Throughout this Annual Report, we present our operations in the way we believe will be most meaningful, useful and transparent to anyone using this financial information to evaluate our performance. In addition to the presentation of Net Income (Loss), Book Value, Book Value per Share, Net Losses and LAE Reserves and Combined Ratio, we show certain non-GAAP financial measures as defined in Regulation G that we believe are valuable in managing our business and drawing comparisons to our peers. These non-GAAP measures are Net Operating Earnings and Underwriting Profit (Loss).
For additional information on the drivers of Underwriting Profit see the U.S. Insurance, Int’l Insurance and GlobalRe reporting segment results sections included herein.
(1) - Cash and overseas deposits that were misclassified within Short-Term Investments prior to 2018 were reclassified, representing an immaterial correction. Refer to Note 1 Organization & Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements, for further information.
Gross Written Premiums increased $94.8 million for the year ended December 31, 2018 as compared to the same period in 2017, driven by increases of $90.2 million and $12.3 million in our P&C and Professional Liability operating segments, respectively, partially offset by a decrease in our Marine operating segment of $7.7 million.
Average renewal premium rates for our U.S. Insurance reporting segment for the year ended December 31, 2017 increased 1.2%, driven by increases of 1.7%, 0.6% and 0.2% within our P&C, Marine and Professional Liability operating segments, respectively.
For the year ended December 31, 2018, our Net Losses and LAE Ratio increased 0.2 points as compared to the same period in 2017 driven by:
These decreases in the Net Current AY Losses and LAE Ratio were partially offset by:
The increase in our P&C operating segment was driven by additional premium from the NICE Group business acquired in the second quarter, as well as increases in our General Liability, Energy & Engineering, and Political Violence and Terrorism (“PV&T”) divisions due to new and renewal business. This increase was partially offset by a decrease in our Property division due to strategic actions taken to exit our International and North American Property businesses in 2017.
Net Earned Premiums increased $26.4 million for the year ended December 31, 2017 as compared to the same period in 2016 driven by increases in our Professional Liability and Marine operating segments, partially offset by a decrease in our P&C operating segment.
Our Commission Expense Ratio for the year ended December 31, 2017 increased 0.5 points as compared to the same period in 2016. The increase was driven by our Professional Liability operating segment, partially offset by a decrease in our Marine operating segment.
For the year ended December 31, 2018, our Net Prior AY Losses and LAE Ratio increased 9.0 points as compared to the same period in 2017. Our GlobalRe reporting segment for the year ended December 31, 2018 recognized $26.0 million of Net Prior AY Reserve Strengthening primarily related to higher than expected claims activity in the 2016 and 2017 accident years of our A&H product, as well as unfavorable loss emergence in our P&C product, partially offset by favorable loss emergence in our Surety product. This compares to $2.8 million of Net Prior AY Reserve Strengthening for the same period in 2017 mostly related to the settlement of a large A&H claim and unfavorable loss emergence within our P&C product, partially offset by favorable loss emergence across our Agriculture and Marine products.
In accordance with the Merger Agreement, the Company’s quarterly cash dividend payments are not to exceed $0.07 per share.
Net cash used in investing activities was $260.1 million for the year ended December 31, 2018 compared to $264.0 million for the comparable period in 2017. The change in cash used in investing activities is the result of changes in operating cash flows and the associated ongoing management of our investment portfolio. Additionally, certain operating cash flows were directed to cash equivalents rather than Fixed Maturities as we anticipate increased cash outflows associated with the non-renewal of our Company’s fixed-premium protection and indemnity business. Finally, investing cash flows were impacted by cash acquired resulting from the Acquisition as discussed in Note 2. Merger and Business Combinations. The cash inflow from the sale of Fixed Maturities to fund the Acquisition was offset by the cash outflow to purchase the subsidiaries
A portion of our premium is estimated for unreported premium, mostly for our Marine and Energy & Engineering products written by our Int’l Insurance reporting segment, as well as our A&H, Marine, P&C, Specialty Casualty, Agriculture and Surety products written by our GlobalRe reporting segment. Such premium estimates are based on submission data received from brokers and agents and recorded when the insurance policy or reinsurance contract is written or bound. The estimates are regularly reviewed and updated taking into account the premium received to date versus the estimate and the age of the estimate. To the extent that the actual premium varies from the estimates, the difference, along with the related loss reserves and underwriting expenses, is recorded in current operations.