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,
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Net loss ratio | ||||||||||||||||
Loss and loss adjustment expense, net | $ | 648,938 | $ | 672,171 | $ | 327,094 | $ | 339,474 | ||||||||
Net earned premium | 1,134,860 | 1,122,542 | 572,248 | 561,356 | ||||||||||||
Net loss ratio (1) | 57.2 | % | 59.9 | % | 57.2 | % | 60.5 | % | ||||||||
(Net loss ratio = net loss and loss adjustment expense | ||||||||||||||||
Expense ratio | ||||||||||||||||
Segment underwriting expense (2) | $ | 300,333 | $ | 277,940 | $ | 153,115 | $ | 139,773 | ||||||||
Segment revenue (3) | 1,152,925 | 1,129,383 | 581,557 | 564,654 | ||||||||||||
Expense ratio | 26.0 | % | 24.6 | % | 26.3 | % | 24.8 | % | ||||||||
(Expense ratio = segment underwriting expense divided by segment revenue) | ||||||||||||||||
Combined ratio | 83.2 | % | 84.5 | % | 83.5 | % | 85.3 | % | ||||||||
(Combined ratio = net loss ratio plus expense ratio) | ||||||||||||||||
Accident year net loss ratio | ||||||||||||||||
Loss and loss adjustment expense, net | $ | 648,938 | $ | 672,171 | $ | 327,094 | $ | 339,474 | ||||||||
Add: Favorable (adverse) development | - | 11,792 | - | 11,792 | ||||||||||||
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Accident year net loss and loss adjustment expense | $ | 648,938 | $ | 683,963 | $ | 327,094 | $ | 351,266 | ||||||||
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Net earned premium | $ | 1,134,860 | $ | 1,122,542 | $ | 572,248 | $ | 561,356 | ||||||||
Add: (Increase) decrease related to prior year | - | - | - | - | ||||||||||||
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Accident year net earned premium | $ | 1,134,860 | $ | 1,122,542 | $ | 572,248 | $ | 561,356 | ||||||||
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Accident year net loss ratio | 57.2 | % | 60.9 | % | 57.2 | % | 62.6 | % | ||||||||
(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) | 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)
Six months ended June 30,
| Three months ended June 30,
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Net paid loss ratio | ||||||||||||||||
Losses paid, net of reinsurance | $ | 674,070 | $ | 586,326 | $ | 319,114 | $ | 286,797 | ||||||||
Net earned premium | 1,134,860 | 1,122,542 | 572,248 | 561,356 | ||||||||||||
Net paid loss ratio | 59.4 | % | 52.2 | % | 55.8 | % | 51.1 | % | ||||||||
(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) | $ | 2,784 | $ | 2,537 | $ | 1,425 | $ | 1,287 | ||||||||
Interest expense | 13,984 | 13,082 | 6,865 | 6,611 | ||||||||||||
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Total fixed charges | $ | 16,768 | $ | 15,619 | $ | 8,290 | $ | 7,898 | ||||||||
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Earnings before income tax expense | $ | 292,616 | $ | 276,227 | $ | 137,644 | $ | 124,831 | ||||||||
Interest factor of rent expense (4) | 2,784 | 2,537 | 1,425 | 1,287 | ||||||||||||
Interest expense | 13,984 | 13,082 | 6,865 | 6,611 | ||||||||||||
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Earnings per calculation | $ | 309,384 | $ | 291,846 | $ | 145,934 | $ | 132,729 | ||||||||
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Ratio of earnings to fixed charges (5) | 18.45 | 18.69 | 17.60 | 16.81 | ||||||||||||
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(4) | Estimated to be 33% of total rent expense. |
(5) | Earnings per calculation divided by total fixed charges. |