Generally as a result of more favorable conditions in certain sectors of the market in 1996 as compared to other sectors, net premiums written increased in 1996. Net premiums written by our international locations increased by 48.2% compared to 1995, to $462.7 million, while domestic premiums decreased by 2.5% to $679.8 million. International business represented 40.5% of total net premiums written. International net premiums written increased significantly in treaty property, motor, ocean marine
TRH's 1996 results did not include any significant catastrophe loss activity. In addition, as a result of net decreases in estimates of losses occurring in prior years, net losses and loss adjustment expenses incurred were reduced by $7.7 million in 1996. In the other liability line, favorable development on losses occurring in more recent years was offset by adverse development in 1984 and prior years. In addition, in more recent years, favorable development, particularly in the fire, allied line and aircraft lines was partially offset by adverse development in the auto liability line.
Reserves for the reinsurance of risks related to environmental impairment and asbestos-related illnesses amounted to $78 million and $75 million at December 31, 1996 and 1995, respectively. The majority of TRH's environmental and asbestos-related liabilities arise from contracts entered into after 1984. These obligations generally arose from contracts underwritten specifically as environmental or asbestos-related coverages rather than from standard general liability coverages where the environmental or asbestos-related liabilities were neither clearly defined nor specifically excluded. The reserves carried for such claims, including incurred but not reported claims (IBNR), are based upon known facts and current law. However, significant uncertainty exists as, among other things, there are inconsistent court resolutions with respect to underlying policy intent and coverage, an increasing number of new claims and uncertainties as to the allocation of responsibility for clean up costs of hazardous waste dump sites. The government's refusal to release parties from liability and the possibility of dramatic changes from the Congressional re-evaluation of Superfund add to this uncertainty. Additional liabilities which cannot be currently measured may emerge in the future and this emergence may have a material adverse effect on future earnings. TRH believes that these claims reserves, as well as all other claims reserves carried at December 31, 1996, are adequate.
In addition, risk-based capital (RBC) standards, promulgated by the National Association of Insurance Commissioners (NAIC), relate an individual company's statutory surplus to the risk inherent in its overall operations and sets thresholds at which certain company and regulatory corrective actions are mandated. At December 31, 1996, the statutory surpluses of TRC and Putnam each significantly exceeded RBC requirements.
Gross gains of $6,771,000, $2,094,000 and $3,240,000 and gross losses of $6,903,000, $2,305,000 and $3,474,000 were realized on sales of investments in fixed maturities available for sale in 1996, 1995 and 1994, respectively.
4. FEDERAL AND FOREIGN INCOME TAXES (Continued) (b) The components of the net deferred income tax asset at December 31, 1996 and 1995 were as follows: