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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 2, 1999
THE PMI GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13664 94-3199675
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
601 Montgomery Street, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (415) 788-7878
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
On November 2, 1999 in San Francisco, California, the Company conducted an
Analyst/Investor Conference. During the conference management indicted that it
believes, based on current estimates, that PMI's persistency levels should be in
the range of 70% -72%, and 80% -83%, at December 31, 1999 and 2000,
respectively. Management stated that it believes, based on current estimates,
that a shift from a refinance market to a purchase market should also improve
premium yield with a shift toward higher premium products such as 95% and 97%
LTV loans, and ARMS. Management indicated that it believes, based on current
estimates, that earnings per share should be in the range of $4.47 - $4.50 and
$5.35 -$5.45, for the years ending 1999 and 2000, respectively.
The statements indicated above which were made orally or reflected on slides
displayed during the Analyst/Investor Conference, are forecasts that are
necessarily based on assumptions about, and estimates of future events that may
or may not occur, and are therefore, forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Past results
are not necessarily representative of future results. The outcome of such future
events may depend in part on the factors set forth in the cautionary statement
below. The information contained in the first paragraph is provided as of the
date reported and PMI does not take any responsibility for providing updates
regarding changes occurring after such date.
Cautionary Statement
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Certain statements in this document and oral statements made or incorporated by
reference from time to time by the Company or its representatives in this
document, other documents filed with the Securities and Exchange Commission,
conferences or otherwise that are not historical facts, and that relate to the
remainder of 1999 and beyond, future plans, events or performance, or are
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "estimates," or similar expressions, are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include, without limitation, the
following: (i) management's expectation regarding PMI's persistency levels for
year end 1999 and 2000; (ii) management's expectation regarding PMI's product
mix and premium yield for year end 1999 and 2000; and (iii) management's
earnings per share estimate of $4.47 - $4.50 for the year ending December 31,
1999 and $5.35 - $5.45 for the year ending December 31 2000. These forward-
looking statements involve a number of risks or uncertainties including, but not
limited to, the factors listed below that could cause the Company's actual
results to differ materially from those expressed as follows:
A number of factors affecting PMI Mortgage Insurance Co. ("PMI") and the
mortgage industry in general could cause claims on policies issued by PMI to
increase and this could materially adversely affect the Company's financial
condition and results of operations. The management of the Company believes
that the loss experience of PMI could be materially and adversely affected by
economic recessions, declining housing values, higher unemployment rates,
deteriorating borrower credit, rising interest rates, legislation impacting
borrower's rights or a combination of such factors, which might have nationwide
impact or a disproportionate impact on regional economic conditions and demand
for housing generally. A decrease in persistency, resulting from policy
cancellations of older books of business affected by refinancing (which is
affected by changes in interest rates), or other factors, may materially and
adversely impact the Company's results of operations and financial condition.
Customer demand and regulatory requirements affect the Company's product mix.
The Company and PMI, from time to time, introduce new mortgage insurance
products or programs. The Company's financial condition and results of
operations could be materially and adversely affected in PMI or the Company
experiences delays in introducing competitive new products and programs. In
addition, for any introduced product, there can be no assurance that such
products, including any mortgage pool type products, or programs will be as
profitable as the Company's existing products and programs.
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The Company's premium yield is affected by premiums earned which is generated
from its existing insurance in force and not from new insurance written. There
can be no assurance that policies for insurance coverage originated in a
particular year or for a particular customer will not be canceled at a later
time or that the Company will be able to regain such insurance coverage at a
later time. As a result, the Company's finance condition and results of
operation could be materially and adversely affected by greater than anticipated
policy cancellations or lower than projected persistency resulting in declines
in insurance in force.
The Company's financial condition and results of operations may materially and
adversely be impacted by changes in legislation which affects the ability of
Fannie Mae or Freddie Mac to offer a substitute for mortgage insurance,
including self-insurance, alternative forms of credit support and proposed risk-
based capital regulations developed by The Office of Federal Housing Enterprise
Oversight, or for the FHA or the VA to increase statutory lending limits or
other expansion of eligibility for the FHA and VA. PMI's financial condition
and results of operations may materially and adversely be impacted by a
reduction in the amount of mortgage insurance coverage required by Fannie Mae
and Freddie Mac.
In addition, PMI's financial condition and results of operations may materially
and adversely be impacted by change in legislation, statutory charters and
regulations governing banks and savings institutions that choose to remain
uninsured, to form reinsurance subsidiaries or permit the offering of
residential mortgage other products which do not require mortgage insurance.
The Company's earnings per share, valuation of its stock and growth in its share
prices are affected by factors in addition to the Company's performance,
including the financial market's perception of relative valuation among
industries. Other investment considerations affecting the Company are listed
from time to time in the Company's Securities and Exchange Commission filings.
Item 7. Financial statements, Pro Forma Financial Information and Exhibits
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The PMI Group, Inc.
(Registrant)
November 2, 1999 By: /s/ John M. Lorenzen, Jr.
John M. Lorenzen, Jr.
Executive Vice President,
Chief Financial Officer
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