Exhibit 12.1
CONSECO, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges,
Preferred Dividends and Distributions on Company-Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trusts - Consolidated Basis
(Dollars in millions)
Successor Predecessor
------------ -------------------------------
Four months Eight months Years
ended ended ended
December 31, August 31, December 31,
---------------
2003 2003(b) 2002 2001
---- ------- ---- ----
Pretax income (loss) from operations:
Net income (loss).................................................... $ 96.3 $2,201.7 $(7,835.7) $ (405.9)
Add income tax expense (benefit)..................................... 53.2 (13.5) 864.3 (57.6)
Add discontinued operations.......................................... - (16.0) 2,216.8 100.6
Add minority interest................................................ - - 173.2 119.5
Add cumulative effect of accounting change........................... - - 2,949.2 -
------ -------- --------- --------
Pretax income (loss) from operations.............................. 149.5 2,172.2 (1,632.2) (243.4)
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Add fixed charges:
Interest expense on corporate debt, including amortization........... 34.4 223.2 346.7 369.5
Interest expense on investment borrowings............................ 2.4 8.3 16.4 30.5
Interest added to policyholder account balances...................... 145.5 307.9 496.6 523.3
Portion of rental (a)................................................ 6.4 8.9 13.8 15.1
------ -------- --------- --------
Fixed charges..................................................... 188.7 548.3 873.5 938.4
------ -------- --------- --------
Adjusted earnings (loss).......................................... $338.2 $2,720.5 $ (758.7) $ 695.0
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Ratio of earnings to fixed charges............................. 1.79X 4.96X (c) (e)
===== ===== = =
Ratio of earnings to fixed charges, excluding interest
added to policyholder account balances..................... 4.46X 10.04X (c) (e)
===== ====== = =
Fixed charges ......................................................... $188.7 $ 548.3 $ 873.5 $ 938.4
Add dividends on preferred stock, including dividends on preferred
stock of subsidiaries (divided by the ratio of income before
minority interest to pretax income).................................. 43.2 - 3.2 19.8
Add distributions on Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts............................ - - 173.2 183.9
------ -------- --------- --------
Fixed charges plus preferred dividends and distributions on
Company-obligated mandatorily redeemable preferred
securities of subsidiary trusts............................ $231.9 $ 548.3 $ 1,049.9 $1,142.1
====== ======== ========= ========
Adjusted earnings (loss).......................................... $338.2 $2,720.5 $ (758.7) $ 695.0
====== ======== ========= ========
Ratio of earnings to fixed charges, preferred dividends and
distributions on Company-obligated mandatorily
redeemable preferred securities of subsidiary trusts....... 1.46X 4.96X (d) (f)
===== ===== = =
Successor Predecessor
------------ ---------------------------------
Four months Eight months Years
ended ended ended
December 31, August 31, December 31,
---------------
2003 2003(b) 2002 2001
---- ------- ---- ----
Ratio of earnings to fixed charges, preferred dividends and
distributions on Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts,
excluding interest added to policyholder account balances.. 2.23X 10.04X (d) (f)
===== ====== = =
<FN>
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(a) Interest portion of rental is estimated to be 33 percent.
(b) Earnings for the eight months ended August 31, 2003 included reorganization
items totaling $2,130.5 million. The reorganization items included: (i)
$3,151.4 million related to the gain on the discharge of prepetition
liabilities; (ii) $(950.0) million related to fresh start adjustments; and
(iii) $(70.9) million related to professional fees. The ratios for the
eight months ended August 31, 2003, excluding such reorganization items
would be as follows: (i) ratio of earnings to fixed charges - 1.08X; and
(ii) ratio of earnings to fixed charges excluding interest added to
policyholder account balances - 1.17X. There were no preferred stock
dividends or distributions on Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts during the eight months ended
August 31, 2003.
(c) For such ratios, earnings were $1,632.2 million less than fixed charges.
Earnings for the year ended December 31, 2002 included: (i) special and
reorganization charges of $110.9 million; (ii) goodwill impairment charges
of $500 million; and (iii) provision for losses related to loan guarantees
of $240.0 million, as described in greater detail in the notes to the
accompanying consolidated financial statements.
(d) For such ratios, earnings were $1,808.6 million less than fixed charges.
Earnings for the year ended December 31, 2002 included: (i) special and
reorganization charges of $110.9 million; (ii) goodwill impairment charges
of $500 million; and (iii) provision for losses related to loan guarantees
of $240.0 million, as described in greater detail in the notes to the
accompanying consolidated financial statements.
(e) For such ratios, earnings were $243.4 million less than fixed charges.
Earnings for the year ended December 31, 2001 included: (i) special charges
of $80.4 million; and (ii) provision for losses related to loan guarantees
of $169.6 million, as described in greater detail in the notes to the
accompanying consolidated financial statements.
(f) For such ratios, earnings were $447.1 million less than fixed charges.
Earnings for the year ended December 31, 2001 included: (i) special charges
of $80.4 million; and (ii) provision for losses related to loan guarantees
of $169.6 million, as described in greater detail in the notes to the
accompanying consolidated financial statements.
</FN>