The Group also conducts limited operations from branch offices located in Rochester, New York and Boston, Massachusetts. The rental charged to the Company for these facilities is prorated in accordance with the pooling agreement described in "Pooling Agreement" under Item 1, herein.
The Company maintains cash, short-term and readily marketable securities and anticipates that the cash flow from investment income, maturities and sales of short- term investments and fixed maturities will be sufficient to satisfy its anticipated cash needs. During 1999, the Company sold certain securities at a net realized capital loss to meet short- term cash flow needs. The Company does not presently anticipate paying dividends in the near future and believes it has sufficient capital to meet its currently anticipated level of operations. [S] Results of Operations [S] Net earned premium revenues of the Company were $42.4 million, $67.5 million and $80.9 million for the years ended December 31, 1999, 1998 and 1997, respectively. While earned premiums declined in all lines of business, the most significant reductions during 1999 were in assigned risk automobile ($7.3 million), voluntary private passenger automobile ($8.1 million) and commercial package policies ($3.7 million). As a result of poor operating results, the Company is no longer entering into new assigned risk contracts. Effective January 1, 2000, all policy renewal obligations have been assigned to another insurance company. However, the Company remains liable for the claim settlement costs for assigned risk claims that occurred during the policy term. The Company believes
it has provided adequate reserves for such liabilities, including loss adjustment expenses. The decline in voluntary private passenger automobile resulted from tighter underwriting standards, increased competition and the Company's decision to no longer accept new policies from those agents who historically have had poor underwriting results. The Company's termination of certain unprofitable agents has also adversely affected premium volume in other lines of business.
During 1999, the Company experienced unfavorable development due to an increase in severity of 1998 accident year losses in the assigned risk automobile and voluntary private passenger automobile lines, and 1996 accident year losses in certain classes of the commercial automobile line. As a result, the Company increased its reserves by $2.2 million for assigned risk automobile, $1.5 million for voluntary private passenger automobile and $1.4 million for commercial automobile lines. As previously discussed, the Company no longer accepts new policies from certain agents identified as having had poor underwriting results in the voluntary private passenger automobile line of business and, effective January 1, 2000, the Company no longer participates in the assigned risk business. Additionally, the Company no longer offers insurance in those classes of the commercial automobile line that contributed to the unfavorable development.
During 1998, the Company reviewed the adequacy of the reserves carried for its open claims' files, focusing on workers' compensation, commercial auto and other commercial liability lines of business. As part of the review, substantially all open workers' compensation claim files were reviewed for every accident year up to and including 1998. Additionally, during 1998, the Company reorganized the commercial auto claims department. As part of this realignment, more complex claims files were reviewed by the most experienced claims examiners and assumptions regarding average claims severity and probable ultimate losses were revised. Accordingly, reserves were strengthened by $3.9 million for workers' compensation, $4.2 million for commercial automobile and $4.2 million for other commercial liability lines of business.
The 1997 reserve strengthening included $3.3 million for commercial package lines of business and $2.1 million for voluntary commercial automobile lines of business. These increases resulted from a review of open claim files and the continued unfavorable development of prior accident years losses, particularly the 1992 through 1994 accident years.
The reserving process relies on the basic assumption that past experience is an appropriate basis for predicting future events. The probable effects of current developments, trends and other relevant matters are also considered. Since the establishment of loss reserves is affected by many factors, some of which are outside the Company's control or are affected by future conditions, reserving for property and casualty claims is a complex and uncertain process, requiring the use of informed estimates and judgments. As additional experience and other data become available and are reviewed, the Company's estimates and judgments may be revised. While the effect of any such changes in estimates could be material to future results of operations, the Company does not expect such changes to have a material effect on its liquidity or financial condition.
gains recognized on the sale of fixed maturities, primarily U.S. Treasury Notes. During 1997, the Company recorded $0.2 million in realized capital losses in the normal course of managing its investment strategy.