We lease office space in Pembroke, Bermuda, where our principal executive office is located. We and our subsidiaries also lease office space in the U.S., U.K., Italy, Brazil, the United Arab Emirates, Switzerland, Malta, Singapore and various geographic locations throughout the world. The properties are leased on terms and for durations that are reflective of commercial standards in the communities where these properties are located. We believe the facilities we occupy are adequate for the purposes in which they are currently used and are well maintained.
The following discussion should be read in conjunction with the consolidated financial statements and related notes beginning on page. This discussion contains forward-looking statements that involve risks and uncertainties. Our future results may differ materially from those disclosed herein as a result of significant risks and uncertainties and various factors described in this report. These risks and uncertainties are discussed in greater detail in Item 1A, “Risk Factors.”
Certain amounts disclosed below vary from those previously provided by the Company, including those furnished as an exhibit to the Form 8-K the Company filed with the SEC on February 17, 2021, as a result of the correction of certain immaterial errors. The adjustments to the financial results primarily related to foreign currency exchange gains and losses and the income tax provision, which are not included in the Company’s operating earnings, a non-U.S. GAAP financial measure. For further discussion about these revisions to previously reported amounts, see Note 2, “Revisions of Previously Issued Financial Statements.”
For the year ended December 31, 2020, we reported a net loss attributable to common shareholders of $58.7 million ($1.70 per diluted common share) as compared to a net loss of $14.1 million ($0.41 per diluted common share) for the year ended December 31, 2019. For the year ended December 31, 2018, we reported net income of $57.0 million ($1.65 per fully diluted share).
The global COVID-19 pandemic has resulted in and is expected to continue to result in significant disruptions in economic activity and financial markets. COVID-19 has directly and indirectly adversely affected the Company and may continue to do so for an uncertain period of time. Beginning in March 2020, the pandemic and related economic conditions began to impact our results of operations. For the year ended December 31, 2020, our underwriting results included net pre-tax catastrophe losses of $73.2 million associated with COVID-19 and related economic conditions, primarily resulting from contingency and property exposures in the Company’s International Operations and property exposures in its U.S. Operations. Property losses relate to sub-limited affirmative business interruption coverage, primarily in certain International markets, as well as expected costs associated with claims handling. Premium levels in certain lines in both our U.S. and International Operations reporting segments has been negatively impacted by the challenges of the economic slowdown. Conversely, our current accident year non-catastrophe loss results saw reduced claim activity during the year ended December 31, 2020 due, in part, to the impact of the COVID-19 pandemic. Our liquidity and capital resources were not materially impacted by COVID-19 and related economic conditions during the year ended December 31, 2020. The extent to which COVID-19 will continue to impact our business will depend on future developments that cannot be predicted, and while we have recorded our best estimates of this impact as of and for the year ended December 31, 2020, actual results in future periods could materially differ from those disclosed herein.
In presenting our results in the following discussion and analysis of our results of operations, we have included certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the SEC. We believe that these non-GAAP measures, specifically the current accident year non-catastrophe loss, expense and combined ratios, which may be defined differently by other companies, better explain our results of operations in a manner that allows for a more complete understanding of the underlying trends in our business. However, these measures should not be viewed as a substitute for those determined in accordance with United States generally accepted accounting principles ("GAAP"). Reconciliations of these financial measures to their most directly comparable GAAP measures are included in the tables below.
(2) Catastrophe losses’ percentage point impact are calculated as the difference between the reported combined ratio and the combined ratio excluding incurred catastrophe losses and catastrophe-related premium adjustments.
Gross written premiums increased $103.1 million, or 3.3%, for the year ended December 31, 2020, as compared to the year ended December 31, 2019. Our U.S. Operations experienced growth in all major lines of business except Liability during 2020, as its gross written premiums increased $134.5 million, or 7.2%, during the comparative periods. The majority of the top line growth in U.S. Operations was concentrated in Professional lines of business. International Operations gross written premiums decreased $31.7 million, or 2.5%, in 2020 as compared to 2019, primarily due to strategic reductions in our Property and Specialty lines during 2020, partially offset by a 21.8% increase in Liability lines, as well as a modest increase in Professional lines. Both U.S. Operations and International Operations saw overall rate increases for the year ended December 31, 2020.
Our gross written and earned premiums are further discussed by reporting segment and major lines of business below under the heading “Segment Results.”
Total invested assets at December 31, 2020 were $5,115.5 million, net of $140.3 million of invested assets attributable to our Syndicate 1200 and 1910 trade capital providers. Total invested assets at December 31, 2019 were $4,940.7 million, net of $156.8 million of invested assets attributable to our Syndicate 1200 and 1910 trade capital providers.
Consolidated net realized investment gains of $80.1 million for the year ended December 31, 2019 consisted of $142.1 million in realized gains from the sale of invested assets, including $129.1 million from the sale of equity securities. The majority of these asset sales were recognized during the fourth quarter of 2019, primarily as a result of a shift in capital management and tax planning strategies, and were partially offset by an associated $40.8 million decrease in the fair value of equity securities. Additionally, for the year ended December 31, 2019, we recognized $20.3 million in other-than-temporary impairment losses related to fixed maturity securities. The remaining $0.9 million net realized investment loss related to net foreign currency exchange losses.
Consolidated losses and loss adjustment expenses were $1,208.8 million and $1,220.7 million for the years ended December 31, 2020 and 2019, respectively. The consolidated loss ratio for the year ended December 31, 2020 was 67.9%, compared to 70.6% for the same period in 2019, driven by lower net unfavorable prior-year reserve development in 2020 as compared to 2019 (7.6 percentage points), as well as a lower current accident year non-catastrophe loss ratio (3.4 percentage points), partially offset by increased catastrophe losses (8.3 percentage points), which included COVID-19-related losses. Catastrophe losses for the year ended December 31, 2020 included $73.2 million for COVID-19-related claims, with the remaining $106.0 million being primarily attributable to Hurricanes Laura, Delta, Zeta and Sally, wildfires, and other U.S. and international events.
The following table summarizes the above referenced prior-year loss reserve development for the year ended December 31, 2020 with respect to net loss reserves by line of business as of December 31, 2019. The unfavorable prior-year reserve development in general liability lines was concentrated in U.S. Operations ($25 million) and Run-off Lines ($21 million), with a smaller amount of unfavorable prior-year reserve development coming from International Operations ($13 million). The favorable prior-year reserve development in surety lines relates to our U.S. Operations reporting segment. Our losses and loss adjustment expenses, including the prior-year loss reserve development shown in the following table, are further discussed by reporting segment under the heading “Segment Results” below.
Our underwriting, acquisition and insurance expenses are further discussed by reporting segment below under the heading “Segment Results.”
Consolidated interest expense was $26.9 million and $34.1 million for the years ended December 31, 2020 and 2019, respectively. The year-over-year decrease was primarily attributable to significant reductions in short-term LIBOR rates during 2020, as well as a lower debt balance due to paying off our $125 million term loan in September 2020.
Consolidated foreign currency exchange losses were $15.4 million for the year ended December 31, 2020, compared to consolidated foreign currency exchange gains of $9.8 million for the year ended December 31, 2019. Consolidated foreign currency exchange losses were $3.9 million for the year ended December 31, 2018. The changes in the foreign currency exchange gains and losses were due to fluctuations of the U.S. Dollar, on a weighted average basis, against the currencies in which we transact our business.
For the year ended December 31, 2020, the foreign currency exchange losses were due to the U.S. Dollar weakening against the Euro, the British Pound, the Australian Dollar and the Canadian Dollar. For the year ended December 31, 2019, the foreign currency exchange gain was driven by the U.S. Dollar strengthening against the Euro and the Australian Dollar, partially offset by the U.S. Dollar weakening against the British Pound and the Canadian Dollar. For the year ended December 31, 2018, the foreign currency exchange loss was primarily driven by changes in our asset and liability positions for transactions denominated in the British Pound, Canadian Dollar and Australian Dollar, as well as the fluctuations in the U.S. Dollar against these currencies.
We incurred other corporate expenses of $5.8 million and $37.6 million during the years ended December 31, 2020 and 2019, respectively, in connection with the previously disclosed corporate governance and compensation matters, including responding to the 2019 subpoena from the SEC related to the Company’s disclosure of certain compensation-related perquisites received by the Company’s former chief executive officer. During the second quarter of 2020, the Company reached a settlement with the SEC related to its investigation, which required that the Company pay a $900,000 civil penalty, which is included in the other corporate expenses for the year ended December 31, 2020.
These non-recurring costs are included in the line item “Other corporate expenses” in the Company’s Consolidated Statements of Income (Loss), and have been excluded from the calculation of our expense ratio.
The consolidated income tax provision represents the income tax expense or benefit associated with our operations based on the tax laws of the jurisdictions in which we operate. Therefore, the consolidated provision for income taxes represents taxes on net income for our Belgium, Brazil, Ireland, Italy, Malta, Switzerland, U.K. and U.S. operations. The consolidated provision for income taxes was $7.7 million for the year ended December 31, 2020, compared to $14.1 million for the year ended December 31, 2019 and $4.0 million for the year ended December 31, 2018. The consolidated effective tax rates were (16.6)%, not meaningful and 6.6% for the years ended December 31, 2020, 2019 and 2018, respectively. The changes in the effective tax rates for the year ended December 31, 2020 as compared to the same period in 2019, and for the year ended December 31, 2019 as compared to the same period in 2018 were primarily related to the changes in concentration of jurisdictional mix of taxable income in the comparative periods. The consolidated provision for income taxes and the effective tax rates for the years ended December 31, 2019 and 2018 have been revised to correct certain immaterial errors in our historical financial statements primarily related to the Company’s allocation of certain corporate-level expenses to our subsidiary companies. For further discussion about the revisions to previously reported amounts, see Note 2, “Revisions of Previously Issued Financial Statements.”
•Specialty includes niche insurance coverages including marine & energy, accident & health and surety product offerings.
(1) For purposes of calculating the percentage points impact on the loss, expense and combined ratios, earned premiums were adjusted to exclude outward reinstatement premium adjustments of $6.4 million, $0 and $7.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.
The increase in gross written premiums for the year ended December 31, 2020 compared to the same period in 2019 was due to new business growth in inland marine and strong rate execution from the contract binding business unit and public entity program, and higher renewal retention in the risk-bearing habitational program, partially offset by lower production from the fronted habitational program. The increase in net earned premiums for the year ended December 31, 2020 compared to the same period in 2019 was driven by the premium growth achieved in inland marine, contract binding business units and programs in recent quarters, partially offset by $6.4 million of outward catastrophe-related reinsurance reinstatement premiums incurred in 2020.
The decrease in gross written premiums for the year ended December 31, 2020 compared to the same period in 2019 was due to the challenges of the current economic environment and pandemic-related economic slowdowns, which generally resulted in a lower exposure base and fewer new business opportunities in workers compensation lines, as well as remediation actions taken on the contract binding and grocery and retail units. These declines were partially offset by growth in general liability lines and environmental products. Net earned premiums decreased for the year ended December 31, 2020 compared to the same period in 2019, largely due to planned increases to ceded premium, as well as a production decline in the units that write coal mine workers compensation and the grocery and retail business. These units have lower reinsurance costs, thus having a larger impact on the decline in net earned premiums.
The following table summarizes the results of operations for the International Operations segment:
(1) For purposes of calculating the percentage points impact on the loss, expense and combined ratios, earned premiums were adjusted to exclude outward reinstatement premium adjustments of $1.2 million, $0.8 million, and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.
The decrease in gross written and net earned premiums for the year ended December 31, 2020 as compared to the same period in 2019 was due to targeted reductions in our U.S. Property Reinsurance book and continued optimization work in Syndicate 1200 and Europe, partially offset by an improved rate environment and increased new business accounts in our Bermuda Insurance operation.
The increase in gross written premiums for the year ended December 31, 2020 as compared to the same period in 2019 was due to new U.S. Casualty Treaty business and growth in our International Casualty Treaty business in our Reinsurance operation, as well as favorable rate changes in our Bermuda Insurance operation. Net earned premiums decreased in 2020 as compared to 2019 as the growth in gross written premiums was offset by additional outwards reinsurance, as well as the cancellation of several coverholders in Europe.
The current accident year non-catastrophe loss ratio for the years ended December 31, 2020 and 2019 were 54.4% and 63.7%, respectively. The improvement in 2020 primarily related to the results of re-underwriting actions across multiple divisions in Syndicate 1200, as well as improvements in our Reinsurance operations. The current accident year non-catastrophe loss ratio also benefited from rate increases earning through earned premiums.
Net favorable prior-year reserve development for the year ended December 31, 2020 was $6.2 million (1.1 percentage point) and primarily related to favorable development in Reinsurance, partially offset by unfavorable development in Bermuda Insurance. The favorable development in Reinsurance was due to experience on catastrophe losses from recent years and decreases on claims from older accident years. The unfavorable movement in Bermuda Insurance was driven by professional and liability losses. The net unfavorable prior-year reserve development for the year ended December 31, 2019 was $110.4 million (18.1 percentage points) and was primarily concentrated in our liability and professional lines. The charges impacted our Bermuda casualty and professional divisions, and our Syndicate 1200 and European operations. The charges in our Bermuda business stemmed from public utility business in our casualty division, which we previously exited, as well as updated estimates on a number of other casualty and professional claims based on new information received in the last three quarters of 2019. The new information included investigations regarding causes of the incidents leading to the losses, reports provided by outside counsel, audits of the underlying losses and recent court decisions, settlements and jury awards. The result was an increase in the number of claims with the potential for underlying losses to reach our attachment point. As it relates to Syndicate 1200, the adverse development generally related to businesses that we have previously exited or where aggressive remedial underwriting actions have been taken. The development related to large claims involving the marine and energy and liability divisions. Losses on small and medium enterprise package business were also higher than expected. As it relates to Europe, the adverse development primarily related to certain coverholders whose contracts were previously terminated or where aggressive remedial underwriting actions have been taken as well as unexpected movements in large professional liability losses. The unfavorable development during the year was also attributable to the results of ongoing audits, underwriting reviews, and updates from those coverholders, which included the identification of differences from original expectations with regard to the classes written, the distribution of writings by geography, and the rates charged by the coverholders.
Catastrophe losses for the year ended December 31, 2020 were $123.0 million (21.6 percentage points), which included reserves associated with COVID-19 of $66.7 million, primarily resulting from contingency exposures. The property losses relate to sub-limited affirmative business interruption coverage in certain International markets, as well as expected costs associated with potential litigation. The remaining catastrophe losses of $56.3 million for the year ended December 31, 2020 were mainly attributable to Hurricanes Sally and Laura with smaller losses from Hurricanes Delta and Zeta, wildfires in the U.S. and other U.S. and international events. Catastrophe losses for the year ended December 31, 2019 were $19.2 million (3.2 percentage points) and related to Hurricane Dorian, Typhoons Hagibis and Faxai, U.S. storms, and included losses from flooding.
Fee and other income and fee and other expense represent amounts we receive, and costs we incur, in connection with the management of third-party capital for our underwriting Syndicates at Lloyd’s. Fee and other income decreased for the year ended December 31, 2020 as compared to the same period in 2019 due to a reduction in external capital to support the Lloyd’s syndicates. Fee and other expense increased for the year ended December 31, 2020 as compared to the same period in 2019 due to an increase in governance costs related to managing the syndicates.
Through our subsidiary Argonaut, we are exposed to asbestos liability at the primary level through claims filed against our direct insureds, as well as through its position as a reinsurer of other primary carriers. Argonaut has direct liability arising primarily from policies issued from the 1960s to the early 1980s, which pre-dated policy contract wording that excluded asbestos exposure. The majority of the direct policies were issued on behalf of small contractors or construction companies. We believe that the frequency and severity of asbestos claims for such insureds is typically less than that experienced for large, industrial manufacturing and distribution concerns.
Losses and loss adjustment expenses for the year ended December 31, 2020 included $11.5 million of net unfavorable loss reserve development on prior accident years, of which $16.4 million was in asbestos and environmental lines and $7.2 million in other run-off lines, partially offset by $12.1 million of net favorable loss reserve development on prior accident years in risk management workers compensation.
Our insurance and reinsurance subsidiaries require liquidity and adequate capital to meet ongoing obligations to policyholders and claimants and fund operating expenses. During the year ended December 31, 2020, cash flow provided by operations was $71.9 million. Based on current premium volumes and other measures of capital deployed in our business, we determined we had excess capital and, therefore, returned capital to our shareholders through dividend payments to our shareholders. We believe our liquidity generated from operations and, if required, from our investment portfolio, will be sufficient to meet our obligations at least the next 12 months. We believe we have access to various sources of liquidity including cash, investments and the ability to borrow under our revolving credit facility.
Cash provided by operating activities can fluctuate due to timing differences in the collection of premiums and reinsurance recoveries and the payment of losses and expenses. For the years ended December 31, 2020 and 2019, cash provided by operating activities was $71.9 million and $182.8 million respectively. The decrease in cash flows provided by operating activities in 2020 compared to 2019 was attributable to various fluctuations within our operating activities, and primarily related to the timing of reinsurance recoveries, claim payments and premium cash receipts in the respective periods.
We invest excess cash in a variety of investment securities. As of December 31, 2020, our investment portfolio consisted of 78.1% fixed maturities, 3.4% equity securities, 8.2% other investments 10.3% short-term investments (based on fair value) compared to 71.2% fixed maturities, 2.7% equity securities, 9.5% other investments and 16.6% short-term investments as of December 31, 2019. We classify the majority of our investment portfolio as available-for-sale; resulting in these investments being reported at fair market value with unrealized gains and losses, net of tax, being reported as a component of shareholders’ equity. At December 31, 2020, no investments were designated as trading. No issuer (excluding United States Government and United States Governmental agencies) of fixed maturity or equity securities represents more than 6.9% of shareholders’ equity at December 31, 2020.
LOCs have been filed with Lloyd’s by trade capital providers as part of the terms of whole account quota share reinsurance contracts entered into by the trade capital providers. In the event such LOCs are funded, the outstanding balance would be the responsibility of the trade capital providers.
During the years ended December 31, 2020 and 2019, we wrote-off uncollectible reinsurance recoverables of $0.4 million and $0.6 million, respectively.
In December 2020, Argo Group U.S., Inc. received an ordinary dividend in the amount of $50.0 million in cash from Argonaut and $10.0 million in cash from Rockwood.
During 2021, Argo Group U.S., Inc. may be permitted to receive dividends from Argonaut up to $97.5 million. Argo Group U.S, Inc. may not be permitted to receive dividends from Rockwood without approval from the Pennsylvania Department of Insurance during 2021. Business and regulatory considerations may impact the amount of dividends actually paid and prior approval of dividend payments may be required.
On November 2, 2018, each of Argo Group, Argo Group U.S., Inc., Argo International Holdings Limited, and Argo Underwriting Agency Limited (the “Borrowers”) entered into a $325 million credit agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement matures on November 2, 2023, and replaced the prior $325 million Credit Agreement (the "Prior Agreement"), dated as of March 3, 2017. In connection with the consummation of the Credit Agreement, Argo Group borrowed $125 million as a term loan due on November 2, 2021, which amount was used on November 2, 2018 to pay off in its entirety the $125 million of borrowings previously outstanding under the Prior Agreement. In addition, the Credit Agreement provided for a $200 million revolving credit facility, and the commitments thereunder shall expire on November 2, 2023 unless extended in accordance with the terms of the Credit Agreement. On September 17, 2020, the Company used most of the net proceeds from the Preferred Stock Offering (as defined below) to pay off the term loan.
Floating Rate Loan Stock. We assumed debt through the acquisition of Syndicate 1200. These notes are unsecured. All are redeemable subject to certain terms and conditions at a price up to 100% of the principal plus accrued and unpaid interest. Interest on the U.S. Dollar and Euro notes is due semiannually and quarterly, respectively. A summary of the notes outstanding at December 31, 2020 is presented below:
Letter of Credit Facilities. Argo Re may be required to secure its obligations under various reinsurance contracts in certain circumstances. In order satisfy these requirements, Argo Re has entered into one committed and two uncommitted secured bilateral LOC facilities with commercial banks and generally uses these facilities to issue LOCs in support of non-admitted reinsurance obligations in the U.S. and other jurisdictions. The committed LOC facility has a term of one year and includes customary conditions and event of default provisions. The uncommitted LOC facilities do not have a term and issuance of LOCs is at the discretion of the lenders. The availability of letters of credit under these secured facilities are subject to a borrowing base requirement, determined on the basis of specified percentages of the market value of eligible categories of securities pledged to the lender. On December 31, 2020, committed and uncommitted LOC facilities totaled $205 million.
In addition to the bilateral, secured letters of credit facilities described above, Argo Re can use other forms of collateral to secure these reinsurance obligations including trust accounts, cash deposits, LOCs issued by commercial banks on an uncommitted basis and the Credit Agreement.
On December 31, 2020, LOCs totaling $167.0 million were outstanding, of which $58.1 million were issued against the committed, secured bilateral LOC facility and $108.9 million were issued by commercial banks against the uncommitted, secured bilateral LOC facilities. Collateral with a market value of $189.4 million was pledged to these banks as security against these LOCs.
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, "Reference Rate Reform" (Topic 848). ASU 2020-04 provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Entities can elect various optional expedients for hedging relationships affected by reference rate reform, if certain criteria are met. The guidance is effective upon issuance and generally can be applied through December 31, 2022. We have certain debt agreements for which the interest rate is based on LIBOR rates. We are currently investigating the impacts of the transition from LIBOR to other rates on these contracts and the resulting accounting requirements, but do not expect the change in rates to have a material impact on our results of operations and financial position.
In January 2020, the FASB issued ASU 2020-01, "Investments - Equity Securities" (Topic 321), "Investments - Equity Method and Joint Ventures" (Topic 323), and "Derivatives and Hedging" (Topic 815). ASU 2020-01 clarifies that entities that apply the measurement alternative in ASC 321 should consider observable transactions that result in entities initially applying or discontinuing the use of the equity method of accounting under ASC 323. The guidance also says that certain forward contracts and purchased options on equity securities that are not deemed to be in-substance common stock under ASC 323 or accounted for as derivatives under ASC 815 are in the scope of ASC 321. The guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption is permitted. The guidance should be applied prospectively. We are currently in the process of evaluating the impact that the adoption of the ASU will have on our results of operations and financial position and the related disclosures, but it is not expected to have a material impact upon adoption.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes, Simplifying the Accounting for Income Taxes (Topic 740). The guidance eliminates certain exceptions for recognizing deferred taxes for investments, performing intraperiod tax allocation and calculating income taxes in interim periods. The ASU also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years. We do not anticipate that this ASU will have a material impact on our results of operations and financial position.
The process for estimating our loss reserves begins with the collection and analysis of claim data. The data collected for actuarial analyses includes reported claims, paid losses and case reserve estimates sorted by the year the loss occurred. The data sets are sorted into homogeneous groupings, exhibiting similar loss and exposure characteristics. We primarily use internal data in the analysis but also consider industry data in developing factors and estimates. We analyze loss reserves on a quarterly basis.
Each business segment is analyzed individually, with development characteristics for each short-tail and long-tail line of business identified and applied accordingly. In comparing loss reserve methods and assumptions used at December 31, 2020 as compared with methods and assumptions used at December 31, 2019, management has not changed or adjusted methodologies or assumptions in any significant manner.
The causes of uncertainty will vary for each product line reviewed. For short-tail property lines of business, we are exposed to catastrophe losses, both natural and man-made. Due to the nature of certain catastrophic loss events, such as hurricanes, earthquakes or terrorist attacks, our normal claims resolution processes may be impaired due to factors such as difficulty in accessing impacted areas and other physical, legal and regulatory impediments. These factors can make establishment of accurate loss reserve estimates difficult and render such estimates subject to greater uncertainty. Additionally, if the catastrophe occurs near the end of a financial reporting period, there are additional uncertainties in loss reserve estimates due to the lack of sufficient time to conduct a thorough analysis. Long-tail casualty lines of business also present challenges in establishing appropriate loss reserves, for example if changes in the legal environment occur over time which broaden our liability or scope of policy coverage and increase the magnitude of claim payments.
•uncertainty regarding the number and identity of insureds with potential asbestos or environmental exposure.
•Changes in the propensity to sue, in general and with specificity to particular issues;
•Use of preferred provider networks and other medical cost containment practices;
•Changes in macroeconomic factors including but not limited to unemployment statistics.
The loss estimation process often begins with the identification of events with characteristics similar to the recent catastrophe (geographic location, wind speed, damageability, etc.), which then results in a list of the expected losses by contract from our proprietary risk-management system. Third-party modeling software is embedded in our proprietary risk-management system.
Recorded gross reserves for general liability were $2,670.0 million, with approximately 3% of that amount related to run-off asbestos and environmental exposures as of December 31, 2020. For general liability losses relating to ongoing operations, reported loss development patterns are a key assumption for this line of business. Historically, assumptions on reported loss development patterns have been impacted by, among other things, emergence of new types of claims (e.g., construction defect claims) or a shift in the mixture between smaller, more routine claims and larger, more complex claims. We have reviewed the historical variation in reported loss development patterns for general liability losses deriving from continuing operations. If the reported loss development patterns change by 15%, a change that we have experienced in the past and that management considers possible, the estimated net reserve could change by $150.0 million, in either direction.
Recorded gross reserves for commercial auto liability were $131.2 million as of December 31, 2020. A key assumption for commercial lines auto liability is the annual loss cost trend, particularly the severity trend component of loss costs. A 3% change in assumed annual severity is within the range of our historical experience and which management considers possible. A 3% change in assumed annual severity could change the estimated net reserve by $10.0 million, in either direction.
Recorded gross reserves for our Lloyd’s Syndicate 1200 business were $894.6 million as of December 31, 2020. Estimation of our international liability reserves are subject to late emergence and mix shifts between smaller, more routine claims and larger, more complex claims. Our international property reserves are analyzed by the characteristics of the underlying exposures. Property loss reserves are characterized by relatively short periods between occurrence, reporting, determination of coverage and ultimate claims settlement. These property loss reserves tend to be the most predictable. Catastrophic loss reserves tend to exhibit more volatility due to the nature of the underlying loss event which may cause delays and complexity in estimating ultimate loss exposure.
After reviewing the output from various loss reserving methodologies, we select our best estimate of reserves. We believe that the aggregate loss reserves at December 31, 2020 were adequate to cover claims for losses that have occurred, including both known claims and claims yet to be reported. As of December 31, 2020, we recorded gross loss reserves of $5,406.0 million and loss reserves net of reinsurance of $2,906.1 million. Although our financial reports reflect our best estimate of reserves, it is unlikely that the final amount paid will exactly equal our best estimate. In order to provide an indication of the variability in loss reserve estimates, we develop reserve ranges by evaluating the variability implied by the results of the various methods and impact of changing the assumptions and factors used in the loss reserving process.
We estimate our range of reserves, net of reinsurance, at approximately $2,695.0 million to $3,235.0 million as of December 31, 2020. In determining this range, we evaluated the variability of the loss reserves for each of our major operating segments, comprising both ongoing operations and run-off businesses. Our estimated range does not make a specific provision for sources of unknown or unanticipated correlated events such as potential sources of liability not anticipated at the time coverage was afforded, such as asbestos. These events in combination with other events which may not be contemplated by management in developing our range may cause reserves to develop either more or less favorably than indicated by assumptions that we consider reasonable. This means that the range of reserve values does not represent the range of all possible favorable or unfavorable reserve outcomes, and actual ultimate paid losses may fall outside this range. No one risk factor has been isolated for the purpose of performing a sensitivity or variability analysis on that particular risk factor.
At December 31, 2020, we had goodwill of $147.3 million assigned to the following reporting units: U.S. Operations - $118.6 million, and International Operations - $28.7 million. Additionally, at December 31, 2020, we had indefinite-lived intangible assets of $60.5 million relating to our Lloyd’s Syndicate 1200. Due to the nature of our Lloyd’s Syndicate’s business, for purposes of the annual impairment evaluation, we have aggregated the fair values between the indefinite-lived intangible asset and goodwill.
On April 30, 2020, we sold our Trident brand and wrote off $4.9 million of goodwill in U.S. Operations as a result of the Trident transaction. On November 25, 2020 we sold Ariel Re’s premium renewal rights and wrote off $9.2 million of goodwill and $30.2 million of intangible assets, net of accumulated amortization, in International Operations as a result of the Ariel Re transaction. For more information about these transactions, see Note 3, “Recent Acquisitions, Disposals & Other Transactions” in the Notes to the Financial Statements.
We evaluated our definite lived intangibles for indicators of impairment. If indicators of impairment had been identified, we would have been required to test definite lived intangible assets for impairment. No indicators of impairment were identified. Therefore, we were not required to test for impairment. As with the indefinite-lived intangible assets, we will continue to monitor for indicators of impairment and test as required.