Net investment income increased $88.3 million, or 33.7%, to $350.3 million in 2010, compared with net investment income of $262.1 million in 2009, primarily as a result of a $73.9 million increase in investment income from our limited partnerships. Net pre-tax investment income, as a percentage of average invested assets, was 4.4% in 2010, compared to 3.4% for 2009.
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by $3.6 million, or 1.1%, in 2011 compared to the same period in 2010. The variance was primarily the result of fluctuations in the mix of business and a change in the affiliated quota share agreement.
Other Underwriting Expenses. Other underwriting expenses were $154.3 million, $139.8 million and $142.6 million in 2011, 2010 and 2009, respectively. The increase in other underwriting expenses for 2011 compared to 2010 was mainly due to expenses of Heartland, which was acquired in January, 2011. The expenses for 2010 and 2009 were comparable.
Income Tax Expense (Benefit). We had an income tax benefit of $170.7 million and $36.6 million in 2011 and 2010, and an income tax expense of $129.4 million in 2009. Our income tax is primarily a function of the statutory tax rates coupled with the impact from tax-preferenced investment income. Variations in our effective tax rate generally result from changes in the relative levels of pre-tax income. The decrease in tax year over year was primarily attributable to the impact on taxable income from the previously mentioned catastrophe losses.
Our net loss was $202.8 million in 2011 compared to a net income of $265.4 million in 2010. The variance was primarily driven by higher catastrophe losses in 2011 in addition to the other components discussed above.
Our net income was $265.4 million and $395.9 million in 2010 and 2009, respectively. The decrease was primarily driven by a few large catastrophe losses in 2010 compared to no similar catastrophe events in 2009 and the realized gain on debt repurchase in 2009, partially offset by an increase in net realized capital gains and a reduction in income taxes.
Our combined ratio increased by 24.6 points to 132.2% in 2011 compared to 107.6% in 2010. The loss ratio component increased by 23.2 points in 2011, over the same period last year, principally due to higher current year catastrophe losses as a result of the Japan earthquake, New Zealand earthquake, Thailand floods, U.S. storms and the Australia floods. The commission and brokerage expense ratio increased slightly to 18.9% in 2011 compared to 18.5% in 2010. The other underwriting expense ratio component increased to 8.6% in 2011 compared to 7.6% in 2010 due primarily to the acquisition of Heartland.
of other-than-temporary impairments on fixed maturity securities. The losses in 2011 and 2010 included the impact of selling part of our municipal bond portfolio as credit concerns arose in this market sector. We were able to carry the 2010 realized losses back for income tax purposes to offset previously realized gains. This carry back availability expired at the end of 2010. In 2009, we recorded $80.3 million of gains due to fair value re-measurements on fixed maturity and equity securities and other invested assets, partially offset by $17.9 million of net realized capital losses from sales of fixed maturity and equity securities and $5.5 million of other-than-temporary impairments on fixed maturity securities.
Premiums. Gross written premiums decreased by 3.5% to $1,346.8 million in 2011 from $1,395.4 million in 2010, primarily due to reduced reinsurance premiums for accident and health, crop and marine business, partially offset by a $24.4 million increase in reinstatement premiums due to higher catastrophe loss activity in the period. Net written premiums decreased 11.0% to $688.5 million in 2011 compared to $773.6 million in 2010, primarily due to the decrease in gross written premiums and a higher percentage of premium ceded under the affiliated quota share agreement. Premiums earned decreased 10.3% to $697.7 million in 2011 compared to $777.7 million in 2010, primarily due to the decline in net written premiums.
Incurred losses were $66.6 million (17.7 points) higher at $623.1 million in 2011 compared to $556.5 million in 2010, primarily as a result of the $159.1 million (23.0 points) increase in current year catastrophe losses, largely due to the Japan and New Zealand earthquakes, U.S. Midwest tornadoes, Hurricane Irene and Thailand floods. Partially offsetting this increase, the current year attritional losses decreased $70.0 million (3.2 points), primarily due to a shift in the mix of business, with a higher level of excess of loss business in the current year, which carries a lower attritional loss ratio, than pro rata business as well as the decline in earned premiums.
Incurred losses were $115.8 million (17.6 points) higher at $556.5 million in 2010 compared to $440.7 million in 2009, primarily as a result of the $58.1 million (10.1 points) increase in current year attritional losses, reflective of current competitive market conditions, $34.1 million (4.5 points) increase in prior year attritional losses and a $24.0 million (3.1 points) increase in catastrophe losses, due to the New Zealand and Chilean earthquakes. The increase in prior years’ attritional losses was primarily driven by reserve strengthening in casualty lines for construction liability claims.
Segment Expenses. Commission and brokerage expenses decreased 7.9% to $156.0 million in 2011 compared to $169.3 million in 2010. This decrease was primarily due to the decline in premiums earned. Segment other underwriting expenses decreased to $39.3 million in 2011 compared to $42.5 million for the same period in 2010. This decline was due to reduced operating costs for the segment.
Segment Expenses. Commission and brokerage expenses increased to $40.4 million in 2011 compared to $29.6 million in 2010. These increases were primarily the result of an increase in net premiums earned and changes in distribution, mix of business and ceded reinsurance. Segment other underwriting expenses in 2011 increased to $87.7 million from $69.7 million in 2010. These increases were primarily due to the expenses of the newly acquired Heartland.
Premiums. Gross written premiums increased by 3.0% to $1,242.6 million in 2011 compared to $1,207.0 million in 2010, primarily due to the effects of foreign exchange. Eliminating this effect, premiums were essentially flat. Growth from increased rate levels, particularly in regions recently affected by catastrophe losses was offset by the termination of business that did not meet our current pricing targets. Net written premiums decreased by 4.1% to $615.1 million in 2011 compared to $641.4 million in 2010, primarily due to the change in our affiliated quota share agreement. Premiums earned increased by 1.7% to $636.7 million in 2011 compared to $626.3 million in 2010. 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 increased by 11.3% to $1,207.0 million in 2010 compared to $1,084.5 million in 2009, due to continued strong growth in premiums written through the Brazil, Miami and New Jersey offices, a $42.7 million increase; Asia, a $55.7 million increase; and Canada, a $24.2 million increase; resulting from a combination of new business, rate increases in select areas, and economic and insurance growth in some markets. Also contributing to the increase was $16.0 million in reinstatement premiums from the Chilean earthquake and Calgary hailstorm. Net written premiums increased by 8.8% to $641.4 million in 2010 compared to $589.7 million in 2009, principally as a result of the increase in gross written premiums. Premiums earned increased by 6.7% to $626.3 million in 2010 compared to $586.7 million in 2009 consistent with the trend noted for net written premiums.
Incurred losses and LAE increased 52.4% to $856.1 million in 2011 compared to $561.9 million in 2010. The increase was principally due to a $357.5 million (55.5 points) increase in current year catastrophes (Japan and New Zealand earthquakes, the Thailand and Australia floods, the wildfire loss in Alberta, Canada and Hurricane Irene), compared to the 2010 reported catastrophe losses (Chile earthquake and Australia hailstorms). The current year attritional loss ratio decreased to 47.6% in 2011 from 55.1% in 2010, primarily due to a shift in the mix of business towards property, catastrophe and excess of loss business, which generally carries a lower loss ratio. Prior years’ attritional losses decreased by $29.9 million (4.6 points) due to favorable development on non-catastrophe property business in Singapore and other international markets.
Incurred losses and LAE increased 68.6% to $561.9 million in 2010 compared to $333.2 million in 2009. The increase was principally due to a $230.9 million (36.6 points) increase in current year catastrophes related to the Chilean earthquake, the Australian hailstorms and floods, the New Zealand earthquake, and the Canadian hailstorm compared to the absence in 2009 of any similar large events. Attritional losses also increased primarily due to the increased premiums earned and higher expected loss ratios, which were partially offset by favorable development of prior years’ attritional reserves.