We monitor the concentrations of the various risk attributes in our insurance portfolio. Our primary IIF and RIF, as of December 31, 2014, were made up of approximately 63% and 62%, respectively, of credit scores at or above 740. Generally, insuring loans made to borrowers with higher credit scores tends to result in a lower frequency of claims. Additionally, as of December 31, 2014, we believe our insurance portfolio is comprised of loans that are full documentation loans, and less than 1% of our RIF is above 95% LTV. As we continue to increase our insurance writings, we expect to continue to seek out and insure high credit quality mortgages. Since we recently began writing MI in April 2013, our portfolio does not yet reflect our expected distribution of LTVs, borrower credit scores, loan sizes, property types and occupancy statuses of loans that we expect to insure, as well as the concentrations within states and metropolitan statistical areas. We believe we will move toward our expected distribution of these risk attributes in our insurance portfolio as we continue to write more business.
We intend to build a geographically diverse portfolio without geographic concentrations that might expose us to undue risk. Risk will be managed by establishing targets and limits for new origination mix and/or portfolio limits. Therefore, aside from the impact of market restrictions, we expect that our insurance origination mix by region will be consistent with the overall distribution of mortgage originations in the U.S. that require mortgage insurance. We currently have no geographic market restrictions in place.
As of December 31, 2014, we had 14,603 primary certificates in force and approximately 21,000 pool certificates in force, compared to 2,072 primary certificates in force and approximately 22,000 pool certificates in force as of December 31, 2013.
Employee compensation represents the majority of our operating expense, which includes both cash and share-based compensation. Our payroll and related expense was $39.0 million for the year ended December 31, 2014, compared to $28.2 million and $11.6 million for the years ended December 31, 2013 and 2012, respectively. The increases year over year were driven by the addition of new employees. Our headcount grew from 141 at December 31, 2013 to 189 at December 31, 2014. As part of our compensation plan, certain employees were granted stock options and RSUs under our 2012 Stock Incentive Plan. Our share-based compensation expense was $9.2 million for the year ended December 31, 2014, compared to $10.4 million and $6.1 million for the years ended December 31, 2013 and 2012, respectively. The majority of our stock options and RSUs were awarded during 2012, with fewer awards in 2013 and 2014. The expense related to the 2012 grants is decreasing as the awards near their vesting terms. Additionally, we have not incurred the same degree of expense from the 2013 and 2014 grants, which were smaller than the 2012 grants, causing the overall share-based compensation expense to decrease year over year.
Our software and equipment balance increased from $8.9 million at December 31, 2013 to $11.8 million at December 31, 2014, primarily due to the $8.2 million spent on the continued development of our technology platform, offset by the write off of the fully depreciated software we purchased with the acquisition of our insurance subsidiaries.
The ratings above are provided by one or more of: Moody's, Standard & Poor's and Fitch Ratings. If three ratings are available, we assign the middle rating for classification purposes, otherwise we assign the lowest rating.
We use accounting principles and methods that conform to generally accepted accounting principles in the U.S. ("GAAP"). Where GAAP specifically excludes mortgage insurance we follow general industry practices. We are required to apply significant judgment and make material estimates in the preparation of our financial statements and with regard to various accounting, reporting and disclosure matters. Assumptions and estimates are required to apply these principles where actual measurement is not possible or practical. These critical accounting policies and estimates are summarized below.
Consistent with industry accounting practices, for purposes of establishing claim reserves, we adhere to the general claim reserving principles contained in ASC Topic 944, Financial Services - Insurance ("ASC 944"), even though that standard expressly excludes mortgage insurance from its guidance. Like other mortgage insurers, we will not establish claim reserves for anticipated future claims on insured loans that are not currently in default.
Expected Life - is the period of time over which the options granted are expected to remain outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. We use the simplified method outlined in SEC Staff Accounting Bulletin No. 107 to estimate expected lives for options granted during the period as historical exercise data is not available and the options meet the requirements set out in the Bulletin. Options granted have a maximum term of ten years.
Basic net loss per share is based on the weighted-average number of common shares outstanding, while diluted net loss per share is based on the weighted-average number of common shares outstanding and common stock equivalents that would be issuable upon the exercise of stock options, other stock-based compensation arrangements, and the dilutive effect of outstanding warrants. As a result of our net losses for the each of the years in the three-year period ended December 31, 2014, 5,839,909 shares, 5,303,394 shares, and 4,414,165 shares of our common stock equivalents issued under stock-based compensation arrangements and warrants, respectively, were not included in the calculation of diluted net loss per share as of such dates because they were anti-dilutive.
In August 2014, the FASB issued an update that requires an entity's management to evaluate whether there is substantial doubt about that entity's ability to continue as a going concern and, if so, disclose that fact. An entity's management will also be
At December 31, 2014, the investment portfolio had gross unrealized losses of $2.4 million, $1.7 million of which has been in an unrealized loss position for a period of twelve months or greater. We did not consider these securities to be other-than-temporarily impaired as of December 31, 2014. We based our conclusion that these investments were not other-than-temporarily impaired at December 31, 2014 on the following facts: (i) the unrealized losses were primarily caused by interest rate movements since the purchase date; (ii) we do not intend to sell these investments; and (iii) we do not believe that it is more likely than not that we will be required to sell these investments before recovery of our amortized cost basis, which may not occur until maturity. For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:
Software and equipment consist largely of capitalized software developed to support our MI operations. Software and equipment, net of accumulated amortization and depreciation, as of December 31, 2014 and December 31, 2013, consists of the following:
Pool risk-in-force as shown in the table above is equal to the aggregate stop loss less a deductible.