Charter of the Compensation Committee

The Board of Directors of The PMI Group, Inc. has established the Compensation Committee to discharge the Board's responsibilities relating to compensation of the Corporation's executives. The Committee has overall responsibility for evaluating and approving the executive compensation plans, policies and programs of the Corporation. The Committee also shall provide general oversight of the Corporation's compensation and benefit plans, policies and programs that pertain to employees other than executive officers. When appropriate, the Committee shall make recommendations to the Board with respect to non-CEO compensation, incentive-based compensation plans and equity-based plans.

The Committee is also responsible for producing an annual report on executive compensation required to be included in the Corporation's proxy statement pursuant to applicable rules and regulations.

Committee Composition. The Committee must consist of no less than three and no more than six directors, and the Committee shall comply with the independence requirements of the New York Stock Exchange and any standards of independence as may be prescribed for purposes of any federal securities, tax or other laws relating to the Committee's duties and responsibilities. The Board designates the members and the Chair(s) of the Committee upon the recommendation of the Governance and Nominating Committee, with the concurrence of the Board Chair.

Qualifications for Committee membership include, but are not limited to, one or more of the following:

(a) Experience in managing a diverse group of executives and other employees, including exposure to compensation policies and practices;

(b) Experience relating to executive compensation oversight or design for a public company;

(c) Experience on a public company board of directors or committee; or

(d) Other qualifications that, in the opinion of the Board of Directors, would add value to the Committee in discharging its responsibilities.

The Committee shall form and delegate authority to subcommittees of one or more Committee members when desired and appropriate. Members of any subcommittee shall serve at the pleasure of the Committee and may be removed by the Committee at any time and for any reason by notice in writing. Members of any subcommittee may resign from such subcommittee at any time by notice in writing to the Committee.

The Committee may also appoint a Secretary, who need not be a director, and may delegate to its Chair such power and authority as the Committee deems to be appropriate, except such power and authorities required by law to be exercised by the whole Committee or by a subcommittee of at least two members.

Duties and Responsibilities of the Committee.

1. The Committee shall have direct responsibility to annually review and approve corporate goals and objectives relevant to compensation of the Chief Executive Officer ("CEO"), evaluate the CEO's performance in light of these goals and objectives, and either as a committee or together with the other independent directors (as directed by the Board), determine and approve the CEO's compensation levels based upon this evaluation.

2. In determining the long-term incentive component of CEO compensation, the Committee shall consider relevant factors, such as the Corporation's performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the grants or awards given to the CEO in past years.

3. The Committee shall approve the appointment of Section 16 reporting persons and other officers with Corporation-wide authority who receive a minimum base salary determined from time to time by the Committee (collectively, the "Senior Officers"). The Committee shall make decisions with respect to the administration of the salaries, bonuses and other compensation to be paid to such Senior Officers, including the terms and conditions of their employment or severance agreements. The Committee may grant awards under the Equity Incentive Plan to any Senior Officer, including the terms and conditions of such awards.

4. The Committee shall review and approve all aspects of executive compensation, taking into account peer group practices and other relevant factors, such as corporate and individual performance and historical compensation practices for such officers.

5. The Committee shall review with the CEO and any other executive officer or member of management the material criteria for evaluating senior manager performance and for establishing compensation, retention, incentive, severance and benefit policies and programs.

6. The Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of CEO or executive compensation and shall have the sole authority to approve the consultant's fees and other retention terms.

7. The Committee shall administer, amend and make grants of options, restricted stock and other rights under all stock option plans and other benefit plans (unless otherwise specified in plan documents or in resolutions of the Board) from time to time in accordance with the terms and provisions thereof and shall, among other things, (i) construe and interpret such plans and the respective options, restricted stock and other rights granted thereunder, (ii) establish and amend the rules for the administration of such plans, (iii) correct any defect or omission or reconcile any inconsistency in such plans or in any option, restricted stock or other right granted thereunder, and (iv) have such other responsibilities as set forth in such plans. In particular --

(a) The Committee shall act on behalf of the Board in adopting, amending, modifying or terminating all employee benefit plans and arrangements that require action by the Board;

(b) The Committee shall review and assess the Corporation's policies and procedures relating to all 401(k) plans or similar plans maintained by the Corporation to purchase, sell or otherwise acquire or transfer any interest in the equity of the Corporation;

(c) The Committee shall set and approve the Corporation's matching contributions. The Committee shall set and certify achievement of annual goals for the Corporation's 401(k) plans and annual performance goals for the Corporation's performance-based compensation programs in compliance with Section 162(m) of the Internal Revenue Code; and

(d) The Committee shall discharge the Board's oversight responsibilities relating to the Corporation's retirement plan. The Committee shall act on behalf of the Board in adopting, amending, modifying or terminating the retirement plan.

8. The Committee shall review and assess the Corporation's compliance with laws and regulations relating to compensation, employee benefits and ERISA. When appropriate, the Committee shall seek assurances from internal or external advisors that all compensation and perquisites are appropriate, legally permissible and, where required, properly disclosed to the Corporation's shareholders.

9. The Committee shall review and assess the Corporation's guidelines regarding stock ownership and the Corporation's policies and procedures governing compliance with applicable laws relating to employee ownership of securities of the Corporation.

10. The Committee shall review any plans, policies or agreements relating to loans to employees of the Corporation. This review shall include an assessment regarding legal compliance, as well as an evaluation of the benefits and risks to the Corporation of maintaining such loans or programs.

11. The Committee shall:

(a) Annually review its performance;

(b) Report to the Board on its activities;

(c) Maintain minutes of its meetings and other records relating to its meetings and activities;

(d) Have authority to obtain, at the expense of the Corporation, advice and assistance from internal or external legal, accounting or other advisors; and

(e) Review and assess the adequacy of this Charter and recommend to the Board any proposed changes.

Reliance on Others. In performing their responsibilities, Committee members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by::

(a) One or more officers or employees of the Corporation whom the Committee member reasonably believes to be reliable and competent in the matters presented;

(b) Counsel, independent auditor, or other persons as to matters that the Committee member reasonably believes to be within the professional or expert competence of such person; and

(c) Other committees of the Board as to matters within its designated authority that the Committee member reasonably believes to merit confidence.