The Company also rents office space totaling approximately 344,872 square feet in Atlanta, Boston, Burlington (VT), Chicago, Columbus (OH), Dallas, Florham Park (NJ), Hartford, Honolulu, Kansas City (KS), Los Angeles, Minneapolis, New York, Philadelphia, San Francisco, Seattle, Woodland Hills (CA), Beijing, Bermuda, Brussels, Johannesburg, London, Melbourne, Montreal, Moscow, Sao Paulo, Singapore, Sydney, Tokyo, and Toronto.
Set forth below are five years of selected financial information derived from the audited consolidated financial statements and related notes of the Company. The statutory data have been derived from statutory financial statements. Such statutory financial statements are prepared in accordance with statutory accounting principles, which differ from GAAP. For additional information, see the Consolidated Financial Statements of the Company, and the related notes thereto included elsewhere in this report.
YEAR ENDED DECEMBER 31, 2000, COMPARED WITH YEAR ENDED DECEMBER 31, 1999
The Company incurred a net loss to common stockholder of $64.4 million for the year ended December 31, 2000 compared to a net loss of $101.0 million in 1999.
The Company's net premiums written increased 10.5% to $3,211.7 million for the year ended December 31, 2000, from $2,905.7 million in 1999. RiskPartners experienced a 18.8% increase in net premiums written to $589.2 million for the year ended December 31, 2000, from $495.8 million for the same period in 1999. This increase was primarily attributable to a $35.0 million increase in RiskPartners' treaty business, a $45.4 million increase in its facultative business, and a $55.3 million increase in its direct business, offset by a $42.3 million decrease in its finite risk writings. HealthCare experienced an increase in treaty net premiums written to $329.1 million for the year ended December 31, 2000, from $123.1 million for the same period in 1999. International Operations experienced a 14.9% increase in net premiums written to $588.0 million for the year ended December 31, 2000, from $511.9 million for the same period in 1999. This increase was primarily attributable to a $109.5 million increase in International Operation's treaty business, partially offset by a $29.9 million decrease in its finite risk writings. These increases were partially offset by a 5.6% decrease in net premiums written in DICO to $1,640.3 million for the year ended December 31, 2000, from $1,737.6 million for the same period in 1999. This decrease was attributable to a $192.4 million decrease in DICO's finite risk business and a $89.3 million decrease in its treaty business, partially offset by a $167.3 million increase in facultative writings.
The Company's net premiums earned increased 10.7% to $3,240.2 million for the year ended December 31, 2000, from $2,927.5 million in 1999. The increase in premiums earned was primarily attributable to the increase in net premiums written and the timing of premiums earned on business in force.
Underwriting expense, which consists of commission expense plus operating expense, increased 13.7% to $990.4 million for the year ended December 31, 2000, from $870.7 million in 1999. This increase included a 26.2% increase in commission expense to $751.4 million for the year ended December 31, 2000 from $595.3 million in 1999. This increase was primarily attributable to the increase in net premiums earned, in addition to a lower commission ratio on several large, retrospectively rated contracts in the 1999 period. Operating expenses decreased 13.2% to $239.0 million for the year ended December 31, 2000 from $275.4 million for 1999, primarily due to a decrease in overhead costs.
The Company experienced an underwriting loss (net premiums earned minus losses and LAE incurred and underwriting expenses) of $563.1 million for the year ended December 31, 2000, compared to an underwriting loss of $597.6 million in 1999. The Company's loss ratio decreased to 86.8% for the year ended December 31, 2000 from 90.7% in 1999, while the underwriting expense ratio increased to 30.6% in 1999 from 29.7% in 1999. The combined ratio for the year ended December 31, 2000, decreased to 117.4% from 120.4% in 1999.
The Company realized net capital gains of $104.9 million for the year ended December 31, 2000, compared to net capital gains of $82.9 million in 1999. The 2000 period included net capital gains of $86.4 million on the sale of common stock, and $23.6 million on the sale of bonds. The 1999 period included net capital gains of $87.9 million on the sale of common stock, offset by net capital losses of $3.8 million on the sale of bonds.
year ended December 31, 1999, from $1,588.8 million for the same period in 1998. This increase was primarily attributable to DICO, which increased treaty net written premiums 22.4% to $1,277.8 million for the year ended December 31, 1999, from $1,044.1 million for the same period in 1998, as a result of retrospective premium adjustments on several reinsurance contracts. The Company's two other major business segments, RiskPartners, the Company's alternative market operation, and International Operations, also had increased treaty net premium writings: RiskPartners increased treaty net written premiums 62.8% to $207.4 million for the year ended December 31, 1999, from $127.4 million for the same period in 1998, and International Operations increased treaty net written premiums 11.9% to $467.0 million for 1999, from $417.3 million for 1998.
When a claim is reported to a ceding company, its claims personnel establish a "case reserve" for the estimated amount of the ultimate payment. The estimate reflects the informed judgment of such personnel based on general insurance reserving practices and on the experience and knowledge of such personnel regarding the nature and value of the specific type of claim. The Company, in turn, typically establishes a case reserve when it receives notice of a claim from the ceding company. Such reserves are based on an independent evaluation by the Claims Division, taking into consideration coverage, liability, severity of injury or damage, jurisdiction, an assessment of the ceding company's ability to evaluate and handle the claim and the amount of reserves recommended by the ceding company. Case reserves are adjusted periodically by the Claims Division based on subsequent developments and audits of ceding companies.
ASBESTOS, ENVIRONMENTAL-RELATED AND OTHER LATENT LIABILITY CLAIMS. American Re-Insurance's underwriting results have been adversely affected by claims developing from latent liability exposures. Reserves established by American Re-Insurance for latent liability exposures necessarily have reflected the uncertainty inherent in estimating the ultimate future claim amounts arising from these types of exposures and the lack of credible actuarial methods to measure and quantify these exposures. American Re-Insurance's difficulty in accurately quantifying these exposures was attributable to the need for latent liability exposures to be first quantified by the insured party and then the primary insurer before the information was made available to the reinsurer.
The Company had reserves for latent liability exposures, prior to cession to the Cover, at December 31, as follows: