We have purchased variable quota share reinsurance for our general casualty business since December 2002. During 2009, we increased the cession of policies with limits less than or equal to $25 million, 25 million or £15 million to 36% (35% in 2008) for policies written by our Bermuda and European offices. Since 2002 for policies with limits greater than $25 million but less than or equal to $50 million, 50 million or £30 million, we ceded between 85% and 100% of up to $25 million of a variable quota share determined by the amount of the policy limit in excess of $25 million divided by the policy limit. During 2009, the cession percentage was 100% (100% in 2008). For policies with limits greater than $50 million but less than or equal to $75 million, 75 million or £45 million, we ceded 80% up to $25 million of a variable quota share determined by the amount of the policy limit in excess of $50 million divided by the policy limit. For policies with limits less than or equal to $25 million by our U.S. offices, our cession percentage was 28% in 2009 (40% in 2008).
for our U.S. offices, we had an excess-of-loss reinsurance treaty that has one layer that is $3 million excess of $2 million, which is 20% placed with reinsurers, and another layer that is $20 million excess $5 million, which is 57% placed with reinsurers.
due to credit related losses where the anticipated discounted cash flows of various debt securities were lower than the amortized cost, and $41.9 million in the first quarter of 2009 related to net impairment charges for those securities in an unrealized loss position where our investment managers had the discretion to sell. The $7.7 million of credit related OTTI recognized consisted of $6.0 million related to mortgage-backed securities and $1.7 million related to a corporate bond. We did not have securities with an unrealized loss as of December 31, 2009 that we intended to sell or that we were required to sell.
Our general and administrative expense ratio was 16.6% for the year ended December 31, 2008 compared to 12.2% for the year ended December 31, 2007. The increase was primarily due to the factors discussed above.
Net premiums earned increased $267.7 million, or 148.9%, primarily due to the inclusion of earned premium from Darwin for the year ended December 31, 2009, including the $3.0 million decrease in premiums ceded for variable-rated reinsurance contracts of Darwin that have swing-rated provisions, which were fully earned.
Premiums. Gross premiums written increased by $127.3 million, or 66.1%, for the year ended December 31, 2008 compared to the year ended December 31, 2007. The increase in gross premiums written was primarily due to increased gross premiums written by our U.S. offices, excluding Darwin, of $58.4 million, as well as the inclusion of Darwin’s gross premiums written for the period from October 20, 2008 to December 31, 2008 of $68.9 million.
We renewed our property catastrophe reinsurance treaty, which resulted in ceded written premiums of $26.1 million, of which $20.3 million was allocated to the international insurance segment. The cost of the property catastrophe reinsurance treaty was higher than the expiring treaty by approximately $7.0 million. The increased cost of the property catastrophe reinsurance treaty was principally due to the renewed treaty expanding earthquake coverage in the United States and increased exposure due to changes in our general property quota share reinsurance treaty.
Net paid losses for the year ended December 31, 2008 and 2007 were $245.0 million and $223.2 million, respectively. The increase in net paid losses was due to several large casualty claims being paid during the year ended December 31, 2008 compared to the year ended December 31, 2007 and net paid losses on catastrophes incurred in 2008 partially offset by lower net paid losses related to the 2004 and 2005 windstorms. During the year ended December 31, 2008, approximately $11.1 million of net losses were paid in relation to the 2004 and 2005 windstorms compared to approximately $57.0 million during the year ended December 31, 2007. The increase also reflects the maturation of our longer tailed casualty business.
loss expense ratio for the current loss year was primarily due to net incurred losses of $1.6 million for the floods in the U.S. Midwest and $39.2 million related to Hurricanes Gustav and Ike that occurred during the year ended December 31, 2008.
Cash flows from investing activities consist primarily of proceeds on the sale of investments and payments for investments acquired. We had cash flows used in investing activities of $582.6 million, $443.1 million and $166.7 million for the years ended December 31, 2009, 2008 and 2007, respectively. The increase in cash flows used in investing activities for the year ended December 31, 2009 compared to the year ended December 31, 2008 was due to increased purchases of fixed maturity investments partially offset by cash provided by increased sales of fixed maturity investments. The increase in cash flows used in investing activities for the year ended December 31, 2008 compared to the year ended December 31, 2007 was primarily due to net cash used to acquire Darwin during 2008 of $536.2 million.