EXHIBIT 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(in thousands, except ratios)
Years ended December 31, | ||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
Net loss ratio | ||||||||||||||||||||
Loss and loss adjustment expense, net | $ | 1,305,511 | $ | 1,399,247 | $ | 1,213,029 | $ | 1,215,759 | $ | 1,211,873 | ||||||||||
Net earned premium | 2,242,625 | 2,127,170 | 2,041,924 | 2,037,235 | 2,007,774 | |||||||||||||||
Net loss ratio (1) | 58.2 | % | 65.8 | % | 59.4 | % | 59.7 | % | 60.4 | % | ||||||||||
(Net loss ratio = incurred loss and loss adjustment expense divided by net earned premium) |
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Expense ratio (2) | ||||||||||||||||||||
Segment underwriting expense (3) | $ | 565,777 | $ | 536,238 | $ | 519,336 | $ | 502,256 | $ | 492,445 | ||||||||||
Segment revenue (4) | 2,231,734 | 2,117,882 | 2,030,219 | 2,020,088 | 1,939,550 | |||||||||||||||
Expense ratio | 25.4 | % | 25.3 | % | 25.6 | % | 24.9 | % | 25.4 | % | ||||||||||
(Expense ratio = segment underwriting expense divided by segment revenue) |
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Combined ratio (2) | 83.6 | % | 91.1 | % | 85.0 | % | 84.6 | % | 85.8 | % | ||||||||||
(Combined ratio = net loss ratio plus expense ratio) |
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Accident year net loss ratio | ||||||||||||||||||||
Loss and loss adjustment expense, net | $ | 1,305,511 | $ | 1,399,247 | $ | 1,213,029 | $ | 1,215,759 | $ | 1,211,873 | ||||||||||
Add: Favorable (adverse) development | 70,011 | (10,147 | ) | 22,663 | 53,524 | 82,371 | ||||||||||||||
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Accident year net loss and loss adjustment expense | $ | 1,375,522 | $ | 1,389,100 | $ | 1,235,692 | $ | 1,269,283 | $ | 1,294,244 | ||||||||||
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Net earned premium | $ | 2,242,625 | $ | 2,127,170 | $ | 2,041,924 | $ | 2,037,235 | $ | 2,007,774 | ||||||||||
Add: (Increase) decrease related to | (5,083 | ) | - | 3,177 | - | - | ||||||||||||||
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Accident year net earned premium | $ | 2,237,542 | $ | 2,127,170 | $ | 2,045,101 | $ | 2,037,235 | $ | 2,007,774 | ||||||||||
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Accident year net loss ratio | 61.5 | % | 65.3 | % | 60.4 | % | 62.3 | % | 64.5 | % | ||||||||||
(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) | The 2011 – 2008 expense ratios and combined ratios have been adjusted to reflect change in Exited Lines in 2012. See Note 12, “Segments” to the Consolidated Financial Statements. |
(3) | Sum of Other Expense for each of our insurance segments. |
(4) | Sum of Segment Revenue for each of our insurance segments. |
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(in thousands, except ratios)
Years ended December 31, | ||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
Net paid loss ratio | ||||||||||||||||||||
Losses paid, net of reinsurance | $ | 1,272,345 | $ | 1,253,689 | $ | 1,218,080 | $ | 1,137,779 | $ | 1,084,778 | ||||||||||
Net earned premium | 2,242,625 | 2,127,170 | 2,041,924 | 2,037,235 | 2,007,774 | |||||||||||||||
Net paid loss ratio | 56.7 | % | 58.9 | % | 59.7 | % | 55.8 | % | 54.0 | % | ||||||||||
(Net paid loss ratio = losses paid, net of reinsurance, divided by net earned premium) |
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Ratio of earnings to fixed charges | ||||||||||||||||||||
Interest factor of rent expense (5) | $ | 5,328 | $ | 5,390 | $ | 5,294 | $ | 5,277 | $ | 4,581 | ||||||||||
Interest expense | 25,628 | 23,070 | 21,348 | 16,164 | 20,362 | |||||||||||||||
Capitalized interest | 303 | 382 | - | 51 | 104 | |||||||||||||||
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Total fixed charges | $ | 31,259 | $ | 28,842 | $ | 26,642 | $ | 21,492 | $ | 25,047 | ||||||||||
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Earnings before income tax expense | $ | 554,427 | $ | 355,006 | $ | 489,827 | $ | 518,551 | $ | 432,238 | ||||||||||
Interest factor of rent expense (5) | 5,328 | 5,390 | 5,294 | 5,277 | 4,581 | |||||||||||||||
Interest expense | 25,628 | 23,070 | 21,348 | 16,164 | 20,362 | |||||||||||||||
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Earnings per calculation | $ | 585,383 | $ | 383,466 | $ | 516,469 | $ | 539,992 | $ | 457,181 | ||||||||||
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Ratio of earnings to fixed charges (6) | 18.73 | 13.30 | 19.39 | 25.13 | 18.25 | |||||||||||||||
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(5) | Estimated to be 33% of total rent expense. |
(6) | Earnings per calculation divided by total fixed charges. |