Exhibit 12
HCC Insurance Holdings, Inc. and Subsidiaries
Statement of Ratios
(unaudited, in thousands except ratios)
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net loss ratio | ||||||||||||||||
Loss and loss adjustment expense, net | $ | 672,171 | $ | 665,753 | $ | 339,474 | $ | 336,825 | ||||||||
Net earned premium | 1,122,542 | 1,112,472 | 561,356 | 565,331 | ||||||||||||
Net loss ratio (1) | 59.9 | % | 59.8 | % | 60.5 | % | 59.6 | % | ||||||||
(Net loss ratio = incurred loss and loss adjustment expense divided by net earned premium) | ||||||||||||||||
Expense ratio (2) | ||||||||||||||||
Segment underwriting expense (3) | $ | 277,940 | $ | 281,364 | $ | 139,773 | $ | 143,684 | ||||||||
Segment revenue (4) | 1,129,383 | 1,103,297 | 564,654 | 561,705 | ||||||||||||
Expense ratio | 24.6 | % | 25.5 | % | 24.8 | % | 25.6 | % | ||||||||
(Expense ratio = segment underwriting expense divided by segment revenue) | ||||||||||||||||
Combined ratio (2) | 84.5 | % | 85.3 | % | 85.3 | % | 85.2 | % | ||||||||
(Combined ratio = net loss ratio plus expense ratio) | ||||||||||||||||
Accident year net loss ratio | ||||||||||||||||
Loss and loss adjustment expense, net | $ | 672,171 | $ | 665,753 | $ | 339,474 | $ | 336,825 | ||||||||
Add: Favorable (adverse) development | 11,792 | - | 11,792 | - | ||||||||||||
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Accident year net loss and loss adjustment expense | $ | 683,963 | $ | 665,753 | $ | 351,266 | $ | 336,825 | ||||||||
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Net earned premium | $ | 1,122,542 | $ | 1,112,472 | 561,356 | 565,331 | ||||||||||
Add: (Increase) decrease related to prior year reinstatement premium | - | - | - | - | ||||||||||||
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Accident year net earned premium | $ | 1,122,542 | $ | 1,112,472 | $ | 561,356 | $ | 565,331 | ||||||||
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Accident year net loss ratio | 60.9 | % | 59.8 | % | 62.6 | % | 59.6 | % | ||||||||
(Accident year net loss ratio = accident year net loss and loss adjustment expense divided by accident year net earned premium) |
(1) | Calculated for our insurance companies using financial data reported in accordance with generally accepted accounting principles. |
(2) | The 2012 expense ratio and combined ratio have been adjusted to reflect change in Exited Lines in 2012. See Note 11, “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
(unaudited, in thousands except ratios)
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net paid loss ratio | ||||||||||||||||
Losses paid, net of reinsurance | $ | 586,326 | $ | 610,490 | $ | 286,797 | $ | 265,968 | ||||||||
Net earned premium | 1,122,542 | 1,112,472 | 561,356 | 565,331 | ||||||||||||
Net paid loss ratio | 52.2 | % | 54.9 | % | 51.1 | % | 47.0 | % | ||||||||
(Net paid loss ratio = losses paid, net of reinsurance, divided by net earned premium) | ||||||||||||||||
Ratio of earnings to fixed charges | ||||||||||||||||
Interest factor of rent expense (5) | $ | 2,537 | $ | 2,625 | $ | 1,287 | $ | 1,313 | ||||||||
Interest expense | 13,082 | 13,139 | 6,611 | 6,230 | ||||||||||||
Capitalized interest | - | 13 | - | - | ||||||||||||
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Total fixed charges | $ | 15,619 | $ | 15,777 | $ | 7,898 | $ | 7,543 | ||||||||
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Earnings before income tax expense | $ | 276,227 | $ | 251,279 | $ | 124,831 | $ | 134,319 | ||||||||
Interest factor of rent expense (5) | 2,537 | 2,625 | 1,287 | 1,313 | ||||||||||||
Interest expense | 13,082 | 13,139 | 6,611 | 6,230 | ||||||||||||
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Earnings per calculation | $ | 291,846 | $ | 267,043 | $ | 132,729 | $ | 141,862 | ||||||||
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Ratio of earnings to fixed charges (6) | 18.69 | 16.93 | 16.81 | 18.81 | ||||||||||||
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(5) | Estimated to be 33% of total rent expense. |
(6) | Earnings per calculation divided by total fixed charges. |