were higher in 2011 due to a higher level of catastrophe losses, and foreign currency fluctuations, gross written premiums were up 2% year over year. Net written premiums decreased 0.7% to $4,081.1 million in 2012 compared to $4,108.9 million in 2011. The variance between the changes in gross and net written premiums was primarily attributable to the growth in the crop business, for which the Company uses a higher level of reinsurance. Premiums earned increased by 1.5% to $4,164.6 million in 2012, compared to $4,101.3 million in 2011. The fluctuations in premiums earned in comparison to net written premiums were primarily attributable to changes in the mix of business, particularly crop insurance which has a different premiums earning pattern.
Our net income was $829.0 million in 2012 and our net loss was $80.5 in 2011. The increase was primarily driven by the decline in catastrophe losses in 2012.
From time to time, we have used open market share repurchases to adjust our capital position and enhance long term expected returns to our shareholders. On July 21, 2008, our existing authorization to purchase up to 5 million of our shares was amended to authorize the purchase of up to 10 million shares. On February 24, 2010, our existing authorization to purchase up to 10 million of our shares was amended to authorize the purchase of up to 15 million shares. On February 22, 2012, our existing authorization to purchase up to 15 million of our shares was amended to authorize the purchase of up to 20 million shares. As of December 31, 2012, we had repurchased 15.7 million shares under this authorization.
Our liquidity requirements are generally met from positive cash flow from operations. Positive cash flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, which disbursements generally take place over an extended period after the collection of premiums, sometimes a period of many years. Collected premiums are generally invested, prior to their use in such disbursements, and investment income provides additional funding for loss payments. Our net cash flows from operating activities were $663.9 million, $659.5 million and $918.5 million for the years ended December 31, 2012, 2011 and 2010, respectively. Additionally, these cash flows reflected a net tax payment of $59.8 million and net tax refunds of $44.5 million and $31.0 million for the years ended December 31, 2012, 2011 and 2010, respectively; net catastrophe loss payments of $551.3 million, $559.2 million and $410.8 million for the years ended December 31, 2012, 2011 and 2010, respectively; and net A&E payments of $54.6 million, $53.5 million and $80.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Interest rate risk is the potential change in value of the fixed maturity securities portfolio, including short-term investments, from a change in market interest rates. In a declining interest rate environment, it includes prepayment risk on the $2,480.3 million of mortgage-backed securities in the $13,183.1 million fixed maturity portfolio. Prepayment risk results from potential accelerated principal payments that shorten the average life and thus the expected yield of the security.