Exhibit 12
CONSOLIDATED EARNINGS RATIOS
The following table sets forth, for the years and periods indicated, Protective Life Insurance Company’s (Protective Life) ratios of:
o Consolidated earnings to fixed charges.
o Consolidated earnings to fixed charges before interest credited on investment products.
------------------------------------------------------------------------------ 6 Months Ended June 30, Year Ended December 31, --------------------- ----------------------------------------------------- 2004 2003 2003 2002 2001 2000 1999 Ratio of Consolidated Earnings to Fixed Charges(1) 1.6 1.6 1.5 1.3 1.2 1.2 1.6 Ratio of Consolidated Earnings to Fixed Charges Before Interest Credited on Investment Products(2) 62.4 74.8 83.4 49.1 47.2 28.3 27.7 - --------------------------------------------------------------------------------------------------------------------------------
(1) | Protective Life calculates the ratio of “Consolidated Earnings to Fixed Charges” by dividing the sum of income from continuing operations before income tax (BT), interest expense (which includes an estimate of the interest component of operating lease expense) (I) and interest credited on investment products (IP) by the sum of interest expense (I) and interest credited on investment products (IP). The formula for this ratio is: (BT+I+IP)/(I+IP). Protective Life continues to sell investment products that credit interest to the contractholder. Investment products include products such as guaranteed investment contracts, annuities, and variable universal life insurance policies. The inclusion of interest credited on investment products results in a negative impact on the ratio of earnings to fixed charges because the effect of increases in interest credited to contractholders more than offsets the effect of the increases in earnings. |
(2) | Protective Life calculates the ratio of “Consolidated Earnings to Fixed Charges Before Interest Credited on Investment Products” by dividing the sum of income from continuing operations before income tax (BT) and interest expense (I) by interest expense (I). The formula for this calculation, therefore, would be: (BT+I)/I. |
COMPUTATION OF CONSOLIDATED EARNINGS RATIOS ---------------------------------------------------------------------------------------- 6 Months Ended June 30, Year Ended December 31, --------------------- -------------------------------------------------------------- 2004 2003 2003 2002 2001 2000 1999 Computation of Ratio of Consolidated Earnings to Fixed Charges Before Interest Credited on Investment Products Income from Continuing Operations before Income Tax $198,510 $160,267 $ 349,972 $ 241,623 $ 213,958 $174,622 $186,613 Add Interest Expense 3,235 2,171 4,249 5,019 4,633 6,400 7,000 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before Interest and Taxes $201,745 $162,438 $ 354,221 $ 246,642 $ 218,591 $181,022 $193,613 Earnings before Interest and Taxes Divided by Interest Expense 62.4 74.8 83.4 49.1 47.2 28.3 27.7 Computation of Ratio of Consolidated Earnings to Fixed Charges Income from Continuing Operations before Income Tax $198,510 $160,267 $ 349,972 $ 241,623 $ 213,958 $174,622 $186,613 Add Interest Expense 3,235 2,171 4,249 5,019 4,633 6,400 7,000 Add Interest Credited on Investment Products 327,199 275,733 647,695 900,930 944,098 766,004 331,746 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before Interest, Interest Credited on Investment Products and Taxes $528,944 $438,171 $1,001,916 $1,147,572 $1,162,689 $947,026 $525,359 Earnings before Interest, Interest Credited on Investment Products and Taxes Divided by Interest Expense And Interest Credited on Investment Products 1.6 1.6 1.5 1.3 1.2 1.2 1.6 - ------------------------------------------------------------------------------------------------------------------------------------