Underwriting and general and administrative expenses, excluding the loss on the termination of a financing transaction with a related party reinsurer (namely, Centre Re), increased $23.7 million or 99.2% to $47.5 million for the year ended December 31, 1998, as compared to the same period in 1997. This increase consists of a $6.6 million write-off of goodwill, associated with the Pac Rim acquisition, reflected in underwriting expense. In addition to the $6.6 million write-off of goodwill, a $9.9 million increase was primarily due to the increase in written premium as a result of the Quota-Share Arrangement, as well as, the acquisition of SPCC and a $5.6 million increase related to the addition of BIG insurance subsidiaries. This increase was also partially due to a $1.8 million expense related to the ZRNA Commutation. Net commission expense decreased $23.2 million or 167.5% to ($9.3) million for the year ended December 31, 1998, as compared to the same period in 1997. The decrease in net commission expense was mainly due to $31.1 million in ceded commission related to the Quota-Share Arrangement, which was partially offset by an increase in gross commission expense related to the BIG insurance subsidiaries, as well as, an increase in gross written premium. Net underwriting and general and administrative expenses, excluding the loss on the termination of a financing transaction with a related party reinsurer, increased 1.3% to $38.2 million for the year ended December 31, 1998 from $37.7 million in the same period of 1997, reflecting the changes discussed above.
Interest expense decreased $5.0 million or 79.1% to $1.3 million for the year ended December 31, 1998, as compared to the year ended December 31, 1997. The decline in interest expense was primarily due to the repayment in the fourth quarter of 1997 of all long-term debt with funds obtained through the sale of the Trust Preferred Securities. The $1.3 million interest expense for 1998 consisted primarily of interest from the funds withheld balance associated with the Quota-Share Arrangement and interest from the $110.0 million in senior debt financing incurred in December 1998.
Discontinued operations claim counts and net claim and claim adjustment expense reserves as of December 31, 1998 were 226 and $8.9 million, respectively, as compared to 215 and $13.5 million as of December 31, 1997. These amounts and estimates are consistent with management's expectations. We have
significant exposure to construction defect liabilities on P&C insurance policies underwritten from 1986 to 1993. We continue to monitor closely our potential exposure to construction defect claims and have not changed our estimates of ultimate claim and claim adjustment expense on discontinued operations since 1995. We believe our current reserves are adequate to cover our claim liabilities. There can be no assurance, however, that further upward development of ultimate loss costs associated with construction defect claims will not occur. See "Business--Discontinued Operations."
We generated $277.5 million in cash from financing activities during the year ended December 31, 1998, as compared to cash generated of $81.6 million in 1997. During 1998, we received approximately $298.2 million from the issuance and sale of common stock and the incurrence of senior debt in connection with our acquisition of BIG. Partially offsetting the proceeds from these financing activities was $15.9 million in reinsurance deposits to ZRNA associated with a reinsurance contract, and $5.1 million to purchase 245,000 shares of our common stock, which are held by SNIC as treasury stock on a GAAP basis. The common stock acquired by SNIC was purchased in a single transaction from Thomas J. Jamieson, a director of SNIG, and Jaco Oil Company, an entity controlled by Mr. Jamieson. The purchase price of $21.00, for total consideration of $5,145,000. The closing sales price per share of common stock on June 10, 1998 was $22.88. SNIG's Board of Directors, with disclosure of the conflicts of interest, unanimously approved SNIC's purchase of the common stock. During 1997, we repaid outstanding bank debts and redeemed the outstanding preferred stock issued in 1994 by an affiliate for a total use of cash of $79.2 million. Partially offsetting the use of cash were the proceeds from the sale of the Trust Preferred Securities and the incurrence of bank debt and the issuance and sale of common stock in connection with our acquisition of SPCC totaling $160.8 million. Our financing activities in 1996 consisted primarily of the November 1996 Chase loan discussed below.
We are developing a contingency plan to deal with certain IT and non-IT Year 2000 issues. We expect to fully develop this plan by the third quarter of 1999 to address specific areas of need. We believe that most functions currently performed by our information systems could be performed manually or outsourced if certain systems were not to be Year 2000 compliant by January 1, 2000. We believe that we are not exposed to the risk of significant data loss because our IT systems are backed-up at the end of each business day.
Also, in June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard, 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"). This statement specifies revised guidelines for determination of an entity's operating segments and the type and level of financial information to be disclosed. SFAS 131 is effective for periods ending after December 15, 1997, including interim periods. Our adoption of SFAS 131 has not had any impact on our current financial reporting practices.
In December 1997, the AICPA Accounting Standards Executive Committee issued Statement of Position (SOP) 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments," which focuses on the timing of recognition and measurement of liabilities for insurance-related assessments. The SOP is effective for fiscal years beginning after December 15, 1998. The adoption of this pronouncement is not expected to have a material effect on our financial statements.