We are a Cayman Islands specialty property and casualty reinsurer that provides reinsurance solutions through our reinsurance subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS. Our more recently organized new subsidiary, Oxbridge Re NS, which was incorporated on December 22, 2017 to function as a reinsurance sidecar which increases the underwriting capacity of Oxbridge Reinsurance Limited. Oxbridge Re NS commenced operations on June 1, 2018 and issued participating notes to third-party investors, the proceeds of which was utilized to collateralize a quota-share of Oxbridge Reinsurance Limited’s reinsurance obligations. We focus on underwriting fully-collateralized reinsurance contracts primarily for property and casualty insurance companies in the Gulf Coast region of the United States, and globally through ILW’s. We specialize in underwriting medium frequency, high severity risks, where we believe sufficient data exists to analyze effectively the risk/return profile of reinsurance contracts.
When compared with the record losses of 2017 due to Hurricanes Harvey, Irma and Maria, the indications at the start of 2018 were that it would be a more moderate year. However, the second half of the year saw an accumulation of billion-dollar losses from floods, tropical cyclones in the US and Japan, wildfires and earthquakes. The overall economic impact is estimated to be US$ 160bn, of which US$ 80bn was insured.
The Company earns management fee income from providing administrative and management services for the reinsurance side-car operations. The Company is also entitled to a performance fee should the side-car underwriting results be profitable for a specific treaty period.
The following table summarizes our results of operations for the years ended December 31, 2018 and 2017 (dollars in thousands, except per share amounts):
Losses Incurred. Losses incurred for the year ended December 31, 2018 decreased $32.4 million to $10 million, from $42.4 million for the year ended December 31, 2017. The decrease is primarily due to limit losses being suffered on a smaller sized reinsurance portfolio during the year ended December 31, 2018, when compared with the reinsurance portfolio that suffered limit losses during the year ended December 31, 2017.
Loss Ratio. The loss ratio is the ratio of losses and loss adjustment expenses incurred to net premiums and ILW income earned and measures the underwriting profitability of our reinsurance business. The loss ratio increased from 180% for the year ended December 31, 2017 to 268.6% (214.9% when taking Series 2018-1 notes into consideration) for the year ended December 31, 2018. The increase is due to the limit losses suffered during year ended December 31, 2018 on a lower denominator in net premiums earned, when compared with the prior fiscal year.
Expense Ratio. The expense ratio is the ratio of policy acquisition costs, other underwriting expenses and general and administrative expenses to net premiums and ILW income earned. We use the expense ratio to measure our operating performance. The expense ratio increased from 8.5% for the year ended December 31, 2017 to 41.5% for the year ended December 31, 2018. The increase is due to the more significant reduction in net premiums than the decrease in policy acquisition costs as recorded during the year ended December 31, 2018, when compared with the prior fiscal year.
Investments. As of December 31, 2018, our available for sale securities decreased marginally by $5.4 million, or 82%, to $1 million, from $6.4 million as of December 31, 2017. The decrease is primarily a result of net sales of fixed-maturity and equity securities during the year ended December 31, 2018.
Reserve for losses and loss adjustment expenses. As of December 31, 2018, our reserve for losses and loss adjustment expenses decreased by $728 thousand, or 15%, to $4.1 million, from $4.8 million at December 31, 2017. The decrease is wholly due to the timely settlement of limit losses on 2017 catastrophe events more than offset by new reserves set up for 2018 catastrophe events.
Unearned Premiums Reserve. As of December 31, 2018, our unearned premiums reserve decreased by $2 million, or 100%, to $Nil, from $2 million at December 31, 2017. The decrease is due to the acceleration of premium recognition due to the full limit losses on all of our contracts.
We are organized as a holding company with substantially no operations at the holding company level. Our operations are conducted through our reinsurance subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS which underwrites risks associated with our property and casualty reinsurance programs. We have minimal continuing cash needs at the holding company level, with such expenses principally being related to the payment of administrative expenses, and shareholder dividends, if any. There are restrictions on Oxbridge Reinsurance Limited’s and Oxbridge Re NS’ ability to pay dividends which are described in more detail below.
Our cash flows from operating, investing and financing activities for the years ended December 31, 2018 and 2017 are summarized below.