CONSOLIDATED EARNINGS RATIOS
The following table sets forth, for the years and periods indicated, Protective Life Insurance Company’s (the “Company”) ratios of:
· | Consolidated earnings to fixed charges. |
· | Consolidated earnings to fixed charges before interest credited on investment products. |
Nine Months Ended | ||||||||||||||||||||||||||||
September 30 | Year Ended December 31 | |||||||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
Ratio of Consolidated Earnings to Fixed Charges(1) | 1.4 | 1.5 | 1.5 | 1.5 | 1.6 | 1.5 | 1.3 | |||||||||||||||||||||
Ratio of Consolidated Earnings to Fixed Charges | ||||||||||||||||||||||||||||
before Interest Credited on Investment Products(2) | 7.7 | 20.3 | 20.1 | 38.5 | 46.4 | 83.4 | 49.1 | |||||||||||||||||||||
(1) The Company 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 expenses) (I) and interest credited on investment products (IP) by the sum of interest expense | ||||||||||||||||||||||||||||
(I) and by interest expense on investment products (IP). The formula for this ratio is (BT+I+I+IP)/(I+IP). The Company | ||||||||||||||||||||||||||||
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) The Company 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. | ||||||||||||||||||||||||||||
Exhibit 12
(continued)
COMPUTATION OF CONSOLIDATED EARNINGS RATIOS
(Dollars in thousands)
Nine Months Ended | ||||||||||||||||||||||||||||
September 30 | Year Ended December 31 | |||||||||||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
Computation of Ratio of Consolidated Earnings to | ||||||||||||||||||||||||||||
Fixed Charges | ||||||||||||||||||||||||||||
Income from Continuing Operations before | ||||||||||||||||||||||||||||
Income Tax | $ | 303,720 | $ | 291,325 | $ | 419,748 | $ | 361,215 | $ | 371,163 | $ | 349,972 | $ | 241,623 | ||||||||||||||
Add Interest Expense | 45,618 | 15,090 | 22,012 | 9,632 | 8,167 | 4,249 | 5,019 | |||||||||||||||||||||
Add Interest Credited on Investment Products | 753,170 | 631,131 | 891,627 | 726,301 | 649,216 | 647,695 | 900,930 | |||||||||||||||||||||
Earnings before Interest, Interest Credited on | ||||||||||||||||||||||||||||
Investment Products and Taxes | $ | 1,102,508 | $ | 937,546 | $ | 1,333,387 | $ | 1,097,148 | $ | 1,028,546 | $ | 1,001,916 | $ | 1,147,572 | ||||||||||||||
Earnings before Interest, Interest Credited on | ||||||||||||||||||||||||||||
Investment Products and Taxes Divided by | ||||||||||||||||||||||||||||
Interest expense and Interest Credited on | ||||||||||||||||||||||||||||
Investment Products | 1.4 | 1.5 | 1.5 | 1.5 | 1.6 | 1.5 | 1.3 | |||||||||||||||||||||
Computation of Ratio of Consolidated Earnings to | ||||||||||||||||||||||||||||
Fixed Charges Before Interest Credited on | ||||||||||||||||||||||||||||
Investment Products | ||||||||||||||||||||||||||||
Income from Continuing Operations before | ||||||||||||||||||||||||||||
Income Tax | $ | 303,720 | $ | 291,325 | $ | 419,748 | $ | 361,215 | $ | 371,163 | $ | 349,972 | $ | 241,623 | ||||||||||||||
Add Interest Expense | 45,618 | 15,090 | 22,012 | 9,632 | 8,167 | 4,249 | 5,019 | |||||||||||||||||||||
Earnings before Interest and Taxes | $ | 349,338 | $ | 306,415 | $ | 441,760 | $ | 370,847 | $ | 379,330 | $ | 354,221 | $ | 246,642 | ||||||||||||||
Earnings before Interest and Taxes Divided | ||||||||||||||||||||||||||||
by Interest Expense | 7.7 | 20.3 | 20.1 | 38.5 | 46.4 | 83.4 | 49.1 | |||||||||||||||||||||