(BUSINESS WIRE) Walnut Creek, CA - The PMI Group, Inc. (NYSE:PMI) announced that its wholly owned subsidiary, PMI Mortgage Insurance Company Limited (PMI Europe), has acquired the UK lenders' mortgage insurance (LMI) business of Royal & Sun Alliance Insurance Group plc (R&SA).

The acquisition of the LMI business is subject to regulatory and UK court approval, which is anticipated to take approximately six months. Cooperation agreements are in place to provide R&SA's clients with access to PMI's products during this interim period and following the acquisition.

"We are delighted to acquire R&SA's LMI business in the United Kingdom," said Tony Porter, PMI Europe Executive Managing Director. "We will work closely with clients over the forthcoming months to educate them about our business and how our products can assist them to manage the risk of their mortgage books and maximize the use of their asset base," said Mr. Porter.

PMI's acquisition of R&SA's LMI business reflects a mortgage insurance portfolio that consists of UK residential mortgage loans originated in 1993 and subsequent years. R&SA has agreed to discontinue writing or renewing LMI business, though R&SA will continue to manage the existing portfolio of pre-1993 contracts and the excess of loss contracts.

The portfolio covers approximately $15 billion of original insured principal value, approximately $2 billion of remaining exposure.

R&SA will transfer all cash loss reserves, unearned premium reserves and central provisions associated with the portfolio to PMI totaling approximately $54.6 million as of July 1, 2003. Included in the reserves being transferred is approximately $23.3 million in unearned premium reserve. In addition, R&SA and PMI have an agreement to share the costs or rewards of loss performance worse or better than expected.

PMI Mortgage Insurance Company Limited, or PMI Europe, is a mortgage insurance and credit enhancement company incorporated and located in Dublin, Ireland, with an affiliated sales company incorporated in England and located in London. PMI Europe is authorized to provide credit, suretyship and miscellaneous financial loss insurance by the Irish Financial Services Regulatory Authority. PMI Europe's claims-paying ability is rated "AA" by S&P and Fitch, and "Aa3" by Moody's. These ratings are based upon PMI Europe's initial capitalization, its management expertise, a capital support agreement provided by PMI, and a guarantee by The PMI Group, Inc. of PMI's obligation under the capital support agreement.

The PMI Group, Inc., headquartered in Walnut Creek, Calif., is an international provider of credit enhancement products and lender services that promote homeownership and facilitate mortgage transactions in the capital markets. Through its wholly owned subsidiaries and unconsolidated strategic investments, the Company offers residential mortgage insurance and credit enhancement products domestically and internationally, title insurance, lender services and financial guaranty reinsurance. Through its subsidiaries, PMI is one of the largest private mortgage insurers in the United States, Australia, New Zealand, and the European Union, as well as the largest mortgage guaranty reinsurer in Hong Kong.