to an increase in notices of defaultsfrom the hurricane impacted areas.

Common shares repurchased in the fourth quarter of 2005 totaled1.1 million shares at a total cost of $44.5 million, completing theCompany's $150 million common share repurchase program authorized inJuly 2005. For the full year 2005, the Company invested $250 millionto repurchase a total of 6.3 million common shares at an average costof $39.74 per share. For the full year 2005, the Company repurchasedapproximately 7% of its common shares outstanding as of December 31,2004.

Hurricane Related Items

-- As of December 31, 2005, U.S. Mortgage Insurance Operations provided loss reserves of $2.5 million (pre-tax) for approximately 3,500 pending notices of default (NODs) from the hurricane impacted areas estimated to have a reduced likelihood of generating a claim. Loss reserves were established for all other NODs from the hurricane impacted areas in the normal course of operations.

-- For the full year 2005, the Company recorded a total of $9.4 million (after tax) in loss reserve increases in the U.S. Mortgage Insurance Operations, reduced equity earnings from Select Portfolio Servicing, Inc. and Financial Guaranty Insurance Company and expenses related to disaster relief donations.

Segment Highlights

U.S. Mortgage Insurance Operations

-- U.S. Mortgage Insurance Operations realized a 30.7% increase in net premiums written for the fourth quarter of 2005 to $201.2 million as compared to $153.9 million for the fourth quarter of 2004. The increase was primarily due to two large single premium structured transactions completed in the fourth quarter of 2005 and an increase in average overall premium rates.

-- U.S. Mortgage Insurance Operations total incurred losses for the fourth quarter 2005 were $63.2 million, bringing the full year 2005 total incurred losses to $253.4 million, which was at the low end of the Company's range of guidance.

-- Equity in earnings from CMG for the full year 2005 increased 22.9% to $18.8 million compared to $15.3 million for the full year 2004.

International Operations

-- PMI Australia reported net income of $23.7 million for the fourth quarter of 2005, an increase of 22.8% over net income for the fourth quarter 2004 of $19.3 million. For the full year 2005, PMI Australia reported net income of $88.5 million compared to $76.3 million for the full year 2004 representing an increase of 16.0% year-over-year. The increases were due primarily to increases in premiums earned, higher investment income and the appreciation of the Australian Dollar relative to the U.S. dollar.

-- PMI Europe reported net income for the quarter and full year of 2005 of $1.6 million and $9.8 million, respectively, compared to $3.5 million and $17.3 million for the same periods a year ago. The decreases in the fourth quarter and full year 2005 were due principally from higher profit sharing commissions related to the continued favorable credit performance of the R&SA portfolio.

-- PMI's Hong Kong gross reinsurance premiums written for the full year 2005 totaled $18.4 million compared to $12.8 million for the same period a year ago, an increase of 43.8%. The increase was due primarily to increased policy writings as a result of higher mortgage market volume and increased market penetration.

Financial Guaranty

-- Equity in earnings from FGIC grew for the fourth quarter and full year 2005 to $18.0 million (after tax) and $69.1 million (after tax), respectively, compared to $13.5 million (after tax) and $56.6 million (after tax) for the same periods a year ago. The increases were due to higher premiums earned and higher investment income partially offset by an increase in reserves related to Hurricane Katrina in the third quarter of 2005.

-- Equity in earnings from RAM Re for the fourth quarter and full year 2005 were $1.3 million (after tax) and $3.1 million (after tax), respectively, compared to $1.0 million (after tax) and $4.1 million (after tax) for the same periods a year ago.

Other

-- As previously reported by the Company, on October 4, 2005 the Company completed the sale of all outstanding stock of SPS to Credit Suisse First Boston (USA). In the fourth quarter of 2004, the Company signed a letter of intent granting Credit Suisse First Boston (USA) an option to buy 100% of the outstanding stock of SPS from the Company. As a result of this agreement, the Company incurred a $13.3 million (after tax) realized capital loss on its investment in SPS for the fourth quarter of 2004.

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

(2) "International Operations" includes the results of PMIAustralia, PMI Europe and the results of operations from the Hong Kongbranch operations.

(3) "Financial Guaranty" includes the results of the FinancialGuaranty Insurance Company, Inc. (FGIC) with which The PMI Group, Inc.has an equity ownership interest of 42.0% and results from the RAMReinsurance Group of Companies (RAM Re), a financial guarantyreinsurer based in Bermuda.

(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. In the fourthquarter of 2004 the Company incurred a $13.3 million (after tax)realized capital loss related to SPS.

ABOUT THE PMI GROUP, INC.

The PMI Group, Inc. (NYSE:PMI) headquartered in Walnut Creek,California is an international provider of credit enhancement productsthat promote 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 as well as financial guaranty insurance andreinsurance.

The Company is an advocate of affordable housing and supports anumber of organizations that foster greater access to affordablehousing. The Company's approach to affordable housing lending is todevelop products and services that assist responsible borrowers whomay not qualify for mortgage loans under traditional underwritingpractices.

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, 2004 and our Form 10-Q for thequarter ended September 30, 2005 and include changes in economicconditions such as interest rates, home values, employment rates andrefinance activity. We undertake no obligation to updateforward-looking statements.

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

FINANCIAL RESULTS AND STATISTICAL INFORMATION
FOR THE PERIOD ENDED DECEMBER 31, 2005

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

Consolidated Statements of Operations and Balance Sheets

Business Segments Results of Operations -- Three Months Ended December
31, 2005 and 2004

Business Segments Results of Operations -- Year Ended December 31,
2005 and 2004

Business Segments Balance Sheets

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

U.S. Mortgage Insurance Operations Financial and Statistical
Information

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

Appendix A - PMI Australia Quarterly Financial Information

Appendix B - PMI Europe Quarterly Financial Information

Appendix C - Business Segments Results of Operations by Quarter

Appendix C - Business Segments Results of Operations by Quarter
(Continued)


Please refer to the following when noted:

(1) For year ended December 31, 2005, the Company's equity in earnings
from unconsolidated subsidiaries include FGIC Corporation, CMG
Mortgage Insurance Company ("CMG"), RAM Reinsurance Company, Ltd.
("RAM Re"), other limited partnership interests and the trust
subsidiary that issued the Company's preferred securities. As of
December 31, 2004, the equity investment in SPS Holding Corp.
("SPS") was reclassified from investments in unconsolidated
subsidiaries to an equity investment held for sale. Effective
January 1, 2005, SPS's equity earnings are reported in other
income.

(2) In the fourth quarter of 2004, the Company recorded a write-down
of its equity investment in SPS for $20.4 million (pre-tax). The
write-down was recorded as a realized capital loss on its equity
investment due to the Company's decision to sell SPS.

(3) The $2.6 million refund relates to the settlement in 2001 of the
Baynham class action litigation.

(4) The operating results, assets and liabilities of American Pioneer
Title Insurance Company ("APTIC") were reflected as discontinued
operations in the fourth quarter of 2003 with prior period
financial information reclassified accordingly. The Company
completed its sale of APTIC in March 2004 and recorded a gain on
sale of discontinued operations of $30.1 million, net of $17.1
million of income tax expense. In December 2004, the Company
reduced its gain on sale of APTIC by $1.1 million after tax
related to the true-up of the Company's pension liability due to
settlement accounting triggered by the sale of APTIC.

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

(6) International Operations include PMI Australia, PMI Europe and the
Company's Hong Kong branch's results of operations.

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

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

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

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

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

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 Year Ended December
December 31, 31,
------------------- -----------------------
2005 2004 2005 2004
--------- --------- ----------- -----------
(Dollars and shares, except per share data,
in thousands)

Net premiums written $246,100 $200,103 $845,689 $771,362
========= ========= =========== ===========

Revenues
Premiums earned $206,577 $202,312 $817,602 $770,399
Net investment income 45,499 42,991 179,463 168,609
Equity in earnings from
unconsolidated
subsidiaries(1) 25,871 19,750 97,885 83,554
Net realized investment
gains (losses) 153 (275) 2,050 2,621
Realized capital loss on
equity investment held
for sale(2) - (20,420) - (20,420)
Other income 5,058 8,404 20,783 33,473
--------- --------- ----------- -----------
Total revenues 283,158 252,762 1,117,783 1,038,236
--------- --------- ----------- -----------

Losses and expenses
Losses and loss
adjustment expenses 64,760 60,092 257,779 237,282
Amortization of deferred
policy acquisition costs 17,387 19,650 74,387 85,216
Other underwriting and
operating expenses 59,074 57,765 213,649 204,695
Legal settlement
refund(3) - - - (2,574)
Interest expense 4,654 8,652 31,137 34,626
--------- --------- ----------- -----------
Total losses and
expenses 145,875 146,159 576,952 559,245
--------- --------- ----------- -----------

Income from continuing
operations before income
taxes 137,283 106,603 540,831 478,991
Income taxes from
continuing operations 29,568 24,952 131,662 112,459
--------- --------- ----------- -----------
Income from continuing
operations after income
taxes 107,715 81,651 409,169 366,532
--------- --------- ----------- -----------

Income from discontinued
operations before income
taxes(4) - - - 5,756
Income taxes from
discontinued operations(4) - - - 1,958
--------- --------- ----------- -----------
Income from discontinued
operations after income
taxes(4) - - - 3,798
--------- --------- ----------- -----------

Gain on sale of
discontinued operations,
net of income taxes of
$16,536(4) - (1,105) - 29,003
--------- --------- ----------- -----------

Net income $107,715 $80,546 $409,169 $399,333
========= ========= =========== ===========

Reconciliation of earnings
per share
Net income $107,715 $80,546 $409,169 $399,333
Plus: Interest expense on
contingently convertible
debt, net of income
taxes 1,912 1,920 7,648 7,685
--------- --------- ----------- -----------

Net income adjusted for
diluted earnings per share
calculation $109,627 $82,466 $416,817 $407,018
========= ========= =========== ===========

Common share data:
Basic weighted average
common shares
outstanding 89,247 94,837 91,738 95,452
Stock options and other
dilutive components 1,789 1,446 1,729 1,626
Common stock equivalent
shares related to
contingently convertible
debt 8,153 8,153 8,153 8,153
--------- --------- ----------- -----------

Diluted weighted average
common shares outstanding 99,189 104,436 101,620 105,231
========= ========= =========== ===========

Per share data:
Diluted net income from
continuing operations
per share $1.11 $0.80 $4.10 $3.55
Income from discontinued
operations after income
taxes - - - 0.04
Gain on sale of
discontinued operations,
net of income taxes - (0.01) - 0.28
--------- --------- ----------- -----------

Diluted net income per
share $1.11 $0.79 $4.10 $3.87
========= ========= =========== ===========

----------------------------------------------------------------------
Share repurchase data:
Common shares repurchased 1,100 1,484 6,292 2,470
========= ========= =========== ===========

Average price paid per
common share repurchased
(including commissions) $40.47 $40.61 $39.74 $40.63
========= ========= =========== ===========
----------------------------------------------------------------------

----------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
December December
31, 31,
2005 2004
----------- -----------
(Dollars in thousands,
except per share data)
Assets
Cash and investments, at
fair value $3,789,432 $3,621,550
Investments in
unconsolidated
subsidiaries(1) 984,925 911,604
Equity investment held
for sale(2) - 109,519
Related party receivables 2,864 18,439
Reinsurance receivables,
reinsurance recoverables
and prepaid premiums 30,338 49,657
Deferred policy
acquisition costs 86,170 92,438
Other assets 360,407 342,760
----------- -----------
Total assets $5,254,136 $5,145,967
=========== ===========

Liabilities
Reserve for losses and
loss adjustment expenses $368,841 $364,847
Unearned premiums 490,899 484,815
Long-term debt 819,529 819,529
Other liabilities 344,077 339,021
----------- -----------
Total liabilities 2,023,346 2,008,212

Shareholders' equity 3,230,790 3,137,755
----------- -----------

Total liabilities
and shareholders'
equity $5,254,136 $5,145,967
=========== ===========

Basic shares issued and
outstanding (shares in
thousands) 88,713 94,025
=========== ===========

Book value per share $36.42 $33.37
=========== ===========




THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
BUSINESS SEGMENTS RESULTS OF OPERATIONS
----------------------------------------------------------------------
U.S.
Mortgage Inter-
Insurance national Financial Consol-
Operations Operations Guaranty idated
(5) (6) (7) Other (8) Total
----------------------------------------------------
Three Months Ended December 31, 2005
----------------------------------------------------
(Dollars in thousands)

Net premiums
written $201,160 $44,913 $- $27 $246,100
========== ============ ======== ========= =========

Revenues
Premiums earned $166,778 $39,781 $- $18 $206,577
Net investment
income 26,168 14,499 - 4,832 45,499
Equity in
earnings
(losses) from
unconsolidated
subsidiaries(1) 4,583 - 21,453 (165) 25,871
Net realized
investment gains
(losses) 378 (221) - (4) 153
Other income
(loss) (3) 778 - 4,283 5,058
---------- ------------ -------- --------- ---------
Total revenues 197,904 54,837 21,453 8,964 283,158
---------- ------------ -------- --------- ---------

Losses and
expenses
Losses and loss
adjustment
expenses 63,159 1,601 - - 64,760
Amortization of
deferred policy
acquisition
costs 14,113 3,274 - - 17,387
Other
underwriting and
operating
expenses 29,057 12,663 - 17,354 59,074
Interest expense 1 9 - 4,644 4,654
---------- ------------ -------- --------- ---------
Total losses
and expenses 106,330 17,547 - 21,998 145,875
---------- ------------ -------- --------- ---------

Income (loss)
before income
taxes 91,574 37,290 21,453 (13,034) 137,283
Income tax
(benefit) 21,696 10,251 2,208 (4,587) 29,568
---------- ------------ -------- --------- ---------

Net income (loss) $69,878 $27,039 $19,245 $(8,447) $107,715
========== ============ ======== ========= =========

Expense ratio(9) 21.5% 35.5%
Loss ratio(9) 37.9% 4.0%
Combined ratio 59.4% 39.5%


Three Months Ended December 31, 2004
----------------------------------------------------
(Dollars in thousands)

Net premiums
written $153,916 $46,156 $- $31 $200,103
========== ============ ======== ========= =========

Revenues
Premiums earned $168,313 $33,979 $- $20 $202,312
Net investment
income 25,496 12,789 - 4,706 42,991
Equity in
earnings from
unconsolidated
subsidiaries(1) 4,569 - 16,156 (975) 19,750
Net realized
investment
losses (12) (263) - - (275)
Realized capital
loss on equity
investment held
for sale(2) - - - (20,420) (20,420)
Other income 15 3,044 - 5,345 8,404
---------- ------------ -------- --------- ---------
Total revenues 198,381 49,549 16,156 (11,324) 252,762
---------- ------------ -------- --------- ---------

Losses and
expenses
Losses and loss
adjustment
expenses 58,355 1,737 - - 60,092
Amortization of
deferred policy
acquisition
costs 16,585 3,065 - - 19,650
Other
underwriting and
operating
expenses 27,258 10,235 - 20,272 57,765
Legal settlement
refund(3) - - - - -
Interest expense 12 - - 8,640 8,652
---------- ------------ -------- --------- ---------
Total losses
and expenses 102,210 15,037 - 28,912 146,159
---------- ------------ -------- --------- ---------

Income (loss) from
continuing
operations before
income taxes 96,171 34,512 16,156 (40,236) 106,603
Income taxes
(benefits) from
continuing
operations 26,328 10,274 1,689 (13,339) 24,952
---------- ------------ -------- --------- ---------

Income (loss) from
continuing
operations after
income taxes 69,843 24,238 14,467 (26,897) 81,651
---------- ------------ -------- --------- ---------

Loss on sale of
discontinued
operations, net
of tax benefit(4) - - - (1,105) (1,105)
---------- ------------ -------- --------- ---------

Net income (loss) $69,843 $24,238 $14,467 $(28,002) $80,546
========== ============ ======== ========= =========


Expense ratio(9) 28.5% 28.8%
Loss ratio(9) 34.7% 5.1%
Combined ratio 63.2% 33.9%




THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
BUSINESS SEGMENTS RESULTS OF OPERATIONS
----------------------------------------------------------------------
U.S.
Mortgage Inter-
Insurance national Financial Consol-
Operations Operations Guaranty idated
(5) (6) (7) Other (8) Total
---------------------------------------------------
Year Ended December 31, 2005
---------------------------------------------------
(Dollars in thousands)

Net premiums
written $667,128 $178,481 $- $80 $845,689
========== ========== ======== ========= ==========

Revenues
Premiums earned $665,190 $152,336 $- $76 $817,602
Net investment
income 104,339 57,155 - 17,969 179,463
Equity in earnings
(loss) from
unconsolidated
subsidiaries(1) 18,811 - 79,752 (678) 97,885
Net realized
investment gains
(losses) 4,563 75 - (2,588) 2,050
Other income
(loss) (1) 2,825 - 17,959 20,783
---------- ---------- -------- --------- ----------
Total revenues 792,902 212,391 79,752 32,738 1,117,783
---------- ---------- -------- --------- ----------

Losses and expenses
Losses and loss
adjustment
expenses 253,440 4,339 - - 257,779
Amortization of
deferred policy
acquisition costs 59,647 14,740 - - 74,387
Other underwriting
and operating
expenses 103,149 41,855 - 68,645 213,649
Interest expense 6 8 - 31,123 31,137
---------- ---------- -------- --------- ----------
Total losses and
expenses 416,242 60,942 - 99,768 576,952
---------- ---------- -------- --------- ----------

Income (loss)
before income
taxes 376,660 151,449 79,752 (67,030) 540,831
Income taxes
(benefits) 101,221 45,996 7,553 (23,108) 131,662
---------- ---------- -------- --------- ----------

Net income (loss) $275,439 $105,453 $72,199 $(43,922) $409,169
========== ========== ======== ========= ==========

Expense ratio(9) 24.4% 31.7%
Loss ratio(9) 38.1% 2.8%
Combined ratio 62.5% 34.5%


Year Ended December 31, 2004
---------------------------------------------------
(Dollars in thousands)

Net premiums
written $598,119 $173,178 $- $65 $771,362
========== ========== ======== ========= ==========

Revenues
Premiums earned $634,004 $136,321 $- $74 $770,399
Net investment
income 102,230 47,091 - 19,288 168,609
Equity in earnings
from
unconsolidated
subsidiaries(1) 15,280 - 67,844 430 83,554
Net realized
investment gains
(losses) 2,582 595 - (556) 2,621
Realized capital
loss on equity
investment held
for sale(2) - - - (20,420) (20,420)
Other income 47 7,342 - 26,084 33,473
---------- ---------- -------- --------- ----------
Total revenues 754,143 191,349 67,844 24,900 1,038,236
---------- ---------- -------- --------- ----------

Losses and expenses
Losses and loss
adjustment
expenses 233,157 4,125 - - 237,282
Amortization of
deferred policy
acquisition costs 72,129 13,087 - - 85,216
Other underwriting
and operating
expenses 101,387 31,388 - 71,920 204,695
Legal settlement
refund(3) (2,574) - - - (2,574)
Interest expense 62 73 - 34,491 34,626
---------- ---------- -------- --------- ----------
Total losses and
expenses 404,161 48,673 - 106,411 559,245
---------- ---------- -------- --------- ----------

Income (loss) from
continuing
operations before
income taxes 349,982 142,676 67,844 (81,511) 478,991
Income taxes
(benefits) from
continuing
operations 95,467 42,761 7,142 (32,911) 112,459
---------- ---------- -------- --------- ----------
Income (loss) from
continuing
operations after
income taxes 254,515 99,915 60,702 (48,600) 366,532
---------- ---------- -------- --------- ----------

Income from
discontinued
operations before
taxes(4) - - - 5,756 5,756
Income taxes from
discontinued
operations(4) - - - 1,958 1,958
---------- ---------- -------- --------- ----------
Income from
discontinued
operations after
income taxes(4) - - - 3,798 3,798
---------- ---------- -------- --------- ----------

Gain on sale of
discontinued
operations, net of
income taxes(4) - - - 29,003 29,003
---------- ---------- -------- --------- ----------

Net income (loss) $254,515 $99,915 $60,702 $(15,799) $399,333
========== ========== ======== ========= ==========

Expense ratio(9) 28.5% 25.7%
Loss ratio(9) 36.8% 3.0%
Combined ratio 65.3% 28.7%




THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
BUSINESS SEGMENTS BALANCE SHEETS
----------------------------------------------------------------------
U.S.
Mortgage Inter-
Insurance national Financial Consol-
Operations Operations Guaranty idated
(5) (6) (7) Other (8) Total
-------------------------------------------------------
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
unconsol-
idated
subsid-
iaries(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 share-
holders'
equity $2,521,475 $1,162,387 $836,752 $733,522 $5,254,136
=========== =========== ========= ========= ===========


December 31, 2004
-------------------------------------------------------
(Dollars in thousands)
Assets
Cash and
investments,
at fair
value $2,132,300 $1,030,751 $- $458,499 $3,621,550
Investments in
unconsol-
idated
subsid-
iaries(1) 112,456 - 774,880 24,268 911,604
Equity
investment
held for
sale(2) - - - 109,519 109,519
Related party
receivables 1,633 - - 16,806 18,439
Reinsurance
receivables,
recoverables
and prepaid
premiums 31,110 18,547 - - 49,657
Deferred
policy
acquisition
costs 53,998 38,440 - - 92,438
Other assets 208,806 26,460 - 107,494 342,760
----------- ----------- --------- --------- -----------
Total assets $2,540,303 $1,114,198 $774,880 $716,586 $5,145,967
=========== =========== ========= ========= ===========

Liabilities
Reserve for
losses and
loss
adjustment
expenses $338,620 $26,224 $- $3 $364,847
Unearned
premiums 152,685 332,091 - 39 484,815
Long-term debt - - - 819,529 819,529
Other
liabilities 237,431 71,740 12,424 17,426 339,021
----------- ----------- --------- --------- -----------
Total
liabilities 728,736 430,055 12,424 836,997 2,008,212

Shareholders'
equity 1,811,567 684,143 762,456 (120,411) 3,137,755
----------- ----------- --------- --------- -----------

Total
liabilities
and share-
holders'
equity $2,540,303 $1,114,198 $774,880 $716,586 $5,145,967
=========== =========== ========= ========= ===========




THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
U.S. MORTGAGE INSURANCE OPERATIONS(5) ANALYSIS OF RESERVE FOR LOSSES
AND LAE
----------------------------------------------------------------------

December 31, 2005 September 30, 2005 December 31, 2004
------------------ ------------------- -------------------
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 42,702 $307,066 38,146 $302,925 39,054 $306,023
Pool
insurance 20,379 38,470 19,037 39,249 17,186 32,597
------- --------- --------- --------- --------- ---------
Total 63,081 $345,536 57,183 $342,174 56,240 $338,620
======= ========= ========= ========= ========= =========

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

December September
31, 30, Reserve
2005 2005 Change
--------- --------- ---------
(Dollars in thousands)
Gross reserve for losses and LAE:
Primary insurance $307,066 $302,925 $4,141
Pool insurance 38,470 39,249 (779)
--------- --------- ---------
Total gross reserve for losses and
LAE 345,536 342,174 3,362

Ceded reserve for losses:
Primary insurance (2,422) (2,595) 173
Pool insurance (55) (89) 34
--------- --------- ---------
Total ceded reserve for losses (2,477) (2,684) 207
--------- --------- ---------

Net reserve for losses and LAE $343,059 $339,490 $3,569
========= ========= =========

----------------------------------------------------------------------
U.S. MORTGAGE INSURANCE OPERATIONS(5) FINANCIAL AND STATISTICAL
INFORMATION
----------------------------------------------------------------------

Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------

Flow insurance written (in
millions) $6,625 $8,259 $28,194 $36,257
Structured transactions
insurance written (in
millions) 2,751 2,260 7,740 4,956
--------- --------- --------- ---------
Primary new insurance written
(in millions) $9,376 $10,519 $35,934 $41,213
========= ========= ========= =========

Primary new risk written (in
millions) $2,392 $2,741 $9,237 $10,680

Pool new insurance written (in
millions)(10) $4,369 $3,043 $14,062 $10,454

Pool new risk written (in
millions)(10) $102 $84 $327 $251

Product mix as a % of new
insurance written:
Above 97% LTV's 13% 15% 13% 12%
90.01% to 95% LTV's 21% 26% 24% 30%
85.01% to 90% LTV's 44% 36% 43% 38%
90.01% to 95% LTV's with
greater than/= 30% coverage 17% 22% 20% 25%
85.01% to 90% LTV's with
greater than/= 25% coverage 38% 31% 37% 32%
ARMs 36% 33% 33% 25%
Monthlies 85% 98% 94% 98%
Refinances 37% 33% 36% 32%
Structured transactions 29% 21% 22% 12%

Premiums written (in
thousands):
Gross premiums written $246,432 $197,953 $849,209 $767,399
Ceded premiums, net of
assumed premiums (41,450) (40,613) (167,778) (155,274)
Refunded premiums (3,822) (3,424) (14,303) (14,006)
--------- --------- --------- ---------
Net premiums written 201,160 153,916 667,128 598,119
Change in unearned premiums (34,382) 14,397 (1,938) 35,885
--------- --------- --------- ---------
Net premiums earned $166,778 $168,313 $665,190 $634,004
========= ========= ========= =========


THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
U.S. MORTGAGE INSURANCE OPERATIONS(5) FINANCIAL AND STATISTICAL
INFORMATION
----------------------------------------------------------------------
12/31/2005 9/30/2005 6/30/2005
------------ ----------- -----------
Primary insurance in force (in
millions)
Flow $ 86,991 $ 88,433 $ 89,965
Structured transactions 14,099 12,788 13,469
------------ ----------- -----------
Total $ 101,090 $ 101,221 $ 103,434
============ =========== ===========

Primary risk in force (in
millions)
Flow $ 21,644 $ 21,981 $ 22,296
Structured transactions 3,584 3,167 3,296
------------ ----------- -----------
Total $ 25,228 $ 25,148 $ 25,592
============ =========== ===========

Pool risk in force
(in millions)(10) $ 2,589 $ 2,530 $ 2,445

Primary risk in force -- credit
score distribution
Flow 620 or above 93.0% 92.7% 92.4%
619-575 5.5% 5.7% 5.9%
574 or below 1.5% 1.6% 1.7%

Structured
transactions 620 or above 76.9% 73.9% 71.7%
619-575 14.5% 16.0% 17.4%
574 or below 8.6% 10.1% 10.9%

Total 620 or above 90.7% 90.3% 89.7%
619-575 6.8% 7.0% 7.4%
574 or below 2.5% 2.7% 2.9%

Primary average loan size (in
thousands)
Flow $ 134.5 $ 133.3 $ 132.2
Structured transactions $ 145.4 $ 139.5 $ 139.8
Total $ 136.0 $ 134.1 $ 133.2

Loss severity -- primary
(quarterly)
Flow 95.6% 84.0% 83.8%
Structured transactions 93.1% 89.6% 87.7%
Total 95.0% 85.2% 84.6%

Persistency 61.9% 61.2% 62.0%

Primary loans, defaults and
default rates
Primary policies in force 743,533 754,934 776,721

Primary loans in default 42,702 38,146 35,030

Primary default rate 5.74% 5.05% 4.51%
Structured transactions only
default rate 9.85% 10.09% 8.54%
Pool default rate 6.84% 6.34% 5.65%

Claims paid (year-to-date in
thousands)
Primary claims paid -- flow $ 165.8 $ 126.6 $ 87.8
Primary claims paid -- structured
transactions 49.1 36.8 25.4
------------ ----------- -----------
Total primary claims paid 214.9 163.4 113.2
Total pool and other 20.1 15.0 9.6
------------ ----------- -----------
Total claims paid $ 235.0 $ 178.4 $ 122.8
============ =========== ===========


Number of primary claims paid
(year-to-date) 9,262 7,124 4,934

Average primary claim size (year-
to-date in thousands) $ 23.2 $ 22.9 $ 22.9

Captive reinsurance arrangements
(year-to-date)
Percentage of flow NIW subject to
captive reinsurance arrangements 69.0% 68.0% 65.0%
Percentage of primary NIW subject
to captive reinsurance
arrangements 54.7% 55.7% 50.7%
Percentage of primary IIF subject
to captive reinsurance
arrangements 53.4% 53.2% 52.1%
Percentage of primary RIF subject
to captive reinsurance
arrangements 53.8% 53.9% 52.9%

Risk-to-capital ratio (11) 8.3 to 1 8.1 to 1 8.4 to 1



3/31/2005 12/31/2004
------------ ------------

Primary insurance in force (in
millions)
Flow $ 91,399 $ 93,263
Structured transactions 12,598 12,058
------------ ------------
Total $ 103,997 $ 105,321
============ ============

Primary risk in force (in
millions)
Flow $ 22,541 $ 22,885
Structured transactions 2,966 2,773
------------ ------------
Total $ 25,507 $ 25,658
============ ============

Pool risk in force
(in millions)(10) $ 2,417 $ 2,408

Primary risk in force -- credit
score distribution
Flow 620 or above 92.2% 92.0%
619-575 6.1% 6.2%
574 or below 1.7% 1.8%

Structured
transactions 620 or above 66.9% 65.9%
619-575 20.2% 21.1%
574 or below 12.9% 13.0%

Total 620 or above 89.3% 89.2%
619-575 7.7% 7.8%
574 or below 3.0% 3.0%

Primary average loan size (in
thousands)
Flow $ 131.5 $ 131.3
Structured transactions $ 134.1 $ 129.8
Total $ 131.8 $ 131.1

Loss severity -- primary
(quarterly)
Flow 85.6% 84.9%
Structured transactions 90.9% 84.6%
Total 86.8% 84.8%

Persistency 60.8% 60.9%

Primary loans, defaults and
default rates
Primary policies in force 788,847 803,236

Primary loans in default 35,716 39,054

Primary default rate 4.53% 4.86%
Structured transactions only
default rate 8.17% 9.19%
Pool default rate 5.65% 5.51%

Claims paid (year-to-date in
thousands)
Primary claims paid -- flow $ 41.7 $ 141.3
Primary claims paid -- structured
transactions 13.8 51.9
------------ ------------
Total primary claims paid 55.5 193.2
Total pool and other 4.7 17.7
------------ ------------
Total claims paid $ 60.2 $ 210.9
============ ============


Number of primary claims paid
(year-to-date) 2,413 8,335

Average primary claim size (year-
to-date in thousands) $ 23.0 $ 23.2

Captive reinsurance arrangements
(year-to-date)
Percentage of flow NIW subject to
captive reinsurance arrangements 60.4% 62.8%
Percentage of primary NIW subject
to captive reinsurance
arrangements 47.1% 55.7%
Percentage of primary IIF subject
to captive reinsurance
arrangements 52.4% 52.0%
Percentage of primary RIF subject
to captive reinsurance
arrangements 53.5% 53.2%

Risk-to-capital ratio (11) 8.1 to 1 8.2 to 1



THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
CMG MORTGAGE INSURANCE COMPANY FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------
December September December
31, 30, 31,
2005 2005 2004
--------- --------- ---------

Primary new insurance written (year-to-
date in millions) $ 5,388 $ 4,234 $ 5,355
Primary insurance in force (in millions) $ 15,495 $ 15,358 $ 14,037
Primary risk in force (in millions) $ 3,666 $ 3,607 $ 3,219
Insured primary loans 111,472 111,217 105,568
Persistency 72.0% 70.2% 69.1%
Primary loans in default 907 632 666
Primary default rate 0.81% 0.57% 0.63%
Primary claims paid (year-to-date in
thousands) $ 4,827 $ 3,152 $ 5,111
Number of primary claims paid (year-to-
date) 222 149 244
Average primary claim size (year-to-date
in thousands) $ 21.7 $ 21.2 $ 20.9



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

December September December
31, 30, 31,
2005 2005 2004
--------- --------- ---------
Net premiums written (year-to-date in
thousands) $151,882 $112,320 $151,164
Premiums earned (year-to-date in
thousands) $123,781 $ 91,096 $109,071
Flow insurance written (year-to-date in
millions) $ 18,321 $ 13,648 $ 19,540
RMBS insurance written (year-to-date in
millions) 10,671 9,484 14,669
--------- --------- ---------
New insurance written (year-to-date in
millions) $ 28,992 $ 23,132 $ 34,209
========= ========= =========

Insurance in force (in millions) $119,915 $124,014 $113,628
Risk in force (in millions) $108,751 $113,028 $103,135
Policies in force 981,732 994,330 926,073
Loans in default 1,264 1,007 751
Default rate 0.13% 0.10% 0.08%
Claims paid (year-to-date in thousands) $ 3,261 $ 1,807 $ 1,111
Number of claims paid (year-to-date) 93 56 65
Average claim size (year-to-date in
thousands) $ 35.1 $ 32.3 $ 17.1



----------------------------------------------------------------------
PMI EUROPE FINANCIAL AND STATISTICAL INFORMATION
----------------------------------------------------------------------
December September December
31, 30, 31,
2005 2005 2004
--------- --------- ---------
Net premiums written (year-to-date in
thousands) $ 8,921 $ 5,444 $ 9,568
Premiums earned (year-to-date in
thousands) $ 17,507 $ 13,083 $ 20,944
New insurance written (year-to-date in
millions) $ 33 $ - $ -
New credit default swaps written (year-
to-date in millions) $ 514 $ 514 $ 2,603
New reinsurance written (year-to-date in
millions) $ 6,215 $ 2,992 $ -
Insurance in force (in millions) $ 38,443 $ 34,501 $ 34,332
Risk in force (in millions) $ 2,776 $ 2,894 $ 2,747
Claims paid including credit default
swaps (year-to-date in thousands) $ 2,761 $ 1,685 $ 979



THE PMI GROUP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------
APPENDIX A -- PMI AUSTRALIA QUARTERLY FINANCIAL INFORMATION
----------------------------------------------------------------------

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

------------------------------------------------
2004
-----------------------------------------------
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- -----------
(Australian $ in thousands,
unless otherwise noted)
Income Statement
Components -- Quarter
Ended

Premiums earned $ 35,819 $ 37,109 $ 37,308 $ 37,790
Net investment income $ 14,087 $ 13,098 $ 12,677 $ 12,139
Change in fair value
of foreign currency
put options $ (228) $ (1,890) $ 1,311 $ -
Total expenses $ 13,624 $ 13,413 $ 12,799 $ 12,030
Net income $ 25,447 $ 24,725 $ 26,832 $ 26,518

Net income (U.S. $ in
thousands) $ 19,272 $ 17,554 $ 19,219 $ 20,265

Balance Sheet
Components

Assets

Cash and investments,
at fair value $1,027,236 $ 973,479 $ 924,330 $ 892,864
Total assets $1,116,874 $1,068,080 $1,013,102 $ 976,723

Liabilities and
Shareholder's Equity

Reserve for losses and
LAE $ 12,547 $ 13,692 $ 13,556 $ 13,537
Unearned premiums $ 378,981 $ 364,120 $ 346,748 $ 330,477
Shareholder's equity $ 673,124 $ 642,585 $ 607,781 $ 586,842



THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
APPENDIX B -- 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)
Total 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

-----------------------------------------------
2004
-----------------------------------------------
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- -----------
(Euro EUR in thousands, unless otherwise noted)

Income Statement
Components -- Quarter
Ended

Premiums earned EUR 4,140 EUR 4,233 EUR 4,172 EUR 4,295
Net investment income EUR 1,435 EUR 2,294 EUR 1,642 EUR 2,198
Change in fair value
of foreign currency
put options EUR (6) EUR (96) EUR (18) EUR -
Total expenses EUR 3,679 EUR 1,476 EUR 1,462 EUR 1,768
Net income EUR 2,703 EUR 3,942 EUR 3,535 EUR 3,781

Net income (U.S. $ in
thousands) $ 3,489 $ 4,822 $ 4,260 $ 4,726

Balance Sheet
Components

Assets

Cash and investments,
at fair value EUR 169,165 EUR 164,558 EUR 161,129 EUR 162,621
Total assets EUR 179,134 EUR 175,731 EUR 172,402 EUR 170,600

Liabilities and
Shareholder's Equity

Reserve for losses and
LAE EUR 12,126 EUR 10,656 EUR 10,497 EUR 10,031
Unearned premiums EUR 26,859 EUR 29,363 EUR 31,748 EUR 33,903
Shareholder's equity EUR 121,494 EUR 117,142 EUR 111,691 EUR 109,386


THE PMI GROUP, INC. AND SUBSIDIARIES

----------------------------------------------------------------------
APPENDIX C -- BUSINESS SEGMENTS RESULTS OF OPERATIONS BY QUARTER
----------------------------------------------------------------------
2005
-----------------------------------------------
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- -----------
(Dollars in thousands)

U.S. Mortgage Insurance
Operations (5)
----------------------------------------------------------------------

Net premiums written $ 201,160 $ 158,866 $ 152,564 $ 154,538
=========== =========== =========== ===========
Revenues
Premiums earned $ 166,778 $ 166,052 $ 168,248 $ 164,112
Net investment income 26,168 25,046 27,546 25,579
Equity in earnings
from unconsolidated
subsidiaries (1) 4,583 5,217 4,937 4,074
Net realized
investment gains 378 2,597 1,167 420
Other income (loss) (3) 3 (5) 4
----------- ----------- ----------- -----------
Total revenues 197,904 198,915 201,893 194,189
----------- ----------- ----------- -----------
Losses and expenses
Losses and loss
adjustment expenses 63,159 61,667 65,496 63,118
Amortization of
deferred policy
acquisition costs 14,113 14,478 15,030 16,026
Other underwriting
and operating
expenses 29,057 25,260 25,278 23,554
Interest expense 1 3 - 1
----------- ----------- ----------- -----------
Total losses and
expenses 106,330 101,408 105,804 102,699
----------- ----------- ----------- -----------
Income before income
taxes 91,574 97,507 96,089 91,490
Income taxes 21,696 27,977 26,400 25,149
----------- ----------- ----------- -----------
Net income $ 69,878 $ 69,530 $ 69,689 $ 66,341
=========== =========== =========== ===========
International
Operations (6)
----------------------------------------------------------------------

Net premiums written $ 44,913 $ 47,197 $ 47,185 $ 39,185
=========== =========== =========== ===========
Revenues
Premiums earned $ 39,781 $ 38,979 $ 38,141 $ 35,435
Net investment income 14,499 14,844 14,058 13,756
Net realized
investment gains
(losses) (221) (27) (18) 340
Other income (loss) 778 1,287 873 (113)
----------- ----------- ----------- -----------
Total revenues 54,837 55,083 53,054 49,418
----------- ----------- ----------- -----------
Losses and expenses
Losses and loss
adjustment expenses 1,601 (365) 1,739 1,363
Amortization of
deferred policy
acquisition costs 3,274 3,269 3,779 4,417
Other underwriting
and operating
expenses 12,663 11,648 10,539 7,005
Interest expense 9 - - -
----------- ----------- ----------- -----------
Total losses and
expenses 17,547 14,552 16,057 12,785
----------- ----------- ----------- -----------
Income before income
taxes 37,290 40,531 36,997 36,633
Income taxes 10,251 12,514 11,747 11,485
----------- ----------- ----------- -----------

Net income $ 27,039 $ 28,017 $ 25,250 $ 25,148
=========== =========== =========== ===========

Financial Guaranty (7)
----------------------------------------------------------------------

Equity in earnings from
unconsolidated
subsidiaries (1) $ 21,453 $ 13,691 $ 23,761 $ 20,846
Income taxes 2,208 1,135 2,254 1,956
----------- ----------- ----------- -----------
Net income $ 19,245 $ 12,556 $ 21,507 $ 18,890
=========== =========== =========== ===========

Other (8)
----------------------------------------------------------------------

Net premiums written $ 27 $ 19 $ 13 $ 23
=========== =========== =========== ===========
Revenues
Premiums earned $ 18 $ 19 $ 19 $ 20
Net investment income 4,832 4,537 4,143 4,455
Equity in earnings
(losses) from
unconsolidated
subsidiaries (1) (165) (388) (416) 292
Net realized
investment gains
(losses) (4) (2,897) 354 (39)
Other income 4,283 2,649 5,383 5,644
----------- ----------- ----------- -----------
Total revenues 8,964 3,920 9,483 10,372
----------- ----------- ----------- -----------
Losses and expenses
Other underwriting
and operating
expenses 17,354 17,607 18,600 15,086
Interest expense 4,644 8,455 8,472 9,552
----------- ----------- ----------- -----------
Total losses and
expenses 21,998 26,062 27,072 24,638
----------- ----------- ----------- -----------
Loss before income tax
benefits (13,034) (22,142) (17,589) (14,266)
Income tax benefits (4,587) (7,750) (5,728) (5,045)
----------- ----------- ----------- -----------

Net loss $ (8,447) $ (14,392) $ (11,861) $ (9,221)
=========== =========== =========== ===========


2004
-----------------------------------------------
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- -----------
(Dollars in thousands)

U.S. Mortgage Insurance
Operations (5)
----------------------------------------------------------------------

Net premiums written $ 153,916 $ 143,732 $ 147,407 $ 153,064
=========== =========== =========== ===========
Revenues
Premiums earned $ 168,313 $ 162,276 $ 154,392 $ 149,023
Net investment income 25,496 24,332 27,944 24,458
Equity in earnings
from unconsolidated
subsidiaries (1) 4,569 3,707 3,676 3,328
Net realized
investment gains
(losses) (12) 1,672 (166) 1,087
Other income (loss) 15 (24) (25) 81
----------- ----------- ----------- -----------
Total revenues 198,381 191,963 185,821 177,977
----------- ----------- ----------- -----------
Losses and expenses
Losses and loss
adjustment expenses 58,355 60,092 55,755 58,956
Amortization of
deferred policy
acquisition costs 16,585 18,003 18,109 19,433
Other underwriting
and operating
expenses 27,258 23,100 24,888 26,137
Legal settlement
refund (3) - (2,574) - -
Interest expense 12 13 17 21
----------- ----------- ----------- -----------
Total losses and
expenses 102,210 98,634 98,769 104,547
----------- ----------- ----------- -----------
Income before income
taxes 96,171 93,329 87,052 73,430
Income taxes 26,328 25,528 23,790 19,822
----------- ----------- ----------- -----------
Net income $ 69,843 $ 67,801 $ 63,262 $ 53,608
=========== =========== =========== ===========

International
Operations (6)
----------------------------------------------------------------------

Net premiums written $ 46,156 $ 43,238 $ 43,460 $ 40,323
=========== =========== =========== ===========
Revenues
Premiums earned $ 33,979 $ 32,829 $ 33,255 $ 36,259
Net investment income 12,789 11,848 10,646 11,807
Net realized
investment gains
(losses) (263) 256 377 225
Other income 3,044 296 2,399 1,602
----------- ----------- ----------- -----------
Total revenues 49,549 45,229 46,677 49,893
----------- ----------- ----------- -----------
Losses and expenses
Losses and loss
adjustment expenses 1,737 746 777 864
Amortization of
deferred policy
acquisition costs 3,065 3,225 3,135 3,662
Other underwriting
and operating
expenses 10,235 7,346 6,940 6,867
Interest expense - 12 60 1
----------- ----------- ----------- -----------
Total losses and
expenses 15,037 11,329 10,912 11,394
----------- ----------- ----------- -----------
Income before income
taxes 34,512 33,900 35,765 38,499
Income taxes 10,274 10,218 10,799 11,470
----------- ----------- ----------- -----------
Net income $ 24,238 $ 23,682 $ 24,966 $ 27,029
=========== =========== =========== ===========

Financial Guaranty (7)
----------------------------------------------------------------------

Equity in earnings from
unconsolidated
subsidiaries (1) $ 16,156 $ 17,061 $ 19,699 $ 14,928
Income taxes 1,689 1,820 2,220 1,413
----------- ----------- ----------- -----------
Net income $ 14,467 $ 15,241 $ 17,479 $ 13,515
=========== =========== =========== ===========

Other (8)
----------------------------------------------------------------------

Net premiums written $ 31 $ 9 $ 9 $ 17
=========== =========== =========== ===========
Revenues
Premiums earned $ 20 $ 18 $ 16 $ 20
Net investment income 4,706 5,775 5,032 3,776
Equity in earnings
(losses) from
unconsolidated
subsidiaries (1) (975) 353 210 842
Net realized
investment losses - (374) (143) (37)
Realized loss on
equity investment
held for sale (2) (20,420) - - -
Other income 5,345 6,146 7,424 7,168
----------------------- ----------- -----------
Total revenues (11,324) 11,918 12,539 11,769
----------------------- ----------- -----------
Losses and expenses
Other underwriting
and operating
expenses 20,272 16,545 17,790 17,316
Interest expense 8,640 8,612 8,745 8,493
----------- ----------- ----------- -----------
Total losses and
expenses 28,912 25,157 26,535 25,809
----------- ----------- ----------- -----------
Loss from continuing
operations before
income tax benefits (40,236) (13,239) (13,996) (14,040)
Income tax benefits
from continuing
operations (13,339) (9,158) (4,964) (5,451)
----------- ----------- ----------- -----------
Loss from continuing
operations after
income tax benefits (26,897) (4,081) (9,032) (8,589)
----------- ----------- ----------- -----------
Income from
discontinued
operations before
income taxes (4) - - - 5,756
Income taxes from
discontinued
operations (4) - - - 1,958
----------- ----------- ----------- -----------
Income from
discontinued
operations after
income taxes (4) - - - 3,798
----------- ----------- ----------- -----------
Gain on sale of
discontinued
operations, net of
income taxes (4) (1,105) - - 30,108
----------- ----------- ----------- -----------

Net income (loss) $ (28,002) $ (4,081) $ (9,032) $ 25,317
=========== =========== =========== ===========