The following is selected financial data of RLI Corp. and subsidiaries for the five years ended December 31, 2019:
LAE represents the cost involved in adjusting and administering losses from policies we issued. The LAE reserves are frequently separated into two components: allocated and unallocated. Allocated loss adjustment expense (ALAE) reserves represent an estimate of claims settlement expenses that can be identified with a specific claim or case. Examples of ALAE would be the hiring of an outside adjuster to investigate a claim or an outside attorney to defend our insured. The claim adjuster typically estimates this cost separately from the loss component in the case reserve. Unallocated loss adjustment expense (ULAE) reserves represent an estimate of claims settlement expenses that cannot be identified with a specific claim. An example of ULAE would be the cost of an internal claim examiner to manage or investigate claims.
● Small volume or lacking internal data requiring significant utilization of external data,
Gross premiums written from the casualty segment totaled $704.2 million, up 8 percent from 2018. Excluding certain exits and repositioning on Prime, a majority of products within this segment posted top line growth. Premiums from commercial excess and personal umbrella increased $29.6 million, due in part to an expanded distribution base in personal umbrella, larger scale in the energy casualty space and overall exposure growth. Our executive products group grew $28.3 million as substantial rate increases were achieved, submissions were up and newer initiatives gained traction. Production from small commercial increased $10.5 million as opportunities arose from market disruption and certain offerings expanded geographically. The third consecutive year of double digit rate increases led to growth within commercial transportation.
The segment’s loss ratio was 44.9 in 2019, compared to 56.2 in 2018. Catastrophe losses added 5 points to the loss ratio in 2019, compared to 26 points of impact from catastrophe losses in 2018. Partially offsetting this reduction were higher current accident year non-catastrophe losses from our commercial property and specialty personal lines, a shift in mix of business and lower favorable development on prior years’ reserves. The expense ratio for the property segment was 44.0 in 2019, compared to 43.2 in 2018. Strong growth in overall earnings and book value led to an increase in bonus and profit-sharing expenses and a higher expense ratio, the impact of which was partially offset by a larger premium base.
The after-tax yield reflects the different tax rates applicable to each category of investment. Our taxable fixed income securities were subject to a corporate tax rate of 21.0 percent, our tax-exempt municipal securities were subject to a tax rate of 5.3 percent and our dividend income was generally subject to a tax rate of 13.1 percent. During 2019, the average after-tax yield on the taxable fixed income portfolio was 2.7 percent, an increase from 2.6 percent in the prior year. The average after-tax yield on the tax-exempt portfolio remained at 2.6 percent.
Our allocation to agency mortgage-backed securities totaled $420.2 million as of December 31, 2019. Agency MBS represented 21 percent of the fixed income portfolio compared to $395.3 million or 22 percent of that portfolio as of December 31, 2018.
In 2019 and 2018, we received a dividend from Maui Jim. Dividends from Maui Jim have been irregular in nature and while they provide added liquidity when received, we do not rely on those dividends to meet our liquidity needs. While these dividends do not flow through the investee earnings line, they do result in the recognition of a tax benefit, which is discussed in the income tax section that follows.
Additionally, two of our insurance companies, RLI Ins. and Mt. Hawley, are members of the Federal Home Loan Bank of Chicago (FHLBC). Membership in the Federal Home Loan Bank system provides both companies with access to an additional source of liquidity via a secured lending facility. Based on qualifying assets at year-end, aggregate borrowing capacity is approximately $25 million. However, under certain circumstances, that capacity may be increased based on additional FHLBC stock purchased and available collateral. Our membership allows each insurance subsidiary to determine tenor and structure at the time of borrowing. As of and during the year ended December 31, 2019, there were no outstanding borrowings with the FHLBC.
Property carriers are still recovering from active catastrophe seasons over the last three years. Despite a benign 2019 in the United States, international catastrophe events were sizable and there has been ongoing re-underwriting across the industry. The Lloyd’s market has reduced capacity and pulled back from select property lines to address their worst performing risks. Other carriers have adjusted their risk profile by reducing limits offered or exiting certain classes. As this disruption has taken several years to evolve, price momentum will likely continue into 2020. A focus on selective underwriting will leverage current conditions with the support of a durable capital base. While prudent risk management will influence the amount of exposures insured, rate improvement on catastrophe and marine business will support top line growth.
Approximately $69.3 million of undistributed earnings from Maui Jim are included in our retained earnings as of December 31, 2019. We received dividends of $13.2 million and $9.9 million from Maui Jim in 2019 and 2018, respectively. No dividends were received in 2017.
The table below illustrates the changes in the balance of each component of accumulated other comprehensive earnings for each period presented in the consolidated financial statements. The 2017 activity and balances include the net unrealized gain and loss activity on both fixed income and equity securities, while the 2019 and 2018 activity and ending balance reflect only the net unrealized gain and loss activity on fixed income securities due to the aforementioned adoption of ASU 2016-01. The changes in accumulated other comprehensive earnings also reflect adjustments from the adoption of two accounting standards. ASU 2016-01 necessitated a cumulative-effect adjustment in the beginning of 2018, which moved $142.2 million of net unrealized gains and losses on equity securities from accumulated other comprehensive earnings to retained earnings.
We compete with a large number of other companies in our selected lines of business. During periods of intense competition for premium, we are vulnerable to the actions of other companies who may seek to write business without the appropriate regard for risk and profitability. The insurance industry is currently operating under highly competitive conditions and, as a result, margins in the industry are under pressure. During these times, it is very difficult to grow or maintain premium volume without sacrificing underwriting discipline and income. Our profitability can be significantly affected by the ability of our underwriters to accurately select and price risk and our claim personnel to appropriately deliver fair outcomes. We attempt to mitigate this risk by incentivizing our underwriters to maximize underwriting profit and remain disciplined in pricing and selecting risks. If we are unable to compete effectively in the markets in which we operate or expand our operations into new markets, our underwriting revenues may decline, as well as overall business results.
Assets measured at fair value on a recurring basis as of December 31, 2019, are summarized below:
On October 2, 2013, we completed a public debt offering, issuing $150.0 million in senior notes maturing September 15, 2023, and paying interest semi-annually at the rate of 4.875 percent. The notes were issued at a discount resulting in proceeds, net of discount and commission, of $148.6 million. The amount of the discount is being charged to income over the life of the debt on an effective-yield basis. The estimated fair value for the senior note was $161.2 million as of December 31, 2019. The fair value of our long-term debt is based on the limited observable prices that reflect thinly traded securities and is therefore classified as a Level 2 liability within the fair value hierarchy.
As discussed in note 1.A., our three insurance companies are subsidiaries of RLI Corp., with RLI Ins. as the first-level, or principal, insurance subsidiary. At the holding company (RLI Corp.) level, we rely largely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt, corporate expenses and dividends to RLI Corp. shareholders. As discussed further below, dividend payments to RLI Corp. from our principal insurance subsidiary are restricted by state insurance laws as to the amount that may be paid without prior approval of the insurance regulatory authorities of Illinois. As a result, we may not be able to receive dividends from such subsidiary at times and in amounts necessary to pay desired dividends to RLI Corp. shareholders. On a GAAP basis, as of December 31, 2019, our holding company had $995.4 million in equity. This includes amounts related to the equity of our insurance subsidiaries, which is subject to regulatory restrictions under state insurance laws. The unrestricted portion of holding company net assets is comprised primarily of investments and cash, including $45.9 million in liquid assets, which would cover nine months of our annual holding company expenditures. Unrestricted funds at the holding company are available to fund debt interest, general corporate obligations and regular dividend payments to our shareholders. If necessary, the holding company also has other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, which include a revolving line of credit, as well as access to capital markets.