Consolidated investment income was $1,017 million in 1995, compared with $749 million in 1994. The consolidation of Cologne Re accounts for approximately $193 million of the $268 million increase in consolidated investment income in 1995. The growth of pretax investment income in the United States operations was adversely affected by the shift in assets from taxable to tax-advantaged securities over the last few years in response to the Corporation's tax planning strategies, the maturity and calls of higher yielding securities and the use of the Corporation's cash flow from operations for stock repurchases. Investment income for the United States property/casualty operations was $711 million in 1995, an increase of 3.7 percent over $686 million earned in 1994. Investment income for the international property/casualty operations increased 375.4 percent to $247 million in 1995, compared with $52 million in 1994. Excluding the effect of Cologne Re, the international property/casualty operations investment income grew 24.2 percent in 1995. The life/health operations had investment income of $40 million in 1995. The financial services operations had investment income of $19 million in 1995, compared with $11 million in 1994.
Income before taxes and minority interest for the international property/casualty operations was $213 million in 1995, an increase of 299.1 percent from 1994. Included in these results were net realized gains of $24 million in 1995, compared with $8 million in 1994. The segment's results in 1995 were significantly affected by the inclusion of Cologne Re's results and are not directly comparable to the results in 1994 (see below for a description of the Cologne Re transaction). Since Cologne Re's results are reported on a quarter lag, the 1995 amounts include only nine months of activity for Cologne Re. Cologne Re's results in 1995, net of financing, opportunity costs and minority interest, contributed approximately $35 million to the Corporation's after-tax income, excluding realized gains.
Dividends paid to the Corporation's common and preferred stockholders were $172 million, $168 million and $170 million in 1995, 1994 and 1993, respectively. The Corporation used $35 million, $207 million and $134 million to repurchase 235,200 shares, 1,912,500 shares and 1,213,600 shares of its common stock in the years ended December 31, 1995, 1994 and 1993, respectively. Through December 31, 1995, the Corporation has purchased $1,598 million (22,144,500 shares) of its common stock since the inception of the repurchase program in 1987. On February 14, 1996, the Corporation's Board of Directors authorized an additional $300 million of stock repurchases, in addition to the standing authority to repurchase shares in anticipation of shares to be issued under various compensation plans. On the same day, the Board of Directors also declared a regular quarterly dividend of $.51 per share on the common stock of the Corporation. This represents an
GRC, the Corporation's principal United States reinsurance subsidiary, has a claims-paying rating of AAA by Standard & Poor's and a financial strength rating of Aaa by Moody's. Each of these ratings represents the highest category for the respective rating agency. GRC was also rated A++ by A.M. Best Company, a leading insurance industry rating agency. Cologne Re has a claims-paying rating of AAA by Standard & Poor's and an A rating from A.M. Best Company.
The "Cumulative (Deficiency) Redundancy" represents the aggregate change in the initial estimates from the original balance sheet date through December 31, 1995. Annual changes in the estimates are included in current operating results each year as the liabilities are reevaluated. The deficiencies shown in the tables represent cumulative differences between the original estimate and the current balance sheet liabilities and therefore they should not be summed. The lower "triangle" of data shows the cumulative amount paid with respect to the previously recorded liability as of the end of each succeeding year.
General Re Corporation ("Parent") is the ultimate controlling entity in the Parent's insurance holding company system, which includes United States insurance companies that are subject to the insurance holding company acts of Delaware and various other states. The Corporation is dependent upon the ability of its operating subsidiaries to transfer funds in the form of loans, advances or dividends. The insurance holding company laws require the filing of annual reports by the insurance company members of the system and regulate transactions between the holding company and affiliated insurance companies to the extent that such transactions must be fair, reasonable and assure the adequacy of insurance companies' statutory surplus in relation to their liabilities and financial needs.
The laws also subject extraordinary dividends and other extraordinary distributions to insurance company stockholders to regulatory approval. Under the insurance laws of the State of Delaware, GRC's state of domicile, dividends or distributions in a twelve-month period exceeding the greater of 10 percent of an insurance company's surplus or 100 percent of net income, excluding realized gains, for the previous calendar year are generally considered extraordinary and require such approval. Based on these restrictions, dividend payments by GRC to the Parent without regulatory approval are limited to $508 million in 1996. Generally, international subsidiaries are subject to fewer restrictions on the payment of dividends.
GRFP reduces exposure to market, currency rate and interest rate risk in connection with its dealer activities by purchasing or selling futures contracts, entering into forward contracts, purchasing or selling government securities, purchasing or selling exchange-traded interest rate options, or entering into offsetting transactions. These hedging instruments are carried at fair value and contain elements of market and credit risk associated with the execution, settlement and financing of these instruments similar to the financial instruments described above.
GRFP is subject to liquidity risk on its portfolio of open transactions. Movements in underlying market variables affect both future cash flows intrinsic in the transactions, and collateral required to be posted to certain counterparties to cover the value of open positions. Management believes GRFP has sufficient resources to cover its potential liquidity needs through its access to the Corporate commercial paper program and lines of credit.