(6) Diluted book value per share represents total stockholders' equity, excluding accumulated other comprehensive income, plus assumed proceeds from the exercise of vested options, divided by the total shares outstanding plus the shares assumed issued from the exercise of vested options.
We use the asset and liability method to account for deferred income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of a change in tax rates.
In January 2000, we acquired CHCS Services, Inc., formerly American Insurance Administration Group, Inc., a privately-held third party administrator located in Clearwater, Florida. American Insurance Administration Group is a third party administrator of senior health insurance. This acquisition strengthened our expertise and capacity to administer senior market products.
Net operating income for 2001, excluding realized gains (losses) and excluding the benefit of the release of a portion of the reserve held against the Company's deferred tax asset, was $26.2 million or $0.52 per share. This is comparable to $21.5 million or $0.46 per share in 2000.
REVENUES. Net premiums for 2001 fell by approximately 2.5% compared to 2000. In the U.S. the decrease is due to a greater amount of annuities, which are not reported as premiums for GAAP
Our senior market brokerage segment improved results by more than 33%, increasing pre-tax operating income by $3.4 million. In the fourth quarter of 2000, we wrote off $1.4 million of deferred acquisition costs related to our decision to exit the major medical line of business. Adjusted for this item, pre-tax operating income for the segment increased by $2.0 million. This improvement is the result of continued internally generated growth of business in this segment, primarily in the Medicare supplement line.
The following table details the service fee revenue earned by our Administrative Service segment:
Our capital is used primarily to support the retained risks and growth of our insurance company and administrative service subsidiaries and to support our parent company as an insurance holding company. In addition, we use capital to fund our anticipated growth through acquisitions of other companies or blocks of insurance or administrative service business.
The following table shows the schedule of remaining principal payments (in thousands) on the Company's outstanding term loan, with the final payment in July 2006:
2002 of $2.0 million, which is due in May 2003. Our holding company pays interest on the outstanding debentures quarterly at a rate of 8.50%. During 2002 our parent holding company paid $0.1 million in interest on these debentures to American Progressive, $0.5 million in 2001 and $0.7 million in 2000. The interest on these debentures is eliminated in consolidation.