We lease 44,000 square feet of office space in Nashville, Tennessee for our corporate headquarters and 32,202 square feet of office space in Memphis, Tennessee for our executive offices and a claims center. We also lease an aggregate of 141,236 square feet of office space for additional claims centers in Columbia, South Carolina, Knoxville, Tennessee and Tampa, Florida and for our administrative and customer service center located in Baton Rouge, Louisiana. In addition, we lease office space for our numerous neighborhood sales offices, none of which is individually material to our business.
We repurchased 2.2 million shares of our common stock for an aggregate price of $40.1 million.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003. Ancillary income increased 24.6% to $97.8 million in 2004 from $78.5 million in 2003. This increase was primarily due to increased sales of ancillary insurance products including approximately $5.3 million of increased business produced by the 42 Cash Register sales offices in Florida that we acquired in November 2003. Prior to our acquisition of these offices, the majority of the ancillary revenues were retained by owners of the agency. During 2004, we also recognized approximately $3.4 million of increased service fee income related to the administration of our assumed business in Texas. In addition, premium finance income increased as a result of higher premium volumes. The increase in premium finance income is net of an increase in the provision for finance receivable losses to $7.3 million in 2004 from $7.0 million in 2003. The majority of the increase in premium finance income is attributable to the increase in average gross premium finance receivables outstanding during the year. The allowance for credit losses was 2.8% and 2.9% of gross finance receivables in 2004 and 2003, respectively. For the year ended December 31, 2004 and 2003, the ratio of ancillary income to gross premiums earned was 20.7% and 19.9%, respectively, and the ratio of ancillary income to operating expenses was 85.8% and 97.0%, respectively.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003. Gross gains on debt securities for the year ended December 31, 2004 were $0.4 million, which were more than offset by gross losses of $0.9 million. The sale of certain debt securities during the year were primarily driven by adjustments to the portfolio in conjunction with the changing interest rate environment. Comparatively, in 2003, we realized gross gains on debt securities of $2.6, which were partially offset by gross losses of $0.6 million, as we repositioned our bond portfolio based on our investment guidelines for changes in market conditions and other factors.
In 2004, we also realized gross gains of $2.4 million and gross losses of $2.2 million on closed contracts in our trading portfolio. The trading portfolio primarily consists of futures contracts, swaps, and other derivative instruments. This represents a speculative investment and does not represent a hedge; accordingly, all open contracts are marked to market with the change in market values included in “net realized (losses) gains on securities and other” in our consolidated statement of operations. The net unrealized loss on open contracts decreased from $0.4 million in 2003 to $0.1 million in 2004, which was comprised of gross unrealized gains of $0.1 million and gross unrealized losses of $0.2 million. For the year ended December 31, 2004, “net realized (losses) gains on securities and other” included a net gain of $0.3 million related to the increase in the market value of open contracts.
Approximately $20.0 million of the proceeds from the issuance of the trust preferred securities were used for the stock repurchase program. The remainder, which was used to temporarily reduce the amount outstanding under the premium finance revolving credit facility, will ultimately be used for general corporate purposes including, but not limited to, pursuit of the Company’s growth and operating strategy, stock repurchases and/ or other general corporate purposes.
At December 31, 2005, investments carried at market value of $16,545,000 and cash of approximately $352,000 were on deposit with regulatory authorities. Additionally, investments carried at market value of $3,559,000 were pledged to an unaffiliated insurer to secure our assumed reinsurance obligations.
The Company also leases certain computer equipment under capital lease arrangements. Depreciation expense on capitalized equipment leases during 2005, 2004 and 2003 was $491,000, $414,000 and $149,000 respectively, and related accumulated depreciation as of December 31, 2005 and 2004, was $3,839,000 and $3,348,000, respectively.
On November 25, 1996, the Company issued a stock warrant for the purchase of 195,060 shares of the Company’s common stock, no par value, in return for consulting services to be provided by a company affiliated with a member of the board of directors. The common stock warrant was exercised in August 2003 for an aggregate exercise price of $800,000.