1 EXHIBIT 12 HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES STATEMENT OF RATIOS ================================================================================ FOR THE YEARS ENDED DECEMBER 31, (DOLLARS IN THOUSANDS) ADJUSTED 2000 1999 (2) 1999 1998 1997 1996 - --------------------------------------------------------------------------------------------------------------------------------- Gross premium to surplus ratio: Gross written premium $972,154 $576,184 $500,962 $346,094 $340,367 Policyholders' surplus 326,249 315,474 369,401 331,922 288,863 Premium to surplus ratio (1) 298.0% 182.6% 135.6% 104.3% 117.8% (Gross premium to surplus ratio = gross written premium divided by policyholders' surplus) Net premium to surplus ratio: Net written premium $283,947 $150,261 $123,315 $143,068 $189,022 Policyholders' surplus 326,249 315,474 369,401 331,922 288,863 Premium to surplus ratio (1) 87.0% 47.6% 33.4% 43.1% 65.4% (Net premium to surplus ratio = net written premium divided by policyholders' surplus) Loss ratio: Incurred loss and LAE $190,272 $119,093 $160,908 $ 95,435 $100,158 $115,521 Net earned premium 267,481 146,850 150,304 142,108 162,626 179,490 Loss ratio (1) 71.1% 81.1% 107.1% 67.2% 61.6% 64.4% (Loss ratio = incurred loss and LAE divided by net earned premium) Expense ratio: Underwriting expense $ 76,548 $ 33,427 $ 34,220 $ 19,417 $ 24,627 $ 36,379 Net written premium 283,947 145,200 150,261 123,315 143,068 189,022 Expense ratio (1) 27.0% 23.0% 22.8% 15.7% 17.2% 19.2% (Expense ratio = underwriting expense divided by net written premium) Combined ratio (1) 98.1% 104.1% 129.9% 82.9% 78.8% 83.6% (Combined ratio = loss ratio plus expense ratio) (1) Calculated for the Company's insurance company subsidiaries on the basis of statutory accounting principles. (2) Excluding the effects of the provision for reinsurance in 1999.