EXHIBIT 12.1
THE PMI GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(unaudited)
Year Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(In thousands, except for ratios) | ||||||||||||||||||||
Earnings | ||||||||||||||||||||
(Loss) income from continuing operations before income taxes | $ | (1,321,154 | ) | $ | (1,255,204 | ) | $ | 432,378 | $ | 415,501 | $ | 369,233 | ||||||||
Less: Equity in losses (earnings) from unconsolidated subsidiaries | 51,802 | 741,500 | (127,309 | ) | (97,885 | ) | (83,554 | ) | ||||||||||||
Add: Equity in (losses) earnings from unconsolidated subsidiaries with greater than 50% ownership | — | — | — | (942 | ) | 764 | ||||||||||||||
Add: Distributed earnings of subsidiaries with less than 50% ownership | 100 | 18,317 | 17,439 | 7,190 | 1,007 | |||||||||||||||
Less: Interest capitalized, net of amortization expense | 520 | 558 | 482 | (3,296 | ) | — | ||||||||||||||
Add: Fixed charges | 42,281 | 34,520 | 42,738 | 46,666 | 49,199 | |||||||||||||||
Total (losses) earnings | $ | (1,226,451 | ) | $ | (460,309 | ) | $ | 365,728 | $ | 367,234 | $ | 336,649 | ||||||||
Fixed charges | ||||||||||||||||||||
Interest expense, distributions on mandatorily redeemable preferred securities and capitalized interest* | $ | 41,007 | $ | 33,391 | $ | 40,234 | $ | 34,919 | $ | 34,552 | ||||||||||
Interest expense of unconsolidated subsidiaries with greater than 50% ownership | — | — | — | 9,781 | 12,744 | |||||||||||||||
Interest component of rent expense** | 1,274 | 1,129 | 2,504 | 1,966 | 1,903 | |||||||||||||||
Total fixed charges | $ | 42,281 | $ | 34,520 | $ | 42,738 | $ | 46,666 | $ | 49,199 | ||||||||||
Ratio of earnings to fixed charges | *** | *** | 8.56 | 7.87 | 6.84 | |||||||||||||||
* | 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 $1.3 billion for the year ended December 31, 2008 and $494.8 million for the year ended December 31, 2007. Total losses for 2008 included approximately $1.1 billion of an increase in net loss reserves and a $103.6 million impairment of the investment in FGIC.Total losses for 2007 included approximately $795 million of increase in net loss reserves, $763.3 million in equity in losses from FGIC, a $39 million partial impairment of the investment in RAM Re and $36 million impairment of the deferred policy acquisition cost assets. |