Rental expense for the Company's operations was approximately $33,003,000, $29,936,000 and $28,067,000 for 2011, 2010 and 2009, respectively. Future minimum lease payments are $34,635,000 in 2012, $31,177,000 in 2013 and $222,469,000 thereafter.
Beginning in 2005, the property casualty insurance market became more competitive and insurance rates decreased across most business lines. Increased competition and the impact of the economic downturn also put pressure on policy terms and conditions. While prices began to increase in 2011, loss costs are also increasing and current market price levels for certain lines of business remain below the prices required for the Company to achieve its return objectives. Recently, there have been increased signs of a hardening market, and, with its investments in new businesses, the Company believes it is well-positioned to take advantage of new opportunities. Price changes are reflected in the Company’s results over time as premiums are earned.
In general, when a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the ultimate payment based upon known information about the claim at that time. The estimate represents an informed judgment based on general reserving practices and reflects the experience and knowledge of the claims personnel regarding the nature and value of the specific type of claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported (“IBNR”) to the insurer, potential inadequacy of case reserves and the estimated expenses of settling claims,
including legal and other fees and general expenses of administrating the claims adjustment process. Reserves are established based upon the then current legal interpretation of coverage provided.
Following is a summary of gross and net premiums written, premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of premiums earned), expense ratios (underwriting expenses expressed as a percentage of premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the years ended December 31, 2010 and 2009. The GAAP combined ratio represents a measure of underwriting profitability, excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit.
Debt. At December 31, 2011, the Company had senior notes, junior subordinated debentures and other debt outstanding with a carrying value of $1,744 million and a face amount of $1,761 million. The maturities of the outstanding debt are $4 million in 2012, $201 million in 2013, $26 million in 2014, $200 million in 2015, $2 million in 2016, $450 million in 2019, $300 million in 2020, $77 million in 2022, $1 million in 2023, $250 million in 2037 and $250 million in 2045.
All other recently issued but not yet effective accounting and reporting guidance is either not applicable to the Company, or is not expected to have a material impact on the Company.
Loans receivable in non-accrual status were $30 million and $21 million at December 31, 2011 and 2010, respectively. If these loans had been current, additional interest income of $805,000 and $340,000 would have been recognized in accordance with their original terms for the years ended December 31, 2011 and 2010, respectively.
The estimated fair values of the Company’s fixed maturity securities, equity securities available for sale and arbitrage trading account securities are based on various valuation techniques. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for similar assets in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs may only be used to measure fair value to the extent that observable inputs are not available. The fair value of loans receivable are estimated by using current institutional purchaser yield requirements for loans with similar credit characteristics. The fair value of the senior notes and other debt and the junior subordinated debentures is determined based on spreads for similar securities.
Summary financial information about the Company’s operating segments is presented in the following table. Income (loss) before income taxes by segment consists of revenues less expenses related to the respective segment’s operations, including allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.