Dividends. The quarterly dividend has been maintained at $0.15 per ordinary share for 2008, 2009 and 2010. Dividends paid on the preference shares in 2010 were $22.8 million. Dividends paid on the preference shares in 2008 were $27.7 million while in 2009, payments reduced to $23.8 million as a result of repurchasing 2.7 million of our 7.401% $25 liquidation value preference shares (NYSE:AHL-PA) at a price of $12.50 per share.
We refer to premiums receivable which are not fixed at the inception of the contract as adjustment premiums. The proportion of adjustable premiums included in the premium estimates varies between business lines with the largest adjustment premiums associated with property and casualty reinsurance business and the smallest with property and liability insurance lines.
Actuarial range of gross reserves. We show in the following table, the 10th percentile, 25th percentile, actuarial mean estimate, 75th percentile and 90th percentile together with the actual percentile that the selected loss reserves represent. The following table sets out the actuarial range of gross reserves for each of our segments and compares it to management’s selected best estimate as at December 31, 2010. Management’s selected reserves include unallocated claims handling expenses which remain unchanged across all reserve distributions.
Investments. We currently classify all except $409.9 million of our fixed maturity investments and short-term investments as “available for sale” and, accordingly, they are carried at estimated fair value. The Company uses quoted values and other data provided by internationally recognized independent pricing sources as inputs into its process for determining the fair value of its fixed income investments. Where multiple quotes or prices are obtained, a price source hierarchy is maintained in order to determine which price source provides the fair value (i.e., a price obtained from a pricing service with more seniority in the hierarchy will be used over a less senior one in all cases). The hierarchy prioritizes pricing services based on availability and reliability and assigns the highest priority to index providers. For mortgage-backed and other asset-backed debt securities, fair value includes estimates regarding prepayment assumptions, which are based on current market conditions. Amortized cost in relation to these securities is calculated using a constant effective yield based on anticipated prepayments and estimated economic lives of the securities. When actual prepayments differ significantly from anticipated prepayments, the effective yield is recalculated to reflect actual payments to date. Changes in estimated yield are recorded on a retrospective basis, which result in future cash flows being used to determine current book value. See additional information below under “Valuation of Investments.”
Gross premiums earned. Gross premiums earned reflect the portion of gross written premiums which are recorded as revenues over the policy periods of the risks we write. The earned premium recorded in any year includes premium from policies incepting in prior years and excludes premium to be earned subsequent to the balance sheet date. Gross premiums earned in the year 2010 increased by 2.9% compared to 2009 reflecting the higher written premium earlier in the year and the $12.0 million of reinstatement premiums from the Chilean earthquake.
Income before tax. In 2010, income before tax was $340.3 million and comprised mainly $63.1 million of underwriting profit, $232.0 million in net investment income and $50.6 million of realized investment gains. In 2009, income before tax was $534.7 million and comprised $288.4 million of underwriting profit and $248.5 million in net investment income. In 2008, income before tax was $140.2 million and comprised $74.8 million of underwriting profit, $139.2 million in net investment income and $47.9 million of realized investment. The decrease in income in 2010 when compared to 2009 was due principally to natural catastrophe losses from the earthquakes in Chile and New Zealand. The increase in income in 2009 compared to 2008 was due principally to an absence of catastrophes and improved investment performance. Further, 2008 was adversely impacted as a result of the financial crisis which contributed to lower investment income and losses from Hurricane Ike.
Non-underwriting Disclosures: We have provided additional disclosures for corporate and other (non-underwriting) income and expenses. Corporate and other includes net investment income, net realized and unrealized investment gains or losses, corporate expenses, interest expense, net realized and unrealized foreign exchange gains or losses and income taxes, which are not allocated to the underwriting segments. Corporate expenses are not allocated to our operating segments as they typically do not fluctuate with the levels of premium written and are related to our operations. They include group executive costs, group finance, legal and actuarial costs, non-underwriting share-based compensation and certain strategic costs including new teams which have not commenced underwriting.
accident years 2009 and prior. For the reinsurance segment, the main events which impacted the reserves were the earthquakes in Chile and New Zealand in 2010 while we have seen overall favorable experience from prior years. The insurance segment did not have material exposure to either earthquake in 2010 in Chile and New Zealand; the largest loss related to a pipeline pollution incident. The level of reserves in insurance also reflect prior year strengthening particularly in the casualty and financial and professional lines.
Reinsurance. Net reserve releases of $65.6 million in the year were attributed to all of our reinsurance lines. The largest release was seen in other property reinsurance where we released $43.7 million due largely to better than expected loss experience. Casualty reinsurance has experienced a lower level of releases than in previous years with some areas with exposure to the global financial crisis being strengthened. We have released $17.5 million from specialty reinsurance spread across several accounts and several years where the experience was better than expected.
Funds at Lloyd’s. AUL operates in Lloyd’s as the corporate member for Syndicate 4711. Lloyd’s determines Syndicate 4711’s required regulatory capital principally through the syndicate’s annual business plan. Such capital, called Funds at Lloyd’s, comprises cash, investments and a fully collateralized letter of credit. The amounts of cash, investments and letter of credit at December 31, 2010 amount to $230.3 million (December 31, 2009 - $219.8 million).