EX-12 2 Exh12.htm EXHIBIT 12  

 

Computation of Ratios of Earnings to Fixed Charges

 

 

 

 

 

 

Exhibit 12

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

(in millions, except ratios)

 

2016

 

2015

 

 

 

2016

 

2015

Earnings:

 

 

 

 

 

 

 

 

 

 

   Pre-tax income (loss)(a):

$

666

$

(419)

 

 

$

3,437

$

5,198

Add - Fixed charges

 

432

 

448

 

 

 

1,250

 

1,362

Adjusted Pre-tax income

$

1,098

$

29

 

 

$

4,687

$

6,560

Fixed charges:

 

 

 

 

 

 

 

 

 

 

Interest expense

$

319

$

311

 

 

$

925

$

930

Portion of rent expense representing interest

 

27

 

45

 

 

 

82

 

134

Interest credited to policy and contract holders

 

86

 

92

 

 

 

243

 

298

Total fixed charges

$

432

$

448

 

 

$

1,250

$

1,362

Total fixed charges, excluding interest credited to

 

 

 

 

 

 

 

 

 

 

policy and contract holders

$

346

$

356

 

 

$

1,007

$

1,064

Ratio of earnings to fixed charges:

 

 

 

 

 

 

 

 

 

 

Ratio

 

2.54

 

n/a

 

 

 

3.75

 

4.82

Coverage deficiency

 

n/a

$

(419)

 

 

 

n/a

 

n/a

Ratio of earnings to fixed charges, excluding interest

 

 

 

 

 

 

 

 

 

 

credited to policy and contract holders(b):

 

 

 

 

 

 

 

 

 

 

   Ratio

 

3.17

 

n/a

 

 

 

4.65

 

6.17

   Coverage deficiency

 

n/a

$

(327)

 

 

 

n/a

 

n/a

(a) From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest. 

(b) The Ratio of earnings to fixed charges, excluding interest credited to policy and contract holders, removes interest credited to guaranteed investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed from earnings used in this calculation. GICs and GIAs are entered into by our subsidiaries. The proceeds from GICs and GIAs are invested in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related policyholders obligation or contract, with the intent of earning a profit from the spread.

 

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