Underwriting income has been reduced by net losses of $35.0 million ($22.8 million after-tax or $0.11 per share) in 2005, $75.0 million ($48.8 million after-tax or $0.25 per share) in 2004, $250.0 million ($162.5 million after-tax or $0.90 per share) in 2003, $741.1 million ($481.7 million after-tax or $2.79 per share) in 2002 and $60.9 million ($39.6 million after-tax or $0.22 per share) in 2001 related to asbestos and toxic waste claims.
Our personal automobile results were profitable in each of the past three years. Results in 2005 were slightly less profitable than in 2004 due to reserve strengthening in the liability component related to prior accident years. The improvement in 2004 was due to lower claim frequency and stable loss severity as well as modest rate increases.
To promote and distribute our insurance products, we rely on a large network of independent brokers and agents. Accordingly, our business is dependent on the willingness of these brokers and agents to recommend our products to their customers. We have agreements in place with insurance brokers under which we agree to pay commissions that are contingent on the volume and/or the profitability of business placed with us. We also have in place contingent commission arrangements with agents who are appointed by us to sell our insurance.
A relatively large proportion of our net loss reserves, particularly for long tail liability classes, are reserves for incurred but not reported (IBNR) losses - claims that have not yet been reported to us, some of which are not yet known to the insured, and future development on reported claims. In fact, approximately 65% of our aggregate net loss reserves at December 31, 2005 were for IBNR losses.
For certain long tail classes of business where anticipated loss experience is less predictable because of the small number of claims and/or erratic claim severity patterns, estimates are based on both expected losses and actual reported losses. These classes include directors and officers liability, errors and omissions liability and commercial excess liability, among others. For these classes, we judgmentally set an estimate of ultimate losses for each accident year based on our evaluation of loss trends and the current risk environment. The estimate of ultimate losses is adjusted as the accident years mature.
In completing their actuarial reserve analysis, our actuaries are required to make numerous assumptions, including the selection of loss development factors and loss cost trend factors. They are also required to determine the most appropriate actuarial methods to employ for each class of business. Each estimation method has its own set of assumption variables and its own advantages and disadvantages, with no estimation method being better than the others in all situations. The relative strengths and weaknesses of the various estimation methods can also change over time. The estimation methods chosen are those that are believed to produce the most reliable indication for the loss reserves being evaluated. In most cases, multiple estimation methods will be valid for the particular facts and circumstances of the loss reserves being evaluated. This will result in a number of point estimates for each class of business.
We experienced favorable development of about $90 million in the fidelity and surety classes due to lower than expected reported loss emergence.
On an after-tax basis, property and casualty investment income increased by 11% in 2005 and 13% in 2004. Management uses property and casualty investment income after-tax, a non-GAAP financial measure, to evaluate its investment performance because it reflects the impact of any change in the proportion of the investment portfolio invested in tax-exempt securities and is therefore more meaningful for analysis purposes than investment income before income tax.
Revenues from the non-insurance business of CFS, primarily consisting of the change in fair value of derivatives contracts, were virtually nil in 2005 and 2004 and negative $62 million in 2003. Revenues were negative in 2003 due to the adverse impact of changes in fair value and the impact of the agreement to terminate the two asset-backed portfolio credit default swaps and replace them with a principal and interest guarantee.
Corporate and other produced a loss before taxes of $166 million in 2005 compared with losses of $159 million and $157 million in 2004 and 2003, respectively. Corporate and other results were similar in all three years as increases in investment income in 2004 and 2005 were substantially offset by increasingly larger losses in our real estate operations. Investment income was higher in 2005 compared with 2004 due to an increase in corporate invested assets resulting primarily from the issuance of common stock under stock-based employee compensation plans. Investment income was higher in 2004 compared with 2003 due to an increase in corporate invested assets resulting primarily from the issuance of debt and equity securities during 2003.
The above table also excludes estimated future cash flows related to our carried loss reserves at December 31, 2005. There is typically no stated contractual commitment associated with property and casualty insurance loss reserves. The obligation to pay a claim arises only when a covered loss event occurs and a settlement is reached. The vast majority of our loss reserves relate to claims for which settlements have not yet been reached. Our loss reserves therefore represent estimates of future payments. These estimates are dependent on the outcome of future events. Accordingly, the payment of the loss reserves is not fixed as to either amount or timing.