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| Exhibit 12 | ||||
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| Three Months Ended |
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| Nine Months Ended | ||||||
| September 30, |
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| September 30, | ||||||
(in millions, except ratios) |
| 2014 |
| 2013 |
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| 2014 |
| 2013 |
Earnings: |
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Pre-tax income(a): | $ | 2,589 | $ | 1,045 |
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| $ | 8,640 | $ | 6,341 |
Add - Fixed charges |
| 650 |
| 993 |
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| 2,372 |
| 3,229 |
Adjusted Pre-tax income | $ | 3,239 | $ | 2,038 |
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| $ | 11,012 | $ | 9,570 |
Fixed charges: |
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Interest expense | $ | 386 | $ | 767 |
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| $ | 1,712 | $ | 2,501 |
Portion of rent expense representing interest |
| 32 |
| 35 |
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| 96 |
| 103 |
Interest credited to policy and contract holders |
| 232 |
| 191 |
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| 564 |
| 625 |
Total fixed charges | $ | 650 | $ | 993 |
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| $ | 2,372 | $ | 3,229 |
Total fixed charges, excluding interest credited to |
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policy and contract holders | $ | 418 | $ | 802 |
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| $ | 1,808 | $ | 2,604 |
Ratio of earnings to fixed charges |
| 4.98 |
| 2.05 |
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| 4.64 |
| 2.96 |
Ratio of earnings to fixed charges, excluding interest |
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credited to policy and contract holders(b) |
| 7.75 |
| 2.54 |
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| 6.09 |
| 3.68 |
(a) From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest.
(b) The Ratio of earnings to fixed charges, excluding interest credited to policy and contract holders, removes interest credited to guaranteed investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed from earnings used in this calculation. GICs and GIAs are entered into by our subsidiaries. The proceeds from GICs and GIAs are invested in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related policyholders obligation or contract, with the intent of earning a profit from the spread.
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