For 2009, 2008 and 2007, our rental expense, net of income from subleases, was approximately $16.9 million, $17.5 million and $14.8 million, respectively. Our future minimum rental charges for the remaining terms of our existing leases, exclusive of escalation clauses and maintenance costs and net of rental income, will be approximately $135.3 million. We believe that the above described office space is adequate for our needs. However, as we continue to develop our business, we may open additional office locations during 2010.
Ceded premiums written by the reinsurance segment were 4.5% of gross premiums written for 2008, compared to 22.0% for 2007. In 2008, Arch Re Bermuda ceded $24.7 million of premiums written, or 2.1%, under the Treaty to Flatiron, compared to $311.4 million, or 20.5%, in 2007, with the lower level due to the expiration of the Treaty. Net premiums written by the reinsurance segment in 2008 were 3.1% lower than 2007, primarily due to the items noted above.
Net Premiums Earned. Net premiums earned in 2009 were 1.4% lower than 2008, which was lower than the 7.8% decline in net premiums written as such decline primarily occurred during the 2009 fourth quarter and will result in lower net premiums earned in 2010 compared to 2009. Net premiums earned in 2008 were 5.8% lower than 2007, and reflected changes in net premiums written over the previous five quarters, including the mix and type of business written. On an earned basis, Arch Re Bermuda ceded $22.0 million to Flatiron in 2009, compared to $151.4 million in 2008 and $282.2 million in 2007.
estimate future losses and necessarily assume that factors that have affected paid losses in the past, such as inflation or the effects of litigation, will remain constant in the future. Because historical paid loss development methods do not use incurred losses to estimate ultimate losses, they may be more reliable than the other methods that use incurred losses in situations where there are significant changes in how incurred losses are established by a company's claims adjusters. However, historical paid loss development methods are more leveraged (meaning that small changes in payments have a larger impact on estimates of ultimate losses) than actuarial methods that use incurred losses because cumulative loss payments take much longer to equal the expected ultimate losses than cumulative incurred amounts. In addition, and for similar reasons, historical paid loss development methods are often slow to react to situations when new or different factors arise than those that have affected paid losses in the past.
For purposes of managing risk, we reinsure a portion of our exposures, paying to reinsurers a part of the premiums received on the policies we write, and we may also use retrocessional protection. Ceded premiums written represented approximately 23.1% of gross premiums written for 2009, compared to 23.5% for 2008 and 29.9% for 2007. We monitor the financial condition of our reinsurers and attempt to place coverages only with substantial, financially sound carriers. If the financial condition of our reinsurers or retrocessionaires deteriorates, resulting in an impairment of their ability to make payments, we will provide for probable losses resulting from our inability to collect amounts due from such parties, as appropriate. We evaluate the credit worthiness of all the reinsurers to which we cede business. If our analysis indicates that there is significant uncertainty regarding the collectability of amounts due from reinsurers, managing general agents, brokers and other clients, we will record a provision for doubtful accounts. See "Financial Condition, Liquidity and Capital Resources-Financial Condition-Premiums Receivable and Reinsurance Recoverables" for further details.
Since 2007, the residential mortgage market in the U.S. has experienced a variety of difficulties. During this time, delinquencies and losses with respect to residential mortgage loans generally have increased and may continue to increase, particularly in the subprime sector. In addition, during this period, residential property values in many states have declined or remained stable, after extended periods during which those values appreciated. A continued decline or an extended flattening in those values may result in additional increases in delinquencies and losses on residential mortgage loans generally, especially with respect to second homes and investment properties, and with respect to any residential mortgage loans where the aggregate loan amounts (including any subordinate loans) are close to or greater than the related property values. These developments may have a significant adverse effect on the prices of loans and securities, including those in our investment portfolio. The situation continues to have wide ranging consequences, including downward pressure on economic growth and the potential for increased insurance and reinsurance exposures, which could have an adverse impact on our results of operations, financial condition, business and operations. Our portfolio includes commercial mortgage backed securities ("CMBS"). At December 31, 2009, CMBS constituted approximately $1.19 billion, or 10.4% of total investable assets, compared to $1.22 billion, or 12.2%, at December 31, 2008. The commercial real estate market has recently experienced price deterioration, which could lead to increased delinquencies and defaults on commercial real estate mortgages.
(1)The financial strength ratings are as of February 9, 2010 and were assigned by A.M. Best based on its opinion of the insurer's financial strength as of such date. An explanation of the ratings listed in the table follows: the rating of "A+" is designated "Superior"; and the "A" and "A-" ratings are designated "Excellent." Additionally, A.M. Best has five classifications within the "Not Rated" or "NR" category. Reasons for an "NR" rating being assigned by A.M. Best include insufficient data, size or operating experience, companies which are in run-off with no active business writings or are dormant, companies which disagree with their rating and request that a rating not be published or insurers that request not to be formally evaluated for the purposes of assigning a rating opinion.
(3)Flatiron is required to contribute funds into a trust for the benefit of Arch Re Bermuda. The recoverable from Flatiron was collateralized with $162.6 million through such trust at December 31, 2009. See note 4, "Reinsurance," of the notes accompanying our consolidated financial statements for further details on the quota share treaty with Flatiron.
(1)Excludes the effects of 5,016,104 and 5,131,135 stock options and 261,012 and 412,622 restricted stock units outstanding at December 31, 2009 and December 31, 2008, respectively.
In November 2009, the board of directors of ACGL authorized the investment of up to an additional $1.0 billion in ACGL's common shares through a share repurchase program. Repurchases under this authorization may be effected from time to time in open market or privately negotiated transactions through December 31, 2011. The board of directors of ACGL had previously authorized the investment of up to $1.5 billion in ACGL's common shares. During 2009, ACGL repurchased 6.7 million common shares for an aggregate purchase price of $458.4 million and from January 1 to February 23, 2010, ACGL repurchased 2.1 million common shares for an aggregate purchase price of $146.9 million. Since the inception of the share repurchase program in February 2007 through February 23, 2010, ACGL has repurchased 24.0 million common shares for an aggregate purchase price of $1.66 billion. At February 23, 2010, $844.6 million of repurchases were available under the share repurchase program.