management fees and commission income components of the Company's total revenue, which management believes has been a more predictable and stable source of revenue than the potential underwriting profits from insurance company operations. The second reason is an effort to insulate the Company from a decline in its revenue growth rate as insurance premium rates become more competitive in the lines of business in which the Company specializes and the Company becomes more selective in its underwriting approach, resulting in reduced earned premium. The third reason is to provide a future source of premium revenue to the Company's insurance company subsidiaries and more control of its distribution channels.
During 1998, the Company had net loss and LAE redundancy of $14.6 million relating to prior year losses compared to a redundancy of $3.8 million in 1997. During 1998, the Company had gross loss and LAE deficiency of $33.5 million compared to a deficiency of $23.2 million in 1997. The gross deficiency results from the development of several large claims on individual policies which were either reported late or reserves were increased as subsequent information became available. However, as these policies were substantially reinsured, there is no material effect to the Company's net earnings. The redundancies in the net reserves result from the Company's and its actuaries' continued review of its loss reserves and the reduction of such reserves as losses are finally settled and claims exposures are reduced.
As of December 31, 1999, several of the Company's subsidiaries maintained revolving lines of credit with a bank in the combined maximum amount of $40.0 million available through December 31, 2000. Advances under the lines of credit are primarily used to fund draws, if any, on letters of credit issued by the bank on behalf of the subsidiaries. The lines of credit are collateralized by securities having an aggregate market value of up to $50.0 million, the actual amount of collateral at any one time being 125% of the aggregate amount outstanding. Interest on the lines is payable at the bank's prime rate of interest (8.5% at December 31, 1999). At December 31, 1999, letters of credit totaling $17.2 million had been issued to insurance companies by the bank on behalf of the subsidiaries, with total securities collateralizing the line of $21.5 million.
The Company maintains a substantial level of cash and liquid short-term investments which are used to meet anticipated payment obligations. As of December 31, 1999, the Company had cash and short-term investments of approximately $242.2 million. The Company's consolidated investment portfolio of $581.3 million as of December 31, 1999, of which $216.3 million is short-term investments, is available to provide additional liquidity.
Under the laws of the State of Maryland, AIC may only pay dividends out of statutory earned surplus. The maximum amount of dividends that AIC may pay without prior regulatory approval in any 12 month period is the greater of its statutory net income (under certain conditions) or 10% of its statutory policyholders' surplus. Because AIC paid an extraordinary dividend of $45.0 million during December, 1999, any dividends paid by AIC during 2000 will need prior regulatory approval. No dividends from AIC are anticipated during 2000.
Industry and regulatory guidelines suggest that a property and casualty insurer's annual statutory GWP should not exceed 900% of its statutory policyholders' surplus and NWP should not exceed 300% of its statutory policyholders' surplus. However, industry standards and rating agency criteria place these ratios at 300% and 200%, respectively. The Company's property and casualty insurance company subsidiaries maintain a premium to surplus ratio significantly lower than such guidelines, generally well below industry norms and for the year ended December 31, 1999, their annual statutory GWP was 182.6% of their statutory policyholders' surplus and their NWP was 47.6% of their statutory policyholders' surplus.
During December, 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101 entitled "Revenue Recognition in Financial Statements" which becomes effective for the Company during the second quarter of 2000. The Company does not expect the adoption of SAB No. 101 to have a material effect on the Company's financial position, results of operations or shareholders' equity.