Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) 29 Year Ended December 31, 2015 Compared to Year Ended December 31, 2014 As an agricultural commodity-based business, the Company is subject to a variety of market factors which affect the Company’s operating results.
Agricultural Services was negatively impacted by the ample global supply of agricultural commodities which limited merchandising opportunities, reduced demand for North American grain exports, and moderated commodity prices throughout the year.
The increase in global supply was due to several large harvests which built up world grain stocks to historically high levels.
In addition, the U. S.  dollar continued to be firm against weakening global currencies, particularly those in major crop growing countries such as Brazil, Argentina, and Ukraine.
This resulted in margin pressure and decreased North American export volumes most of the year, partially offset by higher domestic grain demand.
Transportation was also impacted by the decreased North American export volumes as well as lower global freight rates.
Demand and prices for sweeteners and starches remained solid while co-product prices weakened.
Ethanol demand remained strong both in North America and export markets due to favorable gasoline blending economics and ethanol’s continuing status as a competitive octane enhancer.
Despite strong demand, ethanol margins were weak due to record-high levels of U. S.  industry production for most of the year, leading to excess inventory.
Overall demand for global protein meal and vegetable oil remained strong, especially in North America.
South American oilseeds saw significantly higher volumes and margins for grain origination and exports due to the significant depreciation of the Brazilian Real against the U. S.  dollar.
Lower softseed availability affected seed basis, resulting in lower softseed crushing volumes and weaker margins, particularly in Europe.
Biodiesel demand resulting from international biofuel standards continued to support demand for crude and refined vegetable oil, although demand for biodiesel was softer throughout 2015 due to weaker economic conditions in certain countries.
The Wild Flavors and Specialty Ingredients business continued to focus on cost synergies and new revenue opportunities amid economic uncertainty in many emerging economies and some softening in demand.
Customers’interest to develop innovative, healthy, and nutritious food products in response to macro trends in diet and demographics remained strong and continued to grow.
Net earnings attributable to controlling interests decreased $0.4 billion to $1.8 billion.
Segment operating profit was down 16%, due primarily to weaker ethanol margins and lower volumes and margins of North American grain exports.
Corporate results in the current year include a charge of $189 million related to the repurchase of outstanding debt, in addition to a credit of $2 million from the effect of decreasing agricultural commodity prices on LIFO inventory valuation reserves, compared to a LIFO credit of $245 million in the prior year.
Income taxes decreased from $877 million to $438 million due to lower earnings before income taxes and a decreased effective tax rate.
The Company’s effective tax rate for 2015 decreased to 19% compared to 28% for 2014 due primarily to low tax rates on significant one-time gains related to portfolio actions, a $70 million favorable impact of discrete items, mainly the release of a $66 million valuation allowance, and changes in the geographic mix of pretax earnings (see Note 13 in Item 8 for more information).
Analysis of Statements of Earnings Processed volumes by product for the years ended December 31, 2015 and 2014 are as follows (in metric tons):
## Table 0 ##
The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to current and seasonal local supply and demand conditions.
Record volumes of oilseeds were processed during the year, increased from the prior year as a result of the strong demand environment for soybean meal.
Processed volumes of corn were decreased in response to high ethanol industry production which outpaced demand throughout the year.
Processed volumes of cocoa beans decreased due to the sale of the global cocoa business in October 2015.
Warranty Reserve Some of our salvage mechanical products are sold with a standard six month warranty against defects.
Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects.
We also provide a limited lifetime warranty for certain of our aftermarket products.
These assurance-type warranties are not considered a separate performance obligation, and thus no transaction price is allocated to them.
We record the warranty costs in Cost of goods sold on our Consolidated Statements of Income.
Our warranty reserve is calculated using historical claim information to project future warranty claims activity and is recorded within Other accrued expenses and Other noncurrent liabilities on our Consolidated Balance Sheets based on the expected timing of the related payments.
The changes in the warranty reserve are as follows (in thousands):
## Table 1 ##
Self-Insurance Reserves We self-insure a portion of employee medical benefits under the terms of our employee health insurance program.
We purchase certain stop-loss insurance to limit our liability exposure.
We also self-insure a portion of our property and casualty risk, which includes automobile liability, general liability, directors and officers liability, workers' compensation, and property coverage, under deductible insurance programs.
The insurance premium costs are expensed over the contract periods.
A reserve for liabilities associated with these losses is established for claims filed and claims incurred but not yet reported based upon our estimate of ultimate cost, which is calculated using analysis of historical data.
We monitor new claims and claim development as well as trends related to the claims incurred but not reported in order to assess the adequacy of our insurance reserves.
Total self-insurance reserves were $105 million and $94 million, of which $52 million and $43 million was classified as current, as of December 31, 2018 and 2017, respectively, and are classified as Other accrued expenses in the Consolidated Balance Sheets.
The remaining balances of self-insurance reserves are classified as Other noncurrent liabilities, which reflects management's estimates of when claims will be paid.
We had outstanding letters of credit of $65 million and $71 million at December 31, 2018 and 2017, respectively, to guarantee self-insurance claims payments.
While we do not expect the amounts ultimately paid to differ significantly from our estimates, our insurance reserves and corresponding expenses could be affected if future claims experience differs significantly from historical trends and assumptions.
Stockholders' Equity On October 25, 2018, our Board of Directors authorized a stock repurchase program under which we may purchase up to $500 million of our common stock from time to time through October 25, 2021.
Repurchases under the program may be made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs.
The repurchase program does not obligate us to acquire any specific number of shares and may be suspended or discontinued at any time.
Delaware law imposes restrictions on stock repurchases.
During 2018, we repurchased 2.3 million shares of common stock for an aggregate price $60 million.
As of December 31, 2018, there is $440 million of remaining capacity under our repurchase program.
In 2019, we have repurchased 1.8 million shares of common stock for an aggregate purchase price of $46 million during the period ended February 22, 2019.
Treasury stock is accounted for using the cost method.
Income Taxes Current income taxes are provided on income reported for financial reporting purposes, adjusted for transactions that do not enter into the computation of income taxes payable in the same year.
Deferred income taxes have been provided to show the effect of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements.
A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before we are able to realize their benefit or that future deductibility is uncertain.
Provision is made for taxes on undistributed earnings of foreign subsidiaries and related companies to the extent that such earnings are not deemed to be permanently invested.
Segment Expenses.
Commission and brokerage expenses increased by 27.1% to $466.3 million in 2014 compared to $366.9 million in 2013.
The variance was due to the impact of the increase in premiums earned, change in the mix of business and higher contingent commissions.
Segment other underwriting expenses decreased slightly to $45.6 million in 2014 from $47.2 million in 2013.
Commission and brokerage expenses increased by 4.6% to $366.9 million in 2013 compared to $350.6 million in 2012.
The year over year change was primarily due to the impact of the increase in premiums earned, partially offset by the impact of the termination of the large Florida quota share reinsurance contract in second quarter 2012 as well as the adoption of new accounting standards concerning the accounting for acquisition costs, which increased expenses in 2012.
Segment other underwriting expenses increased to $47.2 million in 2013 from $44.8 million in 2012, primarily due to increased compensation expenses and higher premiums earned.
International.
The following table presents the underwriting results and ratios for the International segment for the periods indicated.
## Table 2 ##
Premiums.
Gross written premiums increased by 17.6% to $1,582.4 million in 2014 compared to $1,345.8 million in 2013, primarily due to new quota share contracts, partially offset by the negative impact of $47.9 million from the movement of foreign exchange rates.
Net written premiums increased by 0.7% to $1,336.6 million in 2014 compared to $1,327.4 million in 2013.
The variance of the change in gross written premiums compared to the change in net written premiums is due to a higher utilization of reinsurance related to the new quota share contracts.
Premiums earned increased 1.7% to $1,310.9 million in 2014 compared to $1,289.3 million in 2013.
The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
UNITED PARCEL SERVICE, INC.  AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 92 Expected volatilities are based on the historical returns on our stock and the implied volatility of our publicly-traded options.
The expected dividend yield is based on the recent historical dividend yields for our stock, taking into account changes in dividend policy.
The risk-free interest rate is based on the term structure of interest rates at the time of the option grant.
The expected life represents an estimate of the period of time options are expected to remain outstanding, and we have relied upon a combination of the observed exercise behavior of our prior grants with similar characteristics, the vesting schedule of the grants, and an index of peer companies with similar grant characteristics in estimating this variable.
We received cash of $122, $92 and $60 million during 2012, 2011 and 2010, respectively, from option holders resulting from the exercise of stock options.
We received a tax benefit of $3, $6 and $4 million during 2012, 2011 and 2010, respectively, from the exercise of stock options, which is reported as cash from financing activities in the cash flow statement.
The total intrinsic value of options exercised during 2012, 2011 and 2010 was $39, $31 and $18 million, respectively.
As of December 31, 2012, there was $2 million of total unrecognized compensation cost related to nonvested options.
That cost is expected to be recognized over a weighted average period of 3 years and 4 months.
The following table summarizes information about stock options outstanding and exercisable at December 31, 2012:

<table><tr><td>(In thousands)</td><td>2015</td><td>2014</td><td>Change</td></tr><tr><td>Oilseeds</td><td>33,817</td><td>32,208</td><td>1,609</td></tr><tr><td>Corn</td><td>23,126</td><td>23,668</td><td>-542</td></tr><tr><td>Milling and cocoa</td><td>7,150</td><td>7,318</td><td>-168</td></tr><tr><td>Total</td><td>64,093</td><td>63,194</td><td>899</td></tr></table>
<table><tr><td>Balance as of January 1, 2017</td><td>$19,634</td></tr><tr><td>Warranty expense</td><td>38,608</td></tr><tr><td>Warranty claims</td><td>-35,091</td></tr><tr><td>Balance as of December 31, 2017</td><td>23,151</td></tr><tr><td>Warranty expense</td><td>43,682</td></tr><tr><td>Warranty claims</td><td>-43,571</td></tr><tr><td>Balance as of December 31, 2018</td><td>$23,262</td></tr></table>
<table><tr><td></td><td colspan="3">Years Ended December 31,</td><td colspan="2">2014/2013</td><td colspan="2">2013/2012</td></tr><tr><td>(Dollars in millions)</td><td>2014</td><td>2013</td><td>2012</td><td>Variance</td><td>% Change</td><td>Variance</td><td>% Change</td></tr><tr><td>Gross written premiums</td><td>$1,582.4</td><td>$1,345.8</td><td>$1,192.3</td><td>$236.7</td><td>17.6%</td><td>$153.5</td><td>12.9%</td></tr><tr><td>Net written premiums</td><td>1,336.6</td><td>1,327.4</td><td>1,188.7</td><td>9.2</td><td>0.7%</td><td>138.7</td><td>11.7%</td></tr><tr><td>Premiums earned</td><td>$1,310.9</td><td>$1,289.3</td><td>$1,214.8</td><td>$21.6</td><td>1.7%</td><td>$74.5</td><td>6.1%</td></tr><tr><td>Incurred losses and LAE</td><td>748.2</td><td>675.4</td><td>586.3</td><td>72.8</td><td>10.8%</td><td>89.0</td><td>15.2%</td></tr><tr><td>Commission and brokerage</td><td>306.2</td><td>295.9</td><td>300.1</td><td>10.3</td><td>3.5%</td><td>-4.2</td><td>-1.4%</td></tr><tr><td>Other underwriting expenses</td><td>34.6</td><td>33.9</td><td>29.3</td><td>0.7</td><td>2.0%</td><td>4.6</td><td>15.8%</td></tr><tr><td>Underwriting gain (loss)</td><td>$221.9</td><td>$284.2</td><td>$299.1</td><td>$-62.3</td><td>-21.9%</td><td>$-14.9</td><td>-5.0%</td></tr><tr><td></td><td></td><td></td><td></td><td></td><td>Point Chg</td><td></td><td>Point Chg</td></tr><tr><td>Loss ratio</td><td>57.1%</td><td>52.4%</td><td>48.3%</td><td></td><td>4.7</td><td></td><td>4.1</td></tr><tr><td>Commission and brokerage ratio</td><td>23.4%</td><td>22.9%</td><td>24.7%</td><td></td><td>0.5</td><td></td><td>-1.8</td></tr><tr><td>Other underwriting expense ratio</td><td>2.6%</td><td>2.7%</td><td>2.4%</td><td></td><td>-0.1</td><td></td><td>0.3</td></tr><tr><td>Combined ratio</td><td>83.1%</td><td>78.0%</td><td>75.4%</td><td></td><td>5.1</td><td></td><td>2.6</td></tr><tr><td colspan="2">(Some amounts may not reconcile due to rounding.)</td><td></td><td></td><td></td><td></td><td></td><td></td></tr></table>

Question: In the year with largest amount of Commission and brokerage, what's the increasing rate of Other underwriting expenses?
Answer: 0.02065