EX-12 3 h65911exv12.htm EX-12 exv12
Exhibit 12
HCC INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
STATEMENT OF RATIOS
(in thousands)
                                         
    Years Ended December 31,  
    2008     2007     2006     2005     2004  
Gross premium to surplus ratio:
                                        
Gross written premium
   $ 2,510,612     $ 2,460,498     $ 2,243,843     $ 2,049,116     $ 1,992,361  
Policyholders’ surplus
     1,852,684       1,744,889       1,342,054       1,110,268       844,851  
Premium to surplus ratio(1)
     135.5 %     141.0 %     167.2 %     184.6 %     235.8 %
(Gross premium to surplus ratio = gross written premium divided by policyholders’ surplus)
 
Net premium to surplus ratio:
                                    
Net written premium
   $ 2,064,091     $ 1,985,641     $ 1,812,896     $ 1,495,931     $ 1,121,343  
Policyholders’ surplus
     1,852,684       1,744,889       1,342,054       1,110,268       844,851  
Premium to surplus ratio(1)
     111.4 %     113.8 %     135.1 %     134.7 %     132.7 %
(Net premium to surplus ratio = net written premium divided by policyholders’ surplus) Loss ratio:
 
Loss ratio:
                                        
Incurred loss and loss adjustment expense
   $ 1,216,746     $ 1,194,925     $ 1,020,221     $ 925,130     $ 651,675  
Net earned premium
   $ 2,000,289       1,971,951       1,700,373       1,378,100       1,013,573  
Loss ratio(1)
     60.8 %     60.6 %     60.0 %     67.1 %     64.3 %
(Loss ratio = incurred loss and loss adjustment expense divided by net earned premium)
 
Expense ratio:
                                        
Underwriting expense
   $ 501,948     $ 473,597     $ 435,371     $ 381,680     $ 299,789  
Net written premium
   $ 2,064,091       1,985,641       1,812,896       1,495,931       1,121,343  
Expense ratio(1)
     24.3 %     23.9 %     24.0 %     25.5 %     26.7 %
(Expense ratio = underwriting expense divided by net written premium)
 
Combined ratio(1)
     85.1 %     84.5 %     84.0 %     92.6 %     91.0 %
(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, in thousands)
                                         
    Years Ended December 31,  
    2008     2007     2006     2005     2004  
Loss ratio:
                                        
Incurred loss and loss adjustment expense
   $ 1,211,873     $ 1,183,947     $ 1,011,856     $ 919,697     $ 645,230  
Net earned premium
     2,007,774       1,985,086       1,709,189       1,369,988       1,010,692  
Loss ratio(2)
     60.4 %     59.6 %     59.2 %     67.1 %     63.8 %
(Loss ratio = incurred loss and loss adjustment expense divided by net earned premium)
 
Expense ratio:
                                        
Underwriting expense
   $ 501,537     $ 472,168     $ 427,456     $ 357,727     $ 269,390  
Net earned premium
     2,007,774       1,985,086       1,709,189       1,369,988       1,010,692  
Expense ratio(2)
     25.0 %     23.8 %     25.0 %     26.1 %     26.7 %
(Expense ratio = underwriting expense divided by net earned premium)
 
Combined ratio(2)
     85.4 %     83.4 %     84.2 %     93.2 %     90.5 %
(Combined ratio = loss ratio plus expense ratio)
                                        
 
Ratio of earnings to fixed charges:
                                        
Interest factor of rent expense(3)
   $ 4,581     $ 4,067     $ 3,944     $ 3,373     $ 3,319  
Interest expense
     16,288       10,304       11,396       7,684       8,374  
 
                              
Total fixed charges
   $ 20,869     $ 14,371     $ 15,340     $ 11,057     $ 11,693  
 
                              
Earnings from continuing operations before income tax expense
   $ 463,312     $ 585,870     $ 509,834     $ 272,609     $ 240,635  
Fixed charges
     20,869       14,371       15,340       11,057       11,693  
 
                              
Earnings per calculation
   $ 484,181     $ 600,241     $ 525,174     $ 283,666     $ 252,328  
 
                              
Ratio of earnings to fixed charges(4)
     23.20 %     41.77       34.24       25.65       21.58  
 
                              
 
(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.