On June 25, 2014, we completed the sale of an aggregate of 31,050,000 shares of our common stock in a private placement exempt from registration under the Securities Act of 1933, which we refer to in this report as the private placement, and received net proceeds of approximately $280.6 million. Of the net proceeds from the private placement, we used approximately (i) $190.6 million to purchase 21,030,294 shares of our common stock from certain of our shareholders pursuant to a stock redemption agreement we entered into with them prior to the private placement at a per share price equal to the net proceeds, after allocable expenses, per share that we received from the private placement, (ii) $17.8 million to make pre-tax payments to CUNA Mutual pursuant to the 2014 amendment to our Collateral Protection Alliance Agreement with CUNA Mutual to increase our retention of the business subject to the alliance and (iii) $50 million to contribute to the capital of our insurance subsidiaries. We intend to use the remainder of the net proceeds for general corporate purposes.
In addition, recent downgrades of certain insurance companies have, and we believe that future downgrades of other insurance companies will, create increased demand for our fronting services. For example, we currently have a large active program with certain subsidiaries of Meadowbrook Insurance Group, Inc. (MIG), including Century Surety Company, Star Insurance Company and Savers Property & Casualty Insurance Corporation. This A.M. Best rating-sensitive book of business came to us in August of 2013 after A.M. Best downgraded the rating of the MIG insurance subsidiaries from “A-” to “B++”. For 2013, we wrote gross premiums of $170 million under this program, for which we earned gross premiums of $64 million and ceding fees of $3.5 million. For the year ended December 31, 2014, we wrote and earned approximately $268 million and $260 million, respectively, of gross premiums related to this program, for which we earned $14.3 million in ceding fees. On December 30, 2014, Meadowbrook announced a proposed acquisition of Meadowbrook by Fosun International Limited, to be closed during the second half of 2015 after regulatory approval
and customary closing conditions. It is unknown if Meadowbrook will seek to terminate our fronting arrangement. If the fronting arrangement is terminated prior to June 30, 2016, we will earn at least the minimum ceding fees of $4.3 million payable in respect of the period July 1, 2015 to June 30, 2016.
Run-off of the Retained Business. In the past, the Company has participated on a quota share basis to a limited extent in certain programs in the Program Services segment. Most recently, from 2007 until 2011, California had required USIC to retain 10% of the risks written. After this requirement was lifted in early 2012, the Company reinsured to inception the retained business under most of the active contracts, but others continue to run-off. As reflected in the “Program Services Segment-Results of Operations,” we recorded negative premiums earned for the years ended December 31, 2014 and December 31, 2013. The negative premiums resulted primarily due to the novation of the three remaining active California programs (one in 2013 and two in 2012) in this run-off book of business and net policy refunds for a number of run-off accounts. Most of the retained business was general liability business. The Company has no active retained contracts and has no present intention of participating in future contracts. We refer to this business as “the run-off of the retained business.” As of December 31, 2014, we had net reserves of $3.1 million related to this business.
Losses and loss adjustment expenses. Losses and LAE increased by $8.7 million, or 27.2%, from $32.1 million for the year ended December 31, 2013 to $40.8 million for the year ended December 31, 2014, which is partly the result of higher premiums earned. A strengthening economy, an aging automobile fleet, and easier access to credit have contributed to an increase in vehicle sales, resulting in higher loan balances which are the bases upon which we pay claims. In addition, the net loss ratio on the Lender Services segment increased from 37.3% to 42.0% for the years ended December 31, 2013 and December 31, 2014, respectively. This increase is primarily due to an increase in claims volume and severity.
Between 2002 and 2004, we formed four statutory business trusts for the sole purpose of issuing $52 million of trust preferred securities in private offering transactions. The trusts used the proceeds from these offerings, together with the equity proceeds received upon their initial formation from TBA, an indirect wholly-owned subsidiary of State National, to purchase $53.6 million of variable-rate subordinated debentures issued by TBA. All voting securities of the trusts are owned by TBA, and the debentures are the sole assets of the trusts. The trusts meet the obligations of the trust preferred securities with the interest and principal paid on the debentures. TBA has guaranteed the obligations of the trusts with respect to the trust preferred securities. We do not have a variable interest in the trusts and therefore do not consolidate the trusts.