The statutory policyholder surplus of NIIC, which includes the statutory policyholder surplus of its subsidiaries, VIC, NIIC-HI and TCC.
claim frequency in our commercial vehicle product in 2010, which is part of the specialty personal lines component, and the impact from several periods of single digit rate decreases in our transportation component. We also experienced higher than expected claims severity among certain of our trucking products both in our alternative risk transfer and transportation components during 2010. Our underwriting expense ratio attributable to ongoing operations remained relatively flat at 24.6% for the year ended December 31, 2010 as compared to 24.0% for the year ended December 31, 2009.
Commissions and other underwriting expenses consist principally of brokerage and agent commissions reduced by ceding commissions received from assuming reinsurers, and vary depending upon the amount and types of contracts written and, to a lesser extent, premium taxes. The consolidated underwriting expense ratio for the year ended December 31, 2010 decreased 1.3 percentage points to 22.7% compared to 24.0% for the same period in 2009, primarily attributable to our mix of business written during 2010.
customers in 2009. Partially offsetting the decrease in severity was an increase in claim frequency related to higher vehicle usage particularly within our specialty personal lines component, primarily commercial vehicle, during 2009.
Net cash used in investing activities was $70.6 million, $57.9 million and $63.3 million for the years ended December 31, 2010, 2009 and 2008, respectively. This $12.7 million increase in cash used in investing activities in 2010, as compared to 2009, was primarily related to the $128.1 million paid on July 1, 2010 to purchase Vanliner, net of $94.6 million of cash and cash equivalents acquired. In order to generate funds to finance the acquisition, we positioned our portfolio to capitalize on maturities and redemptions of investments, as well as increased our sales of fixed maturity securities. These actions resulted in additional proceeds from maturities and redemptions of investments and sales of fixed maturity securities of $131.7 million and $27.9 million, respectively, over the same period in 2009. Additionally, we increased our purchases of fixed maturity securities by $133.2 million over the comparable period in 2009, as we reinvested Vanliner’s excess cash balances and the proceeds from maturities and redemptions of investments which occurred during the period. The $5.4 million decrease in cash used in investing activities in 2009 compared to 2008 was primarily related to a $65.3 million increase in the proceeds from the sale of fixed maturity securities and an $11.2 million decrease in the purchase of fixed maturity investments in 2009, which were offset by a $68.6 million decrease in the proceeds from maturities and redemptions of investments. The decrease in both purchases and redemptions of fixed maturity investments in 2009, compared to the prior period was primarily due to a shift in asset allocation from callable U.S. government agency bonds into longer duration state and local government bonds, residential collateralized mortgage-backed securities and corporate obligations. The increase in proceeds from the sale of fixed maturity securities was the result of taking advantage of improving market conditions in 2009 to realize gains on portions of our fixed maturity portfolio.
Net cash used in financing activities was $0.7 million, $52.0 million and $3.9 million, respectively, for the years ended December 31, 2010, 2009 and 2008. The $51.3 million decrease in net cash used in financing activities in 2010, as compared to 2009, was primarily driven by the termination of our securities lending program in 2009. Additionally, we increased our net borrowings under our credit facility by $5.0 million during 2010 primarily to help fund the purchase of the $3.0 million in information technology assets acquired from UniGroup in conjunction
Our investments are exposed to at least one of three primary sources of investment risk: credit, interest rate and market valuation risks. The financial statement risks are those associated with the recognition of impairments and income, as well as the determination of fair values. We evaluate whether impairments have occurred on a case-by-case basis. Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause and amount of decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations we use in the impairment evaluation process include, but are not limited to:
Transfers out of Level 3 relate to two residential mortgage-backed securities that have inputs, including quotes, which were consistently observed in an active market during 2010.
In 2009, the Company reassessed all of its state tax positions and recorded an additional $1.7 million in state income tax expense related to earnings in 2009 and prior years. The Company recognized state income tax expense of $0.3 million for the year ended December 31, 2010.
For the year ended December 31, 2010, 2009 and 2008, there were 274,315, 498,050 and 358,315 respectively, outstanding options and restricted shares excluded from dilutive earnings because they were anti-dilutive.
based on discussions with Great American, that these services will continue to be provided by the affiliated entity in future periods and the relative impact on operating results is not material.