The 2009 renewals rates, particularly for property catastrophe and retrocessional covers and in international markets, were generally firmer compared to a year ago.
Premiums. Gross written premiums increased by $439.3 million, or 15.2%, in 2009 compared to 2008, reflecting an increase of $368.6 million in our reinsurance business and $70.8 million in our insurance business. The increased reinsurance business was primarily attributable to increased rates on property business, in both the international and U.S. markets, new crop hail quota share treaty business, expanded participation on renewal contracts and new writings as ceding companies continued to favor reinsurers, such as Everest, with strong financial ratings. The increase in insurance premiums were primarily in the workers’ compensation and financial institution D&O and E&O lines of business, which were new offerings for us in 2009. Net written premiums increased by $59.9 million, or 3.6%, in 2009 compared to 2008. The disproportionate variance in net written premiums as compared to gross written premiums is primarily due to the increase in cessions under the affiliated quota share agreement. Premiums earned decreased $96.7 million, or 5.1%, in 2009 compared to 2008. The change in net 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.
development, period over period. Prior years’ attritional losses increased $135.3 million, principally as a result of $85.3 million of development on loss reserves for a run-off auto loan credit insurance program.
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees decreased by $54.0 million, or 13.6%, in 2009 compared to the same period in 2008. The change in this directly variable expense was influenced by the decline in net earned premiums, changes in the mix of business and increased cessions under the affiliated quota share agreement.
Other Underwriting Expenses. Other underwriting expenses were $150.3 million in 2009 compared to $129.9 million in 2008. The increase was primarily due to the increase in staff and staff related expenses as we continue to grow our direct book of business. In addition, other underwriting expenses included corporate expenses, which are expenses that are not allocated to segments, of $7.7 million and $5.6 million for 2009 and 2008, respectively.
Our combined ratio decreased by 17.1 points to 88.9% in 2009 compared to 106.0% in 2008. The loss ratio component decreased 16.7 points in 2009 compared to the same period last year, principally due to the significant decrease in catastrophe losses and lower current year attritional losses as a result of the mix and blend of business. The commission and brokerage ratio component decreased by 1.9 points in 2009 compared to the same period last year, due to mix of business, while the other underwriting expense ratio component increased by 1.5 points in 2009 compared to 2008.
Stockholder's equity decreased by $364.5 million to $2,203.0 million at December 31, 2008 from $2,567.5 million at December 31, 2007, due to $179.7 million of unrealized depreciation, net of tax, on our investments, at market value; a net loss of $124.8 million; $30.5 million of foreign currency translation adjustments; $25.2 million of pension adjustments and $10.0 million of dividends, partially offset by $5.6 million of share-based compensation transactions. The increase in unrealized depreciation was due to the financial market liquidity crisis that resulted in significantly increased credit spreads and dramatic decrease in corporate and municipal security values.
Net investment income decreased 27.8% to $262.1 million in 2009 from $363.1 million in 2008, primarily due to approximately $747.0 million of transferred investments at the end of 2008 in conjunction with a loss portfolio transfer agreement with an affiliate, lower yields on new money and losses from our limited partnership investments that principally invest in public and non-public securities, both equity and debt.
Through our subsidiaries, we operate in four segments: U.S. Reinsurance, U.S. Insurance, Specialty Underwriting and International. The U.S. Reinsurance operation writes property and casualty reinsurance, on both a treaty and facultative basis, through reinsurance brokers, as well as directly with ceding companies within the U.S. The U.S. Insurance operation writes property and casualty insurance primarily through general agents, brokers and surplus lines brokers within the U.S. The Specialty Underwriting operation writes A&H, marine, aviation and surety business within the U.S. and worldwide through brokers and directly with ceding companies. The International operation writes non-U.S. property and casualty reinsurance through Everest Re’s branches in Canada and Singapore and offices in Miami and New Jersey.
Gross written premiums decreased by 19.7% to $957.9 million in 2008 from $1,193.5 million in 2007, primarily due to a $104.9 million (14.7%) decrease in treaty property volume, a $71.7 million (21.6%) decrease in treaty casualty volume and a $57.9 million (39.9%) decrease in facultative volume. Property premiums were lower due to increased common account reinsurance protections, particularly on one Florida quota share account and two quota share non-renewals. Treaty casualty premium was lower than last year as this book was reduced to a group of core accounts in response to the then softer market conditions. Facultative volume decreased due to ceding companies retaining a greater portion of gross premiums and a marketplace that remained competitive. Net written premiums decreased 33.3% to $569.9 million in 2008 compared to $854.8 million in 2007, primarily due to the decrease in gross written premiums and increased cessions under the affiliated quota share agreements. Correspondingly, premiums earned decreased 27.1% to $685.1 million in 2008 compared to $939.7 million for 2007, consistent with the change in net written premiums.
Commission and brokerage expenses decreased 30.7% to $159.7 million in 2008 compared to $230.5 million in 2007, generally in line with the decrease in premiums earned. Segment other underwriting expenses for 2008 decreased slightly to $32.2 million from $33.3 million for 2007.
Incurred Losses and LAE. The following table presents the incurred losses and LAE for the U.S. Insurance segment for the periods indicated.
Commission and brokerage expenses increased by 6.0% to $68.2 million in 2008 compared to $64.3 million in 2007, principally due to higher commissions on two new programs. Segment other underwriting expenses in 2008 increased to $64.3 million compared to $58.2 million for 2007, primarily due to increased compensation costs associated with increased staff.
The following table presents the underwriting results and ratios for the Specialty Underwriting segment for the periods indicated.
Premiums. Gross written premiums decreased by 9.8% to $234.8 million in 2009 compared to $260.4 million for 2008, primarily due to a $33.7 million decrease in marine premiums and a $5.9 million decrease in surety premiums, partially offset by a $10.0 million increase in aviation premiums and a $2.7 million increase in A&H premiums. Net written premiums decreased by 20.7% to $132.9 million in 2009 compared to $167.7 million in 2008 due to the decrease in gross writings coupled with the increased cessions under the affiliated quota share agreement. Premiums earned decreased to $139.1 million in 2009 compared to $168.4 million in 2008. 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 decreased by 3.6% to $260.4 million in 2008 compared to $270.1 million in 2007. Aviation premiums decreased by $16.9 million (58.9%) owing to very competitive market conditions. A&H premiums decreased by $15.4 million (16.1%) largely due to lower premiums under certain quota share contracts where the ceding companies have culled their books to improve their loss experience. Marine premiums increased $19.8 million (19.8%) due to higher premiums on our quota share covers and improved rates across the book, while surety premiums were up $2.8 million or 6.1%. Net written premiums decreased by 9.5% to $167.7 million in 2008 compared to $185.4 million in 2007, as a result of the decrease in gross written premiums combined with the increased cessions under the affiliated quota share agreement. Premiums earned decreased by 8.9% to $168.4 million in 2008 compared to $184.9 million in 2007 as a result of the decline in net written premiums.
Commission and brokerage expenses decreased 7.5% to $40.9 million in 2008 compared to $44.3 million in 2007 due primarily to the increased cessions under the affiliated quota share agreement. Segment other underwriting expenses decreased slightly to $8.1 million in 2008 compared to $8.5 million in 2007.
Commission and brokerage expenses increased slightly to $129.7 million in 2008 compared to $126.7 million in 2007 despite a slight decline in premiums earned. The commission and brokerage ratio increased principally due to increased contingent commissions emanating from the profitable results. Segment other underwriting expenses in 2008 was $19.8 million compared to $18.6 million in 2007.