We lease office space for our principal executive offices in Woodland Hills, California and our offices in Rancho Cordova, California. Our executive offices, comprising approximately 115,448 square feet, are occupied under a lease that was recently renewed with new terms and conditions. As part of the lease renewal, we amended our existing lease, which was scheduled to expire on December 31, 2004, and entered into a new lease with a ten year term. The new lease commences January 1, 2005 and expires December 31, 2015. A significant portion of our California HMO operations are also housed in Woodland Hills, in a separate 333,954 square foot leased facility. This new two-building facility was occupied at the end of 2001, under a lease that expires December 31, 2011. Combined rent for our Woodland Hills facilities was approximately $13.0 million in 2003.
We also lease an aggregate of approximately 452,048 square feet of office space in Rancho Cordova, California for certain Health Plan Services and Government Contract operations. Our aggregate rent obligations under these leases were approximately $7.3 million in 2003. These leases expire at various dates. We also lease a total of approximately 100,012 square feet of office space in San Rafael and Pointe Richmond, California for certain specialty services operations.
• Region 6, covering Arkansas, Oklahoma, most of Texas, and most of Louisiana
We will end the delivery of health care under our existing Region 11 contract on May 31, 2004, our existing Region 9, 10 and 12 contract on June 30, 2004, and our existing Region 6 contract on October 31, 2004.
• Increase in commercial premiums of $326.3 million or 6% for the year ended December 31, 2002 as compared to the same period in 2001 due to a 13% increase in premiums on a PMPM basis partially offset by a 7% decrease
• Increase in revenues of $98.4 million due to higher base contract pricing on new option periods,
Net investment income decreased by $5.9 million or 9.0% for the year ended December 31, 2003 as compared to the same period in 2002. The decline is primarily the result of declines in interest rates, applicable to our cash and cash equivalent balances, as the Federal Reserve lowered the Fed Funds target by 25 basis points during the year ended December 31, 2003 compared to the same period in 2002. This impacts our investment income since the Fed Funds target rates track closely with cash yields, and a significant portion of our total balances available for investment is cash and cash equivalents. The decline is partially offset by higher average cash and investment balances.
Our Health Plan Services MCR decreased to 83.5% for the year ended December 31, 2002 from 84.5% for the same period in 2001. The improvement in our Health Plan Services MCR is due to a continued focus on pricing discipline combined with pricing increases above the health care cost trend for our Medicare products. The increase in our overall Health Plan Services premiums on a PMPM basis of 6% as compared to the same period in 2001 outpaced the increase in our overall health care costs on a PMPM basis of 5% as compared to the same period in 2001. In addition to the pricing increases, our de-emphasis on the large group market, which has had a high MCR relative to MCRs associated with other portions of our health plan services business, also contributed to the decline in the overall Health Plan Services MCR.
G&A costs increased by $56.4 million or 6.6% for the year ended December 31, 2003 as compared to the same period in 2002. The increase reflects continued investment in our operations and systems consolidation projects. Our salaries and benefits expenses increased by $22.0 million for the year ended December 31, 2003 as compared to the same period in 2002. The administrative expense ratio remained the same at 10.6% for the year ended December 31, 2003 as compared to the same period in 2002. The increase of 6.6% in G&A costs substantially offset the increase in health plan services premium revenues of 6.0% for the year ended December 31, 2003.
• Net decrease in cash flows from reserves for claims and other settlements of $83.6 million for the year ended December 31, 2002 as compared to the same period in 2001. This is primarily due to higher paid claims driving inventories down, shared risk reserves reduction and higher electronic data interchange and auto adjudication rates, and
On a monthly basis, we estimate the amount of uncollectible receivables to reflect allowances for doubtful accounts. The allowances for doubtful accounts are estimated based on the creditworthiness of our customers, our historical collection rates and the age of our unpaid balances. During this process, we also assess the recoverability of the receivables, and an allowance is recorded based upon their net realizable value. Those receivables that are deemed to be uncollectible, such as receivables from bankrupt employer groups, are fully written off against their corresponding asset account, with a debit to the allowance to the extent such an allowance was previously recorded.