EX-12 2 c04944exv12.htm EXHIBIT 12 Exhibit 12
EXHIBIT 12
PRIMUS GUARANTY, LTD
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
DISTRIBUTIONS OF SUBSIDIARY
(In thousands, except ratios)
                                                 
    Six Months Ended        
    June 30,     Years Ended December 31,  
    2010     2009     2008     2007     2006     2005  
 
                                                
Earnings (loss):
                                                
Net income (loss) available to common shares
   $ (101,872 )   $ 1,460,280     $ (1,716,146 )   $ (563,541 )   $ 94,891     $ 4,083  
Provision (benefit) for taxes
     3       185       61       52       42       46  
Distributions on preferred securities of subsidiary
     1,712       3,417       6,642       7,568       5,683       3,865  
Net loss attributable to non-parent interests in CLOs
     (36,521 )     —       —       —       —       —  
 
                                    
Income (loss) from continuing operations before taxes (a)
     (136,678 )     1,463,882       (1,709,443 )     (555,921 )     100,616       7,994  
 
                                                
Add:
                                                
Fixed charges
     19,413       12,533       23,674       28,297       16,532       6,525  
 
                                                
Subtract:
                                                
Distributions on preferred securities of subsidiary
     (1,712 )     (3,417 )     (6,642 )     (7,568 )     (5,683 )     (3,865 )
 
                                    
Adjusted earnings (loss)
   $ (118,977 )   $ 1,472,998     $ (1,692,411 )   $ (535,192 )   $ 111,465     $ 10,654  
 
                                    
 
                                                
Fixed charges:
                                                
Interest expense
     17,701       9,116       17,032       20,729       10,849       2,660  
Distributions on preferred securities of subsidiary
     1,712       3,417       6,642       7,568       5,683       3,865  
 
                                    
Total fixed charges and preferred distributions (b)
   $ 19,413     $ 12,533     $ 23,674     $ 28,297     $ 16,532     $ 6,525  
 
                                    
 
                                                
Ratio of earnings to combined fixed charges and distributions on preferred securities of subsidiary (c)
     (6.13 )     117.53       (71.49 )     (18.91 )     6.74       1.63  
 
                                    
     
(a)   Effective January 1, 2010, the Company adopted the accounting guidance ASC Topic 810, Consolidation. As a result, the income (loss) from continuing operations before taxes includes the net income or loss of the consolidated CLOs under management.
 
(b)   CLO interest expense is included in the fixed charges for purposes of the calculation of the ratio.
 
(c)   Due to the loss for the six months ended June 30, 2010, the ratio coverage was less than 1:1. Additional earnings of approximately $138.4 million for the six months ended June 30, 2010 would be needed to achieve the coverage ratio of 1:1.
 
    Due to the losses for the years ended December 31, 2008 and 2007, respectively, the ratio coverage was less than 1:1. Additional earnings of approximately $1.7 billion and $563.5 million for the years ended December 31, 2008 and 2007, respectively, would be needed to achieve the coverage ratio of 1:1.