EXHIBIT 12.1
THE PMI GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(unaudited)
Year Ended December 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
(In thousands, except for ratios) | ||||||||||||||||||||
Earnings | ||||||||||||||||||||
(Loss) income before income taxes | $ | (1,127,416 | ) | $ | 559,715 | $ | 540,831 | $ | 478,991 | $ | 393,122 | |||||||||
Less: Equity in losses (earnings) from unconsolidated subsidiaries | 741,500 | (127,309 | ) | (97,885 | ) | (83,554 | ) | (4,597 | ) | |||||||||||
Add: Equity in (losses) earnings from unconsolidated subsidiaries with greater than 50% ownership | — | — | (942 | ) | 764 | (31,096 | ) | |||||||||||||
Add: Distributed earnings of subsidiaries with less than 50% ownership | 18,317 | 17,439 | 7,190 | 1,007 | 157 | |||||||||||||||
Less: Interest capitalized, net of amortization expense | 558 | 482 | (3,296 | ) | — | — | ||||||||||||||
Fixed charges | 35,536 | 43,315 | 47,177 | 49,701 | 40,414 | |||||||||||||||
Total (losses) earnings | $ | (331,505 | ) | $ | 493,642 | $ | 493,075 | $ | 446,909 | $ | 398,000 | |||||||||
Fixed charges | ||||||||||||||||||||
Interest expense, distributions on mandatorily redeemable preferred securities and capitalized interest* | $ | 33,398 | $ | 40,359 | $ | 34,927 | $ | 34,626 | $ | 24,491 | ||||||||||
Interest expense of unconsolidated subsidiaries with greater than 50% ownership | — | — | 9,781 | 12,744 | 12,389 | |||||||||||||||
Interest component of rent expense ** | 2,138 | 2,956 | 2,469 | 2,331 | 3,534 | |||||||||||||||
Total fixed charges | $ | 35,536 | $ | 43,315 | $ | 47,177 | $ | 49,701 | $ | 40,414 | ||||||||||
Ratio of earnings to fixed charges | *** | 11.40 | 10.45 | 8.99 | 9.85 | |||||||||||||||
* | 2006 includes net costs to exchange and extinguish long-term debt. |
** | Represents an estimated interest factor. |
*** | Total earnings were insufficient to cover fixed charges by $367.0 million for the year ended December 31, 2007. Total earnings for 2007 included approximately $795 million of increase in net loss reserves, a $39 million partial impairment of the investment in RAM Re and $36 million impairment of the deferred policy acquisition cost assets. |