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Principal Financial Group, Inc.
Computation of Earnings to Fixed Charges Ratio
The ratio of earnings to fixed charges is a measure of our ability to cover fixed costs with current period earnings. A high ratio indicates that earnings are sufficiently covering committed expenses. The following table sets forth, for the periods indicated, our ratios of: (1) earnings to fixed charges before interest credited on investment products and (2) earnings to fixed charges.
| | | For the year ended December 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||
1. | Income from continuing operations before income taxes | $ | 1,591.7 | $ | 1,430.8 | $ | 1,494.9 | $ | 1,124.0 | $ | 960.0 | |||||||
2. | Interest expense | 165.8 | 178.5 | 135.5 | 143.4 | 127.1 | ||||||||||||
3. | Interest factor of rental expense | 5.4 | 4.9 | 5.9 | 5.7 | 6.1 | ||||||||||||
4. | Undistributed income from equity investees | (142.2 | ) | (106.3 | ) | (113.9 | ) | (107.3 | ) | (99.9 | ) | |||||||
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5. | Earnings before interest credited on investment products | 1,620.7 | 1,507.9 | 1,522.4 | 1,165.8 | 993.3 | ||||||||||||
6. | Interest credited on investment products | 173.9 | 152.0 | 189.6 | 256.6 | 366.3 | ||||||||||||
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7. | Earnings | $ | 1,794.6 | $ | 1,659.9 | $ | 1,712.0 | $ | 1,422.4 | $ | 1,359.6 | |||||||
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8. | Interest expense | $ | 165.8 | $ | 178.5 | $ | 135.5 | $ | 143.4 | $ | 127.1 | |||||||
9. | Interest factor of rental expense | 5.4 | 4.9 | 5.9 | 5.7 | 6.1 | ||||||||||||
10. | Preferred stock dividends by registrant | — | 16.5 | 33.0 | 33.0 | 33.0 | ||||||||||||
11 | Excess of redemption value over carrying value of preferred shares redeemed | — | 8.2 | — | — | — | ||||||||||||
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12. | Fixed charges before interest credited on investment products | 171.2 | 208.1 | 174.4 | 182.1 | 166.2 | ||||||||||||
13. | Interest credited on investment products | 173.9 | 152.0 | 189.6 | 256.6 | 366.3 | ||||||||||||
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14. | Fixed charges | $ | 345.1 | $ | 360.1 | $ | 364.0 | $ | 438.7 | $ | 532.5 | |||||||
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15. | Ratio of earnings to fixed charges before interest credited on investment products (Line item 5/Line item 12) | 9.5 | 7.2 | 8.7 | 6.4 | 6.0 | ||||||||||||
16. | Ratio of earnings to fixed charges (Line item 7/Line item 14) | 5.2 | 4.6 | 4.7 | 3.2 | 2.6 | ||||||||||||
Principal Financial Group, Inc. Computation of Earnings to Fixed Charges Ratio