The three months ended December 31, 2011 included non-recurring termination fee income of $66.7 million from our previously-announced merger agreement with Transatlantic.
In terms of liquidity, our contractual obligations for reserves for losses and loss expenses would also increase or decrease by approximately $610.6 million after reinsurance recoverable. If our obligations were to increase, we believe we currently have sufficient cash and investments to meet those obligations.
While we believe that the U.S. insurance segment reporting unit is not at risk of failing step one of the goodwill impairment test, the process of determining whether or not an asset, such as goodwill, is impaired or recoverable relies on projections of future cash flows, operating results and market conditions. Such projections are inherently uncertain and, accordingly, actual future cash flows may differ materially from projected cash flows. In evaluating the recoverability of goodwill, we perform a discounted cash flow analysis. The discounted cash value may be different from the fair value that would result from an actual transaction between a willing buyer and a willing seller. Such analyses are particularly sensitive to changes in discount rates and investment rates. Changes to these rates might result in material changes in the valuation and determination of the recoverability of goodwill. For example, an increase in the rate used to discount cash flows will decrease the discounted cash value. There is likely to be a similar, but not necessarily as large as, increase in the investment rate used to project the cash flows resulting from investment income earned on our investments. Accordingly, an increase in the investment rate would increase the discounted cash value.
Corporate income tax expense or benefit is generated through our operations in Bermuda, Europe, Hong Kong, Singapore and the United States. Our income tax expense or benefit may fluctuate significantly from period to period depending on the geographic distribution of pre-tax net income or loss in any given period between different jurisdictions with different tax rates. The geographic distribution of pre-tax net income or loss can vary significantly between periods principally due to the geographic location of the business written, the mix of business and the profitability of such business; the geographic location of investment income; the geographic location of net losses and loss expenses incurred; and the amount of inter-company reinsurance utilized for rating agency purposes.
Income tax expense decreased by $12.6 million for the year ended December 31, 2012 compared to the year ended December 31, 2011. The decrease is due to the lower income before income taxes in the United States due to the losses from Superstorm Sandy and the drought in the United States. In addition, the year ended December 31, 2011 also included higher taxable income from our holding company in Switzerland of approximately $90.6 million due to the merger termination fee income received.
General and administrative expenses decreased by $14.9 million, or 5.2%, for the year ended December 31, 2011 compared to the year ended December 31, 2010. The decrease in general and administrative expenses was primarily due to the following:
The following table summarizes the underwriting results and associated ratios for the international insurance segment for the years ended December 31, 2012, 2011 and 2010.
Net losses and loss expenses. Net losses and loss expenses increased by $46.4 million, or 29.0%, for the year ended December 31, 2011 compared to the year ended December 31, 2010. The loss and loss expense ratio increased by 17.9 percentage points for the same period. The increase in net losses and loss expenses was primarily due to higher loss activity in the current period and lower net favorable reserve development recognized.
Net losses and loss expenses. Net losses and loss expenses increased by $115.3 million, or 46.1%, for the year ended December 31, 2011 compared to the year ended December 31, 2010. The loss and loss expense ratio increased by 16.0 percentage points for the same period. The increase in net losses and loss expenses was due to growth in net premiums earned and increased property catastrophe losses, partially offset by higher favorable net prior year reserve development in 2011 compared to 2010.
Historically, our operating subsidiaries have generated sufficient cash flows to meet all of their obligations. Because of the inherent volatility of our business, the seasonality in the timing of payments by insureds and