Throughout 2001 we have experienced growth opportunities in a number of areas, evidenced by our increase in gross premiums written of $291.4 million, or 33.8%, to $1,153.6 million for the year ended December 31, 2001 from $862.2 million for the year ended December 31, 2000. As a result of prolonged soft market conditions and a series of catastrophic events, both in the United States and globally, trading conditions for us have been improving and we have opportunistically expanded in certain classes of business and in certain geographic regions. Substantial expansion has occurred in the accident and health business as well as selected automobile and property lines. Internationally, our growth is principally derived from the business written through our Paris and Singapore branches. Our non-U.S. operations, including our Lloyds operations, now account for 36.9% of our premium volume.
We, through a review of our reinsurance contracts, have evaluated and estimated our exposure arising from the event of September 11th. The estimate, included in our consolidated statements of operations for the year ended December 31, 2001, reflects a gross underwriting loss of $187.5 million, an increase of $15.8 million during the quarter ending December 31, 2001, and a net pre-tax underwriting loss of $95.0 million, an increase of $14.2 million during the quarter ending December 31, 2001, which is comprised of a reduction to net premiums written and earned of $10.3 million, an increase to net losses and loss adjustment expenses of $75.5 million, and an increase to acquisition costs and other underwriting expenses of $9.2 million. The net after tax loss, assuming a 35% tax benefit, is $61.8 million. Our estimate is based on the most recent information available; however, as additional information becomes available such estimate could be revised, potentially resulting in further adverse effects to us. Considerable time may elapse before the
reported claims. As a result, we cannot be sure that our ultimate liability will not exceed amounts we have reserved.
Rating agencies assess the claims-paying ability of reinsurers and their ratings represent independent opinions of financial strength and ability to meet policyholder obligations. These ratings are used by insurers and reinsurance and insurance intermediaries as an important means of assessing the financial strength and quality of reinsurers. In addition, the rating of a company purchasing reinsurance may be adversely affected by an unfavorable rating of its reinsurer. A reduction in our financial strength ratings could limit or prevent us from writing new reinsurance or insurance policies. Our credit ratings as of December 31, 2001 were: A.M. Best Company, Inc.: A; and Standard & Poor’s Rating services: A-.
Cash flows from operating activities principally result from premiums, collections on losses recoverable and investment income, net of paid losses, acquisition costs and underwriting and investment expenses. Cash used in operations was $49.4 million for the year ended December 31, 2001 and $113.6 million for the year ended December 31, 2000 primarily due to payment during the respective periods of losses incurred by Odyssey America and its subsidiaries.
(k) Payments of claims made by the Company 	as a reinsurer to the broker due to a reinsured company are 	recorded on the Company’s books as a paid loss at the time 	the cash is disbursed. The payment is treated as a paid claim to 	the reinsured. Premiums due the Company from the reinsured are 	recorded as receivables from the reinsured until the cash is 	received by the Company either directly from the reinsured or 	from the broker.
Changes in unrealized net appreciation (depreciation) on investments, and the related tax effect, for the years ended December 31, 2001, 2000 and 1999 follows (in thousands):
The Company’s assumed financial guarantee reinsurance exposure to loss, in the event of nonperformance by the underlying insured and assuming underlying collateral proved to be of no value, was $138.0 million and $173.0 million as of December 31, 2001 and 2000, respectively. It is the responsibility of the ceding insurer to collect and maintain collateral under financial guarantee reinsurance.