EX-12 3 exhibit12.htm EX-12  

 

Computation of Ratios of Earnings to Fixed Charges

 

 

 

 

 

 

 

 

Exhibit 12

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

(in millions, except ratios)

 

2018

 

2017

 

 

2018

 

2017

Earnings:

 

 

 

 

 

 

 

 

 

   Pre-tax income (loss)(a):

$

(1,581)

$

(2,881)

 

$

774

$

293

Add - Fixed charges

 

434

 

388

 

 

1,214

 

1,170

Adjusted Pre-tax income (loss)

$

(1,147)

$

(2,493)

 

$

1,988

$

1,463

Fixed charges:

 

 

 

 

 

 

 

 

 

Interest expense

$

327

$

289

 

$

905

$

864

Portion of rent expense representing interest

 

23

 

28

 

 

68

 

83

Interest credited to policy and contract holders

 

84

 

71

 

 

241

 

223

Total fixed charges

$

434

$

388

 

$

1,214

$

1,170

Total fixed charges, excluding interest credited to

 

 

 

 

 

 

 

 

 

policy and contract holders

$

350

$

317

 

$

973

$

947

Ratio of earnings to fixed charges:

 

 

 

 

 

 

 

 

 

   Ratio

 

n/a

 

n/a

 

 

1.64

 

1.25

Coverage deficiency

$

(1,581)

$

(2,881)

 

 

n/a

 

n/a

Ratio of earnings to fixed charges, excluding interest

 

 

 

 

 

 

 

 

 

credited to policy and contract holders(b):

 

 

 

 

 

 

 

 

 

   Ratio

 

n/a

 

n/a

 

 

2.04

 

1.54

   Coverage deficiency

$

(1,497)

$

(2,810)

 

 

n/a

 

n/a

(a)  From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest. 

(b)  The Ratio of earnings to fixed charges, excluding interest credited to policy and contract holders, removes interest credited to guaranteed investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed from earnings used in this calculation. GICs and GIAs are entered into by our subsidiaries. The proceeds from GICs and GIAs are invested in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related policyholders obligation or contract, with the intent of earning a profit from the spread.