EXHIBIT 10.2

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time
to time, this “Security Agreement”) is entered into as of May 29, 2009 by and
between THE PMI GROUP, INC., a Delaware corporation (the “Company”), and BANK OF
AMERICA, N.A., as Administrative Agent (in such capacity, together with any
successor in such capacity, the “Administrative Agent”) for the financial
institutions (the “Lenders”) from time to time party to the Credit Agreement
referred to below (the Lenders, together with the Administrative Agent, are
collectively referred to herein as the “Secured Parties”).

PRELIMINARY STATEMENT

The Company has entered into a Revolving Credit Agreement, dated as of
October 24, 2006 (as amended, restated, supplemented, refinanced or replaced
from time to time, including as amended and restated as of the date of this
Agreement, the “Credit Agreement”), with the Administrative Agent and the
Lenders, pursuant to which the Administrative Agent and the Lenders have agreed
to make loans and provide other extensions of credit to the Company from time to
time, subject to the terms and conditions set forth in the Credit Agreement; and

This Pledge and Security Agreement is being made by the Company in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, to secure
the payment and performance of the Secured Obligations (as defined in Article II
of this Agreement).

In consideration of the premises set forth herein and in the Loan Documents, the
receipt and sufficiency of which are hereby acknowledged, the Company hereby
agrees with the Administrative Agent for the ratable benefit of the Secured
Parties as follows:

ARTICLE I
DEFINITIONS

Section 1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.

Section 1.2. Terms Defined in UCC. Terms defined in the UCC that are not
otherwise defined in this Security Agreement or the Credit Agreement are used
herein as defined in the UCC.

Section 1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the preamble and Preliminary
Statement above, the following terms shall have the following meanings:

“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.

“Australian Deed Polls” means of (x) that certain Deed Poll, dated as of May 29,
2009, by QBE Lenders’ Mortgage Insurance Limited in favor of the Noteholder (as
defined in the QBE Note) from time to time and the Financiers (as defined
therein) and (y) that certain Deed Poll, dated as of May 29, 2009, by QBE
Holdings (AAP) Pty Limited in favor of the Noteholder (as defined in the QBE
Note) from time to time and the Financiers (as defined therein).

“Collateral” shall have the meaning set forth in Article II.

“Control” shall have the meaning set forth in Article 8 of the UCC or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

“Property” means, with respect to any Person, any right, title or interest in or
to property or assets of any kind whatsoever, whether real, personal or mixed
and whether tangible or intangible, whether now in existence or owned or
hereafter entered into or acquired.

“QBE Note” means the Note Deed entered into in December 2008 (as amended from
time to time) between QBE Insurance Group Limited and PMI Mortgage Insurance Co.
(as transferred from PMI Mortgage Insurance Co. to the Company).

“QBE Note Purchase Agreement” means the Note Purchase Agreement, entered into as
of May 29, 2009, by and between PMI Mortgage Insurance Co. and the Company, as
may be amended, restated or supplemented from time to time.

“Requirement of Law” means, as to any Person, any law, rule or regulation, or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its assets or to
which such Person or any of its assets is subject.

“Section” means a numbered section of this Security Agreement, unless another
document is specifically referenced.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

ARTICLE II
GRANT OF SECURITY INTEREST

Section 2.1 Grant of Security Interest. As collateral security for the prompt
and complete payment, performance and observance of all present and future
Obligations, whether at stated maturity, by acceleration or otherwise
(including, without limitation, all interest thereon, whether accruing prior or
subsequent to the commencement of a bankruptcy or similar proceeding involving
the Company as a debtor and whether or not such interest is an allowed claim in
any such proceeding) (all of the foregoing being herein referred to as the
“Secured Obligations”), the Company hereby assigns, transfers, pledges and
grants to the Administrative Agent, for the ratable benefit of the Secured
Parties, all of its right, title and interest in, to and under the property
described below in this Article II (all of which is collectively referred to as
the “Collateral”) for the purposes of creating a first priority security
interest in such Collateral:

(i) the QBE Note;

(ii) the QBE Note Purchase Agreement;

(iii) all present and future payments, proceeds, distributions, instruments,
compensation, interests and rights with respect to the Collateral, and all
monies due or to become due and payable to the Company with respect to the
Collateral or otherwise paid, issued or distributed from time to time in respect
of or in exchange therefor, and any instrument or other document evidencing or
representing the same (including, without limitation, all proceeds of
dissolution or liquidation); and

(iv) all proceeds of every kind and nature, including proceeds of proceeds, of
any and all of the foregoing.

Section 2.2 Limitations on Rights Upon Initial Transfer. Both the Company and
the Administrative Agent agree that any transfer of the Collateral to the
Administrative Agent prior to the occurrence and continuation of an Event of
Default has been made solely to facilitate the Administrative Agent’s exercise
of its rights and remedies in respect of the Collateral in the capacity of a
secured party under Article 9 of the UCC. Such transfer shall not entitle the
Administrative Agent to take any actions in respect of the Collateral in any
other capacity, and in no event shall the Administrative Agent be permitted to
treat the Collateral as its own property (or as property of the Secured Parties)
or exercise rights in respect thereof except as provided in this Agreement or as
available to it on default as a secured party under the UCC.

ARTICLE III
DELIVERY OF INSTRUMENTS, SECURITIES, CHATTEL PAPER AND DOCUMENTS

Section 3.1. Delivery of Instruments, Securities, Chattel Paper and Documents.
The Company will (a) deliver to the Administrative Agent immediately upon
execution of this Security Agreement an original of the QBE Note, (b) hold in
trust for the Administrative Agent upon receipt and promptly thereafter deliver
to the Administrative Agent any Chattel Paper, Securities and Instruments
constituting Collateral received after the date of this Security Agreement,
(c) upon the Administrative Agent’s request, deliver to the Administrative
Agent, and thereafter hold in trust for the Administrative Agent upon receipt
and promptly deliver to the Administrative Agent any Document evidencing or
constituting Collateral and (d) upon the Administrative Agent’s reasonable
request, deliver to the Administrative Agent a duly executed amendment to this
Security Agreement (each, an “Amendment”), pursuant to which the Company will
pledge any additional Collateral. The Company hereby authorizes the
Administrative Agent to attach each Amendment to this Security Agreement and
agrees that all additional collateral set forth in such Amendments shall be
considered to be part of the Collateral.

ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS

The Company hereby represents, warrants and covenants that:

Section 4.1. Pledged Collateral. Immediately prior to giving effect to this
Agreement, the Company is the sole holder of record and the sole beneficial
owner of the Collateral free and clear of any Lien thereon or affecting the
title thereto, except the Lien created hereunder.

Section 4.2. Place of Perfection; Records; Etc. The organizational number issued
to the Company by the State of Delaware is 2366199. The federal employer
identification number of the Company is 94-3199675. The Company agrees to
furnish to the Administrative Agent prompt written notice of any change in:
(i) the Company’s name; (ii) the location of the Company’s chief executive
office or its principal place of business; (iii) the Company’s organizational
legal entity designation or jurisdiction of incorporation or formation; (iv) the
Company’s federal taxpayer identification number or organizational
identification number assigned to it by its jurisdiction of incorporation or
formation; or (v) the acquisition by the Company of any property that
constitutes Collateral and for which additional filings or recordings are
necessary to perfect and maintain the Administrative Agent’s security interest
therein. The Company agrees not to effect or permit any change referred to in
the preceding sentence unless the Company has made or requested to be made all
filings under the UCC or other applicable law that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and perfected, first priority security interest in the Collateral,
all of which filings shall be in form and substance satisfactory to the
Administrative Agent.

Section 4.3. Sale or Other Disposition of Pledged Collateral. The Company will
not assign (by operation of law or otherwise), sell, lease, transfer, encumber,
pledge or grant a Lien on the Collateral in favor of any Person other than the
Administrative Agent or otherwise dispose of or abandon, nor will it suffer or
permit any of the same to occur with respect to, any Collateral, and the
inclusion of “proceeds” of the Collateral under the security interest granted
herein shall not be deemed a consent by the Administrative Agent or any other
Secured Party to any sale or other disposition of any Collateral.

Section 4.4. Authority; Binding Obligation. The Company has the right and
requisite corporate authority to pledge, assign, deliver and set over the
Collateral to the Administrative Agent as provided herein. This Security
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

Section 4.5. Required Consents. Except as may be required in connection with any
disposition of any portion of the Collateral by laws affecting the offering and
sale of securities generally and the filing of a UCC financing statement in the
form annexed hereto as Exhibit A in the office of the Secretary of State of the
State of Delaware, (i) no consent of any Person (including, without limitation,
any shareholders, partners or creditors of the Company) and no license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with any Governmental Authority that has not
been made or obtained on or prior to the date hereof is required to be made or
obtained by the Company in connection with (a) the execution or delivery by the
Company, validity or enforceability against the Company, or the performance by
the Company of, this Security Agreement, (b) the creation or maintenance by the
Company of the security interest created hereby or the perfection thereof
(including the first priority nature of such security interest) except as
provided under applicable law with respect to the filing of continuation
statements or amendments to financing statements and (ii) no consent of any
Person (including, without limitation, any shareholders, partners or creditors
of the Company) and no license, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing or declaration with any
Governmental Authority is required to be made or obtained by the Company in
connection with the exercise by the Administrative Agent of the rights provided
for in this Security Agreement or the remedies in respect of the Collateral
pursuant to this Security Agreement.

Section 4.6. Nature of Security Interest, etc. No financing statement or
security agreement describing all or any portion of the Collateral naming the
Company as debtor has been filed or is of record in any jurisdiction except for
financing statements or security agreements naming the Administrative Agent as
the secured party. The Company will not authorize the filing of any financing
statement naming it as debtor covering all or any portion of the Collateral. The
Company acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
naming it as debtor covering all or any portion of the Collateral without the
prior written consent of the Administrative Agent, subject to the Company’s
rights under Section 9-509(d)(2) of the UCC. Upon the filing of a UCC financing
statement in the form annexed hereto as Exhibit A in the office of the Secretary
of State of the State of Delaware, the pledge of the Collateral pursuant to this
Security Agreement creates a valid and perfected first priority security
interest in favor of the Administrative Agent for the ratable benefit of the
Secured Parties in the Collateral, securing the prompt and complete payment,
performance and observance of the Secured Obligations, subject to no other Lien.

Section 4.7. Modification of Agreements. It will not, without the prior written
consent of the Administrative Agent, execute any document or instrument or take
any other action of any kind which may, in the reasonable judgment of the
Administrative Agent, reasonably be expected to have an adverse effect on the
value of the Collateral or any rights or remedies in respect of the Collateral
of the Secured Parties set forth in or arising under this Security Agreement,
including but not limited to agreeing to any modification, amendment, waiver, or
consent under or with respect to the QBE Note, the QBE Note Purchase Agreement,
the Australian Deed Polls, or the provisions of the QBE Share Sale Agreements
relating to or affecting the QBE Note, in each case having such effect.

Section 4.8. Further Assurances. It will, at its sole cost and expense, perform
all acts and promptly execute, acknowledge and deliver all such documents and
instruments and take all such actions, in each case, reasonably requested by the
Administrative Agent from time to time to evidence, perfect, maintain or enforce
the Administrative Agent’s first priority security interest granted herein or
otherwise in furtherance of the provisions of this Security Agreement. In
addition and without limiting the foregoing, the Company will (w) promptly from
time to time following the request of the Administrative Agent, request that the
issuer of the QBE Note furnish any and all notices, reports and other
information relating to the QBE Note that the Company is then entitled to
receive (whether pursuant to the terms of the QBE Note or otherwise) and upon
receipt thereof will deliver copies of same to the Administrative Agent
(x) promptly forward to the Administrative Agent true and complete copies of any
notices received or given by the Company or PMI Insurance relating to the QBE
Note or the amount actually or potentially owed thereon, including but not
limited to any notice or other communication regarding a breach of “Warranties”
or relating to the “Actual Insurance Loss Percentage”, as applicable, under
either of the QBE Share Sale Agreements, together with copies of any responses
thereto, (y) keep the Administrative Agent fully informed of any reduction to
the QBE Note Interest (other than by virtue of the capitalization of any such
portion thereof in accordance with the terms of the QBE Note as in effect on the
Restatement Effective Date) or to the QBE Note Principal, in each case that has
occurred pursuant to Section 7 of the QBE Note or otherwise and (z) take any and
all actions necessary, or in the reasonable opinion of the Administrative Agent
desirable, to (i) defend title to the Collateral against all Persons and
(ii) defend the security interest of the Administrative Agent in the Collateral
and the priority thereof.

Section 4.9. Authority; Binding Obligation of QBE Note and Australian Deed
Polls.

(a) To the best of its knowledge, the QBE Note has been duly authorized,
authenticated or issued and delivered by the Issuer thereof, and is the legal,
valid and binding obligation of such issuer enforceable in accordance with its
terms, and as of the date of this Agreement, the Issuer is not in default
thereunder.

(b) To the best of its knowledge, each of the Australian Deed Polls is the
legal, valid and binding obligation of each party thereto.

Section 4.10. Adjustments to the QBE Note Amount. Except with the prior written
consent of the Administrative Agent, the Company will not and will not suffer or
permit any of its Subsidiaries to agree to any reduction of the QBE Note
Principal or QBE Note Interest (including, but not limited to, consenting to any
“Claim” respecting a breach of “Warranties” or agreeing to resolution of the
amount of the “Actual Insurance Loss Percentage” (as each such term is defined
in the applicable QBE Share Sale Agreement) that would result in such an
adjustment) (i) if at the time of such proposed adjustment or immediately after
giving effect thereto (irrespective of whether a Default or Event of Default has
occurred or is then continuing) the QBE Note Amount is or would be less than an
amount equal to 125% of the Aggregate Commitments then outstanding or (ii) at
any time during the continuance of an Event of Default.

Section 4.11. Notices under Australian Deed Polls. The Company acknowledges and
agrees that the Administrative Agent shall at all times have the right to obtain
information and notices, and exercise such other rights, as are provided to the
Administrative Agent under, and pursuant and subject to the terms and conditions
set forth in, the Australian Deed Polls.

ARTICLE V
APPLICATION OF CASH COLLATERAL; EXPENSES

Section 5.1. Application of Cash Collateral. Any monies received and retained by
the Administrative Agent as additional collateral hereunder pursuant to the
foregoing provisions may, at any time and from time to time, be applied by the
Administrative Agent in the manner set forth in Section 8.03 of the Credit
Agreement.Section 5.2. Expenses. Company will upon demand pay the Administrative
Agent or any other Secured Party for any and all reasonable out-of-pocket costs,
sums, and expenses which such Persons may pay or incur pursuant to the
provisions of this Security Agreement or in enforcing the Secured Obligations,
the Collateral or the security interest granted hereunder, including, but not
limited to, all filing or recording fees, court costs, collection charges,
travel expenses, telephone fees, duplicating fees and reasonable attorneys’ fees
and expenses. Such expenses shall include, without limitation, any such costs
paid or incurred by the Administrative Agent or any other Secured Party in
connection with any waivers, amendments, modifications, extensions, renewals or
renegotiations. All of the foregoing shall be part of the Secured Obligations
and be payable on demand.

ARTICLE VI
REMEDIES

Section 6.1. Remedies Upon an Event of Default.

(a) Upon the occurrence and for so long as an Event of Default is continuing,
the Administrative Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the UCC at that
time (whether or not applicable to the affected Collateral) and may also,
without obligation to resort to other security, at any time and from time to
time sell, resell, assign and deliver, in its sole discretion, all or any of the
Collateral, in one or more parcels at the same or different times, and all
right, title and interest, claim and demand therein and right of redemption
thereof, on any securities exchange on which any Collateral or any of them may
be listed, or at public or private sale, for cash, upon credit or for future
delivery, and in connection therewith the Administrative Agent may grant
options, the Company hereby waiving and releasing any and all equity and right
of redemption. Without limiting the generality of the foregoing, upon the
occurrence and for so long as an Event of Default is continuing, the
Administrative Agent may exercise any or all of the following (i) any and all
rights and remedies to, without notice to the Company, compromise and settle,
and to reach accord and satisfaction regarding, the amount due on the QBE Note,
(ii) any and all rights and remedies to enforce the QBE Note against the parties
thereto and (iii) any and all rights and remedies provided to the Administrative
Agent under any of the Australian Deed Polls.

(b) If any of the Collateral is sold by the Administrative Agent upon credit or
for future delivery, the Administrative Agent shall not be liable for the
failure of the purchaser to purchase or pay for the same and, in the event of
any such failure, the Administrative Agent may resell such Collateral. In no
event shall the Company be credited with any part of the proceeds of sale of any
Collateral until cash payment thereof has actually been received by the
Administrative Agent.

(c) The Administrative Agent or any other Secured Party may purchase any
Collateral at any public sale and, if any Collateral is of a type customarily
sold in a recognized market or is of the type which is the subject of widely
distributed standard price quotations, the Administrative Agent or any other
Secured Party may purchase such Collateral at private sale, free from any right
of redemption, which is hereby waived and released to the extent permitted by
applicable law, and in each case may make payment therefor by any means,
including, without limitation, by release or discharge of Secured Obligations in
lieu of cash payment.

(d) The Administrative Agent shall apply the cash proceeds actually received
from any sale or other disposition of the Collateral to the payment of the
Secured Obligations as provided in Section 8.03 of the Credit Agreement. The
Company shall remain liable for any deficiency with respect to the Secured
Obligations, which shall bear interest and be payable at the interest rate
applicable to such Secured Obligations at such time. The rights of the Company
to receive any surplus, if any, shall be subject to any duty of the
Administrative Agent imposed by law to the holder of any subordinate security
interest in the Collateral known to the Administrative Agent. Nothing contained
herein shall be construed as requiring the Administrative Agent to take any such
action at any time.

(e) Except for any notices or advertisements required by applicable law which
are not permitted to be waived, no demand, advertisement or notice, all of which
are hereby expressly waived, shall be required in connection with any sale or
other disposition of any part of the Collateral which threatens to decline
speedily in value or which is of a type customarily sold on a recognized market;
otherwise the Administrative Agent shall give the Company at least ten days’
prior notice of the time and place of any public sale and of the time after
which any private sale or other disposition is to be made, which notice the
Company agrees is reasonable, all other demands, advertisements and notices
being hereby waived except as set forth above.

(f) The Administrative Agent shall not be obligated to make any sale of
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale may have been given. The Administrative Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.

(g) The Company agrees to the maximum extent permitted by applicable law that
following the occurrence and during the continuance of an Event of Default it
will not at any time plead, claim or take the benefit of any appraisal,
valuation, stay, extension, moratorium or redemption law now or hereafter in
force in order to prevent or delay the enforcement of this Security Agreement,
or the absolute sale of the whole or any part of the Collateral or the
possession thereof by any purchaser at any sale hereunder, and the Company
waives the benefit of all such laws to the extent it lawfully may do so. The
Company agrees that it will not interfere with any right, power and remedy of
the Administrative Agent provided for in this Security Agreement or now or
hereafter existing at law or in equity or by statute or otherwise, or the
exercise or beginning of the exercise by the Administrative Agent of any one or
more of such rights, powers or remedies. No failure or delay on the part of the
Administrative Agent to exercise any such right, power or remedy and no notice
or demand which may be given to or made upon the Company by the Administrative
Agent with respect to any such remedies shall operate as a waiver thereof, or
limit or impair the Administrative Agent’s right to take any action or to
exercise any power or remedy hereunder, without notice or demand, or prejudice
its rights as against the Company in any respect.

(h) The Company acknowledges and agrees that the exercise by the Administrative
Agent of its rights and remedies under this Security Agreement, or the QBE Note,
or any of the Australian Deed Polls shall not be deemed to be an election or
proposal to retain the Collateral in satisfaction, in whole or in part, of the
Secured Obligations.

Section 6.2. Specific Performance. The Company acknowledges and agrees that its
failure to perform the obligations provided by Sections 4.07, 4.08, 4.10, and
4.11 of this Security Agreement will result in irreparable injury to the Secured
Parties for which there is no adequate remedy at law, and that it will not be
possible to measure damages for such injuries precisely. In addition, and
without limiting the generality of the foregoing, the Company acknowledges that
(i) because of its financial circumstances an award against it of monetary
damages in addition to the amounts that it already owes in respect of the
Obligations is of uncertain collectibility, (ii) the provisions of
Sections 4.07, 4.08, 4.10, and 4.11 are required and intended to assure to the
Administrative Agent for the benefit of the Secured Parties certain critical and
specific rights in respect of the QBE Note provided to them as Collateral for
the repayment of the Obligations, for which rights an award of damages would be
an inadequate and insufficient substitute, and (iii) the provisions of
Sections 4.07, 4.08, 4.10, and 4.11 and their specific performance are required
and intended to provide to the Administrative Agent and the Secured Parties
certain critical rights with respect to the QBE Note as Collateral which the
issuer of the QBE Note and the purchasers under the QBE Share Sale Agreements
have acknowledged the Company enjoys against such issuer and purchasers directly
and specific performance of such provisions by the Company is essential to
provide such rights to the Administrative Agent and Secured Parties, and (iv) in
exchange for and in reliance on obtaining such rights, including specifically
the right to enforce Sections 4.07, 4.08, 4.10 and 4.11 by specific performance,
the Secured Parties have released certain other Collateral previously provided
to them and provided certain waivers and amendments to the Credit Agreement that
have enabled the Company to avoid an immediate Event of Default. Accordingly,
the Administrative Agent shall, in addition to any other claims or actions for
damages or other remedies, be entitled to entry of a decree of specific
performance, including a temporary restraining order, preliminary and/or
permanent injunction and other equitable remedies in connection with any breach
or violation by the Company of any of Sections 4.07, 4.08, 4.10, or 4.11 of this
Security Agreement. The Company (a) specifically waives the right to notice of
the presentation of a motion for the entry of a temporary restraining order
specifically to perform such provisions, (b) agrees that one Business Day’s
notice shall be adequate notice of the presentation of a motion for entry of a
preliminary injunction specifically to perform such provisions, (c) agrees that
five Business Days’ notice shall be adequate notice of the presentation of a
motion for entry of a permanent injunction specifically to perform such
provisions, and (d) agrees that a temporary restraining order, and a preliminary
or permanent injunction, enforcing any and all such provisions and ordering
their specific performance by the Company may each be entered at any time and
from time to time without the posting of any bond by or in favor of the
Administrative Agent or Secured Parties, and unconditionally and irrevocably
waives all rights to seek or require the posting of such a bond.

Section 6.3. All Remedies Cumulative. The remedies provided herein in favor of
the Administrative Agent shall not be deemed exclusive, but shall be cumulative,
and shall be in addition to all other remedies in favor of the Administrative
Agent existing at law or in equity.         .

ARTICLE VII
ATTORNEY IN FACT; PROXY

Section 7.1. Administrative Agent Appointed Attorney-in-Fact. (a) To effectuate
the terms and provisions hereof, the Company hereby appoints the Administrative
Agent as its attorney-in-fact for the purpose, from and after the occurrence and
for so long as an Event of Default is continuing, of carrying out the provisions
of this Security Agreement and taking any action and executing any instrument
which the Administrative Agent may deem necessary or advisable to accomplish the
purposes hereof. Without limiting the generality of the foregoing, the
Administrative Agent shall, from and after the occurrence and for so long as an
Event of Default is continuing, have the right and power to:

  (i)   receive, endorse and collect all checks and other orders for the payment
of money made payable to the Company representing any interest or dividend or
other distribution or amount payable in respect of the Collateral or any part
thereof and to give full discharge for the same, and

  (ii)   to execute endorsements, assignments or other instruments of conveyance
or transfer with respect to all or any of the Collateral and to exercise all
rights and privileges of (or on behalf of) the owner of the Collateral.

(b) All acts done under the foregoing authorization are hereby ratified and
approved by the Company and neither the Administrative Agent, any Affiliate of
the Administrative Agent, any agent, any other Secured Party nor any designee or
agent thereof shall be liable for any acts of commission or omission, for any
error of judgment or for any mistake of fact or law except for acts of gross
negligence or willful misconduct.

(c) This power of attorney, being coupled with an interest, is irrevocable until
the Termination Date (as defined below) has occurred.

Section 7.2. Administrative Agent’s Duties; Reasonable Care. (a) The
Administrative Agent shall have the duty to exercise reasonable care in the
custody and preservation of any Collateral in its possession, which duty shall
be fully satisfied if the Administrative Agent maintains safe custody of such
Collateral and, with respect to any calls, conversions, exchanges, redemptions,
offers, tenders or similar matters relating to any such Collateral (herein
called “Events”),

(i) the Administrative Agent exercises reasonable care to ascertain the
occurrence and to give reasonable notice to the Company of any Events applicable
to any Collateral which is registered and held in the name of the Administrative
Agent or its nominee,

(ii) the Administrative Agent gives the Company reasonable notice of the
occurrence of any Events, of which the Administrative Agent has received actual
knowledge, as to any securities which are in bearer form or are not registered
and held in the name of the Administrative Agent or its nominee (the Company
agreeing to give the Administrative Agent reasonable notice of the occurrence of
any Events applicable to any securities in the possession of the Administrative
Agent of which the Company has received knowledge), and

(iii) in the exercise of its sole discretion (x) the Administrative Agent
endeavors to take such action with respect to any of the Events as the Company
may reasonably and specifically request in writing in sufficient time for such
action to be evaluated and taken or (y) if the Administrative Agent determines
that the action requested might adversely affect the value of the Collateral as
collateral, the collection of the Secured Obligations, or otherwise prejudice
the interests of the Administrative Agent or any Secured Party, the
Administrative Agent gives reasonable notice to the Company that any such
requested action will not be taken and if the Administrative Agent makes such
determination or if the Company fails to make such timely request, the
Administrative Agent takes such other action as it deems advisable in the
circumstances.

(b) Except as hereinabove specifically set forth, the Administrative Agent shall
have no further obligation to ascertain the occurrence of, or to notify the
Company with respect to, any Events and shall not be deemed to assume any such
further obligation as a result of the establishment by the Administrative Agent
of any internal procedures with respect to any securities in its possession, nor
shall the Administrative Agent be deemed to assume any other responsibility for,
or obligation or duty with respect to, any Collateral, or its use, of any nature
or kind, or any matter or proceedings arising out of or relating thereto,
including, without limitation, any obligation or duty to take any action to
collect, preserve or protect its or the Company’s rights in the Collateral or
against any prior parties thereto, but the same shall be at the Company’s sole
risk and responsibility at all times.

(c) The Company hereby releases the Administrative Agent and the Secured Parties
from any claims, causes of action and demands at any time arising out of or with
respect to this Security Agreement, the Collateral and/or any actions taken or
omitted to be taken by the Administrative Agent or the Secured Parties with
respect thereto (except such claims, causes of action and demands arising from
the gross negligence or willful misconduct of the Administrative Agent or the
Secured Parties) and the Company hereby agrees to hold the Administrative Agent
and the Secured Parties harmless from and with respect to any and all such
claims, causes of action and demands (except such claims, causes of action and
demands arising from the gross negligence or willful misconduct of the
Administrative Agent or the Secured Parties).

Section 7.3. Rights and Remedies Not Waived. The Administrative Agent’s prior
recourse to any Collateral shall not constitute a condition of any demand, suit
or proceeding for payment or collection of the Secured Obligations. No act,
omission or delay by the Administrative Agent or any other Secured Party shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by the Administrative Agent of any default hereunder or right
or remedy which it may have shall operate as a waiver of any other default,
right or remedy or of the same default, right or remedy on a future occasion.

Section 7.4. Administrative Agent May Perform. If the Company fails to perform
any agreement contained herein, the Administrative Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Administrative
Agent incurred in connection therewith shall be payable by the Company pursuant
to the terms of Section 5.05 hereof.

ARTICLE VIII
EXPENSES; GENERAL PROVISIONS

Section 8.1. SETOFF; WAIVER OF JURY TRIAL AND SETOFF; CONSENT TO JURISDICTION,
ETC. (a) IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO, IN CONNECTION WITH,
OR ARISING OUT OF THIS SECURITY AGREEMENT OR ANY OTHER SECURITY DOCUMENT, OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS SECURITY AGREEMENT OR ANY
OTHER SECURITY DOCUMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION
OR ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN
THE COMPANY ON THE ONE HAND AND THE ADMINISTRATIVE AGENT, OR ANY ONE OR MORE OF
THE SECURED PARTIES ON THE OTHER HAND, THE COMPANY HEREBY, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO, (i) WAIVES THE RIGHT TO INTERPOSE ANY SETOFF,
RECOUPMENT, COUNTERCLAIM OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH LEGAL ACTION
OR PROCEEDING, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, RECOUPMENT,
COUNTERCLAIM OR CROSS-CLAIM, UNLESS SUCH SETOFF, RECOUPMENT, COUNTERCLAIM OR
CROSS-CLAIM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR STATE PROCEDURAL
LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION AND (ii) WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LEGAL ACTION OR PROCEEDING,
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO, ACTUAL DAMAGES (AND AGREES THAT IT MAY RECOVER ONLY
ACTUAL DAMAGES, AND ONLY IF AND TO THE EXTENT DETERMINED IN A FINAL ORDER OF A
COURT OF COMPETENT JURISDICTION, WHICH IS NO LONGER SUBJECT TO APPEAL TO HAVE
RESULTED FROM SUCH OTHER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
SECURITY AGREEMENT, THE COMPANY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE COMPANY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS SECURITY AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE
FOREGOING: (1) THE ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE ADMINISTRATIVE AGENT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON ANY SECURITY FOR THE SECURED OBLIGATIONS AND (2) THE COMPANY
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.

(c) THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
(RETURN RECEIPT REQUESTED) DIRECTED TO THE COMPANY AT ITS ADDRESS PROVIDED FOR
IN SECTION 8.03 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5)
DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

(d) NO PROVISION OF THIS SECURITY AGREEMENT OR ANY OTHER SECURITY DOCUMENT SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, OR OTHER SECURED PARTY TO EXERCISE
SELF-HELP REMEDIES SUCH AS SETOFF OR OBTAINING PROVISIONAL OR ANCILLARY REMEDIES
FROM A COURT OF COMPETENT JURISDICTION BEFORE, AFTER, OR DURING THE PENDENCY OF
ANY ARBITRATION OR OTHER PROCEEDING. THE EXERCISE OF A REMEDY DOES NOT WAIVE THE
RIGHT THAT ANY PARTY MAY HAVE TO RESORT TO ARBITRATION OR REFERENCE.

(e) THE COMPANY HEREBY WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS SECURITY
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY HEREBY AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE COMPANY HEREBY FURTHER AGREES THAT ITS RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS SECURITY AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS SECURITY AGREEMENT.

(f) THE COMPANY AGREES THAT THIS SECTION 8.01 IS A SPECIFIC AND MATERIAL ASPECT
OF THIS SECURITY AGREEMENT AND ACKNOWLEDGES THAT THE SECURED PARTIES WOULD NOT
EXTEND TO THE COMPANY ANY FINANCIAL ACCOMMODATIONS IF THIS SECTION 8.01 WERE NOT
PART OF THIS SECURITY AGREEMENT.

Section 8.2. Admissibility of Security Agreement. The Company agrees that any
copy of this Security Agreement signed by the Company and transmitted by
telecopier for delivery to the Administrative Agent shall be admissible in
evidence as the original itself in any judicial or administrative proceeding,
whether or not the original is in existence.

Section 8.3. Address for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing (unless otherwise
expressly provided herein) and mailed, telegraphed, telexed, telecopied, cabled
or delivered, if to the Company, at the address specified below its signature
below; and if to the Administrative Agent, at its address specified below its
signature below or, at such other address as shall be designated by any party in
a written notice to the other parties hereto. All notices and communications
given by a telecommunications device shall be capable of creating a written
record of confirmation receipt. All such notices and communications shall be
mailed, telegraphed, telexed, telecopied or cabled or sent by overnight courier
or personal delivery, and shall be effective when received.

Section 8.4. Amendments and Modification. No provision hereof shall be amended,
supplemented or otherwise modified, altered, waived or limited except by written
instrument expressly referring to this Security Agreement and to such provision,
and executed by all parties to this Security Agreement.

Section 8.5. Continuing Security Interest; Assignments. This Security Agreement
shall create a continuing security interest in the Collateral and shall
(a) remain in full force and effect until the date (the “Termination Date”) that
is the earliest to occur of (i) the date on which Liens created hereunder are
released by the Administrative Agent upon the written consent of all the Lenders
pursuant to Section 10.01 of the Credit Agreement and (ii) the date on which the
Credit Agreement has been irrevocably and permanently terminated and all of the
Secured Obligations have been paid in full in immediately available funds,
(b) be binding upon and inure to the benefit of, and be enforceable by, the
Company and its successors and assigns, and (c) be binding upon and inure to the
benefit of, and be enforceable by, the Administrative Agent and its successors,
transferees and assigns.

Section 8.6. Payments As Secured Obligations. All amounts payable from time to
time by the Company hereunder shall constitute part of the Secured Obligations.

Section 8.7. Counterparts. This Security Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.

Section 8.8. Captions; Separability. The captions of the various sections and
paragraphs of this Security Agreement have been inserted only for the purposes
of convenience; such captions are not a part of this Security Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Security Agreement.

Section 8.9. Security Interest Absolute. All rights of the Administrative Agent
and security interests hereunder, and all of the obligations of the Company
hereunder, shall be absolute and unconditional, irrespective of:

(i) the lack of validity or enforceability of any Loan Document, any other
Security Document, any particular Secured Obligation or any other agreement or
instrument relating thereto;

(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Secured Obligations, or any other amendment or waiver of
or any consent to any departure from any Loan Document, any other Security
Document or any other agreement or instrument relating thereto;

(iii) any exchange, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Secured Obligations; or

(iv) any other circumstance which might otherwise constitute a defense available
to, or a discharge of, the Company or a third party grantor of a security
interest or Lien.

Section 8.10. Termination. On the Termination Date, this Security Agreement
shall terminate and the Administrative Agent, at the written request and expense
of the Company, will promptly execute and deliver to the Company a proper
instrument or instruments (including UCC termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Security Agreement, and
will duly assign, transfer and deliver to the Company (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Administrative Agent or which may have been transferred or
assigned to the Administrative Agent in connection with the grant of the
security interests hereunder and as has not theretofore been sold or otherwise
applied or released pursuant to this Security Agreement.

Section 8.11. Governing Law. This Security Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.

Section 8.12. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any provisions of this Security Agreement.

Section 8.13. Severability. If for any reason any provision or provisions hereof
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or effect those portions of this
Security Agreement which are valid.

Section 8.14. Schedules. The Administrative Agent is authorized to annex hereto
any schedules referred to herein.

Section 8.15. Acknowledgment of Receipt. The Company acknowledges receipt of a
copy of this Security Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company and the Administrative Agent have executed this
Security Agreement as of the date first above written.

      THE PMI GROUP, INC.   By:  
/s/ Donald P. Lofe, Jr.
   
 
Name:  
Donald P. Lofe, Jr.
Title:  
Executive Vice President, Chief Financial Officer and Chief
Administrative Officer

    Address:

3003 Oak Road
Walnut Creek, CA 94597-2098
Attention: Chief Financial Officer
Telephone: 925-658-6530
Telecopier: 925-658-6519

with copies to:

Corporate Treasurer
Telephone: 925-658-6204
Telecopier: 925-658-6519
and
General Counsel
Telephone: 925-658-6212
Telecopier: 925-658-6175

      BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT
 

By:
  /s/ Tyler D. Levings
 
   
Name:
  Tyler D. Levings
Title:
  Senior Vice President

 

Address:

Bank of America, N.A.
Agency Management
1455 Market Street, 5th Floor
Mail Code: CA5-701-05-19
San Francisco, CA 94103
Attention: Aamir Saleem
Telephone: 415 436 2769
Telecopier: 415 503 5089
Electronic Mail: aamir.saleem@bankofamerica.com

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