EXHIBIT 12.1
THE PMI GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(unaudited)
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(In thousands, except for ratios) | ||||||||||||||||||||
Earnings | ||||||||||||||||||||
(Loss) income from continuing operations before income taxes | $ | (773,028 | ) | $ | (1,061,283 | ) | $ | (1,321,154 | ) | $ | (1,255,204 | ) | $ | 432,378 | ||||||
Less: Equity in losses (earnings) from unconsolidated subsidiaries | 12,247 | 12,019 | 51,802 | 741,500 | (127,309 | ) | ||||||||||||||
Add: Distributed earnings of subsidiaries with less than 50% ownership | 1,658 | 10 | 100 | 18,317 | 17,439 | |||||||||||||||
Less: Interest capitalized, net of amortization expense | 541 | 553 | 520 | 558 | 482 | |||||||||||||||
Add: Fixed charges | 49,346 | 43,162 | 42,281 | 34,520 | 42,738 | |||||||||||||||
Total (losses) earnings | $ | (709,236 | ) | $ | (1,005,539 | ) | $ | (1,226,451 | ) | $ | (460,309 | ) | $ | 365,728 | ||||||
Fixed charges | ||||||||||||||||||||
Interest expense, distributions on mandatorily redeemable preferred securities and capitalized interest* | $ | 48,632 | $ | 43,013 | $ | 41,007 | $ | 33,391 | $ | 40,234 | ||||||||||
Interest component of rent expense** | 714 | 149 | 1,274 | 1,129 | 2,504 | |||||||||||||||
Total fixed charges | $ | 49,346 | $ | 43,162 | $ | 42,281 | $ | 34,520 | $ | 42,738 | ||||||||||
Ratio of earnings to fixed charges | *** | *** | *** | *** | 8.56 | |||||||||||||||
* | 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 $758.6 million for the year ended December 31, 2010, by $1.0 billion for the year ended December 31, 2009, by $1.3 billion for the year ended December 31, 2008 and by $494.8 million for the year ended December 31, 2007. Total losses for the year ended December 31, 2010 included approximately $1.3 billion of losses and loss adjustment expenses and a $113.5 million change 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. |