Stockholders equity for the year ended December 31, 2010 was $43,710,000 compared to $41,168,000 at December 31, 2009, an increase of $2,542,000 or 6.2%. The change in stockholders equity is composed of dividends paid to shareholders of $1,480,000 and net income of $3,265,000 as well as accumulated other comprehensive income, primarily increases in accumulated unrealized capital gains, totaling $847,000 and unrealized losses on interest rate swap totaling $90,000. Year-end book value per share, defined as stockholders equity divided by common shares outstanding of 2,466,600, was $17.72 at December 31, 2010 compared to $16.69 at December 31, 2009.
General and administrative expenses decreased $377,000 while deferred policy acquisition costs (DAC) increased $314,000 in 2010 compared to 2009. One reason for the decline in general and administrative expenses was the absence of a bonus accrual in 2010 compared to 2009, which accounted for approximately 25% of the decrease. In addition, software expenses in the Life segment decreased $142,000 compared to the same period last year and accounted for another 38% of the overall decrease in general and administrative expenses compared to the same period last year.
Property and casualty operations constitute our largest segment composing 88.5% and 87.9% of our total premium revenue in 2010 and 2009, respectively. Premium revenues and operating income for the P&C segment for the years ended December 31, 2010 and 2009 are summarized below:
The personal lines automobile program ended 2010 with incurred losses and incurred loss adjustment expenses of $4,661,000 compared to $1,596,000 for the same period last year; an increase of $3,065,000. The auto program also experienced significant revenue growth during the year partially contributing to the increased frequency of claims. However, the loss and adjustment expense ratio increase over 30 percentage points in 2010 compared to 2009. In order to stem losses in the auto program, we implemented significant rate increases in late 2010 which had an immediate impact of decreasing new business production and is expected to decrease the loss ratio on the program.
The amortized cost and aggregate fair values of investments in securities at December 31, 2010 and December 31, 2009 are as follows:
The insurance subsidiaries’ fixed maturity securities include residential mortgage-backed securities (RMBS) of $23.2 million and $21.2 million at amortized value at December 31, 2010 and 2009 respectively. We own no commercial mortgage backed securities. We also have no material direct exposure in sub-prime mortgage loans in our private label RMBS portfolio.
Investments are recorded at fair value based upon quoted prices when available. Quoted prices are available for most investment debt and equity securities included in the financial statements. Further discussion of fair value methodology is discussed in Note 6 to the consolidated financial statements. Periodically, the carrying values of an individual investment may become temporarily impaired because of time value, volatility, credit quality and existing market conditions. Management evaluates investments to determine whether the impairment is other-than-temporary. Evaluation criteria include credit quality of security, severity of decrease between cost and market value, length of time of the impairment and likelihood that the impairment will reverse in the near future. This evaluation requires significant assumptions, estimates and judgments by management. If the impairment is determined to be other-than-temporary, the investment is written down to the current fair value and a realized loss is recorded on the income statement. We have very limited exposure to less liquid and difficult to value investments such as collateralized debt obligations.
Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 are summarized in the following table by the type of inputs applicable to the fair value measurements (in thousands):