Over the five years ended December 31, 2016, our equity portfolio compound annual total return was 13.3 percent compared with a compound annual total return of 14.7 percent for the Index. Our equity portfolio favors larger-capitalization, high-quality, dividend growing stocks with a slight value orientation. In recent years, returns for this type of stocks have generally lagged the broader market. For the year 2016, our annual equity portfolio total return was 18.2 percent, compared with 12.0 percent for the Index.
Exposure levels. Historical earned premiums, when adjusted to reflect common levels of product pricing and loss cost inflation, can serve as a proxy for historical exposures. Our actuaries require this assumption to estimate ultimate loss ratios and ultimate DCCE ratios used by the Bornhuetter-Ferguson reserving methods. They may also use this assumption to establish exposure levels for recent accident years, characterized by “green” or immature data, when working with probabilistic trend family models.
the security. The difference between the net present value of the expected future cash flows and amortized cost of the security is considered a credit loss and recognized as a realized loss in the period in which it occurred. The difference between the fair value and the net present value of the cash flows of the security, the noncredit loss, is recognized in other comprehensive income as an unrealized loss.
The 59.8 percent ratio for current accident year loss and loss expenses before catastrophe losses for 2016 decreased 0.6 percentage points compared with the 60.4 percent accident year 2015 ratio measured as of December 31, 2015. Contributors to the decrease included favorable effects from initiatives, such as ones to improve pricing precision and loss experience related to claims and loss control practices, and were partially offset by more current accident year losses of $1 million or more per claim, shown in the table below.
Commercial auto, representing 19 percent of 2016 earned premiums for our commercial lines insurance segment, was the only major line of business in that segment with a 2016 total loss and loss expense ratio significantly higher than we desired. During 2016, our commercial auto policies experienced average renewal price percentage increases in the mid-single-digit range, which we believe will help improve future profitability. We also continued to improve premium rate classification and use of other rating variables in risk selection and pricing.
Our 3 percent increase in 2016 agency renewal written premiums included higher average pricing. We measure average changes in commercial lines renewal pricing as the rate of change in renewal premium for the new policy period compared with the premium for the expiring policy period, assuming no change in the level of insured exposures or policy coverage between those periods for respective policies. In 2016, our standard commercial lines policies averaged an estimated pricing change at a percentage in the low-single-digit range, slightly lower than in 2015 that was near the middle of that range, compared with near the high end of that range in 2014. Our average commercial lines pricing change includes the flat pricing effect of certain coverages within package policies written for a three-year term that were in force but did not expire during the period being measured. Therefore, the average
Catastrophe losses, as discussed in Consolidated Property Casualty Insurance Results, explain much of the movement in current accident year loss and loss expense ratio for accident year 2016, compared with accident year 2015. Catastrophe losses added 9.7 percentage points in 2016, 6.5 points in 2015 and 8.8 points in 2014 to the respective personal lines current accident year loss and loss expense ratios in the table above. Personal lines catastrophe losses for 2016 resulted in a ratio near our 10.9 percent 10-year annual average for personal lines that included 22.8 percent for 2011. Our personal lines catastrophe loss ratios for 2015 and 2014 were closer to our 8.7 percent 10-year annual average for the years 2001 through 2010. Personal lines catastrophe losses also are inherently volatile, as discussed above and in Consolidated Property Casualty Insurance Results.
Combined ratio - The combined ratio improved 3.0 percentage points in 2016, primarily due to improved experience in current accident year losses and loss expenses before catastrophe losses that reflects careful underwriting.
Total investment return of 8.5 percent in 2016 was significantly more than in 2015. The 2016 contribution from all three components of total investment return was higher than in 2015. Investment income rose $23 million, realized investment gains rose $54 million and the invested assets net change in unrealized gains and losses rose $1.150 billion. The base component of the return calculation, annual average invested assets, was down less than 1 percent in 2016. For 2015 compared with 2014, total investment return declined 7.7 percentage points. The return contribution from the combination of 2015 investment income realized investment gains was nearly offset by a negative contribution from the net change in unrealized gains and losses. The base component of the return calculation, annual average invested assets, was up 7 percent in 2015.
$2 million in OTTI charges to write down four holdings of equity and fixed-maturity securities.
The $225 million unsecured revolving line of credit is administered by PNC Bank, N.A., a subsidiary of The PNC Financial Services Group Inc. (NYSE:PNC). The agreement was established in 2012, extended for two years in 2014, and will expire in May 2019. Our subsidiary CFC Investment Company also is a borrower under this line of credit. PNC Bank is the lead participant bookrunner with a $65 million share. Fifth Third Bancorp (Nasdaq:FITB) is the syndication agent with a $65 million share. U.S. Bancorp (NYSE:USB), BB&T Corp (NYSE:BBT) and Huntington Bancshares, Inc. (Nasdaq:HBAN) each provide $25 million of capacity, and Northern Trust Corporation (Nasdaq:NTRS), provides $20 million of capacity.
Currently participating on our standard market property and casualty per-risk and per-occurrence reinsurance ceded programs are Hannover Reinsurance Company, Munich Reinsurance America, Partner Reinsurance Company of the U.S. and Swiss Reinsurance America Corporation, all of which had A.M. Best insurer financial strength ratings of A (Excellent) or better as of December 31, 2016. Our property catastrophe program is subscribed through a broker by reinsurers from the United States, Bermuda, London and the European markets. The largest participant in our property catastrophe program, representing approximately 48 percent of total participation, is the Lloyds of London placement that features numerous syndicates, with Amlin Underwriting Limited and the Catlin Syndicate taking the largest participations. Other primary participants in our property catastrophe program include Liberty Syndicate, R.J. Kiln & Company Limited, and Fidelis.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Cincinnati Financial Corporation and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The consolidated property casualty companies actively write property casualty insurance through independent agencies in 41 states. Our 10 largest states generated 61 percent and 62 percent of total earned premiums in 2016 and 2015, respectively. Ohio, our largest state, accounted for 17 percent of total earned premiums in 2016 and 2015. Illinois, Indiana, Georgia, North Carolina, Pennsylvania and Michigan each accounted for between 5 percent and 7 percent of total earned premiums in 2016. Our largest single agency relationship accounted for less than 1 percent of our total property casualty earned premiums in 2016. No aggregate agency relationship locations under a single ownership structure accounted for more than 4 percent of our total property casualty earned premiums in 2016. We record revenues for installment charges as fee revenues in the consolidated statements of income.
No premium deficiencies were recorded in the consolidated statements of income in 2016, 2015 and 2014, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income.
This table includes unaudited quarterly financial information for the years ended December 31, 2016 and 2015: