EX-12 2 exhibit12.htm EXHIBIT 12 CONSOLIDATED EARNINGS RATIO Exhibit 12 Consolidated Earnings Ratio


Exhibit 12

CONSOLIDATED EARNINGS RATIOS

The following table sets forth, for the years and periods indicated, the Company’s ratios of:

·  
Consolidated earnings to fixed charges.
·  
Consolidated earnings to fixed charges before interest credited on investment products.

   
 
Year Ended December 31
  
   
2006
  
2005
  
2004
  
2003
  
2002
  
2001
  
                           
Ratio of Consolidated Earnings to Fixed Charges(1)
    
1.5
    
1.5
    
1.6
    
1.5
    
1.3
    
1.2
  
Ratio of Consolidated Earnings to Fixed Charges
Before Interest Credited on Investment Products(2)
    
20.1
    
38.5
    
46.4
    
83.4
    
49.1
    
47.2
  
 
(1) Protective Life calculates the ratio of “Consolidated Earnings to Fixed Charges” by dividing the sum of income from continuing operations before income tax (BT), interest expense (which includes an estimate of the interest component of operating lease expense) (I) and interest credited on investment products (IP) by the sum of interest expense (I) and interest credited on investment products (IP). The formula for this ratio is: (BT+I+IP)/(I+IP). Protective Life continues to sell investment products that credit interest to the contractholder. Investment products include products such as guaranteed investment contracts, annuities, and variable universal life insurance policies. The inclusion of interest credited on investment products results in a negative impact on the ratio of earnings to fixed charges because the effect of increases in interest credited to contractholders more than offsets the effect of the increases in earnings.
 
(2) Protective Life calculates the ratio of “Consolidated Earnings to Fixed Charges Before Interest Credited on Investment Products” by dividing the sum of income from continuing operations before income tax (BT) and interest expense (I) by interest expense (I). The formula for this calculation, therefore, would be: (BT+I)/I.


COMPUTATION OF CONSOLIDATED EARNINGS RATIOS
 
   
 
Year Ended December 31
  
   
2006
  
2005
  
2004
  
2003
  
2002
  
2001
  
                           
Computation of Ratio of Consolidated Earnings to
Fixed Charges Before Interest Credited on
Investment Products
                                      
                                       
Income from Continuing Operations before Income Tax
  
$
419,748
  
$
361,215
  
$
371,163
  
$
349,972
  
$
241,623
  
$
213,958
  
                                       
Add Interest Expense
    
22,012
    
9,632
    
8,167
    
4,249
    
5,019
    
4,633
  
Earnings before Interest and Taxes
  
$
441,760
  
$
370,847
  
$
379,330
  
$
354,221
  
$
246,642
  
$
218,591
  
                                       
Earnings before Interest and Taxes
Divided by Interest Expense
    
20.1
    
38.5
    
46.4
    
83.4
    
49.1
    
47.2
  
                                       
                                       
Computation of Ratio of Consolidated Earnings to
Fixed Charges
                                      
                                       
Income from Continuing Operations before Income Tax
  
$
419,748
  
$
361,215
  
$
371,163
  
$
349,972
  
$
241,623
  
$
213,958
  
                                       
Add Interest Expense
    
22,012
    
9,632
    
8,167
    
4,249
    
5,019
    
4,633
  
                                       
Add Interest Credited on Investment Products
    
891,627
    
726,301
    
649,216
    
647,695
    
900,930
    
944,098
  
                                       
Earnings before Interest, Interest Credited on
Investment Products and Taxes
  
$
1,333,387
  
$
1,097,148
  
$
1,028,546
  
$
1,001,916
  
$
1,147,572
  
$
1,162,689
  
                                       
Earnings before Interest, Interest Credited on Investment
Products and Taxes Divided by Interest Expense
and Interest Credited on Investment Products
    
1.5
    
1.5
    
1.6
    
1.5
    
1.3
    
1.2