EXHIBIT 12.1
THE PMI GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
Quarter Ended | Year Ended December 31, | |||||||||||||||||||||||
March 31, 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
(In thousands, except for ratios) | ||||||||||||||||||||||||
Earnings | ||||||||||||||||||||||||
(Loss) income from continuing operations before income taxes | $ | (245,896 | ) | $ | (1,060,870 | ) | $ | (1,321,154 | ) | $ | (1,255,204 | ) | $ | 432,378 | $ | 415,501 | ||||||||
Less: Equity in losses (earnings) from unconsolidated subsidiaries | 4,410 | 12,019 | 51,802 | 741,500 | (127,309 | ) | (97,885 | ) | ||||||||||||||||
Add: Equity in losses from unconsolidated subsidiaries with greater than 50% ownership | — | — | — | — | — | (942 | ) | |||||||||||||||||
Add: Distributed earnings of subsidiaries with less than 50% ownership | — | 10 | 100 | 18,317 | 17,439 | 7,190 | ||||||||||||||||||
Less: Interest capitalized, net of amortization expense | 138 | 553 | 520 | 558 | 482 | (3,296 | ) | |||||||||||||||||
Add: Fixed charges | 9,699 | 43,162 | 42,281 | 34,520 | 42,738 | 46,666 | ||||||||||||||||||
Total (losses) earnings | $ | (231,649 | ) | $ | (1,005,126 | ) | $ | (1,226,451 | ) | $ | (460,309 | ) | $ | 365,728 | $ | 367,234 | ||||||||
Fixed charges | ||||||||||||||||||||||||
Interest expense, distributions on mandatorily redeemable preferred securities and capitalized interest* | $ | 9,523 | $ | 43,013 | $ | 41,007 | $ | 33,391 | $ | 40,234 | $ | 34,919 | ||||||||||||
Interest expense of unconsolidated subsidiaries with greater than 50% ownership | — | — | — | — | — | 9,781 | ||||||||||||||||||
Interest component of rent expense ** | 176 | 149 | 1,274 | 1,129 | 2,504 | 1,966 | ||||||||||||||||||
Total fixed charges | $ | 9,699 | $ | 43,162 | $ | 42,281 | $ | 34,520 | $ | 42,738 | $ | 46,666 | ||||||||||||
Ratio of earnings to fixed charges | *** | *** | *** | *** | 8.56 | 7.87 | ||||||||||||||||||
* | 2006 includes net costs to exchange and extinguish long-term debt. |
** | Represents an estimated interest factor. |
*** | As the results were net losses, total earnings were insufficient to cover fixed charges for the quarter ended March 31, 2010 and the years ended December 31, 2009, 2008 and 2007. Total losses for the first quarter of 2010 included approximately $79.6 million of an increase in net loss reserves and a $40.8 million increase in the fair value of debt instruments. Total losses for 2009 included approximately $319.9 million of an increase in net loss reserves. 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 losses from FGIC, a $39 million partial impairment of the investment in RAM Re and $36 million impairment of deferred policy acquisition costs |