Other operating expenses, which include non-deferrable policy acquisition costs, commissions due to broker-dealer registered agents, finders fees, formulaic compensation related to Asset Management revenue growth and other segment and administrative expenses, decreased $4.4 million, or 1%, in 2004 from 2003. The decrease is principally due to a decrease of $55.9 million for Life and Annuity ($48.1 million after elimination of inter-segment expenses), partially offset by increases in management restructuring and early retirement costs of
Traditional life insurance revenue decreased $46.1 million, or 3%, in 2005 from 2004, due primarily to lower renewal premiums, partially offset by improved investment earnings. Since our demutualization in 2001, we no longer sell participating life insurance policies, which comprise the majority of our traditional life insurance block of business.
Traditional life insurance revenue decreased $58.8 million, or 3%, in 2004 from 2003, due to lower renewal premiums and net investment income for participating life insurance, partially offset by modest increases for term life, from business growth and a modest increase in investment earnings, primarily related to an old block of corporate-owned life insurance. Since our demutualization in 2001, we no longer sell participating life insurance policies.
Other operating expenses increased $4.5 million, or 2%, in 2004 compared to 2003, due primarily to an increase in formulaic compensation expense, which was driven by higher investment product fee revenues. Increases in compensation expense were offset, in part, by lower general and administrative expenses, primarily related to a decrease in information technology costs.
We also measure, manage and monitor market risk associated with our general account investments, both backing insurance liabilities and supporting surplus. This process involves Corporate Portfolio Management and Goodwin, our Hartford-based asset management affiliate. These organizations work together, make recommendations and report results to our Investment Policy Committee, chaired by the Chief Investment Officer. Please refer to the sections that follow, including “Debt and Equity Securities Held in General Account”, for more information on our investment risk exposures. We regularly refine our policies and procedures to appropriately balance market risk exposure and expected return.
Cash from operating activities decreased $35.2 million in 2005 from 2004 due primarily to a decrease in dividends received from Phoenix Life of $34.5 million.
On December 15, 2004, we repurchased $144.8 million of the previously $175.0 million outstanding principal amount of our 6.95% surplus notes scheduled to mature in 2006, and recognized a pre-tax loss of $10.4 million in connection with the transaction. To finance the tender, we issued $175.0 million principal of 7.15% surplus notes with a scheduled maturity of 30 years for proceeds of $171.6 million, net of discount and issue costs.
Equity securities decreased by $122.5 million in 2005 from December 31, 2004, due primarily to disposition of HRH stock and our investment in Lombard, offset by additional investments in various Phoenix Funds. See Note 5 to our consolidated financial statements in this Form 10-K for additional information on equity securities.
Cash decreased $133.5 million in 2005 from December 31, 2004, due primarily to higher investment purchases, the liquidation of the Mistic CBO and net redemptions for policyholder deposit funds, offset by higher cash from operations.