We also took advantage of favorable market conditions in 2010 to issue $350.0 million of long-term debt due in 2020 at a fixed rate of interest of 6.25%, which replaced our variable rate $200.0 million revolving short-term borrowing and provided funds for general corporate purposes. Over the long term, we believe the issuance of these notes and reduction of short-term borrowing will be accretive to our return on shareholders’ equity by lowering our weighted average cost of capital and will provide us greater capital flexibility.
Within our life and annuity reinsurance segment, we have not been able to identify many meaningful opportunities to write new life and annuity reinsurance contracts where we can earn an attractive investment spread. As a result, we have determined not to write any new life and annuity reinsurance contracts in the foreseeable future.
(5) Gross and net reserve for property and casualty losses includes, for the first time, Alterra Capital UK, which we acquired in November 2008.
Fair value prices for all securities in our fixed maturities portfolio are independently provided by our investment custodian, investment accounting service provider and our investment managers, which each utilize internationally recognized independent pricing services. We record the unadjusted price provided by the investment custodian or the investment accounting service provider after an internal validation process. Our validation process includes: (i) comparison to the price provided by the investment manager, with significant differences investigated; (ii) quantitative analysis (e.g., comparing the quarterly return for each managed portfolio to its target benchmark, with significant differences identified and investigated); (iii) evaluation of methodologies used by external parties to calculate fair value; and (iv) comparing the price to our knowledge of the current investment market.
(d) The combined ratio is the sum of the loss ratio, the acquisition cost ratio and the general and administrative expense ratio for the property and casualty business.
Gross premiums written for the year ended December 31, 2009 increased by 9.6% compared to the year ended December 31, 2008. The increase was primarily due to growth across all of our property and casualty segments. A significant proportion of this growth came from our Alterra at Lloyd’s segment, which was acquired as an ongoing operation in November 2008. The property and casualty premium growth was partially offset by a decrease in gross premiums written in our life and annuity reinsurance segment.
The decrease in loss ratio described above was partially offset by an increase in net losses related to property catastrophe events and significant per-risk losses. For the year ended December 31, 2010, our results included net losses of $54.9 million related to property catastrophe events and significant per-risk losses. For the year ended December 31, 2009, our results included net losses of $8.9 million for such events.
Acquisition costs. Our acquisition cost ratio for the year ended December 31, 2010 increased by 3.9 percentage points compared to the year ended December 31, 2009. The ratio for the year ended December 31, 2009 increased by 2.9 percentage points compared to the year ended December 31, 2008. The insurance and reinsurance contracts we write have a wide range of acquisition cost ratios. Changes in the mix of business written and earned changes our acquisition cost ratio from year to year. The increase in the acquisition cost ratio for the year ended December 31, 2010 was principally due to changes in the mix of business written, partially influenced by the additional net premiums earned from the former Harbor Point companies. The Harbor Point portfolio of contracts contains a higher proportion of quota share contracts, which generally carry higher acquisition cost ratios than excess of loss contracts. Also contributing to the increase in the ratio for 2010 was the decrease in the level of reinsurance purchased across all of our segments, but in particular our U.S. specialty segment. As we have retained more business in our segments, we have received less ceding commission income to offset our brokerage and commission costs, which increases our acquisition cost ratio.
(c) The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned.
The net favorable development in the year ended December 31, 2010 reflected better than expected loss emergence. Favorable loss development principally emerged on the 2008 and 2009 years for the property line of business, on the 2002 - 2009 years for the general casualty line of business and on the 2005 and prior years for the workers compensation lines of business. This favorable loss development was partially offset by adverse development principally on the 2004 and 2008 - 2009 years for the professional liability line of business, the 2005 - 2009 years for the marine & energy line of business and the 2007 and 2009 years for the aviation line of business;
We are able to redeem our hedge fund portfolio on the same terms that the underlying funds can be liquidated. In general, the funds in which we are invested require at least 30 days notice of redemption, and may be redeemed on a monthly, quarterly, semi-annual, annual or longer basis, depending on the fund.