EX-12 3 h43882exv12.htm STATEMENT RE COMPUTATION OF RATIOS exv12
 

Exhibit 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
                                         
    Years ended December 31,  
    (in thousands)  
    2006     2005     2004     2003     2002  
 
 
                                        
Gross premium to surplus ratio:
                                        
Gross written premium
   $ 2,243,843     $ 2,049,116     $ 1,992,361     $ 1,746,413     $ 1,163,397  
Policyholders’ surplus
     1,342,054       1,110,268       844,851       591,889       523,807  
Premium to surplus ratio (1)
     167.2 %     184.6 %     235.8 %     295.1 %     222.1 %
 
                                        
(Gross premium to surplus ratio = gross written premium divided by policyholders’ surplus)
 
                                        
Net premium to surplus ratio:
                                        
Net written premium
   $ 1,812,896     $ 1,495,931     $ 1,121,343     $ 867,795     $ 545,475  
Policyholders’ surplus
     1,342,054       1,110,268       844,851       591,889       523,807  
Premium to surplus ratio (1)
     135.1 %     134.7 %     132.7 %     146.6 %     104.1 %
 
                                        
(Net premium to surplus ratio = net written premium divided by policyholders’ surplus)
 
                                        
Loss ratio:
                                        
Incurred loss and loss adjustment expense
   $ 1,020,221     $ 925,130     $ 651,675     $ 494,024     $ 313,744  
Net earned premium
     1,700,373       1,378,100       1,013,573       739,376       506,371  
Loss ratio (1)
     60.0 %     67.1 %     64.3 %     66.8 %     62.0 %
 
                                        
(Loss ratio = incurred loss and loss adjustment expense divided by net earned premium)
 
                                        
Expense ratio:
                                        
Underwriting expense
   $ 435,371     $ 381,680     $ 299,789     $ 199,927     $ 130,578  
Net written premium
     1,812,896       1,495,931       1,121,343       867,795       545,475  
Expense ratio (1)
     24.0 %     25.5 %     26.7 %     23.0 %     23.9 %
 
                                        
(Expense ratio = underwriting expense divided by net written premium)
 
                                        
Combined ratio (1)
     84.0 %     92.6 %     91.0 %     89.8 %     85.9 %
 
                                        
(Combined ratio = loss ratio plus expense ratio)
 
(1)   Calculated for our insurance companies using financial data reported in accordance with statutory accounting principles.

 

 

Exhibit 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(continued)
                                         
    Years ended December 31,  
    (in thousands)  
    2006     2005     2004     2003     2002  
 
 
                                        
Loss ratio:
                                        
Incurred loss and loss adjustment expense
   $ 1,011,856     $ 919,697     $ 645,230     $ 488,000     $ 307,143  
Net earned premium
     1,709,189       1,369,988       1,010,692       738,272       505,521  
Loss ratio (2)
     59.2 %     67.1 %     63.8 %     66.1 %     60.8 %
 
                                        
(Loss ratio = incurred loss and loss adjustment expense divided by net earned premium)
 
                                        
Expense ratio:
                                        
Underwriting expense
   $ 427,456     $ 357,727     $ 269,390     $ 181,637     $ 128,938  
Net earned premium
     1,709,189       1,369,988       1,010,692       738,272       505,521  
Expense ratio (2)
     25.0 %     26.1 %     26.7 %     24.6 %     25.5 %
 
                                        
(Expense ratio = underwriting expense divided by net earned premium)
 
                                        
Combined ratio (2)
     84.2 %     93.2 %     90.5 %     90.7 %     86.3 %
 
                                        
(Combined ratio = loss ratio plus expense ratio)
                                         
Ratio of earnings to fixed charges:
                                       
Interest factor of rent expense (3)
  $ 3,944     $ 3,373     $ 3,319     $ 3,067     $ 2,838  
Interest expense
    11,396       7,684       8,374       7,453       8,301  
                                         
Total fixed charges
  $ 15,340     $ 11,057     $ 11,693     $ 10,520     $ 11,139  
                                         
 
                                        
Earnings from continuing operations before income tax expense
  $ 509,834     $ 272,609     $ 240,635     $ 164,725     $ 150,326  
Fixed charges
    15,340       11,057       11,693       10,520       11,139  
                                         
Earnings per calculation
  $ 525,174     $ 283,666     $ 252,328     $ 175,245     $ 161,465  
                                         
 
                                        
Ratio of earnings to fixed charges (4)
    34.24       25.65       21.58       16.66       14.50  
                                         
 
 
(2)  Calculated for our insurance companies using financial data reported in accordance with generally accepted accounting principles.
 
(3)  Estimated to be 33% of total rent expense.
 
(4)  Earnings per calculation divided by total fixed charges.