Cincinnati Financial Corporation owns Gilmore Pointe, located on the northwest corner of our headquarters property. This four-story building contains approximately 103,000 square feet of usable space. The property is carried in the financial statements at $5 million at December 31, 2015, and is classified as land, building and equipment, net, for company use. Unaffiliated tenants occupied 7 percent of the usable square footage at year end December 31, 2015. This property is used by all segments reported in the Consolidated Financial Statements and accompanying Notes. On January 25, 2016, the company entered into a leasing agreement with a new tenant that will be leasing 61,000 square feet of usable space beginning during the third quarter of 2016. Once the new tenant takes occupancy, 66 percent of the usable square footage will be occupied by unaffiliated tenants.
Premium growth - We believe over any five-year period our agency relationships and initiatives can lead to a property casualty written premium growth rate that exceeds the industry average. The compound annual growth rate of our net written premiums was 8.0 percent over the five-year period 2011 through 2015, approximately double the 3.8 percent estimated growth rate for the property casualty insurance industry. The industry’s growth rate excludes its mortgage and financial guaranty lines of business. In late 2011, we established a long-term target for profitable premium growth of our property casualty and life insurance segments in aggregate. In 2015, our direct written premiums totaled $4.739 billion, less than the target of $5 billion.
New business written premiums produced through agencies rose $29 million in 2015, compared with 2014. Agents appointed during 2015 or 2014 produced a 2015 increase in standard lines new business of $27 million.
Other written premiums primarily consist of premiums that are ceded to reinsurers and that lower our net written premiums. A decrease in ceded premiums contributed $29 million to net written premium growth for 2015, compared with 2014.
The total loss and loss expense ratio for other commercial lines improved in 2015, compared with 2014, primarily due to improved loss experience for the current accident year before catastrophe losses. Careful underwriting, disciplined pricing and improved risk selection were largely responsible for the improvement. More favorable catastrophe loss experience also contributed to the 2015 improvement. The 2014 ratio improvement, compared with 2013, was primarily due to more benefit from favorable development on prior accident year reserves. Development on prior accident year reserves was unfavorable in 2013, largely due to experience with our management liability policies. Prior accident year reserve development has been volatile for this business in recent years, reflecting varying loss experience for director and officer liability related to financial institutions we insured during the U.S. credit crisis of 2008. We briefly described how we manage the potentially high risk of writing director and officer liability in Item 1, Commercial Lines Insurance Segment.
The average pretax yield of 4.00 percent for fixed-maturity securities acquired during 2015, shown in the table below, was lower than the 4.70 percent average yield-to-amortized cost of the fixed-maturity securities portfolio at the end of 2015.
We had $247 million of income tax expense in 2015 compared with $196 million in 2014 and $197 million in 2013. Our corporate effective tax rate for 2015 was 28.0 percent compared with 27.2 percent in 2014 and 27.6 percent in 2013.
We provide details of our three long-term notes in Item 8, Note 8 of the Consolidated Financial Statements. None of the notes are encumbered by rating triggers. The total principal amount of our long-term debt at December 31, 2015, was $793 million and included:
The historical pattern of using premium receipts for the payment of loss and loss expenses has enabled us to extend slightly the maturities of our investment portfolio beyond the estimated settlement date of the loss reserves. The effective duration of our consolidated property casualty fixed-maturity portfolio was 4.7 years at year-end 2015. By contrast, the duration of our loss and loss expense reserves was approximately 4.22 years. We believe this difference in duration does not affect our ability to meet current obligations because cash flow from operations is sufficient to meet these obligations. In addition, investment holdings could be sold, if necessary, to meet higher than anticipated loss and loss expenses.
Commercial auto loss emergence - Commercial auto continued to develop unfavorably during calendar year 2015. This line of business has been troublesome for the industry as a whole in recent years. As part of the U.S. economic recession of a few years ago, slowing business activity influenced our estimates of reserves for ultimate losses and loss expenses during that period. As the economy slowly recovered, we believe we have been slow to recognize some of the higher loss cost effects in current accident year reserve estimates for at least part of that period. As claims that occurred during that period have become more mature, paid and reported loss cost trends resulted in us increasing our estimated ultimate losses. Initiatives to improve profitability of our commercial auto line of business are discussed in Commercial Lines Insurance Results.
After reinsurance, and before any applicable benefit from our catastrophe bond, our maximum exposure to a catastrophic event that causes $600 million in covered losses in 2016 would be $125 million, matching our retention for 2015. The largest catastrophe loss event in our history occurred during 2011 from a May 20-27 storm system that included a tornado in Joplin, Missouri, and also significant losses from hail in the Dayton, Ohio, area. Our losses from that storm were estimated at December 31, 2015, to be $223 million before reinsurance.
The company’s independent registered public accounting firm has issued an audit report on our internal control over financial reporting as of December 31, 2015.
For the purpose of ASC 825 disclosure, we estimate the fair value of long-term senior notes on market pricing of similar debt instruments that are actively trading. We estimate the fair value of our note payable on the year-end outstanding balance because it is short term and tied to a variable interest rate. We estimate the fair value of liabilities for investment contracts and annuities using discounted cash flow calculations across a wide range of economic interest rate scenarios with a provision for our nonperformance risk. We estimate the fair value for policyholder loans on insurance contracts using a discounted cash flow model. Determination of fair value for structured settlements assumes the discount rates used to calculate the present value of expected payments are the risk-free spot rates plus an A3 rated bond spread for financial issuers at December 31, 2015, to account for nonperformance risk. See Note 3, Fair Value Measurements, for further details.
Our leasing subsidiary provides auto and equipment direct financing (leases and loans) to commercial and individual clients. We generally transfer ownership of the property to the client as the terms of the leases expire. Our lease contracts contain bargain purchase options. We account for these leases and loans as direct financing-type leases. We capitalize and amortize lease or loan origination costs over the life of the financing, using the effective interest method. These costs may include, but are not limited to finder fees, broker fees, filing fees and the cost of credit reports. We record income as other revenues over the financing term using the effective interest method in the consolidated statements of income, Finance receivables are reviewed for impairment and are insignificant to our consolidated financial position, results of operations and cash flows.
Determination of fair value for structured settlements assumes the discount rates used to calculate the present value of expected payments are the risk-free spot rates plus an A3 rated bond spread for financial issuers at December 31, 2015 and 2014, to account for nonperformance risk.
In the ordinary course of conducting business, the company and its subsidiaries are involved in various legal proceedings, namely claims litigation. The company's insurance subsidiaries participate in most of these proceedings by either defending third-party claims brought against insureds or litigating first-party coverage claims. The company accounts for such activity through the establishment of unpaid loss and loss adjustment expense reserves. We believe that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, is immaterial to our consolidated financial condition, results of operations and cash flows.