1999, we recorded a $368.9 million loss from discontinued operations attributable to the write-off of SNTL's investment in the five insurance companies seized and conserved by the CDI, as compared to a $4.8 million loss net of income tax benefit from discontinued operations in 1998. During 1999, we recorded a $11.4 million in dividend expense and accretion on preferred securities, as compared to $7.4 million in dividend expense and accretion on preferred securities net of income tax benefit in 1998.
The consolidated financial statements have been prepared in conformity with principles of accounting applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a result of the Chapter 11 filing and circumstances relating to this event, realization of assets and satisfaction of liabilities are subject to uncertainty. A plan of reorganization could materially change the amounts reported in the accompanying consolidated financial statements, which do not give effect to adjustments to the carrying values of assets and liabilities which may be necessary as a consequence of a plan of reorganization. The Company's ability to continue as a going concern is contingent upon, among other things, its ability to formulate a plan of reorganization that will be confirmed by the Bankruptcy Court, to achieve satisfactory levels of profitability and cash flow from operations and the preservation for, and utilization by, one or more of SNTL's former stockholders or creditors, of SNTL's NOLs, See "Business-Tax Net Operating Loss Carryforwards".
Other operating expenses increased $41.3 million or 645.3% to $47.7 million for the year ended December 31, 2000, as compared to the year ended December 31, 1999. The large increase is mainly due to the general and administrative expenses incurred by SNIS and SNIA as a result of the services performed pursuant to the UMA and CMA, respectively. No such services were performed by SNIS and SNIA in 1999.
Underwriting management expense was $39.2 million for the year ended December 31, 1999, as compared to $7.9 million for the year ended December 31, 1998. Since SNIS had no employees, it contracted the employees of the liquidating companies to perform the services of SNIS's front company business. SNIS agreed to reimburse the liquidating companies for an amount equal to the commission income SNIS received from the front company business. The $31.3 million increase in underwriting management expense is directly associated with the increase in the commission income from front company business as discussed above.
in investment income was due to an increase in the average assets available for investment in 1999 as opposed to 1998.
Discontinued operations for the year ended December 31, 1999 recorded a loss of $368.9 million, as compared to a net of income tax benefit loss of $4.8 million for the same period in 1998. The increase in loss in 1999 over 1998 is due to SNTL's $333.6 million disposal in 1999 of its investment in the five insurance companies that the CDI seized and conserved, see Business-California Insurance Department Seizure and Conservation. In addition, SNTL recognized a $35.3 million loss in operations during 1999, as compared to a $4.8 million loss net of income tax benefit in 1998. The table below summarizes the components that make up the results of discontinued operations. See "Business-Discontinued Insurance Company Operations."
During the year ended December 31, 2000, net cash provided by operating activities was $7.6 million as opposed to cash used of $3.0 million in the year ended December 31, 1999. The $10.6 million increase in cash provided is primarily due to the $10.5 million of consideration received by SNIS from the CDI pursuant to the Global Settlement Agreement in September 2000. See "Business-Global Settlement Agreement." In addition, SNTL received $1.9 million in 2000 from the liquidating companies as a result of the CCIC/CCCC merger termination. See "Business-Commercial Compensation Casualty Company Merger and Distribution." At December 31, 2000, we had total cash and cash equivalents of $24.2 million. Reorganization costs for the year ended December 31, 2000 consisted primarily of professional fees. Cash paid for reorganization items during the year ended December 31, 2000 amounted to $2.1 million.
Net cash provided by financing activities was $101 thousand during the year ended December 31, 2000, as compared to cash generated of $654 thousand in 1999. The $553 thousand decrease in cash provided is primarily due to $269 thousand of stock options exercised in 1999 and $230 thousand of additional activities from the Employee Stock Purchase Plan in 1999 over 2000.
In November of 1999, SNTL entered into agreements with Thomas I. Boggs, Jr., Arnold J. Senter, William L. Gentz, Robert E. Nagle and J. Chris Seaman, each of whom had purchased shares of SNTL in the 1998 rights offering. SNTL lent funds to the participants sufficient to pay the purchase price for the common stock and any resulting tax liability and the participants signed a promissory note, and pledged to SNTL, as collateral, stock options, warrants and shares of common stock and restricted stock (including shares of common stock purchased in the rights offering). Under the terms of this pledge, if the amount outstanding under any promissory note (including interest) exceeds the value of the collateral, then the borrower is obligated to either prepay a portion of the promissory note or pledge additional securities as collateral, in either case, in an amount equal to the shortfall. The agreements provided that the collateral securing the promissory notes would be valued at no less than $10 per share per share in the event that the note became due and payable upon the occurrence of certain events, including conservation of SNTL's insurance companies, and no more than $20 per share in any event. Following the conservation and seizure in March 2000, the Company exercised its right to apply the collateral, valued at $10 per share pursuant to the agreements, to the amounts due and payable under the notes.
On December 3, 1997, the Trust, a wholly owned subsidiary of SNTL, issued its Trust Preferred Securities, having an aggregate liquidation amount of $105 million, in a private placement and also issued to SNTL, for an aggregate consideration of approximately $3.25 million, all of the Trust's common securities. The proceeds from the sale of these securities were used by the Trust to purchase SNTL's Senior Subordinated Notes. On January 16, 1998, SNTL and the Trust completed the registration with the Securities and Exchange Commission of an exchange offer for the outstanding Trust Preferred Securities, Senior Subordinated Notes and related Company Guarantee, pursuant to which substantially all of these securities were exchanged for substantially similar securities.
classified on our consolidated balance sheet at December 31, 2000, under the category of liabilities subject to compromise under reorganization proceedings. As a result of the commencement of bankruptcy proceedings, the Trustee of the Trust has the right at any time to cause the holders of Preferred Securities to exchange their securities for the Senior Subordinated Notes held by the Trust.
The effect of inflation on our revenues and net income during the years ended December 31, 2000, 1999, and 1998 was not significant.