EX-12 2 ex12.htm CONSOLIDATED EARNINGS RATIO ex12.htm



CONSOLIDATED EARNINGS RATIOS

The following table sets forth, for the years and periods indicated, Protective Life Insurance Company’s (the “Company”) ratios of:

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

 
Six Months Ended
June 30
  
Year Ended December 31
 
2007
2006
  
2006
2005
2004
2003
2002
Ratio of Consolidated Earnings to Fixed Charges(1)
1.4
1.6
 
1.5
1.5
1.6
1.5
1.3
Ratio of Consolidated Earnings to Fixed Charges
Before Interest Credited on Investment Products(2)
10.6
26.2
 
20.1
38.5
46.4
83.4
49.1
(1)    The Company 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).  The Company 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)    The Company 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.



Exhibit 12
(continued)

COMPUTATION OF CONSOLIDATED EARNINGS RATIOS
(Dollars in thousands)

   
Six Months Ended
June 30
    
Year Ended December 31
  
   
2007
    
2006
    
2006
    
2005
    
2004
    
2003
    
2002
  
Computation of Ratio of Consolidated
Earnings to Fixed Charges
                                          
                                           
Income from Continuing Operations
before Income Tax
   $
215,429
     $
219,525
     $
419,748
     $
361,215
     $
371,163
     $
349,972
     $
241,623
  
                                                         
Add Interest Expense
    
22,452
      
8,728
      
22,012
      
9,632
      
8,167
      
4,249
      
5,019
  
                                                         
Add Interest Credited on Investment
Products
    
494,214
      
379,760
      
891,627
      
726,301
      
649,216
      
647,695
      
900,930
  
                                                         
Earnings before Interest, Interest
Credited on Investment Products
and Taxes
   $
732,095
     $
608,013
     $
1,333,387
     $
1,097,148
     $
1,028,546
     $
1,001,916
     $
1,147,572
  
                                                         
Earnings before Interest, Interest
Credited on Investment Products
and Taxes Divided by Interest
expense and Interest Credited on
Investment Products
    
1.4
      
1.6
      
1.5
      
1.5
      
1.6
      
1.5
      
1.3
  
                                                         
Computation of Ratio of Consolidated
Earnings to Fixed Charges Before
Interest Credited on Investment
Products
                                                        
                                                         
Income from Continuing Operations
before Income Tax
   $
215,429
     $
219,525
     $
419,748
     $
361,215
     $
371,163
     $
349,972
     $
241,623
  
                                                         
Add Interest Expense
    
22,452
      
8,728
      
22,012
      
9,632
      
8,167
      
4,249
      
5,019
  
Earnings before Interest and Taxes
   $
237,881
     $
228,253
     $
441,760
     $
370,847
     $
379,330
     $
354,221
     $
246,642
  
                                                         
Earnings before Interest and Taxes
Divided by Interest Expense
    
10.6
      
26.2
      
20.1
      
38.5
      
46.4
      
83.4
      
49.1