Based on 59.3 million, 61.4 million, 62.9 million, 65.0 million and 64.6 million common shares outstanding for December 31, 2009, 2008, 2007, 2006 and 2005, respectively.
The 2009 renewal rates, particularly for property catastrophes and retrocessional covers and in international markets, were generally firmer compared to a year ago.
Our combined ratio decreased by 6.0 points to 89.6% in 2009 compared to 95.6% in 2008. The loss ratio component decreased 5.0 points in 2009 compared to the same period last year, principally due to the significant decrease in catastrophe losses. The commission and brokerage ratio component decreased by 1.4 points in 2009 compared to the same period last year, due to mix of business, while the other underwriting expense ratio component increased by 0.4 points in 2009 compared to the same period last year.
Gross written premiums decreased by 3.6% to $260.4 million in 2008 compared to $270.1 million in 2007. Aviation premiums decreased by $16.9 million (58.9%) owing to very competitive market conditions. A&H premiums decreased by $15.4 million (16.1%) largely due to decreased premiums under certain quota share contracts where the ceding companies have culled their books to improve their loss experience. Marine premiums increased by $19.8 million (19.8%) due to higher premiums on our quota share covers and improved rates across the book. Surety premiums increased by $2.8 million or 6.1%. Net written premiums decreased 3.6% to $254.2 million in 2008 compared to $263.8 million in 2007, as a result of the decrease in gross written premiums. Net premiums earned decreased 3.9% to $251.8 million in 2008 compared to $262.0 million in 2007, in line with the change in net written premiums.
Premiums. Gross written premiums increased 1.5% to $794.8 million in 2009 compared to $783.4 million in 2008. The Bermuda home office gross written premium increased $33.0 million, or 12.8%. Premiums written out of the UK branch decreased $21.3 million, or 4.1%, as a result of the change in foreign exchange rates period over period. Excluding the impact of the foreign exchange, the branch premiums were up approximately 15.7%. Net written premiums also increased 1.5% to $795.1 million in 2009 compared to $783.1 million in 2008. Premiums earned decreased 2.1% to $784.6 million in 2009 compared to $801.2 million in 2008. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
We sort both our reinsurance and insurance reserves into exposure groupings for actuarial analysis. We assign our business to exposure groupings so that the underlying exposures have reasonably homogeneous loss development characteristics and are large enough to facilitate credible estimation of ultimate losses. We periodically review our exposure groupings and we may change our grouping over time as our business changes. We currently use over 200 exposure groupings to develop our reserve estimates. One of the key selection characteristics for the exposure groupings is the historical duration of the claims settlement process. Business in which claims are reported and settled relatively quickly are commonly referred to as short tail lines, principally property lines. On the other hand, casualty claims tend to take longer to be reported and settled and casualty lines are generally referred to as long tail lines. Our estimates of ultimate losses for shorter tail lines, with the exception of loss estimates for large catastrophic events, generally exhibit less volatility than those for the longer tail lines.
At December 31, 2009, the Group Credit Facility had no outstanding letters of credit under tranche one and $386.5 million outstanding letters of credit under tranche two. At December 31, 2008, the Group Credit Facility had no outstanding letters of credit under tranche one and $411.9 million under tranche two.
plus the applicable margin. The amount of margin and the fees payable for the Holdings Credit Facility depends upon Holdings’ senior unsecured debt rating.
Foreign Currency Risk. Foreign currency risk is the potential change in value, income and cash flow arising from adverse changes in foreign currency exchange rates. Each of our non-U.S./Bermuda (“foreign”) operations maintains capital in the currency of the country of its geographic location consistent with local regulatory guidelines. Generally, we prefer to maintain the capital of our operations in U.S. dollar assets, although this varies by regulatory jurisdiction in accordance with market needs. Each foreign operation may conduct business in its local currency, as well as the currency of other countries in which it operates. The primary foreign currency exposures for these foreign operations are the Canadian Dollar, the British Pound Sterling and the Euro. We mitigate foreign exchange exposure by generally matching the currency and duration of our assets to our corresponding operating liabilities. In accordance with FASB guidance, we translate the assets, liabilities and income of non-U.S. dollar functional currency legal entities to the U.S. dollar. This translation amount is reported as a component of other comprehensive income. As of December 31, 2009 there has been no material change in exposure to foreign exchange rates as compared to December, 31, 2008.