Gross written premiums increased by 24.3% to $4,437.5 million in 2013 compared to $3,569.4 million in 2012, reflecting a $676.5 million, or 26.8%, increase in our reinsurance business and a $191.6 million, or 18.3%, increase in our insurance business. The increase in reinsurance premiums was mainly due to the impact of a Florida quota share reinsurance contract as well as new business, increased participations on existing business, and higher original rates on subject business. Excluding the year over year impact of the large Florida quota share reinsurance contract, gross written premiums increased 16.9% and reinsurance premiums increased 16.4%, compared to the prior year. The increase in insurance premiums was primarily due to the growth in California workers’ compensation, crop and non-standard auto business. Net written premiums increased by 25.2% to $2,117.4 million in 2013 compared to $1,691.6 million in 2012, which is consistent with the increase in gross written premiums. Premiums earned increased by 13.1% to $2,006.4 million in 2013, compared to $1,773.9 million in 2012. Unlike written premiums, premiums earned were minimally impacted by the Florida quota share reinsurance contract. The change in premiums earned was comparable to net written premiums, excluding the impact of the Florida quota share reinsurance contract.
Net investment income decreased by 3.0% to $297.0 million in 2013 compared with net investment income of $306.1 million in 2012. Net pre-tax investment income as a percentage of average invested assets was 3.6% in 2013 compared to 3.7% in 2012. The declines were primarily due to lower reinvestment rates for the fixed maturities portfolio.
Net Realized Capital Gains (Losses). Net realized capital gains were $206.7 million, $723.1 million and $391.7 million in 2014, 2013 and 2012, respectively. Comprising the $206.7 million, there were $251.8 million of gains from fair value re-measurements on fixed maturity, equity securities and other invested assets, partially offset by $38.9 million of other-than-temporary impairments and $6.2 million of losses from sales on our fixed maturity and equity securities. The net realized capital gains of $723.1 million in 2013 were the result of $687.6 million of gains from fair value re-measurements and $35.6 million of net realized capital gains from sales on our fixed maturity and equity securities. The net realized capital gains of $391.7 million in 2012 were the result of $364.5 million of gains from fair value re-measurements and $33.9 million of net realized capital gains from sales on our fixed maturity and equity securities, partially offset by $6.6 million of other-than-temporary impairments on our available for sale fixed maturity securities.
Other Income (Expense). We recorded other expense of $22.3 million and $7.7 million in 2014 and 2013, respectively, and other income of $12.1 million in 2012. The changes were primarily the result of fluctuations in foreign currency exchange rates for the corresponding periods.
Incurred losses and LAE increased by 6.4% to $1,354.1 million for the year ended December 31, 2014 compared to $1,272.2 million for the year ended December 31, 2013, primarily due to increases in current year and prior years attritional losses, partially offset by a reduction in current year and prior years catastrophe losses. The increase in current year attritional losses of $105.5 million is primarily due to the impact of the increase in premiums earned. The $62.8 million of unfavorable prior years development for 2014 is a combination of $87.4 million of development on A&E reserves and $11.3 million of development on insurance reserves, primarily related to construction liability and umbrella business, partially offset by $35.9 million of favorable development in the reinsurance segments, related primarily to treaty casualty and treaty property reserves. The $41.8 million of current year catastrophe losses for the year ended December 31, 2014 represented 2.0 points and related to the Japan snowstorm ($13.9 million), the Chilean earthquake ($10.4 million), Hurricane Odile ($10.1 million) and the Brisbane hailstorm ($7.5 million). The $59.9 million of current year catastrophe losses for the year ended December 31, 2013 related to U.S. storms ($22.4 million), Canadian floods ($20.4 million), Typhoon Fitow ($14.6 million) and European floods ($2.5 million).
Commission, brokerage, taxes and fees decreased by 5.4% to $293.9 million in 2013 compared to $310.7 million in 2012. The 2013 decline was primarily due to the impact from the Florida quota share reinsurance contract and an increase in excess of loss business in 2013 which carries a lower commission rate than pro rata business, partially offset by the impact of the increase in premiums earned.
Other Underwriting Expenses. Other underwriting expenses were $192.0 million, $193.5 million and $170.6 million in 2014, 2013 and 2012, respectively. Other underwriting expense was essentially flat for 2014 compared to 2013. The increase in other underwriting expenses for 2013 compared to 2012 was mainly due to the impact of higher premiums earned and higher compensation expenses.
Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was $38.0 million, $45.5 million and $50.7 million in 2014, 2013 and 2012, respectively. The decreases were primarily due to the redemption of $329.9 million of trust preferred securities in May, 2013 and the maturity of $250.0 million of senior notes on October 15, 2014, partially offset by the impact of the issuance of $400.0 million of senior notes in June, 2014.
Our net income was $454.1 million, $798.3 million and $520.3 million in 2014, 2013 and 2012, respectively. The changes were primarily driven by the financial component fluctuations explained above.
Our combined ratio decreased by 9.9 points to 87.7% in 2013 compared to 97.6% in 2012. The loss ratio component decreased 7.1 points in 2013, over the same period last year primarily due to the $186.0 million decrease in current year catastrophe losses, which lowered the loss ratio by 10.9 points. The commission and brokerage ratio components decreased 2.9 points in 2013, due to an increase in excess of loss business which carries a lower commission than pro rata business and the impact from the Florida quota share reinsurance contract. The other underwriting expense ratio component remained relatively flat in 2013 over the same period last year.
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.
Stockholder's equity increased by $711.9 million to $4,190.5 million at December 31, 2013 from $3,478.6 million at December 31, 2012, principally as a result of $798.3 million of net income, $23.6 million of net benefit plan obligation adjustments and $10.8 million of share-based compensation transactions, partially offset by $101.7 million of net unrealized depreciation on investments, net of tax, and $19.1 million of net foreign currency translation adjustments.
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 U.S. Reinsurance operation writes property and casualty reinsurance and specialty lines of business, including Marine, Aviation, Surety and A&H business, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies primarily within the U.S. The International operation writes non-U.S. property and casualty reinsurance through Everest Re’s branches in Canada, Singapore and through offices in Brazil, Miami and New Jersey. The Insurance operation writes property and casualty insurance directly and through general agents, brokers and surplus lines brokers within the U.S and Canada.
Gross written premiums increased by 39.3% to $1,826.0 million in 2013 from $1,310.7 million in 2012, primarily due to the impact of a large Florida quota share reinsurance contract, new business opportunities, particularly for contracts with catastrophe exposed risks and higher subject premium on casualty quota share business as rates began to rise in these markets. Excluding the impact of the Florida quota share reinsurance contract, gross written premiums increased 18.9%. Net written premiums increased by 37.9% to $909.6 million in 2013 compared to $659.7 million in 2012, which is in line with the increase in gross written premiums. Premiums earned increased 16.6% to $842.3 million in 2013 compared to $722.4 million in 2012. Premiums earned were only minimally impacted by the Florida quota share reinsurance contract that affected written premiums. The change in premiums earned was relatively comparable to net written premiums, excluding the impact from the Florida quota share reinsurance contract.
Segment Expenses. Commission and brokerage increased by 26.4% to $201.9 million in 2014 compared to $159.7 million in 2013. These variances were due to the impact of the increases in premiums earned, higher contingent commissions and changes in the mix of business. Segment other underwriting expenses decreased slightly to $45.6 million in 2014 from $47.2 million in 2013.
Premiums. Gross written premiums increased by 19.0% to $1,630.4 million in 2014 compared to $1,370.6 million in 2013, primarily due to new quota share contracts, partially offset by the negative impact of approximately $47.9 million from the movement of foreign exchange rates. Net written premiums increased by 0.4% to $612.2 million in 2014 compared to $610.1 million in 2013. The variance of the change in gross written premiums compared to the change in net written premiums is due to a higher utilization of reinsurance related to the new quota share contracts. Premiums earned increased 1.6% to $601.0 million in 2014 compared to $591.7 million in 2013. 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.
Gross written premiums increased by 13.3% to $1,370.6 million in 2013 compared to $1,209.5 million in 2012, primarily due to growth in Latin and South America business. Net written premiums increased by 10.8% to $610.1 million in 2013 compared to $550.7 million in 2012, which is consistent with the increase in gross written premiums. Premiums earned increased 3.4% to $591.7 million in 2013 compared to $572.5 million in 2012. 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.
Gross written premiums increased by 18.3% to $1,240.8 million in 2013 compared to $1,049.2 million in 2012. This increase was primarily driven by California workers’ compensation, crop and non-standard auto business. Net written premiums increased by 24.2% to $597.7 million in 2013 compared to $481.2 million in 2012. The larger increase in net written premiums compared to gross written premiums is mainly due to less use of reinsurance, particularly on the crop business. Premiums earned increased 19.5% to $572.3 million in 2013 compared to $479.0 million in 2012. 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. There were no current year catastrophe losses in 2014. The $0.5 million of current year catastrophe losses for 2013 were due to the Canadian floods.
Segment Expenses. 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.