Exhibit 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
| Years Ended December 31, | ||||||||||||||||||||
| 2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Gross premium to surplus ratio: | ||||||||||||||||||||
| Gross written premium | $ | 2,460,498 | $ | 2,243,843 | $ | 2,049,116 | $ | 1,992,361 | $ | 1,746,413 | ||||||||||
| Policyholders’ surplus | 1,744,889 | 1,342,054 | 1,110,268 | 844,851 | 591,889 | |||||||||||||||
| Premium to surplus ratio(1) | 141.0 | % | 167.2 | % | 184.6 | % | 235.8 | % | 295.1 | % | ||||||||||
| (Gross premium to surplus ratio = gross written premium divided by policyholders’ surplus) | ||||||||||||||||||||
| Net premium to surplus ratio: | ||||||||||||||||||||
| Net written premium | $ | 1,985,641 | $ | 1,812,896 | $ | 1,495,931 | $ | 1,121,343 | $ | 867,795 | ||||||||||
| Policyholders’ surplus | 1,744,889 | 1,342,054 | 1,110,268 | 844,851 | 591,889 | |||||||||||||||
| Premium to surplus ratio(1) | 113.8 | % | 135.1 | % | 134.7 | % | 132.7 | % | 146.6 | % | ||||||||||
| (Net premium to surplus ratio = net written premium divided by policyholders’ surplus) Loss ratio: | ||||||||||||||||||||
| Loss ratio: | ||||||||||||||||||||
| Incurred loss and loss adjustment expense | $ | 1,194,925 | $ | 1,020,221 | $ | 925,130 | $ | 651,675 | $ | 494,024 | ||||||||||
| Net earned premium | 1,971,951 | 1,700,373 | 1,378,100 | 1,013,573 | 739,376 | |||||||||||||||
| Loss ratio(1) | 60.6 | % | 60.0 | % | 67.1 | % | 64.3 | % | 66.8 | % | ||||||||||
| (Loss ratio = incurred loss and loss adjustment expense divided by net earned premium) | ||||||||||||||||||||
| Expense ratio: | ||||||||||||||||||||
| Underwriting expense | $ | 473,597 | $ | 435,371 | $ | 381,680 | $ | 299,789 | $ | 199,927 | ||||||||||
| Net written premium | 1,985,641 | 1,812,896 | 1,495,931 | 1,121,343 | 867,795 | |||||||||||||||
| Expense ratio(1) | 23.9 | % | 24.0 | % | 25.5 | % | 26.7 | % | 23.0 | % | ||||||||||
| (Expense ratio = underwriting expense divided by net written premium) | ||||||||||||||||||||
| Combined ratio(1) | 84.5 | % | 84.0 | % | 92.6 | % | 91.0 | % | 89.8 | % | ||||||||||
| (Combined ratio = loss ratio plus expense ratio) | ||||||||||||||||||||
| (1) | Calculated for our insurance companies using financial data reported in accordance with statutory accounting principles. |
Exhibit 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(continued)
| Years Ended December 31, | ||||||||||||||||||||
| 2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Loss ratio: | ||||||||||||||||||||
| Incurred loss and loss adjustment expense | $ | 1,183,947 | $ | 1,011,856 | $ | 919,697 | $ | 645,230 | $ | 488,000 | ||||||||||
| Net earned premium | 1,985,086 | 1,709,189 | 1,369,988 | 1,010,692 | 738,272 | |||||||||||||||
| Loss ratio(2) | 59.6 | % | 59.2 | % | 67.1 | % | 63.8 | % | 66.1 | % | ||||||||||
| (Loss ratio = incurred loss and loss adjustment expense divided by net earned premium) | ||||||||||||||||||||
| Expense ratio: | ||||||||||||||||||||
| Underwriting expense | $ | 472,168 | $ | 427,456 | $ | 357,727 | $ | 269,390 | $ | 181,637 | ||||||||||
| Net earned premium | 1,985,086 | 1,709,189 | 1,369,988 | 1,010,692 | 738,272 | |||||||||||||||
| Expense ratio(2) | 23.8 | % | 25.0 | % | 26.1 | % | 26.7 | % | 24.6 | % | ||||||||||
| (Expense ratio = underwriting expense divided by net earned premium) | ||||||||||||||||||||
| Combined ratio(2) | 83.4 | % | 84.2 | % | 93.2 | % | 90.5 | % | 90.7 | % | ||||||||||
| (Combined ratio = loss ratio plus expense ratio) | ||||||||||||||||||||
| Ratio of earnings to fixed charges: | ||||||||||||||||||||
| Interest factor of rent expense(3) | $ | 4,067 | $ | 3,944 | $ | 3,373 | $ | 3,319 | $ | 3,067 | ||||||||||
| Interest expense | 10,304 | 11,396 | 7,684 | 8,374 | 7,453 | |||||||||||||||
| Total fixed charges | $ | 14,371 | $ | 15,340 | $ | 11,057 | $ | 11,693 | $ | 10,520 | ||||||||||
| Earnings from continuing operations before income tax expense | $ | 585,870 | $ | 509,834 | $ | 272,609 | $ | 240,635 | $ | 164,725 | ||||||||||
| Fixed charges | 14,371 | 15,340 | 11,057 | 11,693 | 10,520 | |||||||||||||||
| Earnings per calculation | $ | 600,241 | $ | 525,174 | $ | 283,666 | $ | 252,328 | $ | 175,245 | ||||||||||
| Ratio of earnings to fixed charges(4) | 41.77 | 34.24 | 25.65 | 21.58 | 16.66 | |||||||||||||||
| (2) | Calculated for our insurance companies using financial data reported in accordance with generally accepted accounting principles. | |
| (3) | Estimated to be 33% of total rent expense. | |
| (4) | Earnings per calculation divided by total fixed charges. |