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
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Year Four months Eight months Year
ended ended ended ended
December 31, December 31, August 31, December 31,
2004 2003 2003(b) 2002
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Pretax income (loss) from operations:
Net income (loss)...................................... $294.8 $ 96.3 $2,201.7 $(7,835.7)
Add income tax expense (benefit)....................... 159.3 53.2 (13.5) 864.3
Add discontinued operations............................ - - (16.0) 2,216.8
Add minority interest.................................. - - - 173.2
Add cumulative effect of accounting change............. - - - 2,949.2
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Pretax income (loss) from operations................ 454.1 149.5 2,172.2 (1,632.2)
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Add fixed charges:
Interest expense on corporate debt, including
amortization........................................ 71.5 34.4 223.2 346.7
Interest expense on investment borrowings.............. 8.0 2.4 8.3 16.4
Interest added to policyholder account balances........ 410.4 145.5 307.9 496.6
Portion of rental (a).................................. 13.5 6.4 8.9 13.8
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Fixed charges....................................... 503.4 188.7 548.3 873.5
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Adjusted earnings (loss)............................ $957.5 $338.2 $2,720.5 $ (758.7)
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Ratio of earnings to fixed charges............... 1.90X 1.79X 4.96X (c)
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Fixed charges.............................................. $503.4 $188.7 $ 548.3 $ 873.5
Add dividends on preferred stock, including dividends on
preferred stock of subsidiaries (divided by the ratio of
income before minority interest to pretax income)...... 100.9 43.2 - 3.2
Add distributions on Company-obligated mandatorily
redeemable preferred securities of subsidiary trusts... - - - 173.2
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Fixed charges plus preferred dividends and
distributions on Company-obligated
mandatorily redeemable preferred
securities of subsidiary trusts.............. $604.3 $231.9 $ 548.3 $ 1,049.9
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Adjusted earnings (loss)............................ $957.5 $338.2 $2,720.5 $ (758.7)
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Ratio of earnings to fixed charges, preferred
dividends and distributions on
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts.... 1.58X 1.46X 4.96X (d)
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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.