EXHIBIT 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(in thousands, except ratios)
Years ended December 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
GAAP Ratios (1) | ||||||||||||||||||||
Net loss ratio | ||||||||||||||||||||
Loss and loss adjustment expense, net | $ | 1,399,247 | $ | 1,213,029 | $ | 1,215,759 | $ | 1,211,873 | $ | 1,183,947 | ||||||||||
Net earned premium | 2,127,170 | 2,041,924 | 2,037,235 | 2,007,774 | 1,985,086 | |||||||||||||||
Net loss ratio | 65.8 | % | 59.4 | % | 59.7 | % | 60.4 | % | 59.6 | % | ||||||||||
(Net loss ratio = incurred loss and loss adjustment expense divided by net earned premium) |
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Expense ratio | ||||||||||||||||||||
Segment underwriting expense (2) | $ | 541,163 | $ | 525,702 | $ | 505,991 | $ | 496,327 | $ | 480,386 | ||||||||||
Segment revenue (3) | 2,163,077 | 2,084,848 | 2,086,126 | 2,008,767 | 2,013,532 | |||||||||||||||
Expense ratio | 25.0 | % | 25.2 | % | 24.3 | % | 24.7 | % | 23.9 | % | ||||||||||
(Expense ratio = segment underwriting expense divided by segment revenue) |
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Combined ratio | 90.8 | % | 84.6 | % | 84.0 | % | 85.1 | % | 83.5 | % | ||||||||||
(Combined ratio = net loss ratio plus expense ratio) |
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Accident year loss ratio | ||||||||||||||||||||
Loss and loss adjustment expense, net | $ | 1,399,247 | $ | 1,213,029 | $ | 1,215,759 | $ | 1,211,873 | $ | 1,183,947 | ||||||||||
Add: Favorable (adverse) development | (10,147 | ) | 22,663 | 53,524 | 82,371 | 26,397 | ||||||||||||||
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Accident year net loss and loss adjustment expense | $ | 1,389,100 | $ | 1,235,692 | $ | 1,269,283 | $ | 1,294,244 | $ | 1,210,344 | ||||||||||
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Net earned premium | $ | 2,127,170 | $ | 2,041,924 | $ | 2,037,235 | $ | 2,007,774 | $ | 1,985,086 | ||||||||||
Add: Prior year reinstatement premium | - | 3,177 | - | - | - | |||||||||||||||
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Accident year net earned premium | $ | 2,127,170 | $ | 2,045,101 | $ | 2,037,235 | $ | 2,007,774 | $ | 1,985,086 | ||||||||||
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Accident year net loss ratio | 65.3 | % | 60.4 | % | 62.3 | % | 64.5 | % | 61.0 | % | ||||||||||
(Accident year net loss ratio = accident year net loss and loss adjustment expense divided by accident year net earned premium) |
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(1) | Calculated for our insurance companies using financial data reported in accordance with generally accepted accounting principles. |
(2) | Sum of Other Expense for each of our insurance segments. |
(3) | Sum of Segment Revenue for each of our insurance segments. |
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(in thousands, except ratios)
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Years ended December 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
Ratio of earnings to fixed charges | ||||||||||||||||||||
Interest factor of rent expense (4) | $ | 5,390 | $ | 5,294 | $ | 5,277 | $ | 4,581 | $ | 4,067 | ||||||||||
Interest expense | 23,070 | 21,348 | 16,164 | 20,362 | 16,270 | |||||||||||||||
Capitalized interest | 382 | - | 51 | 104 | - | |||||||||||||||
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Total fixed charges | $ | 28,842 | $ | 26,642 | $ | 21,492 | $ | 25,047 | $ | 20,337 | ||||||||||
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Earnings before income tax expense | $ | 355,006 | $ | 489,827 | $ | 518,551 | $ | 432,238 | $ | 579,904 | ||||||||||
Interest factor of rent expense (4) | 5,390 | 5,294 | 5,277 | 4,581 | 4,067 | |||||||||||||||
Interest expense | 23,070 | 21,348 | 16,164 | 20,362 | 16,270 | |||||||||||||||
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Earnings per calculation | $ | 383,466 | $ | 516,469 | $ | 539,992 | $ | 457,181 | $ | 600,241 | ||||||||||
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Ratio of earnings to fixed charges (5) | 13.30 | 19.39 | 25.13 | 18.25 | 29.51 | |||||||||||||||
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(4) | Estimated to be 33% of total net expense. |
(5) | Earnings per calculation divided by total fixed charges. |