Other operating income has been generated through our insurance services operations, which supported our own operations as well as provided services for other clients. Additionally, other operating income may include the equity in the earnings of a company in which we invest, dividends or gains or losses from the disposition of these investments. In 2001, we sold the last of our service operations, which will result in a decrease in other operating income in future years.
Late in 1999, primarily due to a reduction in reinsurance capacity, rates began to increase, particularly in our life, accident and health, and aviation lines of business. These market conditions continued to improve during 2000 and 2001 and also in our marine, energy and property line of business. This improvement accelerated after the September 11 terrorist attacks and we expect this to continue in 2002. In response to these changing market conditions, we plan to continue to expand our underwriting activities.
During 2001, we had net loss and loss adjustment expense redundancy of $10.7 million relating to prior year losses compared to a redundancy of $9.6 million in 2000 and we had gross loss and loss adjustment expense deficiency of $44.5 million compared to a redundancy of $1.9 million in 2000. The gross deficiency for 2001 resulted from rate reported loss information received during 2001. These losses primarily came from assumed reinsurance business written by one of our insurance companies. The other deficiencies and redundancies result from our continued review with our actuaries of loss reserves and the increase or reduction of such reserves as losses are finally settled and claims exposures are reduced. We continue to believe we have provided for all material net incurred losses.
We maintain a substantial level of cash and liquid short-term investments which are used to meet anticipated payment obligations. Our consolidated cash and investment portfolio increased $180.3 million, or 25% during 2001, and totaled $905.4 million as of December 31, 2001, of which $355.8 million was cash and short-term investments. The increase in investments resulted primarily from operating cash flows and the $60.0 million in capital contributions we made to our insurance companies in 2002. Total assets increased to $3.2 billion as of December 31, 2001.
options. This could subject us to reinvestment risk should interest rates fall or issuers call their securities and we reinvest the proceeds at lower interest rates. We mitigate this risk by investing in securities with varied maturity dates, so that only a portion of our portfolio will mature at any point in time.
See preceding paragraphs and Notes (5) and (9) in Notes to the Consolidated Financial Statements for additional information of these obligations. The convertible notes have various put dates beginning September 1, 2002.
All of the property and casualty policies written by our insurance companies qualify as short-duration contracts as defined by current accounting literature. Written premium, net of reinsurance, is primarily included in earnings on a pro rata basis over the lives of the related policies. However, for certain types of business, it is recognized over the period of risk in proportion to the amount of insurance risk provided. Policy acquisition costs, including commissions, taxes, fees and other direct costs of underwriting policies, less ceding commissions allowed by reinsurers, including expense allowances, are deferred and charged or credited to earnings proportionate to the premium earned. Historical and current loss and loss adjustment expense experience and anticipated investment income are considered in determining premium deficiencies and the recoverability of deferred policy acquisition costs.