The Company incurred claims and claims expenses, net of recoveries, of $131.1 million during the 1999 fiscal year compared with $95.5 million during the 1998 fiscal year. During the 1999 fiscal year, claims and claims expenses incurred included $25.6 million in losses from various catastrophes including Hurricane Floyd, the Australian hailstorm and Oklahoma tornadoes. During the same year, the Company recorded additions to prior year reserves of $14.5 million in respect of Hurricane Georges, which occurred in September 1998, due to an increase in market estimates of the damage caused by the hurricane. The Company also incurred $16.0 million of additional reserves in the 1999 fiscal year following the completion of an evaluation of its catastrophe reserving methodology. In addition, the Company recorded approximately $14.0 million of additional reserves in the 1999 fiscal year relating to contracts written in prior years, including contracts which had incidental extended warranty coverages.
At December 31, 2000, reserves for unpaid claims and claims expenses were $174.8 million compared to $190.4 million at December 31, 1999. Included in the reserve for unpaid claims and claims expenses at December 31, 2000 was an amount of $37.2 million compared to $21.5 million at December 31, 1999 in respect of the business underwritten by LaSalle Re Capital. The decrease in outstanding claims recoverable from reinsurers from $17.8 million as at December 31, 1999 to $6.4 million as at December 31, 2000 was primarily due to the collection of funds from reinsurers.
We have audited the accompanying consolidated statements of operations and comprehensive income, changes in common shareholders' equity, and cash flows of LaSalle Re Holdings Limited and subsidiaries for the year ended September 30, 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
Net unrealized gains and losses on debt securities are included in other comprehensive income, net of applicable minority interest.
The Company had issued options to purchase common shares to certain shareholders and their affiliates and LaSalle Re had issued options to purchase exchangeable non-voting shares. These options became exercisable on October 1, 1996 and were exerciseable until November 22, 2003. As the options were granted to certain of the founding shareholders and their affiliates as an inducement to purchase stock in LaSalle Re, no compensation expense has been recorded in connection with the options.
The Company awarded restricted common stock to key employees. At the time of the award, the market value of the shares was recorded as deferred compensation and was presented as a separate component of shareholders' equity. The deferred compensation was charged to the income statement over the vesting period.
The only awards of restricted stock were granted during the 1999 year. The Company granted two separate awards of restricted stock to certain executive officers. The first vested over 5 years from the date of award with 331/3% vested on the third anniversary date of the award date, 662/3% vested on the fourth anniversary date of the award and 100% vested on the fifth anniversary date of the award. The second award of restricted stock vested ratably in two annual installments over 2 years from the date of award. During the restricted period the employee received dividends in the form of additional shares of restricted stock.
In consideration for entering into an employment agreement with LaSalle Re, the Company's former Chief Executive Officer was granted an award of SAR's during 1994. The number of SARs awarded was dependent upon the financial performance of the Company over a set period of time and the value of each SAR was dependent upon the fair market value of a common share. Following the exchange of shares in connection with the Business Combination, the value of each SAR became dependent upon the fair market value of Trenwick's publicly traded common stock, therefore the liability was assumed by Trenwick. During the 2000 year, the Company recorded a reduction in the total liability relating to the SARs of $964. For the 1999 period, 1999 year and 1998 year, the Company increased (decreased) the total liability by $242, ($1,490) and ($548) respectively.
LaSalle Re, the Company's insurance subsidiary, is subject to Bermuda insurance regulations, which mandate minimum solvency margins and liquidity ratios. LaSalle Re must maintain a minimum statutory capital and surplus level of the greater of $100,000, 50% of net premiums written ($49,266 for the 2000 year), or 15% of net loss reserves ($25,250 at year end 2000). Statutory capital and surplus of LaSalle Re was $453,766 and $426,453 at year end 2000 and period end 1999, respectively. In addition, Bermuda insurance regulations restrict the payment of dividends from retained earnings or additional paid-in-capital which exceed certain thresholds without prior approval from the Bermuda Minister of Finance. At year end 2000, there were no restrictions on the distribution of retained earnings.
Summarized unaudited quarterly financial data for the years presented is as follows: