Our investment securities are classified as available for sale. Investments classified as available for sale are available to be sold in the future in response to our liquidity needs, changes in market interest rates, tax strategies and asset-liability management strategies, among other reasons. Available for sale securities that are not determined to be other-than-temporary impaired (“OTTI”) are reported at fair value, with unrealized gains and losses reported in the accumulated other comprehensive income component of shareholders’ equity, net of deferred taxes and, accordingly have no effect on net income.
Gross written premium increased $231.0 million, or 50.5%, to $688.7 million, compared to $457.7 million in 2008. Included in this increase was $139.7 million in gross written premiums related to our Century Surety Company (“Century”) operations. In addition, this increase includes $92.2 million in gross written premiums related to our new relationship with a program agent who specializes in non-contractors workers’ compensation in the Midwest, California, and other western states, as well as new programs which include a general agent that focuses on the food services industry and a general agent who focuses on heterogeneous workers’ compensation in the Southeast region of the United States. The increase is also a result of growth in new business from programs implemented in 2008 and 2009. We anticipate further growth during 2010 as the annualized premiums of these programs continue to be realized. In addition, we continue to experience selective growth within existing programs consistent with our corporate underwriting guidelines and our controls over price adequacy. While the level of rate decreases has slowed, we have seen a continued competitive market. Along with the recession, there has been downward pressure on revenue growth, but a decrease in frequency of losses has helped to support underwriting profitability.
In July 2009, our subsidiary, Star, purchased a 28.5% ownership interest in an insurance holding limited liability company for $14.8 million in cash. This ownership interest is significant, but is less than a majority ownership and, therefore, is accounted for under the equity method of accounting. Star, therefore, will recognize 28.5% of the profits and losses as a result of this equity interest ownership.
Net earned premiums increased $169.9 million, or 45.9%, to $539.6 million for the year ended December 31, 2009, from $369.7 million in the comparable period in 2008. This increase was the result of $114.2 million in net earned premiums related to our Century operations. The remaining increase of $55.7 million was primarily the result of growth within our existing programs and the new business we implemented in 2008 and 2009.
Salaries and employee benefits increased $18.0 million, or 28.7%, to $80.9 million in 2009, from $62.9 million in 2008. This increase was primarily the result of the salary expense related to our Century operations. This increase was also the result of an increase in variable compensation, in comparison to 2008, due to performance criteria established by our Compensation Committee of the Board of Directors. The increase in variable compensation was primarily attributable to the inclusion of additional participants into the variable compensation plans due to the ProCentury merger, as well as overall improved financial results.
After our review of our investment portfolio in relation to our OTTI policy, the Company recorded an OTTI loss of $5.2 million for the year ended December 31, 2009, of which a non-credit related OTTI loss of