During 2009, AFG repurchased 3.3 million shares of its Common Stock for $81 million. Through February 19, 2010, an additional 2.1 million shares were repurchased for $53 million, using cash on hand at the parent company.
Approximately 92% of the fixed maturities held by AFG at December 31, 2009, were rated "investment grade" (credit rating of AAA to BBB) by nationally recognized rating agencies. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated and noninvestment grade. Management believes that the high quality investment portfolio should generate a stable and predictable investment return.
An important assumption underlying reserve estimates is that the cost trends implicitly built into development patterns will continue into the future. However, future results could vary due to an unexpected change in the underlying cost trends. This unexpected change could arise from a variety of sources including a general increase in economic inflation, inflation from social programs, new medical technologies, or other factors such as those listed below in connection with our largest lines of business. It is not possible to isolate and measure the potential impact of just one of these variables, and future cost trends could be partially impacted by several such variables. However, it is reasonable to address the sensitivity of the reserves to potential impact from changes in these variables by measuring the effect of a possible overall 1% change in future cost trends that may be caused by one or more variables. Utilizing the effect of a 1% change in overall cost trends enables changes greater than 1% to be estimated by extrapolation. Each additional 1% change in the cost trend would increase the effect on net earnings by an amount slightly (about 5%) greater than the effect of the previous 1%. For example, if a 1% change in cost trends in a line of business would change net earnings by $20 million, a 2% change would change net earnings by approximately $41 million.
AFG's net earnings attributable to shareholders, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following table identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions, except per share amounts):
gross written premiums decreased in 2009 primarily due to the impact of lower automobile sales on automotive-related lines of business. The decrease in net written premiums also reflects the decision to exit certain automotive-related lines of business. Premium growth in the financial institutions and fidelity and crime businesses partially offset these declines. This group reported an underwriting profit of $134 million in 2009, compared to an underwriting loss of $46 million in the comparable 2008 period. The run-off RVI operations reported an underwriting profit of $94 million in 2009 compared to an underwriting loss of $106 million in 2008, due to significant improvement in used car sale prices during the year. This group reported a combined ratio of 74.1%, a 35.1 point improvement over the 2008 period. Excluding the effect of RVI, the group's 2009 combined ratio was 91.8%, 5.0 points higher than in 2008 due primarily to losses in certain automotive-related lines.
The amortized cost of AFG's portfolio of non-agency residential MBS decreased $530 million during 2009 due primarily to paydowns. As these securities continue to pay down, management expects to reinvest the proceeds principally in high quality corporate bonds placing downward pressure on AFG's investment portfolio yield.
In June 2009, the FASB issued a new standard eliminating the concept of qualifying special purpose entities, revising the sale recognition requirements for transfers of financial assets, establishing conditions for transfer of a portion of a financial asset and requiring the initial measurement of beneficial interests that are received as proceeds in connection with transfers of financial assets at fair value. The new standard is effective for transfers of financial assets occurring on or after January 1, 2010. Management does not believe adoption of this standard will have a material impact on AFG's consolidated financial statements.
In our opinion, American Financial Group, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.
Goodwill represents the excess of cost of subsidiaries over AFG's equity in their underlying net assets. Goodwill is not amortized, but is subject to an impairment test at least annually.
In 2009, 2008, and 2007, less than 4% of AFG's revenues were derived from the sale of property and casualty insurance outside of the United States.
increased significantly during 2008 and early 2009 as widespread deterioration in economic conditions resulted in significantly wider spreads. As a result of improving financial markets, spreads have narrowed since March of 2009, significantly reducing the unrealized loss on these two groups. Approximately 88% of the gross unrealized losses on these two groups at December 31, 2009, included securities that were in an unrealized loss position for more than 12 months.
Regarding the "all other corporate" securities that were impaired for 12 months or more at December 31, 2009 (255 securities), $50 million (44%) of the gross unrealized loss related to investments in debt securities of banks, credit and lending institutions. Investment grade rated securities represented 70% of the unrealized loss and 84% of the fair value. Approximately $14 million of the unrealized loss (10 securities) relates to securities that were more than 20% impaired, compared to $84 million (29 securities) at December 31, 2008.
Included in other assets in AFG's Balance Sheet is $59.6 million at December 31, 2009 and $76.4 million at December 31, 2008 in amortizable intangible assets related to property and casualty insurance acquisitions, primarily the 2008 acquisitions of Marketform and Strategic Comp. These amounts are net of accumulated amortization of $22.8 million and $38.0 million, respectively. Amortization of these intangibles was $22.0 million in 2009, $24.3 million in 2008 and $8.4 million in 2007.
Comprehensive income (loss) is defined as all changes in Shareholders' Equity except those arising from transactions with shareholders. Comprehensive income (loss) includes net income and other comprehensive income (loss), which consists primarily of changes in net unrealized gains or losses on available for sale securities and foreign currency translation. The progression of the components of accumulated other comprehensive income (loss) follows (in millions):
Prior year development in 2009 includes favorable development of $38.7 million, $30.6 million and $20.5 million in the second, third and fourth quarters, respectively, related to the run-off residual value insurance ("RVI") operations and $47.7 million of unfavorable development in the fourth quarter related to Marketform's Italian public hospital medical malpractice business.