2007 completes our first full year of operations. We have in place a knowledgeable and experienced senior management team and we continue to build our internal information systems. In 2007, we wrote 1) reinsurance business, both from Tower and third parties, in CastlePoint Re, 2) brokerage business managed by Tower in CastlePoint Insurance and 3) traditional and specialty program business through CastlePoint Management using both Tower and CastlePoint Insurance policies. CastlePoint Management earns fee revenues from Tower on the program business it manages.
Our Business Segments. We report our business in three segments: insurance, reinsurance and insurance services. The insurance segment includes all of the results of CastlePoint Insurance Company and the results from CastlePoint Re for excess and surplus lines written on a primary basis. The reinsurance segment includes the results from the reinsurance business written through CastlePoint Re. Our insurance services segment includes the results from managing the specialty program business and insurance risk-sharing business through CastlePoint Management, as well as results from providing our unbundled insurance services to program underwriting managers.
a limited amount of time about any claim that is reported to them, which has characteristics making it probable that the claim will be covered by the excess reinsurance. Upon receipt of claims notices from program underwriting managers, risk-sharing clients, or cedents, we review the nature of the claim against the scope of coverage provided under the contract. Questions arise from time to time regarding the interpretation of the characteristics of a particular claim measured against the scope of contract terms and conditions. Reinsurance contracts under which we assume business generally contain specific dispute resolution provisions in the event that there is a coverage dispute with the ceding company. The resolution of any individual dispute may impact estimates of ultimate claim liabilities.
In our insurance segment, we generally establish reserves separately by line of business. In our reinsurance segment, we generally reserve for each treaty that we reinsure separately, so that we are able to take into consideration the underlying experience reported by each ceding company. While ceding companies may report their own estimate of IBNR, we independently analyze the losses for each treaty, and consequently we may choose to establish IBNR reserves in an amount different from the amount reported by the ceding company.
Underwriting profit and combined ratio. The underwriting profit and the net combined ratio from the reinsurance segment was $28.7 million and 87.5% respectively, for the year ended December 31, 2007 compared to $9.4 million and 88.1% for the year ended December 31, 2006.
Included in the “Fixed maturity securities” on the balance sheet at December 31, 2007, the Company held $343.9 million ($187.7 million at December 31, 2006), at fair value in residential mortgage-backed, commercial mortgage-backed and asset backed securities (reflecting primarily assets backed by automobile loans and credit card receivables, with approximately $2.5 million of the asset backed securities being backed by home equity loans at December 31, 2007). Of the total residential and commercial mortgage-backed securities of $287.4 million, approximately 77% were residential mortgage-backed securities (“RMBS”) and 23% were commercial mortgage-backed securities (“CMBS”). Approximately $155 million of the RMBS were backed by U.S. government or government charted agencies. The remaining fixed maturity securities at December 31, 2007 and December 31, 2006 consisted primarily of corporate securities in the amount of $132.3 million with an average rating of A+ at December 31, 2007 ($89.2 million at December 31, 2006) and are distributed over the following industries - banks, brokerage, insurance, other finance, media, pipelines and utilities.