EX-12 3 a10-12853_1ex12.htm EX-12

Exhibit 12

 

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.

 

 

 

For The

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

For The Year Ended December 31,

 

 

 

2010

 

2009

 

2009

 

2008(3)

 

2007

 

2006

 

2005

 

Ratio of Consolidated Earnings to Fixed Charges (1)

 

1.3

 

1.3

 

1.4

 

0.9

 

1.4

 

1.5

 

1.5

 

Ratio of Consolidated Earnings (Losses) to Fixed Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before Interest Credited on Investment Products(2)

 

7.1

 

9.6

 

11.3

 

(0.2

)

6.9

 

20.1

 

38.5

 

 

(1)       The Company calculates the ratio of “Consolidated Earnings to Fixed Charges” by dividing the sum of income (loss) 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 contract holder.  Investment products include products such as guaranteed investment contracts, annuities, and variable universal life interest credited 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 contract holders more than offsets the effect of the increases in earnings.

(2)            The Company calculates the ratio of “Consolidated Earnings (Losses) to Fixed Charges Before Interest Credited on Investment Products” by dividing the sum of income (loss) 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.

(3)            For the year ended December 31, 2008, additional income required to achieve a 1:1 ratio coverage was $86.4 million.

 

103


 

Exhibit 12

(continued)

 

Computation of Consolidated Earnings Ratios

 

 

 

For The

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

For The Year Ended December 31,

 

 

 

2010

 

2009

 

2009

 

2008(1)

 

2007

 

2006

 

2005

 

 

 

(Dollars In Thousands, Except Ratio Data)

 

Computation of Ratio of Consolidated Earnings (Losses) to Fixed Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations before Income Tax

 

$

173,642

 

$

170,628

 

$

425,034

 

$

(86,373

)

$

395,956

 

$

419,748

 

$

361,215

 

Add Interest Expense(2)

 

28,668

 

19,840

 

41,411

 

72,154

 

66,707

 

22,012

 

9,632

 

Add Interest Credited on Investment Products

 

494,693

 

505,417

 

993,245

 

1,043,676

 

1,010,944

 

891,627

 

726,301

 

Earnings before Interest, Interest Credited on Investment Products and Taxes

 

$

697,003

 

$

695,885

 

$

1,459,690

 

$

1,029,457

 

$

1,473,607

 

$

1,333,387

 

$

1,097,148

 

Earnings before Interest, Interest Credited on Investment Products and Taxes Divided by Interest expense and Interest Credited on Investment Products

 

1.3

 

1.3

 

1.4

 

0.9

 

1.4

 

1.5

 

1.5

 

Computation of Ratio of Consolidated Earnings (Losses) to Fixed Charges Before Interest Credited on Investment Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Continuing Operations before Income Tax

 

$

173,642

 

$

170,628

 

$

425,034

 

$

(86,373

)

$

395,956

 

$

419,748

 

$

361,215

 

Add Interest Expense(2)

 

28,668

 

19,840

 

41,411

 

72,154

 

66,707

 

22,012

 

9,632

 

Earnings (Losses) before Interest and Taxes

 

$

202,310

 

$

190,468

 

$

466,445

 

$

(14,219

)

$

462,663

 

$

441,760

 

$

370,847

 

Earnings (Losses) before Interest and Taxes Divided by Interest Expense

 

7.1

 

9.6

 

11.3

 

(0.2

)

6.9

 

20.1

 

38.5

 

 

(1)  For the year ended December 31, 2008, additional income required to achieve a 1:1 ratio coverage was $86.4 million.

(2)  Interest expense primarily relates to interest on our non-recourse funding obligations.

 

104