Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses (“LAE”) incurred represent our largest expense item and, for any given reporting period, include estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending and servicing claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and loss adjustment expenses related to estimates of future claim payments based on case-by-case valuations and statistical analysis. We seek to establish all reserves at the most likely ultimate exposure based on our historical claims experience. It is typical for our more serious bodily injury claims to take several years to settle, and we revise our estimates as we receive additional information about the condition of injured employees and claimants and the costs of their medical treatment. Our ability to estimate loss and loss adjustment expenses accurately at the time of pricing our insurance policies is a critical factor in our profitability.
It is important to understand our accounting policies in order to understand our financial statements. These policies require us to make estimates and assumptions. Our management has discussed the development, selection and disclosure of the estimates and assumptions we use with the Audit Committee of our Board of Directors. These estimates and assumptions affect the reported amounts of our assets, liabilities, revenues and expenses and the related disclosures. Some of the estimates result from judgments that can be subjective and complex, and, consequently, actual results in future periods might differ significantly from these estimates.
Extended Warranty segment because warranty is short-duration business. Claims are generally reported immediately after they occur and are closed within months of reporting. In the Specialty Risk and Extended Warranty segment, the reserve for unearned premium is, in general, an estimate of our liability for projected future losses emanating from the unearned portion of written policies and is inherently more uncertain. Approximately 69% of polices written have policy terms exceeding one year and currently range between 13 months and 120 months. A portion of these policies are earned on a method other than evenly over the contract period. For those policies that are not earned evenly over the contract period, they are earned over the period of risk in proportion to the amount of insurance protection provided. As of December 31, 2014, we had unearned premium of approximately $749.4 million on these policies. An upward/downward movement of 5% on the entire pool of the earn out pattern for these policies would result in an increase/decrease in unearned premium of approximately $37.5 million. In 2014, we had no material changes to prior period estimates of these claim patterns. Our liability for return of unearned premium is not significant.
Income Before Other Income (Expense), Income Taxes and Equity in Earnings of Unconsolidated Subsidiaries. Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries increased $92.7 million, or 26.1%, to $448.4 million from $355.8 million for the years ended December 31, 2014 and 2013, respectively. The change in income from 2014 to 2013 resulted primarily from the increase in underwriting income of approximately $112 million and an increase in income from our investment portfolio of $47 million, partially offset by higher goodwill impairment in 2014.
Service and Fee Income. Service and fee income increased $159.4 million, or 92.6%, to $331.6 million from $172.2 million for the years ended December 31, 2013 and 2012, respectively. The increase primarily related to additional fee income from acquisitions, as well as organic growth. We produced additional fee income of approximately $115 million during the year ended December 31, 2013 related to the acquisitions of CCPH and AMTCS in 2013, and FNC and CNH in the second half of 2012. We also increased our warranty administration fees by approximately $13 million in 2013 compared to 2012. Additionally, we had higher technology fee income from NGHC of approximately $10 million and higher reinsurance brokerage fees from Maiden of approximately $9 million.
We may generate liquidity through a combination of debt or equity securities issuances, as well as financing through borrowing and sales of securities. During 2014, we issued $185 million of preferred stock and completed a convertible debt exchange and issuance, which resulted in cash proceeds of approximately $68 million. Additionally, we amended our existing revolving credit facility to increase our borrowing capacity from $200 million to $350 million, and we amended our £200 million funds at Lloyd's credit facility to increase our borrowing capacity to £235 million. In 2013, we issued $250 million of our 6.125% notes due 2023, $115 million of preferred stock and entered into a £200 million credit facility to support our Lloyd's underwriting capacity.
We forecast claim payments based on our historical trends. We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short-term and long-term basis. Cash payments for claims were $1,441.2 million, $953.2 million, and 691.7 million in 2014, 2013 and 2012, respectively. Historically, we have funded claim payments from cash flow from operations (principally premiums) net of amounts ceded to our third party reinsurers. We presently expect to maintain sufficient cash flow from operations to meet our anticipated claim obligations and operating and capital expenditure needs. Our total investment portfolio has increased from $4.47 billion (excluding $25.7 million of other investments) at December 31, 2013 to $5.51 billion (excluding $31.2 million of other investments) at December 31, 2014. We do not anticipate selling securities in our investment portfolio to pay claims or to fund operating expenses. Should circumstances arise that would require us to do so, we may incur losses on such sales, which would adversely affect our results of operations and financial condition and could reduce investment income in future periods.
Loss and loss expense reserves increased $1,296.0 million and unearned premium increased $766.2 million in 2014 due primarily to higher premium writings in 2014 compared to 2013 as well as assumed amounts from acquisitions in 2014. Accrued expenses and other liabilities increased $123.3 million primarily from acquisitions and increases in premium taxes, assessments and surcharges payable related to growth in premiums. Debt increased by $197.7 million in 2014 primarily as a result of borrowings on our revolving credit facility of $120 million and a net increase of approximately $50 million related to convertible debt associated with an exchange of 2021 Notes and issuance of 2044 Notes in 2014.