Our insurance subsidiaries lease 315,267 square feet of office space in numerous cities throughout the United States. All of these leases expire within 8 years. The most significant leased office spaces are located in suburban Los Angeles, California and Miami, Florida. Refer to Note 14 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for further information about leases. We own a 33,515 square foot call center in McAllen, Texas, a 50,900 square foot call center in Tucson, Arizona, and three properties in Birmingham, Alabama - a 116,433 square foot building, a 62,808 square foot warehouse and a 120,493 square foot building we purchased in April 2015 to replace a leased 120,137 square foot facility and serve as our new corporate headquarters beginning in June 2016.
During 2015 our gross written premium grew 2.0% compared with 2014. The majority of this growth came from California personal auto and countrywide Commercial Vehicle, which grew a combined 10.4%, compared with the prior year. Partially offsetting premium growth in these two areas was premium decline of 42.1% for the combined states of Georgia, Nevada and Pennsylvania as we discontinued writing new business in these states effective January 1, 2015. Refer to Results of Operations - Underwriting - Premium for a more detailed discussion of our gross written premium.
Included in net earnings for the year ended December 31, 2015, was $18.8 million ($28.9 million pre-tax) of favorable development on prior accident year loss and LAE reserves. This development was primarily due to decreases in severity estimates in Florida bodily injury coverages and California bodily injury loss adjustment expense estimates, all related to accident years 2013 and 2014. This compares with $11.3 million ($17.4 million pre-tax) of favorable development for 2014. The following table displays GAAP combined ratio results by accident year developed through December 31, 2015:
Our book value per share increased 1.5% from $60.75 at December 31, 2014, to $61.66 at December 31, 2015. This increase was primarily due to net earnings partially offset by share repurchases, shareholder dividends, and a decrease in unrealized gains during the year.
The preparation of financial statements requires management to make estimates and assumptions that can have a significant effect on amounts reported in the financial statements. As more information becomes known, these estimates and assumptions could change and thus impact amounts reported in the future. We believe that the establishment of insurance reserves, the determination of “other-than-temporary” impairment on investments, accruals for litigation and valuation of goodwill are the areas where the degree of judgment required to determine amounts recorded in the financial statements makes the accounting policies critical.
For each subset of the business evaluated, each test generates a point estimate based on development factors applied to known paid and incurred claims and claim counts to estimate ultimate paid claims and claim counts. Selections of development factors are based on historical loss development patterns with adjustment based on professional actuarial judgment where anticipated development patterns vary from those seen historically. Deviations from historical loss development patterns may occur due to changes in items such as claims settlement and payment practices, business mix, coverage limits and deductibles, inflation trends in auto repair and medical costs and legal and regulatory trends affecting claims settlements. This estimation of IBNR requires selection of hundreds of such factors. A single point estimate for the subset being evaluated is then selected from the results of various tests, based on a combination of simple averages of the point estimates of the various tests and selections based on professional actuarial judgment.
Ultimate loss estimates, excluding extra-contractual obligation (ECO) losses, usually experience the greatest adjustment within the first 12 to 18 months after the accident year. Accordingly, the highest degree of uncertainty is associated with reserves for the current accident year because the current accident year contains the greatest proportion of losses that have not been reported or settled, and we must estimate these elements as of the current reporting date. The proportion of losses with these characteristics typically diminishes in subsequent years.
As compared with loss and LAE reserves held at December 31, 2015, our best estimate of reserve ranges using indicated results from utilized estimates of loss and LAE could range from a deficiency of 8%, or $54.6 million, to a redundancy of 12%, or $78.0 million. These ranges do not present a forecast of future redundancy or deficiency since actual development of future losses on current loss reserves may vary materially from those estimated in the year-end 2015 reserve tests. Reserves recorded are our best estimate of the ultimate amounts that will be paid.
The following tables present the development of our loss reserves, net of reinsurance, on a GAAP basis for the calendar years 2005 through 2015. The top line of each table shows the estimated liability for unpaid losses and LAE recorded at the balance sheet date for the indicated years. The next line shows the re-estimated liability as of December 31, 2015. The remainder of the table presents intervening development as percentages of the initially estimated liability. Additional information and experience in subsequent years results in development. The middle line shows a cumulative deficiency (redundancy) which represents the aggregate percentage increase (decrease) in the liability initially estimated. The lower portion of the table indicates the cumulative amounts paid as of successive periods as a percentage of the original loss reserve liability.
The $28.9 million favorable reserve development during the twelve months ended December 31, 2015, was primarily due to decreases in severity estimates in Florida bodily injury coverages and California bodily injury loss adjustment expense estimates, all related to accident years 2013 and 2014.
The $17.4 million favorable reserve development during the twelve months ended December 31, 2014, was primarily due to decreases in California property damage severity estimates and in both severity and frequency estimates in Florida bodily injury coverages, all related to accident year 2013.
The October 1, 2015, test results indicated that the fair value of our goodwill exceeded our carrying value and therefore no impairment charge was required at that date. Additionally, there was no indication of impairment at December 31, 2015.
As of December 31, 2015, the holding company had $143.1 million of cash and investments. In 2016, our insurance subsidiaries may pay us up to $65.4 million in ordinary dividends without prior regulatory approval. Rating agency capital requirements, among other factors, will be considered when determining the actual amount of dividends paid in 2016.
Our insurance subsidiaries generate liquidity to satisfy their obligations, primarily by collecting and investing premiums in advance of paying claims and generating investment income on their $1.4 billion investment portfolio. Our insurance subsidiaries generated positive cash flows from operations of approximately $80.2 million in 2015, $117.9 million in 2014 and $145.6 million in 2013.
In June 2013 we filed a "shelf" registration statement with the Securities and Exchange Commission registering $300.0 million of our securities, which will allow us to sell any combination of senior or subordinated debt securities, common stock, preferred stock, warrants, depositary shares and units in one or more offerings should we choose to do so in the future. This shelf registration statement expires in June 2016. We intend to file a new shelf registration statement in 2016, registering securities similar to the types included in the prior shelf registration statement.
Our consolidated investment portfolio at December 31, 2015, contained $1.4 billion in fixed maturity securities, $89.9 million in equity securities and $4.7 million of short-term investments, all carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income, a separate component of shareholders' equity, on an after-tax basis. At December 31, 2015, we had pre-tax net unrealized losses of less than $0.1 million on fixed maturities and pre-tax net unrealized gains of $11.1 million on equity securities. Combined, the pre-tax net unrealized gain declined by $24.9 million for the twelve months ended December 31, 2015, primarily as a result of increases in market interest rates during 2015.
Our Level 1 securities are U.S. Treasury securities, an exchange-traded fund and equity securities held in a rabbi trust. Our Level 2 securities are comprised of securities whose fair value was determined using observable market inputs. Our Level 3 securities are comprised of (i) securities for which there is no active or inactive market for similar instruments; (ii) securities whose fair value is determined based on unobservable inputs; and (iii) securities that nationally recognized statistical rating organizations do not rate.
Summarized information for our investment portfolio at December 31, 2015, follows ($ in thousands):
The following table provides information about our fixed maturity investments at December 31, 2015, which are sensitive to interest rate risk. The table shows expected principal cash flows by expected maturity date for each of the five subsequent years and collectively for all years thereafter. Callable bonds and notes are included based on call date or maturity date depending upon which date produces the most conservative yield. Mortgage-Backed Securities (MBS) and sinking fund issues are included based on maturity year adjusted for expected payment patterns. The cash flows presented take into consideration historical relationships of market yields and prepayment rates. However, the actual prepayment rate may differ from historical trends resulting in actual principal cash flows that differ from those presented below.
We manage credit risk by diversifying our portfolio to avoid concentrations in any single industry group or issuer and by limiting investments in securities with lower credit ratings. The largest investment in any one fixed income security, excluding U.S.
Equity price risk is the potential economic loss from adverse changes in equity security prices. Our exposure to equity price risk is limited, as our equity investments comprise only 6.1% of our total investment portfolio. At December 31, 2015, the fair value of our equity portfolio was $89.9 million.
The increase in gross written premium in our Focus States is primarily due to growth in California, which grew 9.4%, compared with the prior year. California's premium growth, most of which occurred during the first half of 2015, was primarily due to an increase in both new and renewal business as a result of an improving economy and higher average written premiums.
The growth in the Focus States during 2014 was partially offset by declining gross written premium in the Other States as we took actions to improve profitability in those states, which resulted in a decline in written premium.
Our Commercial Vehicle gross written premium grew 27.4% during the twelve months ended December 31, 2014. This growth was primarily due to higher average premium and new business growth.
A key operating performance measure of insurance companies is underwriting profitability, as opposed to overall profitability or net earnings. We measure underwriting profitability by the combined ratio. When the combined ratio is under 100%, we consider underwriting results profitable; when the ratio is over 100%, we consider underwriting results unprofitable. The combined ratio does not reflect investment income, other income, interest expense, corporate general and administrative expenses, other expenses or federal income taxes.
The discussion of underwriting results that follows will focus on statutory ratios and the components thereof, unless otherwise indicated.
The statutory combined ratio for the twelve months ended December 31, 2015, increased by 0.5 point from the same period of 2014. The twelve months ended December 31, 2015, included $28.9 million of favorable development on prior year loss and LAE reserves compared with $17.4 million of favorable development on prior year loss and LAE reserves in 2014. Excluding the effect of development from both periods, the statutory combined ratio increased by 1.3 points for the twelve months ended December 31, 2015, compared with 2014.
The 1.8 points decline in the Focus States combined ratio for the twelve months ended December 31, 2015, was primarily due to an improvement in the calendar year loss and LAE ratio as a result of favorable development from prior accident year loss and LAE reserves in Florida and California, as well as an increase in net written premium, resulting in a reduction of the underwriting ratio.
The 13.3 points increase in the Other States combined ratio for the twelve months ended December 31, 2015, was primarily due to increases in the current accident year combined ratios in Pennsylvania and Georgia.
Losses from catastrophes totaled $2.5 million during 2014, compared with $1.8 million for 2013.
The 6.4 points decline in the Other States combined ratio for the twelve months ended December 31, 2014, was primarily due to an improvement in the combined ratio on renewal business in Georgia, Nevada and Pennsylvania.
The 11.3 points decline in the Commercial Vehicle product combined ratio during the twelve months ended December 31, 2014, was primarily due to favorable development on loss and LAE reserves.
Gross and net investment income for the year ended December 31, 2015, includes $1.1 million of make whole proceeds. In prior periods, make whole proceeds were included in realized gains and losses.
Other income is primarily comprised of commission from the sales of third party insurance policies and items of a non-recurring nature. Other income for the year ended December 31, 2015, increased $0.5 million primarily as a result of a growth in the sales of these policies.
Other expenses for the twelve months ended December 31, 2015, increased primarily due to losses on subleases related to the closure of offices in Georgia, Nevada and Pennsylvania as well as a partial lease buyout on our existing corporate headquarters. In addition, we incurred an impairment to bring the book values of two properties down to the appraised value after the demolition of buildings that were on the premises at the time of purchase.
The following table reconciles our U.S. statutory rate and effective tax rate for the periods ended December 31, 2015, 2014 and 2013:
In 2014 our underwriting income increased as a result of a decrease in our combined ratio. This increase in income resulted in a smaller benefit from both tax exempt interest and the dividends-received deduction, which therefore increased the effective tax rate.
Consolidated Statements of Cash Flows: Years ended December 31, 2015, 2014 and 2013