Worldwide insurance and reinsurance market conditions continued to be very competitive, particularly in the property catastrophe and casualty reinsurance lines of business. Generally, there was ample insurance and reinsurance capacity relative to demand, as well as, additional capital from the capital markets through insurance linked financial instruments. These financial instruments such as side cars, catastrophe bonds and collateralized reinsurance funds, provide capital markets with access to insurance and reinsurance risk exposure. The capital markets demand for these products is being primarily driven by the current low interest environment and the desire to achieve greater risk diversification and potentially higher returns on their investments. This increased competition is generally having a negative impact on rates, terms and conditions; however, the impact varies widely by market and coverage.
Rates tend to fluctuate by specific region and products, particularly areas recently impacted by large catastrophic events. During the second and third quarters of 2013, Canada experienced historic flooding in Alberta and Toronto, which resulted in higher catastrophe rates in these areas during 2014. Although there have been other flooding and wind storm events and earthquakes in other parts of the world , the overall 2013, 2014 and 2015 catastrophe losses for the industry were considerably lower than average. This lower level of losses, combined with increased competition has resulted in downward pressure on insurance and reinsurance rates in certain geographical areas. These lower catastrophe historic losses are placing downward pressure on worldwide regional catastrophe markets.
Premiums. Gross written premiums increased by 0.6% to $4,995.6 million in 2015, compared to $4,965.3 million in 2014, reflecting a $293.4 million, or 24.9%, increase in our insurance business, partially offset by a $263.0 million, or 6.9%, decrease in our reinsurance business. The rise in insurance premiums was primarily due to increases in most lines of business, as we have focused on expanding the insurance operations. The decline in reinsurance premiums were due mainly to decreases in treaty casualty business, reductions in quota share agreements and a negative impact of approximately $91.9 million from the year over year movement in foreign exchange rates. Net written premiums decreased by 0.6% to $2,093.3 million in 2015 compared to $2,107.0 million in 2014. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance mainly related to quota share contracts. Premiums earned increased by 1.4% to $2,143.8
million in 2015, compared to $2,113.7 million in 2014. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Gross written premiums increased by 11.9% to $4,965.3 million in 2014, compared to $4,437.5 million in 2013, reflecting a $588.3 million, or 18.4%, increase in our reinsurance business, partially offset by a $60.4 million, or 4.9%, decrease in our insurance business. The increase in reinsurance premiums was mainly due to new business: quota share contracts and contracts with catastrophe exposed risks, partially offset by a negative impact of approximately $50.0 million from the movement in foreign exchange rates. The decrease in insurance premiums was primarily due to lower crop premiums, partially offset by an increase in non-standard auto business. Net written premiums decreased by 0.5% to $2,107.0 million in 2014 compared to $2,117.4 million in 2013. The variances of the changes in gross written premiums compared to the changes in net written premiums is primarily due to a higher utilization of reinsurance related to the new quota share contracts. Premiums earned increased by 5.4% to $2,113.7 million in 2014, compared to $2,006.4 million in 2013. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Net Investment Income. Net investment income decreased by 5.9% to $273.3 million in 2015, compared with net investment income of $290.3 million in 2014. Net pre-tax investment income, as a percentage of average invested assets, was 3.1% in 2015 compared to 3.5% in 2014. The decline in income and yield was primarily the result of lower income on fixed income securities and a decrease in our limited partnership income.
Net investment income decreased by 2.3% to $290.3 million in 2014, compared with net investment income of $297.0 million in 2013. Net pre-tax investment income, as a percentage of average invested assets, was 3.5% in 2014 compared to 3.6% in 2013. The decline in income and yield in 2014 compared to 2013 was primarily the result of a decrease in our limited partnership income and lower reinvestment rates for the fixed income portfolios, partially offset by an increase in dividends from shares held of the parent.
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees decreased by 7.2% to $315.1 million in 2015 compared to $339.4 million in 2014. These changes were primarily due to the impact of changes in the mix of business and the impact of affiliated quota shares.
Other Underwriting Expenses. Other underwriting expenses were $214.8 million, $192.0 million and $193.5 million in 2015, 2014 and 2013, respectively. The increase for 2015 compared with 2014 was due to the impact of higher premium earned and higher compensation expenses. Other underwriting expense was essentially flat for 2014 compared to 2013.
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $7.2 million, $7.3 million and $8.3 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Income Tax Expense (Benefit). Income tax expenses were $191.9 million, $203.6 million and $407.2 million in 2015, 2014 and 2013, respectively. Income tax expense is primarily a function of the geographic location of the Company's pre-tax income and the statutory tax rates in those jurisdictions, as affected by tax-exempt investment income. Variations in the income tax expense generally result from changes in the relative levels of pre-tax income, including the impact of catastrophe losses and net capital gains (losses), among jurisdictions with different tax rates. The decrease in income tax expense for 2015 compared to 2014 was due to lower realized capital gains in the U.S. The decrease in income tax expense for 2014 compared to 2013 is primarily due to lower net realized capital gains in the U.S. and the realization of additional foreign tax credits.
Our net income was $412.7 million, $454.1 million and $798.3 million in 2015, 2014 and 2013, respectively. The changes were primarily driven by the financial component fluctuations explained above.
Our combined ratio decreased by 2.9 points to 86.3% in 2015 compared to 89.2% in 2014. The loss ratio component decreased 2.5 points in 2015 over the same period last year, primarily due to the decrease in prior years attritional losses. The commission and brokerage ratio components decreased 1.4 points in 2015 over the same period last year primarily due to changes in the mix of business and the impact of the affiliated quota shares. The other underwriting expense ratio components increased 1.0 points in 2015 over the same period last year due to the additional expenses related to the increased focus on the expansion of the insurance business.
Stockholders' equity increased by $358.5 million to $4,931.2 million at December 31, 2015 from $4,572.7 million at December 31, 2014, principally as a result of $412.7 million of net income, $12.5 million of share-based compensation transactions and $11.9 million of net benefit plan obligation adjustments, partially offset by $54.6 million of net foreign currency translation adjustments and $24.0 million of net unrealized depreciation on investments, net of tax.
Stockholders' equity increased by $382.2 million to $4,572.7 million at December 31, 2014 from $4,190.5 million at December 31, 2013, principally as a result of $454.1 million of net income and $11.2 million of share-based compensation transactions, partially offset by $36.1 million of net benefit plan obligation adjustments, $29.2 million of net foreign currency translation adjustments and $17.8 million of net unrealized depreciation on investments, net of tax.
Net investment income decreased 2.3% to $290.3 million in 2014 compared to $297.0 million in 2013 primarily due to a decline in income from our limited partnership investments and a decline in income from our fixed maturities, reflective of lower reinvestment rates, partially offset by an increase in dividends from parent's shares.
The following table presents the underwriting results and ratios for the U.S. Reinsurance segment for the periods indicated.
Premiums. Gross written premiums decreased by 0.3% to $2,147.9 million in 2015 from $2,154.5 million in 2014, primarily due to a decline in treaty casualty business resulting from the cancellation of some contracts. Net written premiums decreased by 8.0% to $899.9 million in 2015 compared to $977.9 million in 2014. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to a varying utilization of reinsurance primarily related to affiliated quota share contracts. Premiums earned decreased 3.7% to $951.5 million in 2015 compared to $988.3 million in 2014. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Incurred losses decreased by 24.3% to $413.3 million in 2015 compared to $545.9 million in 2014, primarily resulting from favorable development of $122.9 million on prior years attritional losses in 2015 compared to 2014 related to treaty property, treaty casualty and marine lines of business and less year over year development on A&E reserves. In addition, current year attritional losses decreased $22.3 million due primarily to the impact of the decline in earned premiums partially offset by $6.7 million of losses related to the explosion at the Chinese port of Tianjin. The $8.4 million of current year catastrophe losses in 2015 were mainly due to the 2015 US Storms ($8.2 million). The $6.3 million of current year catastrophe losses in 2014 related to the Japan snowstorm ($3.9 million) and Hurricane Odile ($2.4 million).
Incurred losses increased by 28.7% to $545.9 million in 2014 compared to $424.2 million in 2013, primarily due to the increase in current year attritional losses of $95.3 million resulting primarily from the impact of the increase in premiums earned and less favorable development of $80.2 million on prior years attritional losses in 2014 compared to 2013, mainly related to an increase in A&E reserves. This increase was partially offset by a favorable development of $34.2 million on prior year catastrophe losses in 2014 compared to 2013, mainly related to Superstorm Sandy, and a decrease of $19.6 million in current year catastrophe losses. The $25.9 million of current year catastrophe losses in 2013 were mainly due to U.S. Storms ($22.4 million), the European floods ($2.5 million) and the Canadian Floods ($1.0 million).
Segment Expenses. Commission and brokerage decreased by 1.4% to $199.0 million in 2015 compared to $201.9 million in 2014. This decrease was primarily due to the impact of the decrease in premiums earned and changes related to the affiliated quota share contracts. Segment other underwriting expenses increased to $50.1 million in 2015 from $45.6 million in 2014. The increase was primarily due to the impact of changes in the mix of business and higher employee benefit costs.
Incurred losses and LAE increased by 13.3% to $358.0 million in 2014 compared to $315.9 million in 2013, primarily due to an increase of $31.1 million in current year attritional losses, related to additional losses in the Middle East, Africa and Latin America. The $33.6 million of current year catastrophe losses for 2013 were due to Canadian floods ($19.0 million) and Typhoon Fitow ($14.6 million).
Segment Expenses. Commission and brokerage increased 1.3% to $121.2 million in 2015 compared to $119.7 million in 2014. The variances were primarily due to the impact of changes in the mix of business and changes in affiliated quota share agreements. Segment other underwriting expenses decreased slightly to $34.3 million in 2015 compared to $34.6 million in 2014.
Commission and brokerage increased 4.7% to $119.7 million in 2014 compared to $114.3 million in 2013. This increase was primarily due to the impact of the increase in premiums earned. Segment other underwriting expenses slightly increased to $34.6 million in 2014 compared to $33.9 million in 2013.
Gross written premiums decreased by 4.9% to $1,180.4 million in 2014 compared to $1,240.8 million in 2013. This decrease was primarily driven by a decline in crop business, partially offset by an increase in the non-standard auto business. Net written premiums decreased by 13.5% to $516.9 million in 2014 compared to $597.7 million in 2013. The variance of the change in gross written premiums compared to the change in net written premiums is due to changes in the utilization of reinsurance, particularly on the crop business. Premiums earned decreased 8.4% to $524.4 million in 2014 compared to $572.3 million in 2013. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Incurred losses and LAE decreased by 15.4% to $450.2 million in 2014 compared to $532.0 million in 2013, mainly due to a decrease of $61.6 million of prior years attritional losses which mainly related to development on workers' compensation, constructions liability and umbrella business in 2013, which did not recur to the same extent in 2014 and by a decrease of $21.0 million in current year attritional losses, which were mainly related to the decline in the crop book of business. The $0.5 million of current year catastrophe losses for 2013 were due to the Canadian floods.
Commission and brokerage decreased 10.1% to $17.8 million in 2014 compared to $19.8 million in 2013. The decrease for the year was primarily driven by the decline in premiums earned. Segment other underwriting expenses decreased slightly to $111.8 million in 2014 compared to $112.4 million in 2013 due primarily to the impact of the decline in premiums earned.