<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-13664
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address
of its principal executive office:
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
<PAGE>
REQUIRED INFORMATION
1. The financial statements of The PMI Group, Inc., Savings and
Profit-Sharing Plan as of December 31, 1998 and 1997 and for the years
then ended including: the statements of net assets available for
benefits (modified cash basis), the related statements of changes in
net assets available for benefits (modified cash basis), supplemental
schedule (modified cash basis) of assets held for investment purposes
as of December 31, 1998, and supplemental schedule (modified cash
basis) of reportable transactions for the year ended December 31,
1998, are contained in Exhibit 1 to this Annual Report.
2. Consent of Deloitte & Touche LLP, independent auditors, is contained
in Exhibit 2 to this Annual Report.
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PMI GROUP, INC., SAVINGS AND PROFIT-SHARING PLAN
Date: June 30, 1999 By: /s/ Victor J. Bacigalupi
Senior Vice President, General Counsel
and Secretary
<PAGE>
Exhibit 1
THE PMI GROUP, INC. 401(K) PLAN
FINANCIAL STATEMENTS (MODIFIED CASH BASIS) AS OF
AND FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, SUPPLEMENTAL SCHEDULES
(MODIFIED CASH BASIS) AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1998 AND
INDEPENDENT AUDITORS' REPORT
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1-2
FINANCIAL STATEMENTS (MODIFIED CASH BASIS) AS OF
THE YEARS ENDED DECEMBER 31, 1998 AND 1997:
Statements of Net Assets Available for Benefits With Fund Information 3
Statements of Changes in Net Assets Available for Benefits With Fund Information 4-7
NOTES TO FINANCIAL STATEMENTS 8-11
SUPPLEMENTAL SCHEDULES (MODIFIED CASH BASIS) FOR THE YEAR
ENDED DECEMBER 31, 1998:
Item 27a - Schedule of Assets Held for Investment Purposes 12
Item 27d - Schedule of Reportable Transactions - Series of Transactions
in Excess of 5% of Beginning Plan Assets 13
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants of The PMI Group, Inc. Savings and Profit-Sharing Plan
and Board of Directors of The PMI Group, Inc.:
We have audited the accompanying statements of net assets available for benefits
(modified cash basis) of The PMI Group, Inc. Savings and Profit-Sharing Plan
(the "Plan") as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for benefits (modified cash basis) for the years
ended December 31, 1998 and 1997. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 2 to the financial statements, these financial statements
were prepared on the modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles.
In our opinion, such financial statements present fairly, in all material
respects, information regarding the net assets available for benefits of the
Plan as of December 31, 1998 and 1997, and the changes in net assets available
for benefits for the years ended December 31, 1998 and 1997, on the basis of
accounting described in Note 2.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules (modified cash
basis) listed in the Table of Contents are presented for the purpose of
additional analysis and are not a required part of the basic 1998 financial
statements, but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental information by fund is
presented for the purpose of additional analysis of the basic financial
statements rather than to present information regarding the net assets available
for benefits and changes in net assets available for benefits of the individual
funds, and is not a required part of the basic financial statements. The
supplemental schedules and supplemental fund information are the responsibility
of the Plan's management. Such supplemental schedules and supplemental fund
information have been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as whole on the basis of accounting described in Note 2.
Deloitte & Touche LLP
San Francisco, California
June 30, 1999
3
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION (MODIFIED CASH BASIS)
DECEMBER 31, 1998 AND 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
INVESTMENTS AT FAIR VALUE:
<S> <C> <C>
Barclays Short- Intermediate Term Fund $ - $ 1,145,599
Barclays International Equity Fund 978,551 675,849
Barclays S&P Midcap Stock Fund 4,274,635 3,269,388
Barclays S&P 500 Stock Fund 11,516,453 8,191,383
Barclays Lifepath 2000 Fund 2,385,579 2,597,028
Barclays Lifepath 2010 Fund 4,264,548 4,349,893
Barclays Lifepath 2020 Fund 1,699,802 1,148,602
Barclays Lifepath 2030 Fund 1,474,071 1,214,755
Barclays Lifepath 2040 Fund 935,089 744,090
Barclays Money Market Fund 1,826,477 1,562,110
Founders Growth Fund 779,299 -
Templeton Foreign Fund 311,082 -
PIMCO Total Return Class A Fund 1,417,161 -
PMI Stock Fund 2,555,027 1,617,038
Loan Fund 887,480 786,825
----------- -----------
Total $35,305,254 $27,332,560
=========== ===========
</TABLE>
See accompanying notes to financial statements (modified cash basis).
4
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION (MODIFIED CASH BASIS) YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Barclays Barclays Barclays
Short- Barclays S&P S&P
Intermediate International Midcap 500
Sweep Term Equity Stock Stock
Account Fund Fund Fund Fund
ADDITIONS TO NET ASSETS
AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C> <C>
Net appreciation (depreciation) of investments $ -- $ 110,692 $ 130,844 $ 676,901 $ 2,439,826
Dividend and interest income 34 -- -- -- --
----- ---------- ------------ ------------ ------------
Total investment income (loss) 34 110,692 130,844 676,901 2,439,826
----- ---------- ------------ ------------ ------------
Contributions:
Participants -- 204,379 140,031 676,899 1,203,999
Rollovers -- 1,587 5,834 28,371 268,727
Employer -- 29,493 20,613 108,933 186,758
----- ---------- ------------ ------------ ------------
Total contributions -- 235,459 166,478 814,203 1,659,484
----- ---------- ------------ ------------ ------------
Total additions 34 346,151 297,322 1,491,104 4,099,310
DEDUCTIONS FROM NET ASSETS
AVAILABLE FOR BENEFITS -
Participant withdrawals 803 61,698 34,073 143,093 328,508
----- ---------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS
BEFORE INTERFUND TRANSFERS (769) 284,453 263,249 1,348,011 3,770,802
INTERFUND TRANSFERS - Net 769 (1,430,052) 39,453 (342,764) (445,732)
----- ---------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS -- (1,145,599) 302,702 1,005,247 3,325,070
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year -- 1,145,599 675,849 3,269,388 8,191,383
----- ---------- ------------ ------------ ------------
End of year $ -- $ -- $ 978,551 $ 4,274,635 $ 11,516,453
===== ========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Barclays Barclays Barclays Barclays
Lifepath Lifepath Lifepath Lifepath
2000 2010 2020 2030
Fund Fund Fund Fund
ADDITIONS TO NET ASSETS
AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C> <C>
Net appreciation (depreciation) of investments $ 227,100 $ 586,164 $ 234,119 $ 267,538
Dividend and interest income -- -- -- --
----------- ----------- ----------- -----------
Total investment income (loss) 227,100 586,164 234,119 267,538
----------- ----------- ----------- -----------
Contributions:
Participants 64,664 165,158 250,785 210,522
Rollovers 2,019 52,586 19,475 8,790
Employer 8,588 26,674 41,798 34,346
----------- ----------- ----------- -----------
Total contributions 75,271 244,418 312,058 253,658
----------- ----------- ----------- -----------
Total additions 302,371 830,582 546,177 521,196
DEDUCTIONS FROM NET ASSETS
AVAILABLE FOR BENEFITS -
Participant withdrawals 129,143 276,346 69,369 54,721
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS
BEFORE INTERFUND TRANSFERS 173,228 554,236 476,808 466,475
INTERFUND TRANSFERS - Net (384,677) (639,581) 74,392 (207,159)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS (211,449) (85,345) 551,200 259,316
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 2,597,028 4,349,893 1,148,602 1,214,755
----------- ----------- ----------- -----------
End of year $ 2,385,579 $ 4,264,548 $ 1,699,802 $ 1,474,071
=========== =========== =========== ===========
</TABLE>
(Continued)
5
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION (MODIFIED CASH BASIS) YEAR ENDED DECEMBER 31, 1998
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Barclays Barclays
Lifepath Money Founders Templeton
2040 Market Growth Foreign
Fund Fund Fund Fund
ADDITIONS TO NET ASSETS
AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C> <C>
Net appreciation (depreciation) of investments $ 179,613 $ -- $ 32,399 $ (57,090)
Dividend and interest income -- 83,791 39,027 31,276
----------- ----------- ----------- -----------
Total investment income (loss) 179,613 83,791 71,426 (25,814)
----------- ----------- ----------- -----------
Contributions:
Participants 160,416 237,127 109,238 30,591
Rollovers 1,560 18,134 50,253 5,353
Employer 22,190 11,229 2,914 2,618
----------- ----------- ----------- -----------
Total contributions 184,166 266,490 162,405 38,562
----------- ----------- ----------- -----------
Total additions 363,779 350,281 233,831 12,748
DEDUCTIONS FROM NET ASSETS
AVAILABLE FOR BENEFITS -
Participant withdrawals 68,817 300,790 18,493 1,648
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS
BEFORE INTERFUND TRANSFERS 294,962 49,491 215,338 11,100
----------- ----------- ----------- -----------
INTERFUND TRANSFERS - Net (133,963) 214,876 563,961 299,982
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 160,999 264,367 779,299 311,082
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year 774,090 1,562,110 -- --
----------- ----------- ----------- -----------
End of year $ 935,089 $ 1,826,477 $ 779,299 $ 311,082
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
PIMCO
Total
Return
Class A PMI Stock
Fund Fund Loans Total
ADDITIONS TO NET ASSETS
AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C> <C>
Net appreciation (depreciation) of investments $ (3,085) $ (948,706) $ -- $ 3,875,415
Dividend and interest income 2,840 -- 83,259 240,227
------------ ------------ ----------- -----------
Total investment income (loss) (1,145) (948,706) 83,259 4,115,642
----------- ----------- ----------- -----------
Contributions:
Participants 6,981 155,117 -- 3,615,907
Rollovers -- 14,372 -- 477,061
Employer -- 917,266 -- 1,413,420
----------- ----------- ----------- -----------
Total contributions 6,981 1,086,755 -- 5,506,388
----------- ----------- ----------- -----------
Total additions 5,836 138,049 83,259 9,622,030
DEDUCTIONS FROM NET ASSETS
AVAILABLE FOR BENEFITS -
Participant withdrawals 21 143,259 18,554 1,649,336
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS
BEFORE INTERFUND TRANSFERS 5,815 (5,210) 64,705 7,972,694
----------- ----------- ----------- -----------
INTERFUND TRANSFERS - Net 1,411,346 943,199 35,950 --
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS 1,417,161 937,989 100,655 7,972,694
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of year -- 1,617,038 786,825 27,332,560
----------- ----------- ----------- -----------
End of year $ 1,417,161 $ 2,555,027 $ 887,480 $35,305,254
=========== =========== =========== ===========
</TABLE>
(Concluded)
See accompanying notes to financial statements (modified cash basis).
6
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION (MODIFIED CASH BASIS) YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Barclays Barclays Barclays
Short- Barclays S&P S&P
Intermediate International Midcap 500
Sweep Term Equity Stock Stock
Account Fund Fund Fund Fund
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C> <C> <C>
Net appreciation of investments $ -- $ 73,608 $ 5,225 $ 654,036 $ 1,768,475
Dividend and interest income 134 19,880 5,634 22,929 77,013
----------- ----------- ----------- ----------- -----------
Total investment income 134 93,488 10,859 676,965 1,845,488
----------- ----------- ----------- ----------- -----------
Contributions:
Participants -- 214,897 171,110 611,016 1,055,407
Rollovers -- 9,317 2,547 16,890 46,619
Employer -- 31,626 27,308 103,140 169,265
----------- ----------- ----------- ----------- -----------
Total contributions -- 255,840 200,965 731,046 1,271,291
----------- ----------- ----------- ----------- -----------
Total additions 134 349,328 211,824 1,408,011 3,116,779
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 3,561 307,737 45,185 81,358 173,807
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE INTERFUND TRANSFERS (3,427) 41,591 166,639 1,326,653 2,942,972
INTERFUND TRANSFERS - Net 3,427 21,589 154,672 382,956 318,376
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS -- 63,180 321,311 1,709,609 3,261,348
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year -- 1,082,419 354,538 1,559,779 4,930,035
----------- ----------- ----------- ----------- -----------
End of year $ -- $ 1,145,599 $ 675,849 $ 3,269,388 $ 8,191,383
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Barclays Barclays Barclays
Lifepath Lifepath Lifepath
2000 2010 2020
Fund Fund Fund
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C>
Net appreciation of investments $ 226,122 $ 550,047 $ 150,394
Dividend and interest income 30,745 63,558 10,606
----------- ----------- -----------
Total investment income 256,867 613,605 161,000
----------- ----------- -----------
Contributions:
Participants 55,304 185,953 234,528
Rollovers -- -- 3,149
Employer 9,498 35,871 44,528
----------- ----------- -----------
Total contributions 64,802 221,824 282,205
----------- ----------- -----------
Total additions 321,669 835,429 443,205
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 290,081 94,783 76,303
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE INTERFUND TRANSFERS 31,588 740,646 366,902
INTERFUND TRANSFERS - Net (353,507) (1,215,086) 129,487
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS (321,919) (474,440) 496,389
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 2,918,947 4,824,333 652,213
----------- ----------- -----------
End of year $ 2,597,028 $ 4,349,893 $ 1,148,602
=========== =========== ===========
</TABLE>
(Continued)
7
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION (MODIFIED CASH BASIS) YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Barclays Barclays Barclays
Lifepath Lifepath Money Prior
2030 2040 Market Employer PMI Stock
Fund Fund Fund Fund Fund
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C> <C> <C> <C>
Net appreciation of investments $ 168,177 $ 119,416 $ -- $ -- $ 379,169
Dividend and interest income 2,917 8,360 31,577 42,254 8,510
----------- ----------- ----------- ----------- -----------
Total investment income 171,094 127,776 31,577 42,254 387,679
----------- ----------- ----------- ----------- -----------
Contributions:
Participants 194,846 126,800 53,606 -- 42,022
Rollovers 3,519 8,745 17,590 -- 333
Employer 33,446 16,914 3,500 -- 707,668
----------- ----------- ----------- ----------- -----------
Total contributions 231,811 152,459 74,696 -- 750,023
----------- ----------- ----------- ----------- -----------
Total additions 402,905 280,235 106,273 42,254 1,137,702
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 34,690 84,319 67,212 46,139 67,458
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE INTERFUND TRANSFERS 368,215 195,916 39,061 (3,885) 1,070,244
----------- ----------- ----------- ----------- -----------
INTERFUND TRANSFERS - NET 206,944 133,785 1,437,051 (1,536,387) (22,567)
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS 575,159 329,701 1,476,112 (1,540,272) 1,047,677
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 639,596 444,389 85,998 1,540,272 569,361
----------- ----------- ----------- ----------- -----------
End of year $ 1,214,755 $ 774,090 $ 1,562,110 $ -- $ 1,617,038
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Loans Total
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS:
Investment income:
<S> <C> <C>
Net appreciation of investments $ -- $ 4,094,669
Dividend and interest income 64,007 388,124
----------- -----------
Total investment income 64,007 4,482,793
----------- -----------
Contributions:
Participants -- 2,945,489
Rollovers -- 108,709
Employer -- 1,182,764
----------- -----------
Total contributions -- 4,236,962
----------- -----------
Total additions 64,007 8,719,755
DEDUCTIONS FROM NET ASSETS AVAILABLE FOR
BENEFITS - Participant withdrawals 75,182 1,447,815
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS BEFORE INTERFUND TRANSFERS (11,175) 7,271,940
----------- -----------
INTERFUND TRANSFERS - NET 339,260 --
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE
FOR BENEFITS 328,085 7,271,940
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 458,740 20,060,620
----------- -----------
End of year $ 786,825 $27,332,560
=========== ===========
</TABLE>
See accompanying notes to financial statements (modified cash basis).
(Concluded)
8
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (MODIFIED CASH BASIS)
YEARS ENDED DECEMBER 31, 1998 AND 1997
- ------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of The PMI Group, Inc. Savings and
Profit-Sharing Plan (the "Plan") is provided for general information only.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
General - The Plan was established on April 1, 1995. The Plan is a defined
contribution plan covering all full-time and regular part-time employees
of The PMI Group, Inc. (the "Company"). The Plan is available to those
employees who have completed one year of service. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). The Plan is administered by the Company. The trustee of the
Plan is Merrill Lynch Trust Company.
Contributions - The participants may contribute up to 17% of their annual
compensation, as defined, not to exceed the ERISA limit of $10,000 for
1998 and $9,500 for 1997. The Company's cash contributions total 25% of
each eligible participant's pre-tax contributions for the period, not to
exceed 6% of each participant's eligible pay, with an additional
discretionary stock contribution up to 50%, not to exceed 6% of each
eligible participant's annual compensation. In 1999, the Company made a
$620,703 cash contribution related to the 1998 Plan year. In addition, the
Company made an additional discretionary stock contribution of $1,241,406
in 1999 related to the 1998 Plan year. Both of these contributions will be
reported in the Plan's 1999 financial statements.
Contributions are invested, at the option of the participant, in any of
the following investment funds:
o Barclays Short-Intermediate Term Fund - Amounts within this fund are
invested in a broad range of debt securities with short-to-intermediate
term maturities. This option is no longer available.
o Barclays International Equity Fund - Amounts within this fund are
invested in the stocks of established companies based in Europe,
Australia and the Far East.
o Barclays S & P Midcap Stock Fund - Amounts within this fund are
invested in mid-sized companies which are expected to grow faster than
larger, more established companies.
o Barclays S & P 500 Stock Fund - Amounts within this fund are invested
in companies to match the performance of the S&P 500.
o Barclays Lifepath Funds - Amounts within these funds are invested in
stocks, bonds and money market instruments.
o Barclays Money Market Fund - Amounts within this fund are invested in
high quality money market securities.
o Founders Growth Fund - Amounts within this fund are invested in well
established high quality growth stock funds, with some assets in
foreign securities.
9
<PAGE>
o Templeton Foreign Fund - Amounts within this fund are invested in the
stocks of established companies based mainly in Europe.
o PIMCO Total Return Class A Fund - Amounts within this fund are invested
in high quality money market and short-term securities.
o PMI Stock Fund - Amounts within this fund are invested in common stock
of the Company.
o Sweep Account - Amounts within this account represent cash held
temporarily until allocated to a fund.
Participant Accounts - Each participant's account is credited with the
participant's and Company's prescribed contributions and an allocation of
Plan earnings. Allocations are based on participant's contributions or
account balances, as defined in the Plan. The maximum annual addition to
each participant's account, as defined, may not exceed the lesser of 25%
of the participant's compensation for the year or $30,000.
Vesting - Employer contributions, employee contributions and Plan earnings
are fully vested to all participant accounts at all times.
Participant Withdrawals - Withdrawals from the Plan are available upon
hardship in accordance with Plan provisions. Upon termination of
employment, a participant may elect to receive a lump-sum benefit. Upon
attaining age 59 1/2, participants may elect to receive either a lump-sum
amount equal to their vested account balance or a portion paid in a
lump-sum with the remainder paid at a later date. At age 70-1/2, if no
amount has been previously paid out, a participant may be required to take
a partial withdrawal in accordance with Plan provisions.
Plan Termination - In the event of Plan termination, the full value of all
participants' accounts would become fully vested and lump sum
distributions to participants would be made in accordance with the Plan.
Although it has not expressed any intention to do so, the Company has the
right under the Plan to suspend, terminate or completely discontinue
contributions.
Participant Loans - The Plan allows participants to obtain loans in an
amount not to exceed $50,000 or 50% of the participant's vested accrued
benefit under the Plan. As of December 31, 1998, 136 loans with interest
rates of 8.75% - 9.5% were outstanding with maturities through October
2002. These loans are being repaid over one year to five years at the
prime interest rate in effect on the date the loan was obtained plus 1%.
The loans are fully collateralized by the participants' remaining vested
account balance.
Plan Expenses - Plan expenses are paid by the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared on
the modified cash basis. Transactions are primarily recorded upon receipt
and disbursement of cash, except for investments which are stated at
current market value. Certain revenues and the related assets are
recognized when received rather than when earned, and certain expenses are
recognized when paid rather than when the obligation is incurred.
Accordingly, the accompanying financial statements are not intended to be
a presentation in conformity with generally accepted accounting
principles.
10
<PAGE>
Valuation of Investments - Investments in mutual funds are stated at
market values, determined on the basis of quotations obtained from
national securities exchanges or from the trustee. Investment transactions
are recorded on the settlement date.
Cost of Securities Sold - The cost of mutual and equity fund shares sold,
as used to calculate realized gains and losses on disposition of mutual
and equity fund shares, is determined using the average cost basis.
Payment of Benefits - Distributions to participants are recorded when
paid.
Accounting Estimates - The preparation of financial statements in
conformity with the modified cash basis of accounting requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
additions to and deductions from net assets during the reporting period.
Actual results could differ from those estimates.
3. TAX STATUS
The Plan obtained its latest determination letter dated March 23, 1999, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. Management of the Company believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
4. UNIT AND NET ASSET VALUE
The following schedule represents the number of units and the net asset
value per unit and in total for the Merrill Lynch Masterworks Funds as of
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Value
Per Total
1998 Units Unit Value **
<S> <C> <C> <C>
International Equity Fund 57,629.598 $ 16.98 $ 978,551
S&P Midcap Stock Fund 151,047.170 28.30 4,274,635*
S&P 500 Stock Fund 244,044.349 47.19 11,516,453*
Lifepath 2000 Fund 164,070.051 14.54 2,385,579*
Lifepath 2010 Fund 246,505.695 17.30 4,264,548*
Lifepath 2020 Fund 86,901.955 19.56 1,699,802
Lifepath 2030 Fund 68,914.027 21.39 1,474,071
Lifepath 2040 Fund 39,944.008 23.41 935,089
Merrill Lynch Masterworks
Money Market Fund 1,826,476.982 1.00 1,826,477*
Founders Growth 38,182.207 20.41 779,299
Templeton Foreign Fund 37,077.694 8.39 311,082
PIMCO Total Return Class A Fund 134,455.471 10.54 1,417,161
PMI Stock Fund 231,643.447 11.03 2,555,027*
</TABLE>
* Investment that represents more than 5% of the Plan's net assets as of
December 31, 1998.
** Calculated amount may differ from reported amount due to rounding.
11
<PAGE>
<TABLE>
<CAPTION>
Value
Per Total
1997 Units Unit Value **
<S> <C> <C> <C>
Short-Intermediate Term Fund 82,804.431 $13.83 1,145,599
International Equity Fund 47,595.038 14.20 675,849
S&P Midcap Stock Fund 137,196.330 23.83 3,269,388 *
S&P 500 Stock Fund 222,591.960 36.80 8,191,383 *
Lifepath 2000 Fund 195,854.324 13.25 2,597,028 *
Lifepath 2010 Fund 287,881.675 15.11 4,349,893 *
Lifepath 2020 Fund 69,443.876 16.54 1,148,602
Lifepath 2030 Fund 68,941.877 17.62 1,214,755
Lifepath 2040 Fund 41,153.095 18.81 774,090
Merrill Lynch Masterworks Money Market Fund 1,562,108.660 1.00 1,562,110 *
PMI Stock Fund 100,437.184 16.10 1,617,038 *
</TABLE>
* Investment that represents more than 5% of the Plan's net assets as of
December 31, 1997.
** Calculated amount may differ from reported amount due to rounding.
******
12
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
YEAR ENDED DECEMBER 31, 1998
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Current
Description of Investment Units Cost Value
<S> <C> <C> <C>
Barclays International Equity Fund 57,629.598 $ 856,552 $ 978,551
Barclays S&P Midcap Stock Fund 151,047.170 3,627,812 4,274,635
Barclays S&P 500 Stock Fund 244,044.349 9,228,091 11,516,453
Barclays Lifepath 2000 Fund 164,070.051 2,180,579 2,385,579
Barclays Lifepath 2010 Fund 246,505.695 3,746,218 4,264,548
Barclays Lifepath 2020 Fund 86,901.955 1,477,266 1,699,802
Barclays Lifepath 2030 Fund 68,914.027 1,241,438 1,474,071
Barclays Lifepath 2040 Fund 39,944.008 780,750 935,089
Barclays Masterworks
Money Market Fund 1,826,476.982 1,826,477 1,826,477
Founders Growth 38,182.207 744,849 779,299
Templeton Foreign Fund 37,077.694 367,801 311,082
PIMCO Total Return Class A Fund 134,455.471 1,421,143 1,417,161
PMI Stock Fund 231,643.447 3,466,196 2,555,027
Loans to participants (136 loans at 8.75% - 9.5%) 887,480 887,480
----------- -----------
TOTAL INVESTMENTS $31,852,651 $35,305,254
=========== ===========
</TABLE>
13
<PAGE>
THE PMI GROUP, INC. SAVINGS AND PROFIT-SHARING PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------------
Series of Transactions in Excess
of 5% of Beginning Plan Assets
<TABLE>
<CAPTION>
Total Total
Dollar Dollar Net Gain
Number of Value of Number Value of (Loss)
Description Purchases Purchases of Sales Sales Realized
<S> <C> <C> <C> <C> <C>
Barclays Short-Intermediate Term Fund 68 $ 412,819 57 $ 1,459,380 $ 209,731
Barclays S&P Midcap Stock Fund 89 1,143,913 75 624,189 191,379
Barclays S&P 500 Stock Fund 102 2,502,611 87 1,100,992 516,376
Barclays Lifepath 2010 Fund 55 373,619 70 794,184 250,943
Barclays Money Market 81 1,469,334 77 1,204,966
PIMCO Total Return
Class A Fund 4 1,421,715 1 573 (3)
PMI Stock Fund 89 2,118,337 59 228,663 2,980
</TABLE>
14
<PAGE>
EXHIBIT 2
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion of our report dated June 30, 1999 on the financial
statements and supplemental schedules (modified cash basis) of The PMI Group,
Inc., Savings and Profit-Sharing Plan in this Annual Report on Form 11-K for the
year ended December 31, 1998.
/s/ Deloitte & Touche LLP
San Francisco, California
June 30, 1999
