HCC Insurance 10-K 2008 FY Annual report

Exhibit 12

HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

STATEMENT OF RATIOS
(in thousands)

	Years Ended December 31,
	2008			2007			2006			2005			2004
Gross premium to surplus ratio:
Gross written premium	$	2,510,612		$	2,460,498		$	2,243,843		$	2,049,116		$	1,992,361
Policyholders’ surplus		1,852,684			1,744,889			1,342,054			1,110,268			844,851
Premium to surplus ratio(1)		135.5	%		141.0	%		167.2	%		184.6	%		235.8	%
(Gross premium to surplus ratio = gross written premium divided by policyholders’ surplus)
Net premium to surplus ratio:
Net written premium	$	2,064,091		$	1,985,641		$	1,812,896		$	1,495,931		$	1,121,343
Policyholders’ surplus		1,852,684			1,744,889			1,342,054			1,110,268			844,851
Premium to surplus ratio(1)		111.4	%		113.8	%		135.1	%		134.7	%		132.7	%
(Net premium to surplus ratio = net written premium divided by policyholders’ surplus) Loss ratio:
Loss ratio:
Incurred loss and loss adjustment expense	$	1,216,746		$	1,194,925		$	1,020,221		$	925,130		$	651,675
Net earned premium	$	2,000,289			1,971,951			1,700,373			1,378,100			1,013,573
Loss ratio(1)		60.8	%		60.6	%		60.0	%		67.1	%		64.3	%
(Loss ratio = incurred loss and loss adjustment expense divided by net earned premium)
Expense ratio:
Underwriting expense	$	501,948		$	473,597		$	435,371		$	381,680		$	299,789
Net written premium	$	2,064,091			1,985,641			1,812,896			1,495,931			1,121,343
Expense ratio(1)		24.3	%		23.9	%		24.0	%		25.5	%		26.7	%
(Expense ratio = underwriting expense divided by net written premium)
Combined ratio(1)		85.1	%		84.5	%		84.0	%		92.6	%		91.0	%
(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, in thousands)

	Years Ended December 31,
	2008			2007			2006			2005			2004
Loss ratio:
Incurred loss and loss adjustment expense	$	1,211,873		$	1,183,947		$	1,011,856		$	919,697		$	645,230
Net earned premium		2,007,774			1,985,086			1,709,189			1,369,988			1,010,692
Loss ratio(2)		60.4	%		59.6	%		59.2	%		67.1	%		63.8	%
(Loss ratio = incurred loss and loss adjustment expense divided by net earned premium)
Expense ratio:
Underwriting expense	$	501,537		$	472,168		$	427,456		$	357,727		$	269,390
Net earned premium		2,007,774			1,985,086			1,709,189			1,369,988			1,010,692
Expense ratio(2)		25.0	%		23.8	%		25.0	%		26.1	%		26.7	%
(Expense ratio = underwriting expense divided by net earned premium)
Combined ratio(2)		85.4	%		83.4	%		84.2	%		93.2	%		90.5	%
(Combined ratio = loss ratio plus expense ratio)
Ratio of earnings to fixed charges:
Interest factor of rent expense(3)	$	4,581		$	4,067		$	3,944		$	3,373		$	3,319
Interest expense		16,288			10,304			11,396			7,684			8,374
Total fixed charges	$	20,869		$	14,371		$	15,340		$	11,057		$	11,693
Earnings from continuing operations before income tax expense	$	463,312		$	585,870		$	509,834		$	272,609		$	240,635
Fixed charges		20,869			14,371			15,340			11,057			11,693
Earnings per calculation	$	484,181		$	600,241		$	525,174		$	283,666		$	252,328
Ratio of earnings to fixed charges(4)		23.20	%		41.77			34.24			25.65			21.58

(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.