PMI GROUP INC

CIK:0000935724|SEC Filings

Comprehensive Loss

6 Months Ended

Jun. 30, 2011

NOTE 11. COMPREHENSIVE LOSS

The following table shows the components of comprehensive loss for the three and six months ended June 30, 2011 and 2010:


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	*(Dollars in thousands)*						*(Dollars in thousands)*
Net loss	$	(134,766	)	$	(150,560	)	$	(261,590	)	$	(307,547	)
Unrealized gains (losses) on investments
Total change in unrealized gains (losses) arising during the period, net of tax expense		33,145			14,767			24,382			28,613
Less: realized investment gains (losses), net of tax expense		654			(181	)		594			4,861

Change in unrealized gains arising during the period, net of tax (benefit) expense of $(899), $5,270, $(426) and $7,844, respectively		32,491			14,948			23,788			23,752
Accretion of cash flow hedges, net of tax expense of $0, $54, $0 and $107, respectively		153			100			306			199
Change in unrealized gains (losses) on foreign currency translation, net of tax expense of $0, $3,958, $0 and $7,485, respectively		3,798			(7,512	)		10,933			(10,079	)

Other comprehensive income		36,442			7,536			35,027			13,872

Comprehensive loss	$	(98,324	)	$	(143,024	)	$	(226,563	)	$	(293,675	)

The change in unrealized gains in the second quarter and first half of 2011 was primarily due to the fall in yields across the yield curve and the improvement in the market values of the municipal bonds. The change in unrealized gains/losses in the second quarter and first half of 2010 was primarily due to improved valuation of the municipal, government and corporate bond portfolios partially offset by deterioration in the valuation of the preferred and common stock securities. The improvement in foreign currency translation adjustment in the second quarter and first half of 2011 was primarily due to the strengthening of the Euro and Canadian dollar relative to the U.S. dollar. Conversely, the deterioration in foreign currency translation adjustment in the second quarter and first half of 2010 was driven by the weakening of the Euro relative to the U.S. dollar, offset in part by the strengthening of the Canadian dollar relative to the U.S. dollar.

The following table shows the accumulated balances for each component of AOCI net of tax for the six months ended June 30, 2011 and 2010:


	Unrealized gains (losses) on investments			Defined benefit plans			Accretion of cash flow hedges			Foreign currency translation gains			Total
	*(Dollars in thousands)*
Balance, December 31, 2009		28,444			(8,557	)		(4,554	)		50,075			65,408
Current period change		23,752			—			199			(10,079	)		13,872

Balance, June 30, 2010	$	52,196		$	(8,557	)	$	(4,355	)	$	39,996		$	79,280


Balance, December 31, 2010		(28,852	)		(11,668	)		(4,103	)		51,109			6,486
Current period change		23,788			—			306			10,933			35,027

Balance, June 30, 2011	$	(5,064	)	$	(11,668	)	$	(3,797	)	$	62,042		$	41,513

Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
Consolidated Statements Of Cash Flows (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Net loss	$ (412,110)	$ (307,547)
Gain on sale of discontinued operations, net of taxes	125,520	0
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in losses from unconsolidated subsidiaries	2,732	8,327
Net realized investment gains	(713)	(7,958)
Change in fair value of certain debt instruments	(97,281)	88,500
Depreciation and amortization	28,277	16,732
Deferred income taxes	98,592	(136,108)
Compensation expense related to share-based payments	1,995	1,536
Deferred policy acquisition costs incurred and deferred	(11,808)	(11,269)
Amortization of deferred policy acquisition costs	8,623	8,039
Amortization of debt discount and debt issuance cost	4,520	2,155
Changes in:
Accrued investment income	(272)	6,515
Premiums receivable	3,679	2,581
Reinsurance receivables, and prepaid premiums net of reinsurance payables	1,136	(36,897)
Reinsurance recoverables	67,697	89,904
Prepaid and recoverable income taxes	46,287	1,349
Reserve for losses and loss adjustment expenses	122,898	(146,507)
Reserve for premium refunds	22,089	11,105
Unearned premiums	3,546	(7,346)
Related party receivables, net of payables	(109)	14,212
Liability for pension benefit	(2,406)	10,784
Note receivable	(206,569)	0
Other receivables	(2,652)	(121,030)
Other	(24,869)	(7,887)
Net cash used in operating activities from continuing operations	(221,198)	(520,810)
CASH FLOWS FROM INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from sales of fixed income securities	203,784	513,743
Proceeds from maturities of fixed income securities	3,596	765
Proceeds from sales of equity securities	55,230	25,101
Investment purchases:
Fixed income securities	(81,772)	(329,863)
Equity securities	(3,957)	(4,243)
Net change in short-term investments	10,737	1,088
Distributions from unconsolidated subsidiaries, net of investments	818	(45)
Capital expenditures and capitalized software, net of dispositions	(4,570)	(1,277)
Net cash provided by investing activities from continuing operations	183,866	205,269
CASH FLOWS FROM FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from issuance of convertible notes, net of issuance costs of $6,109	0	278,961
Proceeds from issuance of common stock, net of issuance costs of $28,199	0	453,183
Repayment of credit facility	0	(75,000)
Proceeds from issuance of treasury stock	264	275
Net cash provided by financing activities from continuing operations	264	657,419
CASH FLOWS FROM DISCONTINUED OPERATIONS
Net cash provided by sale of discontinued operations	25,000	0
Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations	3,665	(6,928)
Net (decrease) increase in cash and cash equivalents	(8,403)	334,950
Cash and cash equivalents at the beginning of the period	267,705	686,891
Cash and cash equivalents of continuing operations at end of period	259,302	1,021,841
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid, net of capitalization	22,246	17,066
Income taxes refunds, net of payments	45,924	0
Income taxes payments, net of refunds	$ 0	$ 1

Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Fixed income securities	$ 2,538,271	$ 2,651,206
Equity securities:
Common	23,539	30,664
Preferred	74,516	120,421
Short-term investments	6,813	17,867
Total investments	2,643,139	2,820,158
Cash and cash equivalents	259,302	267,705
Investments in unconsolidated subsidiaries	119,853	121,040
Related party receivables	6,490	6,355
Accrued investment income	20,173	19,783
Premiums receivable	42,751	46,336
Reinsurance receivables and prepaid premiums	59,768	65,357
Reinsurance recoverables, net	391,974	459,671
Deferred policy acquisition costs	49,557	46,372
Property, equipment and software, net of accumulated depreciation and amortization	81,368	85,186
Prepaid and recoverable income taxes	1,748	48,042
Deferred income tax assets	44,804	142,899
Note receivable	206,569	0
Other receivables	68,987	66,335
Other assets	17,987	23,748
Total assets	4,014,470	4,218,987
LIABILITIES
Reserve for losses and loss adjustment expenses	2,994,795	2,869,765
Reserve for premium refunds	110,785	88,696
Unearned premiums	68,113	64,298
Debt (includes $229,902 and $327,181 measured at fair value)	522,128	616,158
Reinsurance payables	23,753	28,206
Related party payables	1,809	1,786
Other liabilities and accrued expenses	102,580	134,808
Total liabilities	3,823,963	3,803,717
Commitments and contingencies (Notes 7 and 9)
SHAREHOLDERS' EQUITY
Preferred stock - $0.01 par value; 5,000,000 shares authorized; none issued or outstanding	0	0
Common stock - $0.01 par value; 500,000,000 and 350,000,000 shares authorized; 197,078,767 and 197,078,767 shares issued; 161,647,907 and 161,167,542 shares outstanding	1,971	1,971
Additional paid-in capital	1,359,902	1,370,757
Treasury stock, at cost (35,430,860 and 35,911,225 shares)	(1,282,990)	(1,295,644)
Retained earnings	70,111	331,700
Accumulated other comprehensive income, net of deferred taxes	41,513	6,486
Total shareholders' equity	190,507	415,270
Total liabilities and shareholders' equity	$ 4,014,470	$ 4,218,987