Net premiums written increased by 3% in 2013 compared with 2012 and 1% in 2012 compared with 2011. Net premiums written in the United States, which in 2013 represented 75% of our total net premiums, increased by 4% in 2013 and 2% in 2012 compared with the respective prior year. Net premiums written outside the United States, expressed in U.S. dollars, were flat in 2013 and decreased by 3% in 2012. In both 2013 and 2012, foreign currency translation had a negative impact on growth of net premiums written outside the United States, reflecting the impact of the stronger U.S. dollar relative to several currencies in which we wrote business in each year compared to the respective prior year. Measured in local currencies, net premiums written outside the United States grew modestly in 2013 and grew slightly in 2012. The countries outside the United States which were significant contributors to net premiums written in recent years were the United Kingdom, Canada, Brazil, Australia and Germany.
In both 2013 and 2012, overall premium growth in our commercial insurance business was driven by an increase in business written in the United States. Net premiums written outside the United States were flat in 2013 and decreased modestly in 2012 compared with the respective prior year. The decrease in 2012 was due in part to the negative impact of foreign currency translation. Premium growth for our commercial insurance business in both years reflected higher rates, particularly in the United States. Premium growth was limited in most classes of business, however, by a market that remained highly competitive and offered only limited attractive new business opportunities. In both 2013 and 2012, significant growth occurred in the workers’ compensation class as a result of a high level of rate increases, a high retention level as well as new business opportunities. Growth in the workers’ compensation class in 2012 also reflected the positive impact of higher audit premiums. The positive
Property and marine results were highly profitable in 2013 compared with highly unprofitable results in 2012 and 2011. The significant improvement in results in 2013 compared with the results in 2012 and 2011 was primarily due to a significantly lower impact of catastrophes. The impact of catastrophes accounted for 4.3 percentage points of the combined loss and expense ratio in 2013 compared with 31.6 percentage points in 2012 and 24.9 percentage points in 2011. Excluding the impact of catastrophes, the combined ratio was 70.3%, 83.4% and 89.8% in 2013, 2012 and 2011, respectively. On this basis, the improved results in 2013 and 2012 compared with the respective prior year reflected a lower current accident year loss ratio excluding catastrophes, partly due to improved pricing and a lower impact from large losses. Results in 2013 also reflected a significant amount of favorable prior year loss development.
The determination of whether a decline in value of any investment is temporary or other than temporary requires the judgment of management. The assessment of other-than-temporary impairment of fixed maturities and equity securities is based on both quantitative criteria and qualitative information. A number of factors are considered including, but not limited to, the length of time and the extent to which the fair value has been less than the cost, the financial condition and near term prospects of the issuer, whether the issuer is current on contractually obligated interest and principal payments, general market conditions and industry or sector specific factors. The decision to recognize a decline in the value of a security carried at fair value as other than temporary rather than temporary has no impact on shareholders’ equity.
The maximum dividend distributions that the property and casualty subsidiaries could have paid to Chubb during 2013, 2012 and 2011 without prior approval were approximately $1.6 billion, $1.8 billion and $2.0 billion, respectively. During 2013, 2012 and 2011 these subsidiaries paid dividends to Chubb of $1.6 billion, $1.8 billion and $2.7 billion, respectively. Included in the dividends paid in 2012 and 2011 were $830 million and $2.5 billion, respectively, of dividends deemed to be extraordinary under applicable insurance regulations due to the limitation on the amount of dividends that may be paid within twelve consecutive months. Regulatory approval was required and obtained for the payment of these dividends. Whether any dividends the property and casualty subsidiaries may pay in 2014 require regulatory approval will depend on the amount and timing of the dividend payments. The maximum aggregate dividend distribution that may be made by the subsidiaries to Chubb during 2014 without prior regulatory approval is approximately $2.0 billion.
Fair values of warrants are determined by management, utilizing an option pricing model.