Underwriting and Other Expenses. Losses and loss expenses for 2000 were $3.5 million as compared to $5.5 million for 1999. Losses and loss expenses in 2000 and 1999 primarily reflect the accretion of the discounted values of existing reserves. Losses and loss expenses in 2000 have been reduced by a $0.5 million gain realized on the recapture by RSL of approximately 29% of the existing group long term disability liabilities ceded to Oracle Re under its quota share reinsurance agreement with RSL. Underwriting and acquisition expenses totaled $3.2 million for 2000 as compared to $6.3 million for 1999. Underwriting and acquisition expenses in 2000 include $3.1 million of profit sharing commissions payable under the Safety National and RSL reinsurance agreements. Underwriting and acquisition expenses in 1999 include profit-sharing commissions of $6.1 million for the period from inception through December 31, 1999.
Year Ended December 31, 1999 Compared to Period From January 27, 1998 to December 31, 1998
Underwriting and Other Expenses. Losses and loss expenses for the year ended December 31, 1999 were $5.5 million as compared to $131.4 million for the period ended December 31, 1998. Losses and loss expenses in 1999 primarily reflect the accretion of the discounted values of existing reserves. Losses and loss expenses incurred for the period ended December 31, 1998 include the discounted value of the loss portfolios assumed under the reinsurance agreements with Safety National and RSL and provisions for loss and loss expenses for the professional liability aggregate excess reinsurance agreement. Underwriting and acquisition expenses totaled $6.3 million for the year ended December 31, 1999 as compared to $5.2 million for the period ended December 31, 1998. Underwriting and acquisition expenses in 1999 include $6.1 million of profit sharing commissions payable under the Safety National and RSL reinsurance agreements for the period from inception through December 31, 1999. Underwriting and acquisition expenses in the period ended December 31, 1998 include ceding commissions of $4.8 million.
The Company's current liquidity needs at the holding company level include funding operating expenses, the repayment of incorporation expenses paid by DFG and interest payments on the Subordinated Notes. At the Company's option, the Company may pay interest on the Subordinated Notes in additional Subordinated Notes in lieu of cash payments during any five-year period. In 2000, the Company elected to pay $3.0 million of interest due on the Subordinated Notes by the issuance of additional Subordinated Notes with an aggregate principal amount of $3.0 million. As of December 31, 2000, the Company had $14.3 million in financial assets at the holding company level. The Company's other source of liquidity at the holding company level consists of dividends from Oracle Re. Dividend payments by the Company's insurance subsidiary to the Company are subject to certain Bermuda regulatory restrictions as well as contractual restrictions. Under the LOC Agreement, dividends by Oracle Re in any fiscal year may generally not exceed the greater of (a) 50% of Oracle Re's statutory net income for the preceding fiscal year and (b) the lesser of (i) $3,000,000 and (ii) Oracle Re's statutory net income for the preceding fiscal year. See "Business - Regulation - Bermuda."
portfolio. Each of the Company's existing reinsurance agreements involved a one-time payment to Oracle Re at inception and does not provide for ongoing reinsurance premiums. In 2000, Oracle Re and RSL effected the recapture of approximately 29% of the existing group long term disability liabilities ceded to Oracle Re under its quota share reinsurance agreement with RSL. In this connection, $4.1 million in cash was transferred to RSL, as of the effective date of the recapture, with respect to the liabilities as to which Oracle Re's reinsurance coverage was terminated. The Company recognized a gain of $0.5 million on the recapture.
Investments and Market Risk. At December 31, 2000, the Company has allocated $107.1 million, or 86.1% of the Company's investment portfolio, among a number of investment managers that utilize diverse investment strategies and to investments in the LLC, the assets of which are invested among similar investment managers. Ninety percent of the Company's investment in the LLC consists of redeemable preferred securities carrying a cumulative dividend of 13.5% per annum. See "Business-Investments." The ability of the LLC to pay dividends depends on the performance of the investment vehicles of the independent investment manager with which it invests its assets and the frequency with which the LLC can withdraw its investments in such vehicles. The investment managers' general strategy categories include, among others, diversified hedging, hedged equity, common stock/specialised trading, short selling, risk arbitrage, distressed securities, futures and commodities and foreign securities investing. The managers primarily invest in a variety of marketable securities and other liquid assets. The Company has invested, and the LLC also invests, in the investment vehicles of the managers, which are generally in the form of a corporation or other limited liability entity, or through managed accounts in which the manager invests directly on behalf of the Company or the LLC, as applicable. The investments in substantially all of these investment vehicles can be redeemed on at least an annual basis with many of the managers providing quarterly or more frequent liquidity.