Exhibit 12
HCC Insurance Holdings, Inc. and Subsidiaries
Statement of Ratios
(unaudited, in thousands except ratios)
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net loss ratio | ||||||||||||||||
Loss and loss adjustment expense, net | $ | 992,547 | $ | 969,767 | $ | 320,376 | $ | 304,014 | ||||||||
Net earned premium | 1,679,210 | 1,676,122 | 556,668 | 563,650 | ||||||||||||
Net loss ratio (1) | 59.1 | % | 57.9 | % | 57.6 | % | 53.9 | % | ||||||||
(Net loss ratio = incurred loss and loss adjustment expense divided by net earned premium) | ||||||||||||||||
Expense ratio | ||||||||||||||||
Segment underwriting expense (2) | $ | 423,712 | $ | 423,516 | $ | 145,772 | $ | 142,152 | ||||||||
Segment revenue (3) | 1,692,293 | 1,667,772 | 562,910 | 564,475 | ||||||||||||
Expense ratio | 25.0 | % | 25.4 | % | 25.9 | % | 25.2 | % | ||||||||
(Expense ratio = segment underwriting expense divided by segment revenue) | ||||||||||||||||
Combined ratio | 84.1 | % | 83.3 | % | 83.5 | % | 79.1 | % | ||||||||
(Combined ratio = net loss ratio plus expense ratio) | ||||||||||||||||
Accident year net loss ratio | ||||||||||||||||
Loss and loss adjustment expense, net | $ | 992,547 | $ | 969,767 | $ | 320,376 | $ | 304,014 | ||||||||
Add: Favorable (adverse) development | 39,634 | 34,632 | 27,842 | 34,632 | ||||||||||||
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Accident year net loss and loss adjustment expense | $ | 1,032,181 | $ | 1,004,399 | $ | 348,218 | $ | 338,646 | ||||||||
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Net earned premium | $ | 1,679,210 | $ | 1,676,122 | $ | 556,668 | $ | 563,650 | ||||||||
Add: (Increase) decrease related to prior year reinstatement premium | - | - | - | - | ||||||||||||
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Accident year net earned premium | $ | 1,679,210 | $ | 1,676,122 | $ | 556,668 | $ | 563,650 | ||||||||
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Accident year net loss ratio | 61.5 | % | 59.9 | % | 62.6 | % | 60.1 | % | ||||||||
(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) | 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
(unaudited, in thousands except ratios)
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net paid loss ratio | ||||||||||||||||
Losses paid, net of reinsurance | $ | 884,022 | $ | 944,203 | $ | 297,696 | $ | 333,713 | ||||||||
Net earned premium | 1,679,210 | 1,676,122 | 556,668 | 563,650 | ||||||||||||
Net paid loss ratio | 52.6 | % | 56.3 | % | 53.5 | % | 59.2 | % | ||||||||
(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 (4) | $ | 3,875 | $ | 3,981 | $ | 1,338 | $ | 1,356 | ||||||||
Interest expense | 19,656 | 19,101 | 6,574 | 5,962 | ||||||||||||
Capitalized interest | - | 303 | - | 290 | ||||||||||||
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Total fixed charges | $ | 23,531 | $ | 23,385 | $ | 7,912 | $ | 7,608 | ||||||||
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Earnings before income tax expense | $ | 416,327 | $ | 404,898 | $ | 140,100 | $ | 153,619 | ||||||||
Interest factor of rent expense (4) | 3,875 | 3,981 | 1,338 | 1,356 | ||||||||||||
Interest expense | 19,656 | 19,101 | 6,574 | 5,962 | ||||||||||||
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Earnings per calculation | $ | 439,858 | $ | 427,980 | $ | 148,012 | $ | 160,937 | ||||||||
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Ratio of earnings to fixed charges (5) | 18.69 | 18.30 | 18.71 | 21.15 | ||||||||||||
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(4) | Estimated to be 33% of total rent expense. |
(5) | Earnings per calculation divided by total fixed charges. |