The PMI Group, Inc. Reports Fourth Quarter and Year End 2007 Financial Results
The PMI Group, Inc. Reports Fourth Quarter and Year End 2007 Financial Results Monday March 17, 6:00 am ET
WALNUT CREEK, Calif., March 17 /PRNewswire-FirstCall/ -- The PMI Group, Inc. (NYSE: PMI - News; the "Company") today reported a net loss for the full year 2007 of $915.3 million, or $10.81 per basic and diluted(1) share. Net income for the full year 2006 was $419.7 million, or $4.57 per diluted share. The net loss for the fourth quarter 2007 was $1.0 billion or $12.51 per basic and diluted share(1), compared to net income in the fourth quarter 2006 of $100.5 million, or $1.19 per diluted share. The net loss for the fourth quarter of 2007 was primarily due to our equity in the losses from FGIC of $776.1 million (after tax) and a net loss of $236.0 million in the U.S. Mortgage Insurance Operations due to increases in paid claims, loss adjustment expenses and additions to the reserve for losses (collectively "Losses and LAE").
Key results include: -- U.S. Mortgage Insurance Operations(2) - The net loss was $236.0 million in the fourth quarter of 2007. During the fourth quarter, the Company added $434.8 million to the reserves for losses and loss adjustment expenses and paid $114.5 million in claims. Total revenues in the fourth quarter increased by approximately 9% compared to the fourth quarter of 2006, driven by strong growth in net premiums written and earned. Insurance in force at the end of 2007 was $123.6 billion, representing a 20% increase from one year ago. -- International Operations(3) - PMI Australia posted net income of $17.8 million in the fourth quarter of 2007 on higher premiums earned and net investment income, partially offset by higher Losses and LAE. Losses and LAE increased in the fourth quarter of 2007 to $29.4 million from $17.8 million in the fourth quarter 2006 due primarily to higher claim rates. PMI Europe reported a net loss of $29.6 million in the fourth quarter 2007, primarily as a result of increased Losses and LAE of $22.1 million and an unrealized $8.4 million (pre-tax) mark-to-market loss on credit default swaps related to European prime mortgage risks due to widening credit spreads. PMI Asia reported net income of $2.9 million fueled by strong growth in reinsurance premiums written compared to the fourth quarter 2006. -- Financial Guaranty(4) - equity in losses from FGIC for the fourth quarter of 2007 were $776.1 million (after tax), as a result of higher Losses and LAE and an unrealized mark-to-market loss related to its credit derivative portfolio. During the fourth quarter, the Company recorded an other than temporary impairment of its investment in Ram Re of $38.5 million (pre-tax).
Consolidated Operating Results
Consolidated net premiums written for the fourth quarter and full year totaled $263.5 million and $1.0 billion, respectively, compared with $235.5 million and $861.6 million for the same periods one year ago. The year over year increase was primarily due to increases in new insurance written in the U.S. Mortgage Insurance Operations and an increase in International Operations' net premiums written combined with favorable Australian foreign exchange rates.
Consolidated premiums earned for the fourth quarter and full year were $259.6 million and $995.2 million, respectively, compared with $225.7 million and $860.5 million for the same periods one year ago. The increases were due primarily to new insurance written, improved persistency and larger loan sizes in the U.S. Mortgage Insurance Operations.
Consolidated losses and LAE for the fourth quarter and full year were $574.7 million and