Our inception to date business portfolio for years 2011 through 2020 including exited niches is as follows:
Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes may differ materially from those made in or suggested by the forward-looking
Ceded written premiums are the amount of GWP ceded to reinsurers. We actively use ceded reinsurance across our book of business to reduce our overall risk position and to protect our capital. Ceded written premiums are earned over the reinsurance contract period in proportion to the period of risk covered and the underlying policies. The volume of our ceded written premiums is impacted by the level of our GWP and any decision we make to increase or decrease retention levels.
The following tables summarize the effect of the WAQS on our underwriting (loss) income for the years ended December 31, 2020, 2019 and 2018:
The following table summarizes the components of the expense ratio for the years ended December 31, 2020 and 2019:
Our effective tax rate for the years ended December 31, 2020 and 2019 was 27.9% and 21.1%, respectively. The increase in the effective tax rate for the year ended December 31, 2020 compared to the same period in 2019 was primarily due to lack of tax benefit from the goodwill impairment. Excluding the goodwill impairment, the effective tax rate was 21.4%.
Our largest quota share reinsurance agreements were the WAQS. In connection with the divestment of our U.K. business, New York Marine as reinsured entered into the WAQS with third party reinsurers to maintain reasonable underwriting leverage within New York Marine and its subsidiary insurance companies during a transition period following the U.K. divestment. During 2018, and following the transition of the U.S. business back to New York Marine, the WAQS were terminated. Effective January 1, 2020, the WAQS were commuted.
PSUs vest based on the average book value per share growth over a three-year performance period and cliff vest on the third anniversary of the grant date to the extent performance metrics are met, subject to continued service. 123,016 and 90,559 PSUs were granted in 2020 and 2019 and the fair value of the awards on grant date was $1.6 million and $1.3 million, respectively.
Our gross reserves for losses and LAE at December 31, 2018 were $1.4 billion, and of this amount, 69.8% related to IBNR. Our net reserves for losses and LAE at December 31, 2018 were $1.2 billion, and of this amount, 67.8% related to IBNR.
recorded in the period in which the related gross liability is established. Reinsurance reinstatement premiums are incurred by the Company based upon the provisions of the reinsurance contracts. In the event of a loss, the Company may be obligated to pay additional reinstatement premiums under its excess of loss reinsurance treaties. In such instances, the respective reinstatement premium is expensed immediately. The Company accounts for reinsurance receivables and prepaid reinsurance premiums as assets. The Company maintains an allowance for doubtful accounts, which includes amounts in dispute, amounts due from insolvent or financially impaired companies and other balances deemed uncollectible. Management continually reviews and updates such estimates. Profit commission revenue derived from reinsurance transactions is recognized when such amounts become earned as provided in the treaties with the respective reinsurers.
The reserve for loss and loss adjustment expenses includes a provision for both reported claims (case reserves) and IBNR. IBNR estimates are generally calculated by first projecting the ultimate cost of all losses that have occurred (expected losses), and then subtracting paid losses, case reserves, and loss expenses. The reserve for loss and loss adjustment expenses represents management’s best estimate of unpaid losses and loss adjustment expenses using individual case-basis valuations and statistical analysis that is not discounted, with the exception of certain workers’ compensation claims. Workers’ compensation reserves for policy years between 2007 and 2020 were discounted at discount rates between 2.04% and 5.00%. Carried discounted reserves on these workers’ compensation claims, net of reinsurance, were $122.1 million and $116.9 million at December 31, 2020 and 2019, respectively. The amount of discount related to workers’ compensation reserves was $48.2 million and $47.4 million at December 31, 2020 and 2019, respectively.
Basic earnings per share of common stock is based on the weighted-average number of shares of outstanding common stock, par value $0.01 per share, of the Company (“Common Stock”) during the period, and vested RSUs. Vested RSUs awaiting conversion into common stock were 489,439 for the year ended December 31, 2020, 906,182 for the year ended December 31, 2019 and 548,292 for the year ended December 31, 2018. Diluted earnings per share of Common Stock are based on those shares used to calculate basic earnings per share of Common Stock plus the dilutive effect of unvested stock-based compensation awards. Basic and diluted earnings per share are calculated by dividing net income by the applicable weighted-average number of shares outstanding during the period. The Company did not declare any stock dividends for the years ended December 31, 2020, 2019 and 2018.
On November 23, 2010, the Company acquired 100% of NYMAGIC, Inc.’s outstanding common stock for a cash price of $25.75 per share or approximately $231.9 million. The acquisition of NYMAGIC, Inc. provided a platform for which the Company could issue insurance policies. The fair value of net assets acquired amounted to $220.0 million after
(i) Net investment income included in net income from continuing operations in the consolidated statements of operations from each major category of investments for the years ended December 31, 2020, 2019 and 2018, is as follows:
(1) Other category represents unallocated loss adjustment expense reserves $40.3 million, discounting of loss reserves ($48.3) million, retroactive reinsurance agreements $10.8 million and other of $3.2 million.
The following tables represent information on unpaid losses and loss adjustment expenses incurred and cumulative paid losses, since 2011 for the Company’s All Other lines in thousands except claim counts: