Primus Guaranty (PRSG) 10-Q 2007 Q2 Quarterly report

EXHIBIT 12

PRIMUS GUARANTY, LTD
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
DISTRIBUTIONS OF SUBSIDIARY

(In thousands, except ratios)

			Six Months Ended June 30, 2007						Year Ended December 31,
									2006						2005						2004						2003						2002
Earnings (loss):
Net earnings (loss)				$	(31,234	)				$	94,891					$	4,083					$	23,685					$	78,471					$	(3,069	)
Provision (benefit) for taxes					52						42						46						46						(172	)					254
Distributions on preferred securities of subsidiary					3,861						5,683						3,865						2,138						1,854						—
Income (loss) from continuing operations before taxes(b)					(27,321	)					100,616						7,994						25,869						80,153						(2,815	)
Add:
Fixed charges					13,738						16,698						6,589						3,033						1,854						—
Subtract:
Distributions on preferred securities of subsidiary					(3,861	)					(5,683	)					(3,865	)					(2,138	)					(1,854	)					—
Adjusted earnings (loss)				$	(17,444	)				$	111,631					$	10,718					$	26,764					$	80,153					$	(2,815	)
Fixed charges:
Interest expense					9,721						10,849						2,660						881						—						—
Amortization of capitalized debt issuance costs					156						166						64						14						—						—
Distributions on preferred securities of subsidiary					3,861						5,683						3,865						2,138						1,854						—
Total fixed charges and preferred distributions				$	13,738					$	16,698					$	6,589					$	3,033					$	1,854					$	—
Ratio of earnings to combined fixed charges and distributions on preferred securities of subsidiary(a)					(1.27	)(c)					6.69						1.63						8.82						43.23						—

(a) In 2002, the ratio was not applicable as no fixed charges were incurred in such years.

(b) Income (loss) from continuing operations before taxes represents income (loss) before income taxes plus adding back distributions on preferred securities of subsidiary.

(c) Due to the loss for the six months ended June 30, 2007, the ratio coverage was less than 1:1. Additional earnings of $31.2 million would be needed to achieve the coverage ratio of 1:1.