Income from continuing operations, which includes realized investment gains and losses related to such operations, was $770 million in 1997 compared with $486 million in 1996 and $655 million in 1995. Decisions to sell securities are governed principally by considerations of investment opportunities and tax consequences. Thus, realized investment gains and losses may vary significantly from year to year.
$563 million in 1995. The increase in earnings in 1997 was due to highly profitable underwriting results as well as strong growth in investment income compared with 1996. Earnings in 1996 were adversely affected by higher catastrophe losses, resulting primarily from the winter storms in the eastern part of the United States in the first quarter. Investment income increased in 1996 compared with the prior year. Earnings in 1995 benefited from highly profitable underwriting results.
A comparison of reported net premiums written with net premiums written adjusted to reflect the changes to the reinsurance agreements with Sun Alliance follows:
Net premiums written, as adjusted, increased 9% in 1997 compared with 1996. Similarly, net premiums written, as adjusted, increased 9% in 1996 compared with 1995.
Our automobile business produced substantial profits in each of the last three years. Results in each year benefited from stable loss frequency and severity. Automobile results were adversely affected each year by losses from the mandated business that we are required by law to accept for those individuals who cannot obtain coverage in the voluntary market.
Loss reserves are our property and casualty subsidiaries' largest liability. At the end of 1997, gross loss reserves totaled $9.8 billion compared with $9.5 billion and $9.6 billion at year-end 1996 and 1995, respectively. Reinsurance recoverable on such loss reserves was $1.2 billion at year-end 1997 compared with $1.8 billion and $2.0 billion at the end of 1996 and 1995, respectively.
Pacific Indemnity and Continental Casualty reached a separate agreement for the handling of all asbestos-related bodily injury claims pending on August 26, 1993 against Fibreboard. Pacific Indemnity's obligation under this agreement with respect to such pending claims is approximately $635 million, all of which has been paid. The agreement further provides that the total responsibility of both insurers with respect to pending and future asbestos-related bodily injury claims against Fibreboard will be shared between Pacific Indemnity and Continental Casualty on an approximate 35% and 65% basis, respectively.
The Corporation and its property and casualty subsidiaries have consistently invested in high quality marketable securities. As a result, we believe that the Corporation has minimal credit quality risk. Taxable bonds in our domestic portfolio comprise U.S. Treasury, government agency, mortgage- backed and corporate securities. Approximately 80% of taxable bonds are issued by the U.S. Treasury or U.S. government agencies or are rated AA or better by Moody's or Standard and Poor's. Of the tax exempt bonds, approximately 90% are rated AA or better with more than half rated AAA. Less than 1% of our bond portfolio is below investment grade. Both taxable and tax exempt bonds have an average maturity of approximately 9 years.
Loans receivable, which were issued in connection with our joint venture activities and other property sales, are primarily purchase money mortgages. Such loans are generally collateralized by buildings and, in some cases, land. We continually evaluate the ultimate collectibility of such loans and establish appropriate reserves. Our valuation approach is similar to that utilized under SFAS No. 121, except that cash flows are discounted at the receivable interest rates. The reserve for possible uncollectible receivables was increased by charges against income of $18 million in 1995, including $10 million from the initial application of SFAS No. 114, Accounting by Creditors for Impairment of a Loan, which established new criteria for measuring impairment of a loan. Such charges were not significant in 1996 and 1997. Management believes the reserve of $24 million at December 31, 1997 adequately reflects the current condition of the portfolio.