(3)Expense ratio is calculated by dividing other underwriting and operating expenses by net premiums earned.
financial impact of the COVID-19 event may allow some families to be able to remain in their homes and avoid foreclosure. For borrowers that have the ability to begin to pay their mortgage at the end of the forbearance period, we expect that mortgage servicers will work with them to modify their loans at which time the mortgage will be removed from delinquency status.
We establish loss reserves for delinquent loans when we are notified that a borrower has missed at least two consecutive monthly payments ("Case Reserves"), as well as estimated reserves for defaults that may have occurred but not yet been reported to us ("IBNR Reserves"). We also establish reserves for the associated loss adjustment expenses, consisting of the estimated cost of the claims administration process, including legal and other fees. Using both internal and external information, we establish our reserves based on the likelihood that a default will reach claim status and estimated claim severity. See "-Critical Accounting Policies" for further information.
The decrease in net investment income to $80.1 million for the year ended December 31, 2020 as compared to $83.5 million for the year ended December 31, 2019 was due to a decrease in the pre-tax investment income yield partially offset by the increase in the weighted average balance of our investment portfolio. The average cash and investment portfolio balance increased to $4.0 billion during the year ended December 31, 2020 from $3.1 billion during the year ended December 31, 2019, primarily as a result of investing cash flows generated from operations, proceeds from the public offering of common shares completed in June 2020 and increased borrowings under the Credit Facility. The pre-tax investment income yield decreased from 2.8% in the year ended December 31, 2019 to 2.1% in the year ended December 31, 2020 primarily due to an increase in the share of our investments allocated to cash, a general decline in investment yields due to declining interest rates and an increase in premium amortization on mortgage-backed and asset-backed securities. The pre-tax investment income yields are calculated based on amortized cost and exclude investment expenses. See "-Liquidity and Capital Resources" for further details of our investment portfolio.
As of December 31, 2020, the ending default inventory included 28,922 defaults classified as COVID-19 defaults.
For the years ended December 31, 2020 and 2019, we incurred interest expense of $9.1 million and $10.2 million, respectively. Interest expense decreased primarily due to a decrease in the weighted average interest rate on amounts outstanding under the Credit Facility, partially offset by an increase in the average amounts outstanding under the Credit Facility. For the year ended December 31, 2020, the average amount outstanding under the Credit Facility was $356.3 million as compared to $225.0 million for the year ended December 31, 2019. For the years ending December 31, 2020 and 2019, the borrowings under the Credit Facility had a weighted average interest rate of 2.30% and 4.26%, respectively.
We lease office space in Pennsylvania, North Carolina, California and Bermuda under leases accounted for as operating leases. A portion of the space leased in North Carolina has been subleased to Triad; minimum lease payments shown above have not been reduced by minimum sublease rental income of $0.1 million due in 2021 under the non-cancelable sublease.
investment earnings on the assets in the reinsurance trusts. See Note 5 to our consolidated financial statements for additional information.
We have audited the accompanying consolidated balance sheets of Essent Group Ltd. and its subsidiaries (the "Company") as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We are required to establish a premium deficiency reserve if the net present value of the expected future losses and expenses for a particular group of policies exceeds the net present value of expected future premium, anticipated investment income and existing reserves for that specified group of policies. We reassess our expectations for premium, losses and expenses of our mortgage insurance business periodically and update our premium deficiency analysis accordingly. As of December 31, 2020 and 2019, we concluded that no premium deficiency reserve was required to be recorded in the accompanying consolidated financial statements.
The assets of Radnor Re are the source of reinsurance claim payments to Essent Guaranty and provide capital relief under the PMIERs financial strength requirements (see Note 16). A decline in the assets available to pay claims would reduce the capital relief available to Essent Guaranty.