The following tables set forth our selected historical consolidated financial and operating information for the periods ended and as of the dates indicated. The selected consolidated income statement data for the years ended December 31, 2012, 2011 and 2010 and the balance sheet data as of December 31, 2012 and 2011 are derived from our audited financial statements included elsewhere in this report, which have been audited by BDO USA, LLP, our independent auditors. These historical results are not necessarily indicative of results to be expected from any future period. You should read the following selected consolidated financial information together with the other information contained in this report, including “
Personal Lines Reinsurance. We reinsure 10% of the net premiums of the GMACI personal lines business, pursuant to the Personal Lines Quota Share with the GMACI personal lines insurance companies. See discussion below related to ACAC investment.
In December 2011, AHL acquired all the issued and outstanding stock of Reaal Reassurantie S.A., a Luxembourg domiciled captive insurance company, from SNS REAAL N.V. and REAAL N.V. The purchase price of Reaal Reassurantie S.A. was approximately $71.9 million. We recorded approximately $78.7 million of cash, intangible assets of $15 million and a deferred tax liability of $22.3 million. Reaal Reassurantie S.A. subsequently changed its name to AmTrust Re Kappa.
In June 2011, AHL acquired all the issued and outstanding stock of International Crédit Mutuel Reinsurance SA (“ICM Re”), a Luxembourg domiciled captive insurance company, from Assurance du Credit Mutuel IARD SA. The purchase price of ICM Re was approximately $315 million. We recorded approximately $347 million of cash, intangible assets of $55.9 million and a deferred tax liability of $87.8 million. ICM Re subsequently changed its name to AmTrust Re Alpha.
Net Earned Premium. Net earned premium increased $96.3 million, or 30.1%, to $416.6 million for the year ended December 31, 2012 from $320.3 million for the year ended December 31, 2011. As premiums written earn ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the year ended December 31, 2012 compared to the year ended December 31, 2011.
Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income). Net earned premium less expenses included in combined ratio were $11.9 million and $9.3 million for the years ended December 31, 2012 and 2011, respectively. The increase of $2.6 million resulted primarily from an increase in earned premium in 2012 compared to 2011 partially offset by a higher combined ratio in 2012 compared to 2011.
The table below summarizes the average duration by type of fixed maturity as well as detailing the average yield as of December 31, 2012 and 2011:
There are 118 securities at December 31, 2012 that account for the gross unrealized loss, none of which we deem to be OTTI. Significant factors influencing our determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent not to sell these securities and it being not more likely than not that we will be required to sell these investments before anticipated recovery of fair value to our cost basis.
We enter into repurchase agreements and reverse repurchase agreements. The agreements are accounted for as collateralized borrowing transactions and are recorded at contract amounts. In the case of repurchase agreements, we receive cash or securities that we invest or hold in short term or fixed income securities. As of December 31, 2012, there were $234.9 million principal amount outstanding at interest rates between 0.42% and 0.50%. Interest expense associated with these repurchase agreements for 2012 was $0.9 million of which $0 million was accrued as of December 31, 2012. We have approximately $253.1 million of collateral pledged in support of these agreements. Under reverse repurchase agreements, we lend cash or securities for a short term. During 2012, we entered into a collateralized lending transaction with a principal amount of $57 million that is included in cash and cash equivalents for the year ended December 31, 2012. We retain collateral of $57 million related to this agreement.