Net investment income totaled $4,261,000 in 2011 compared to $5,089,000 in 2010; a decrease 16.3%. The primary reason for the decline in investment income was the decrease in invested assets in 2011 compared to the same period last year. The Company ended 2011 with invested assets of $101,972,000 compared to $109,682,000 in 2010; a 7% or $7,710,000 decrease. The decline was primarily related to selling of securities from our investment portfolio in 2011 to raise cash for claim payments from increased tornado and windstorm activity in the spring of 2011. In addition to the decline in invested assets, the subsidiaries continue to reinvest matured investments at interest rates substantially below the average book yield of the total portfolio. This trend will continue as long as the current record low interest rate environment persists and will continue to put downward pressure on investment income.
Property and casualty operations constitute our largest segment composing 87.8% and 88.5% of our total premium revenue in 2011 and 2010, respectively. Premium revenues and operating income for the P&C segment for the year ended December 31, 2011 and 2010 are summarized below:
Due to continued underwriting losses in our private passenger automobile line of business, the program was terminated during the fourth quarter of 2011. The combination of previously implemented rate increases, which slowed the rate of new business growth, and ultimate termination of the program lead to the 34.0% decrease in premium revenue in this line of business for 2011 compared to the same period last year. The commercial automobile program was also evaluated, and based on poor underwriting results in the current period and previous years, this program was also terminated during 2011. Net premium earned from this program was down $138,000 or 27.5% compared to the same period last year.
Commission expense for 2011 was $7,615,000 (15.4% of premium revenue) compared to $7,319,000 (13.5% of premium revenue) for the same period last year. The primary reason for the $296,000 or 4.0% increase in commission expense during 2011 compared to 2010 was an increase in contingent commissions.
rating agencies, US Government and agency debt is shown in the table below in the category of AAA/AA+.
and financial condition. Changes in loss ratios, projected investment income, premium rates or overall expense levels could negatively impact the recoverability of DAC.
Policy receivables are reported at unpaid balances. Policy receivables are generally offset by associated unearned premium liabilities and are not subject to significant credit risk. Receivables from agents, less provision for credit losses, are composed of balances due from independent agents. At December 31, 2011, the single largest balance due from one agent totaled $541,000.
The Company conducts periodic reviews to identify and evaluate securities in an unrealized loss position in order to identify other-than-temporary-impairments. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more likely than not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes.
In April 2007, the Company sold substantially all of its 50% interest in Mobile Attic, Inc. The Company, Peter L. Cash and Russell L. Cash (collectively the "Sellers") sold to Purchaser 61% of the outstanding stock of Mobile Attic under the terms of a Stock Purchase Agreement dated April 5, 2007, executed by Sellers, Mobile Attic and Purchaser's assignor, James W. Bagley (the "Stock Purchase Agreement").