Home | Business News | Browse by Publication | P | PR Newswire

The PMI Group, Inc. Reports First Quarter 2007 Net Income of $102.0 Million, or $1.16 Per Diluted Share.

Article Excerpt
Record Quarterly Revenues Driven BY Growth IN U.S. Mortgage insurance operations

WALNUT CREEK, Calif., April 30 /PRNewswire-FirstCall/ -- The PMI Group, Inc. (the "Company") today reported net income for the first quarter of 2007 of $102.0 million compared to net income in the first quarter of 2006 of $105.3 million. Diluted net income per share grew by approximately six percent to $1.16 for the first quarter of 2007 compared to $1.09 for the first quarter of 2006 and was positively influenced by the Company's redemption of its 2.5% Senior Convertible Debentures in October 2006.

The Company ended the first quarter of 2007 with a book value of $42.21 per share compared to $37.24 at the end of the first quarter of 2006, representing an increase of approximately 13%.

Highlights include: -- U.S. Mortgage Insurance Operations(1) - achieved record total revenues driven by strong growth in net premiums written and earned, and grew primary insurance in force to $106.9 billion. Net premiums written and net premiums earned in the first quarter of 2007 increased approximately 20% and 16%, respectively, compared to the same period one year ago; -- International Operations(2) - PMI Australia had solid growth in net premiums written driven by insurance in force growth of 27%, compared to the first quarter 2006, to end at $156.7 billion. PMI Europe reported strong growth in net premiums written of approximately 24% compared to the first quarter of 2006; -- Financial Guaranty(3) - equity in earnings from FGIC grew by 34% to $29.3 million compared to the first quarter of 2006 as a result of strong premium earnings, increased net investment income and a favorable impact to tax expense from a reduction of contingent tax reserves; -- Capital Events - the Company repurchased approximately 325,000 common shares for approximately $14 million. The Company's accelerated stock buyback program is expected to be completed in the second quarter of 2007. Consolidated Operating Results

Consolidated net premiums written for the first quarter of 2007 totaled $244.1 million compared to $201.9 million for the same period one year ago. The year over year increase was primarily due to an increase in new insurance written, improved persistency, higher average premium rates and higher average insured loan balances in U.S. Mortgage Insurance Operations and an increase in net premiums written in PMI Australia.

Consolidated premiums earned for the first quarter of 2007 were $236.4 million compared to $206.2 million for the same period one year ago. The increase in the first quarter of 2007 was due to insurance in force growth, higher average premium rates and loan sizes in U.S. Mortgage Insurance Operations and insurance in force growth in PMI Australia.

Consolidated losses and loss adjustment expenses for the first quarter of 2007 were $109.3 million compared to $60.9 million in the same period last year. The increase in first quarter of 2007 was primarily a result of higher incurred losses in U.S. Mortgage Insurance Operations and PMI Australia. The incurred losses increase in U.S. Mortgage Insurance Operations was a result of an increase in claim size and claim rates while the increase in PMI Australia was due to higher claim sizes and an increase in the number of delinquent loans.

Consolidated other underwriting and operating expenses for the first quarter of 2007 were $62.7 million compared to $58.6 million for the same period one year ago. The increase in the first quarter of 2007 was due primarily to higher stock option expense charges.

Consolidated reserve for losses and loss adjustment expenses totaled $443.0 million as of March 31, 2007 compared to $414.7 million as of December 31, 2006 and $369.9 million as of March 31, 2006. Loss reserves in U.S. Mortgage Insurance Operations increased $19.9 million in the first quarter of 2007 primarily due to lower default cure rates and higher claim sizes. PMI Australia's reserve for losses and LAE increased $7.8 million in the first quarter of 2007 primarily due to an increase in the number of delinquent loans.

The PMI Group, Inc. First Quarter Results by Segment First Quarter Total First Quarter Revenues Net Income (Dollars in millions, except per share data) 2007 2006 % Change 2007 2006 % Change U.S. Mortgage Insurance Operations $229.2 $197.9 15.8 % $68.9 $70.1 (1.7)% International Operations 63.8 56.6 12.7 % 23.1 28.6 (19.2)% Financial Guaranty 34.2 23.2 47.4 % 29.9 21.1 41.7 % Corporate and Other(4) 3.8 10.1 n.m. (19.8) (14.5) n.m. Total $331.0 $287.9 15.0 % $102.0 $105.3 (3.1)% Diluted Net Income Per Share $1.16 $1.09 6.4 % Book Value Per Share $42.21 $37.24 13.3 % May not total due to rounding n.m. - Not meaningful Segment Highlights U.S. Mortgage Insurance Operations -- Net premiums written in the first quarter of 2007 increased to $195.9 million from $163.5 million in the first quarter of 2006. The increase was due primarily to increases in new insurance written, improved persistency, higher average premium rates and higher average insured loan balances. -- The primary persistency rate improved to 70.7% in the first quarter of 2007 compared to 63.1% in the first quarter of 2006. -- Total incurred losses in the first quarter of 2007 were $92.8 million compared to $59.1 million in the first quarter of 2006 driven by higher claim sizes and higher claim rates. -- Total claims paid increased to $69.3 million for the first quarter of 2007 compared to $55.1 million in the first quarter of 2006 driven by an increase in the number of claims paid and a higher average claim size. -- After-tax equity in earnings from CMG MI for the first quarter of 2007 was $3.2 million, compared to $2.9 million for the same period of 2006. CMG MI's insurance in force grew to $16.7 billion, persistency increased to 78.5% and the...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!