The following table shows our adjusted loss and loss expense ratio for the years ended December 31, 2009, 2008, and 2007.
## Table 0 ##
Net catastrophe losses for 2009 were $51 million, compared with $83 million and $94 million in 2008 and 2007, respectively.
The catastrophe losses for 2009 were primarily related to floods and windstorms in Europe.
Catastrophe losses in 2008 were primarily related to Hurricanes Gustav and Ike, tornadoes in the U. S. , and an earthquake in China.
Insurance – Overseas General experienced net favorable prior period development of $255 million, $304 million, and $192 million in 2009, 2008, and 2007, respectively.
Refer to “Prior Period Development” for more information.
Insurance – Overseas General’s policy acquisition cost ratio increased in 2009, compared with 2008, primarily due to lower net premiums earned in the retail A&H business, without a commensurate reduction in advertising costs, which are generally deferred and amortized over a longer period than the related premium.
The policy acquisition cost ratio increased in 2008 compared with 2007, primarily due to growth in A&H business and the impact of the acquired Combined Insurance business, which is predominantly A&H business.
A&H business typically attracts higher commission rates than traditional P&C business.
Insurance – Overseas General’s administrative expense ratio increased in 2009, primarily due to the inclusion of Combined Insurance for the full year.
For 2008, administrative expenses increased primarily due to unfavorable foreign exchange impact and the inclusion of administrative expenses related to Combined Insurance.
Global Reinsurance The Global Reinsurance segment represents ACE’s reinsurance operations, comprising ACE Tempest Re Bermuda, ACE Tempest Re USA, ACE Tempest Re Europe, and ACE Tempest Re Canada.
Global Reinsurance markets its reinsurance products worldwide under the ACE Tempest Re brand name and provides a broad range of coverage to a diverse array of primary P&C companies.
## Table 1 ##
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) ACE Limited and Subsidiaries a credit loss has occurred primarily based on a combination of qualitative and quantitative factors including a discounted cash flow model, where necessary.
If a credit loss is indicated, an OTTI is considered to have occurred.
Prior to the adoption, when evaluating fixed maturities for OTTI, the Company principally considered its ability and intent to hold the impaired security to the expected recovery period, the issuer’s financial condition, and the Company’s assessment (using available market information such as credit ratings) of the issuer’s ability to make future scheduled principal and interest payments on a timely basis.
The factors that the Company now considers when determining if a credit loss exists related to a fixed maturity security are discussed in “Evaluation of potential credit losses related to fixed maturities” below.
The Company reviews all non-fixed maturity investments for OTTI based on the following: ?
the amount of time a security has been in a loss position and the magnitude of the loss position; ?
the period in which cost is expected to be recovered, if at all, based on various criteria including economic conditions and other issuer-specific developments; and ?
the Company’s ability and intent to hold the security to the expected recovery period.
ACE, as a general rule, also considers that equity securities in an unrealized loss position for twelve consecutive months are impaired.
Evaluation of potential credit losses related to fixed maturities ACE reviews each fixed maturity security in an unrealized loss position to assess whether the security is a candidate for credit loss.
Specifically, ACE considers credit rating, market price, and issuer specific financial information, among other factors, to assess the likelihood of collection of all principal and interest as contractually due.
Securities for which ACE determines that credit loss is likely are subjected to further analysis to estimate the credit loss recognized in net income, if any.
In general, credit loss recognized in net income equals the difference between the security’s amortized cost and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security.
The specific methodologies and significant assumptions used by asset class are discussed below.
All significant assumptions used in determining credit losses are subject to change as market conditions evolve.
U. S.  Treasury and agency obligations (including agency mortgage-backed securities), foreign government obligations, and states, municipalities, and political subdivisions obligations U. S.  Treasury and agency obligations (including agency mortgage-backed securities), foreign government obligations, and states, municipalities, and political subdivisions obligations represent less than $80 million of gross unrealized loss at December 31, 2009.
These securities were evaluated for credit loss primarily using qualitative assessments of the likelihood of credit loss considering credit rating of the issuers and level of credit enhancement, if any.
ACE concluded that the high level of credit worthiness of the issuers coupled with credit enhancement, where applicable, supports recognizing no credit loss in net income.
Corporate securities Projected cash flows for corporate securities (principally senior unsecured bonds) are driven primarily by assumptions regarding probability of default and also the timing and amount of recoveries associated with defaults.
ACE develops these estimates using information based on market observable data, issuer specific information, and credit ratings.
ACE developed its default assumption by using historical default data by Moody’s Investors Service (Moody’s) rating category to calculate a 1-in-100 year probability of default, which results in a default assumption in excess of the historical mean default rate.
ACE believes that use of a default assumption in excess of the historical mean is reasonable in light of recent market conditions.
Default assumptions by Moody’s rating category are as follows (historical mean default rate provided for comparison):
## Table 2 ##
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) ACE Limited and Subsidiaries Asbestos and environmental (A&E) and other run-off liabilities Included in ACE’s liabilities for losses and loss expenses are amounts for A&E (A&E liabilities).
The A&E liabilities principally relate to claims arising from bodily-injury claims related to asbestos products and remediation costs associated with hazardous waste sites.
The estimation of ACE’s A&E liabilities is particularly sensitive to future changes in the legal, social, and economic environment.
ACE has not assumed any such future changes in setting the value of its A&E reserves, which include provisions for both reported and IBNR claims.
ACE’s exposure to A&E claims principally arises out of liabilities acquired when it purchased Westchester Specialty in 1998 and the P&C business of CIGNA in 1999, with the larger exposure contained within the liabilities acquired in the CIGNA transaction.
In 1996, prior to ACE’s acquisition of the P&C business of CIGNA, the Pennsylvania Insurance Commissioner approved a plan to restructure INA Financial Corporation and its subsidiaries (the Restructuring) which included the division of Insurance Company of North America (INA) into two separate corporations: (1) an active insurance company that retained the INA name and continued to write P&C business and (2) an inactive run-off company, now called Century Indemnity Company (Century).
As a result of the division, predominantly all A&E and certain other liabilities of INA were allocated to Century and extinguished, as a matter of Pennsylvania law, as liabilities of INA.
As part of the Restructuring, most A&E liabilities of various U. S.  affiliates of INA were reinsured to Century.
Century and certain other run-off companies having A&E and other liabilities were contributed to Brandywine Holdings.
As part of the 1999 acquisition of the P&C business of CIGNA, ACE acquired Brandywine Holdings and its various subsidiaries.
For more information refer to “Brandywine Run-Off Entities” below.
During 2009, ACE conducted its annual internal, ground-up review of its consolidated A&E liabilities as at December 31, 2008.
As a result of the internal review, the Company increased its net loss reserves for the Brandywine operations, including A&E, by $44 million (net of reinsurance provided by NICO), while the gross loss reserves increased by $198 million.
In addition, the Company decreased gross loss reserves for Westchester Specialty’s A&E and other liabilities by $64 million, while the net loss reserves did not change.
An internal review was also conducted during 2008 of consolidated A&E liabilities as at December 31, 2007.
As a result of that internal review, the Company increased net loss reserves for the Brandywine operations, including A&E, by $65 million (net of reinsurance provided by NICO), while the gross loss reserves increased by $143 million.
This review also resulted in the Company decreasing net loss reserves for Westchester Specialty’s A&E and other liabilities by $13 million (net of NICO), while the gross loss reserves decreased by $10 million.
In 2008, in addition to ACE’s annual internal review, a team of external actuaries performed an evaluation as to the adequacy of the reserves of Century.
This external review was conducted in accordance with the Brandywine Restructuring Order, which requires that an independent actuarial review of Century’s reserves be completed every two years.
Management takes full responsibility for the estimation of its A&E liabilities.
The conclusions of the external review provided estimates of ultimate net Brandywine liabilities that were little changed from a comparable study conducted in 2006.
ACE’s A&E reserves are not discounted for GAAP reporting and do not reflect any anticipated future changes in the legal, social, or economic environment, or any benefit from future legislative reforms.
The table below presents a roll forward of ACE’s consolidated A&E loss reserves (excludes other run-off liabilities), allocated and unallocated loss expense reserves for A&E exposures, and the provision for uncollectible paid and unpaid reinsurance recoverables for the year ended December 31, 2009.
## Table 3 ##
(1) The net balances at December 31, 2008, were reduced by $21 million ($4 million Asbestos, and $17 million Environmental) to reflect final adjustments to the provision for uncollectible reinsurance.
The A&E net loss reserves including allocated and unallocated loss expense reserves and provision for uncollectible reinsurance at December 31, 2009, of $1.4 billion shown in the above table are comprised of $1.07 billion in reserves in respect of Brandywine operations, $110 million of reserves held by Westchester Specialty, $123 million of reserves held by ACE Bermuda and $111 million of reserves held by Insurance – Overseas General.
The incurred activity of $47 million is the
Trademarks and Trade Names We use various trademarks and trade names in our business.
These trademarks and trade names protect names of certain products and services we offer and are important to the extent they provide goodwill and name recognition in the insurance industry.
We use commercially reasonable efforts to protect these proprietary rights, including various trade secret and trademark laws.
One or more of the trademarks and trade names could be material to our ability to sell our products and services.
We have taken appropriate steps to protect our ownership of key names and we believe it is unlikely that anyone would be able to prevent us from using names in places or circumstances material to our operations.
Available Information We make available free of charge through our website (www.
acelimited.
com, under Investor Information / Financial Reports or Investor Information / SEC – Section 16 Filings) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13 (a) or 15 (d) of the Exchange Act (15 U. S. C.  78m(a) or 78o(d)) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We also make available free of charge through our website (under Investor Information / Corporate Governance) our Corporate Governance Guidelines, our Code of Conduct, and Charters for the Committees of our Board of Directors (the Board).
These documents are also available in print to any shareholder who requests them from our Investor Relations Department by: Telephone: (441) 299-9283 Facsimile: (441) 292-8675 E-mail: investorrelations@acegroup.
com We also use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under SEC Regulation FD (Fair Disclosure).
Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, and public conference calls and webcasts.
The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this report.
Segment Information We operate through the following business segments: Insurance – North American, Insurance – Overseas General, Global Reinsurance, and Life.
The following table sets forth an analysis of net premiums earned by segment for the years ended December 31, 2009, 2008, and 2007.
Additional financial information about our segments, including net premiums earned by geographic area, is included in Note 17 to the Consolidated Financial Statements, under Item 8.
## Table 4 ##
Insurance – North American Overview The Insurance – North American segment comprises our operations in the U. S. , Canada, and Bermuda.
This segment, which accounted for 43 percent of our 2009 consolidated net premiums earned, includes the operations of ACE USA (including ACE Canada), ACE Westchester, ACE Bermuda, ACE Private Risk Services, and various run-off operations: ?
ACE USA, our retail operating division, provides a broad array of P&C, accident and health (A&H), and risk management products and services to a diverse group of commercial and non-commercial enterprises and consumers.
ACE USA is this segment’s largest operation and represented approximately 69 percent of Insurance – North American’s net premiums earned in 2009.
MASTERCARD INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (In thousands, except percent and per share data) Note 17.
Commitments At December 31, 2008, the Company had the following future minimum payments due under non-cancelable agreements:
## Table 5 ##
Included in the table above are capital leases with imputed interest expense of $9,483 and a net present value of minimum lease payments of $42,343.
In addition, at December 31, 2008, $92,300 of the future minimum payments in the table above for leases, sponsorship, licensing and other agreements was accrued.
Consolidated rental expense for the Company’s office space, which is recognized on a straight line basis over the life of the lease, was approximately $42,905, $35,614 and $31,467 for the years ended December 31, 2008, 2007 and 2006, respectively.
Consolidated lease expense for automobiles, computer equipment and office equipment was $7,694, $7,679 and $8,419 for the years ended December 31, 2008, 2007 and 2006, respectively.
In January 2003, MasterCard purchased a building in Kansas City, Missouri for approximately $23,572.
The building is a co-processing data center which replaced a back-up data center in Lake Success, New York.
During 2003, MasterCard entered into agreements with the City of Kansas City for (i) the sale-leaseback of the building and related equipment which totaled $36,382 and (ii) the purchase of municipal bonds for the same amount which have been classified as municipal bonds held-to-maturity.
The agreements enabled MasterCard to secure state and local financial benefits.
No gain or loss was recorded in connection with the agreements.
The leaseback has been accounted for as a capital lease as the agreement contains a bargain purchase option at the end of the ten-year lease term on April 1, 2013.
The building and related equipment are being depreciated over their estimated economic life in accordance with the Company’s policy.
Rent of $1,819 is due annually and is equal to the interest due on the municipal bonds.
The future minimum lease payments are $45,781 and are included in the table above.
A portion of the building was subleased to the original building owner for a five-year term with a renewal option.
As of December 31, 2008, the future minimum sublease rental income is $4,416.
Note 18.
Obligations Under Litigation Settlements On October 27, 2008, MasterCard and Visa Inc.  (“Visa”) entered into a settlement agreement (the “Discover Settlement”) with Discover Financial Services, Inc.  (“Discover”) relating to the U. S.  federal antitrust litigation amongst the parties.
The Discover Settlement ended all litigation between the parties for a total of $2,750,000.
In July 2008, MasterCard and Visa had entered into a judgment sharing agreement that allocated responsibility for any judgment or settlement of the Discover action between the parties.
Accordingly, the MasterCard share of the Discover Settlement was $862,500, which was paid to Discover in November 2008.
In addition, in connection with the Discover Settlement, Morgan Stanley, Discover’s former parent company, paid MasterCard $35,000 in November 2008, pursuant to a separate agreement.
The net impact of $827,500 is included in litigation settlements for the year ended December 31, 2008.

<table><tr><td></td><td> 2009</td><td>2008</td><td>2007</td></tr><tr><td>Loss and loss expense ratio, as reported</td><td> 50.5%</td><td>50.4%</td><td>52.4%</td></tr><tr><td>Catastrophe losses</td><td> -1.0%</td><td>-1.6%</td><td>-2.1%</td></tr><tr><td>Prior period development</td><td> 5.0%</td><td>5.7%</td><td>4.1%</td></tr><tr><td>Loss and loss expense ratio, adjusted</td><td> 54.5%</td><td>54.5%</td><td>54.4%</td></tr></table>
<table><tr><td></td><td></td><td></td><td></td><td colspan="2">% Change</td></tr><tr><td>(in millions of U.S. dollars)</td><td>2009</td><td>2008</td><td>2007</td><td>2009 vs.2008</td><td>2008 vs.2007</td></tr><tr><td>Net premiums written</td><td>$1,038</td><td>$914</td><td>$1,197</td><td>14%</td><td>-24%</td></tr><tr><td>Net premiums earned</td><td>979</td><td>1,017</td><td>1,299</td><td>-4%</td><td>-22%</td></tr><tr><td>Losses and loss expenses</td><td>330</td><td>524</td><td>664</td><td>-37%</td><td>-21%</td></tr><tr><td>Policy acquisition costs</td><td>195</td><td>192</td><td>248</td><td>2%</td><td>-23%</td></tr><tr><td>Administrative expenses</td><td>55</td><td>56</td><td>64</td><td>-2%</td><td>-13%</td></tr><tr><td>Underwriting income</td><td>$399</td><td>$245</td><td>$323</td><td>63%</td><td>-24%</td></tr><tr><td>Net investment income</td><td>278</td><td>309</td><td>274</td><td>-10%</td><td>13%</td></tr><tr><td>Net realized gains (losses)</td><td>-17</td><td>-163</td><td>21</td><td>90%</td><td>NM</td></tr><tr><td>Other (income) expense</td><td>2</td><td>2</td><td>4</td><td>0%</td><td>-50%</td></tr><tr><td>Income tax expense</td><td>46</td><td>30</td><td>32</td><td>53%</td><td>-6%</td></tr><tr><td>Net income</td><td>$612</td><td>$359</td><td>$582</td><td>70%</td><td>-38%</td></tr><tr><td>Loss and loss expense ratio</td><td>33.7%</td><td>51.5%</td><td>51.1%</td><td></td><td></td></tr><tr><td>Policy acquisition cost ratio</td><td>19.9%</td><td>18.8%</td><td>19.1%</td><td></td><td></td></tr><tr><td>Administrative expense ratio</td><td>5.6%</td><td>5.5%</td><td>4.9%</td><td></td><td></td></tr><tr><td>Combined ratio</td><td>59.2%</td><td>75.8%</td><td>75.1%</td><td></td><td></td></tr></table>
<table><tr><td>Moody’s Rating Category</td><td>1-in-100 YearDefault Rate</td><td>Historical MeanDefault Rate</td></tr><tr><td><i>Investment Grade:</i></td><td></td><td></td></tr><tr><td>Aaa-Baa</td><td>0.0%-1.4%</td><td>0.0%-0.3%</td></tr><tr><td><i>Below Investment Grade:</i></td><td></td><td></td></tr><tr><td>Ba</td><td>4.8%</td><td>1.1%</td></tr><tr><td>B</td><td>12.8%</td><td>3.4%</td></tr><tr><td>Caa-C</td><td>51.6%</td><td>13.1%</td></tr></table>
<table><tr><td></td><td colspan="2">Asbestos</td><td colspan="2">Environmental</td><td colspan="2">Total</td></tr><tr><td>(in millions of U.S. dollars)</td><td>Gross</td><td>Net -1</td><td>Gross</td><td>Net -1</td><td>Gross</td><td>Net -1</td></tr><tr><td>Balance at December 31, 2008</td><td>$2,629</td><td>$1,365</td><td>$310</td><td>$297</td><td>$2,939</td><td>$1,662</td></tr><tr><td>Incurred activity</td><td>61</td><td>37</td><td>24</td><td>10</td><td>85</td><td>47</td></tr><tr><td>Payment activity</td><td>-415</td><td>-233</td><td>-83</td><td>-68</td><td>-498</td><td>-301</td></tr><tr><td>Foreign currency revaluation</td><td>18</td><td>6</td><td>1</td><td>–</td><td>19</td><td>6</td></tr><tr><td> Balance at December 31, 2009</td><td>$2,293</td><td>$1,175</td><td>$252</td><td>$239</td><td>$2,545</td><td>$1,414</td></tr></table>
<table><tr><td>(in millions of U.S. dollars)</td><td> 2009 Net Premiums Earned</td><td>% of Total</td><td>2008 Net Premiums Earned</td><td>% of Total</td><td>2007 Net Premiums Earned</td></tr><tr><td>Insurance – North American</td><td>$5,684</td><td>43%</td><td>$5,679</td><td>43%</td><td>$6,007</td></tr><tr><td>Insurance – Overseas General</td><td>5,147</td><td>39%</td><td>5,337</td><td>40%</td><td>4,623</td></tr><tr><td>Global Reinsurance</td><td>979</td><td>7%</td><td>1,017</td><td>8%</td><td>1,299</td></tr><tr><td>Life</td><td>1,430</td><td>11%</td><td>1,170</td><td>9%</td><td>368</td></tr><tr><td></td><td>$13,240</td><td>100%</td><td>$13,203</td><td>100%</td><td>$12,297</td></tr></table>
<table><tr><td></td><td>Total</td><td>Capital Leases</td><td>Operating Leases</td><td>Sponsorship, Licensing & Other</td></tr><tr><td>2009</td><td>$372,320</td><td>$8,435</td><td>$40,327</td><td>$323,558</td></tr><tr><td>2010</td><td>140,659</td><td>2,758</td><td>18,403</td><td>119,498</td></tr><tr><td>2011</td><td>80,823</td><td>1,978</td><td>11,555</td><td>67,290</td></tr><tr><td>2012</td><td>50,099</td><td>1,819</td><td>9,271</td><td>39,009</td></tr><tr><td>2013</td><td>50,012</td><td>36,837</td><td>7,062</td><td>6,113</td></tr><tr><td>Thereafter</td><td>21,292</td><td>—</td><td>19,380</td><td>1,912</td></tr><tr><td>Total</td><td>$715,205</td><td>$51,827</td><td>$105,998</td><td>$557,380</td></tr></table>

Question: Which year / section is Net premiums earned the lowest?
Answer: 2009