Commencing in 1996, the Company subleased approximately 13,000 square feet of the office space to MMCI for a term expiring in October 2002. Future minimum rental income under the remaining term of the sublease, exclusive of escalation clauses and maintenance costs, will be approximately $1,648,000. Rental income for 1998, 1997 and 1996 was $430,000, $430,000 and $264,000, respectively. MMCI also reimbursed the Company approximately $100,000 and $574,000 in 1998 and 1997, respectively, for MMCI's pro rata share of improvement and maintenance costs under the sublease. In addition, commencing in 1997, the Company subleased approximately 6,000 square feet of the office space to another tenant for a term expiring in October 2002. Future minimum rental income under the remaining term of the sublease, exclusive of escalation clauses and maintenance costs, will be approximately $549,000. Rental income for 1998 and 1997 was $225,000 and $117,000, of which $89,000 and $44,000, respectively, was paid to MMCI as its pro rata share of such income.
Net premiums written for the year ended December 31, 1998 compared to 1997 and 1996 was as follows:
In March 1999, the Company was notified of additional satellite losses pertaining to 1998 in the amount of approximately $4 million, after-tax, that will be recorded in the first quarter of 1999. In order to mitigate the impact of possible future loss activity, in the fourth quarter of 1998, the Company commenced the process of re-underwriting and reducing its satellite business and seeking additional retrocessional protection. There can be no assurances that any such retrocessional protection, if purchased, will be sufficient to preclude the occurrence of additional underwriting losses.
Therefore, the total after-tax underwriting losses that will be recorded in the first quarter of 1999 generated from reinsurance on satellite risks and business produced by the managing underwriting agency will be approximately $22 million. While such loss estimate represents the Company's current expectation based on all information available to the Company to date, there can be no assurances that the actual amount will not differ from such estimate due to the inherent uncertainties of estimating reserves. See also Note 14 of the accompanying Notes to the Consolidated Financial Statements of the Company.
The Company's effective tax rate of 5% for 1998, income tax benefit for 1997 and effective tax rate of 7% for 1996 are less than the 35% statutory rate on pre-tax operating income due to tax exempt income and the dividends received deductions. The 1998, 1997 and 1996 gross deferred income tax benefits of approximately $7.3 million, $2.1 million and $1.8 million, respectively, which are assets considered recoverable from future taxable income, resulted from temporary differences between financial and taxable income.
In March 1998, AcSEC issued SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. SOP 98-1 is effective for fiscal years beginning after December 15, 1998. This SOP requires companies to capitalize certain costs incurred in connection with an internal use software project. Such costs are not significant for the Company. Accordingly, the adoption of SOP 98-1 will not have a material impact on the Company's financial statements.