We believe our value creation ratio is a useful measure. With the continuation of economic and market uncertainty in recent years, the long-term nature of this measure provides a meaningful measure of our long-term progress in creating shareholder value. The table below shows calculations for VCR.
Net income increased $454 million in 2017, compared with 2016, primarily due to a $495 million benefit from net deferred income tax liability revaluation due to U.S. tax reform.
For loss expenses that pertain primarily to salaries and other costs related to our claims department associates, also referred to as adjusting and other expense or AOE, we calculate reserves based on an analysis of the relationship between paid losses and paid AOE. Reserves for AOE are allocated to company, line of business and accident year based on a claim count algorithm. Claim counts reported and used in the reserving process are primarily measured by insurance coverages that are triggered when a loss occurs and a reserve is established. Coverages are defined as unique combinations of certain attributes such as line of business and cause of loss. Claims that are opened and closed without payment are included in the reported claim counts. Claim counts are presented on a direct basis only and do not reflect any assumed or ceded reinsurance.
Catastrophe loss trends are an important factor in assessing trends for overall underwriting results. Our 10-year historical annual average contribution of catastrophe losses to the combined ratio was 6.8 percentage points at December 31, 2018. Our five-year average was 6.2 percentage points.
Renewal and new business pricing for commercial risks continues to experience significant competitive pressure, reinforcing the need for enhanced pricing analytics and careful risk selection. Commentary regarding the commercial lines market within the property casualty insurance industry indicates commercial lines pricing in 2019 may be generally similar to 2018. Despite challenging market conditions from strong competition, we believe we can manage our business and execute strategic initiatives to offset market pressures to some extent and profitably grow our commercial lines insurance segment.
The 7 percent increase in agency renewal written premiums in 2018 largely reflected various rate changes. We estimate that premium rates for our personal auto line of business increased at average percentages in the high-single-digit range during 2018, with some individual policies experiencing lower or higher rate changes based on enhanced pricing precision enabled by predictive models that consider characteristics of specific risks. For our homeowner line of business, we estimate that rate increases during 2018 averaged in the mid-single-digit range. Similar to our personal auto line of business, that average varied widely by state, and some individual policies experienced lower or higher rate changes based on pricing precision and current rate level indications that helped determine appropriate premium rates.
The $30 million increase in 2018 renewal premiums reflected the opportunity to renew many policies for the first time as well as higher renewal pricing. Average renewal estimated price increases were in the low-single-digit range during 2018. We measure average changes in excess and surplus lines renewal pricing as the rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for respective policies.
The excess and surplus lines market is expected to see the magnitude of rate increases remain flat for risks that are casualty-driven. For property risks involving catastrophe exposures, premium rates in the foreseeable future are expected to become more firm. Competition is expected to remain strong, especially on large accounts, due primarily to standard market insurance companies insuring businesses that previously were written by excess and surplus lines insurers. Firming is expected to continue for specific classes of business where loss costs are exceeding rates, such as habitational for property coverages, liquor liability for general liability coverages and hired and non-owned for auto liability coverages.
Total investment return of negative 0.7 percent in 2018 was significantly less than in 2017. The 2018 contribution from the investment income component was offset by the net unfavorable effect of the investment gains and losses components. Comparing contributions for 2018 with 2017, investment income rose $10 million, investment gains decreased by $550 million and the invested assets net change in unrealized gains and losses decreased by $1.252 billion. The base component of the return calculation, annual average invested assets, was up 9 percent in 2018. For 2017 compared with 2016, total investment return rose 2.0 percentage points, reflecting an increase in the contributions of investment income, investment gains and the net change in unrealized gains and losses. The base component of the return calculation, annual average invested assets, increased 8 percent in 2017.
Dividend income rose $11 million, or 6 percent, in 2018, after also rising 6 percent in 2017. Increases in dividend payment rates for most of the holdings in our common stock portfolio during both 2018 and 2017 drove the increases in dividend income. An increase in funds invested in that portfolio during 2018, and a small net decrease in 2017, also affected dividend income.
Our leasing subsidiary provides auto and equipment direct financing (leases and loans) to commercial and individual clients. We generally transfer ownership of the property to the client as the terms of the leases expire. Our lease contracts contain bargain purchase options. We account for these leases and loans as direct financing-type leases. We capitalize and amortize lease or loan origination costs over the life of the financing, using the effective interest method. These costs may include, but are not limited to finder fees, broker fees, filing fees and the cost of credit reports. We record income as other revenues over the financing term using the effective interest method in the consolidated statements of income. Finance receivables are reviewed for impairment and are insignificant to our consolidated financial position, results of operations and cash flows.
The net unrealized investment gains in our fixed-maturity portfolio at December 31, 2018, are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa1/AA at December 31, 2018 and 2017. At December 31, 2018, Microsoft Corporation (Nasdaq:MSFT) was our largest single equity holding with a fair value of $255 million, which was 4.4 percent of our publicly traded common equities portfolio and 1.5 percent of the total investment portfolio.
Investments gains and losses, net, and life deferred acquisition costs, life policy reserves and other investment gains and losses, net, are recorded in the investment gains and losses, net, line item in the consolidated statements of income. Amortization on pension obligations is recorded in the insurance losses and contract holders' benefits and underwriting, acquisition and insurance expenses line items in the consolidated statements of income.
$7 million in 2018, 2017 and 2016, on premium volume of $45 million for 2018 and 2017 and $44 million for 2016.
Under all active shareholder approved plans, a total of 17.3 million shares were authorized to be granted. At December 31, 2018, 9.7 million shares remained available for future issuance under the plans. During 2018, we granted 14,600 shares of common stock to our directors for 2017 board service fees.
Loss before income taxes for the Other category is primarily due to interest expense from debt of the parent company, operating expenses of our headquarters and premiums earned minus loss and loss expenses and underwriting expenses of Cincinnati Re.