In August 2017, the Company completed the sale of approximately six acres of land located in Brea, California (the "Property"), for a total sale price of approximately $12.2 million. Approximately $5.7 million of the total sale price was received in the form of a promissory note (the "Note") and the remainder in cash. The Note is secured by a first trust deed and an assignment of rents on the Property, and bears interest at an annual rate of 3.5%, payable in monthly installments. The Note matures in August 2020.
The Company’s net (loss) for the year ended December 31, 2018 was $(5.7) million, or $(0.10) per diluted share, compared to net income of $144.9 million, or $2.62 per diluted share, for the same period in 2017. Included in net (loss) income was $135.8 million of pre-tax investment income that was generated during 2018 on a portfolio of $3.8 billion, at fair value, at December 31, 2018, compared to $124.9 million of pre-tax investment income that was generated during 2017 on a portfolio of $3.7 billion, at fair value, at December 31, 2017. Also included in net (loss) income were pre-tax net realized investment (losses) gains of $(133.5) million and $83.7 million in 2018 and 2017, respectively, and pre-tax catastrophe losses, net of reinsurance benefits and related reinstatement premiums earned, of approximately $82.0 million and $81.6 million in 2018 and 2017, respectively.
The Company’s financial instruments include securities issued by the U.S. government and its agencies, securities issued by states and municipal governments and agencies, certain corporate and other debt securities, equity securities, and exchange traded funds. 98.2% of the fair value of these financial instruments held at December 31, 2018 is based on observable market prices, observable pricing parameters, or is derived from such prices or parameters. The availability of observable market prices and pricing parameters can vary by financial instrument. Observable market prices and pricing parameters of a financial instrument, or a related financial instrument, are used to derive a price without requiring significant judgment.
The lower expense ratio for the year ended December 31, 2017 was primarily attributable to lower policy acquisition costs and advertising expenses compared to the year ended December 31, 2016.
Income tax expense (benefit) was $22.2 million and $(2.3) million for the years ended December 31, 2017 and 2016, respectively. The $24.5 million increase in income tax expense was mainly due to a significant increase in pre-tax income of $96.4 million, partially offset by a net tax benefit of approximately $7.4 million resulting from the income tax effect of the Act.
The table excludes liabilities of $11.5 million related to uncertainty in tax settlements as the Company is unable to reasonably estimate the timing and amount of related future payments.
which is the option vesting term of four years. The Company estimates forfeitures expected to occur in determining the amount of compensation cost to be recognized in each period. The fair value of stock option awards is estimated using the Black-Scholes option pricing model with the grant-date assumptions and weighted-average fair values.
At December 31, 2018 and 2017, the Company did not have any nonrecurring fair value measurements of nonfinancial assets or nonfinancial liabilities.
Debt maturities for each of the next five years and thereafter as of December 31, 2018 are as follows:
The increase in the provision for insured events of prior years in 2016 of approximately $85.4 million primarily resulted from the California and Florida automobile lines of business which experienced higher loss severity on liability coverages including bodily injury, combined single limits and property damage than was originally estimated.
In February 2016, 88,074 shares of common stock, net of 58,822 shares withheld for payroll taxes, were issued upon vesting of 146,896 RSUs awarded in 2013 resulting from the attainment of performance goals above the target threshold during the three-year performance period ended December 31, 2015.
Net income for 2018 was primarily attributable to net premiums earned, net investment income and income tax benefit on pre-tax loss, partially offset by net realized investment losses, operating expenses and losses and loss adjustment expenses, including catastrophe losses and unfavorable development on prior accident years' loss and loss adjustment expense reserves. The primary causes of the net loss for the fourth quarter of 2018 were the decreases in the fair values of the Company’s fixed maturity and equity securities due to the rising market interest rates and the overall decline in the equity markets.