General and administrative expenses in 2018 were $4.30 billion, $127 million or 3% higher than in 2017, primarily reflecting the impacts of (i) the acquisition of Simply Business in August 2017 and (ii) variable costs associated with higher business volumes. General and administrative expenses in 2017 were $4.17 billion, comparable with 2016. General and administrative expenses are discussed in more detail in the segment discussions that follow.
Other revenues in all years presented included installment premium charges and other policyholder service charges. Other revenues in 2018 and 2017 included revenues from Simply Business, which was acquired in August 2017. Other revenues in 2017 and 2016 also included gains related to the settlement of reinsurance disputes. Additionally, other revenues in 2016 included proceeds from the favorable settlement of a claims-related legal matter.
Catastrophe losses in 2018 and 2017 accounted for 4.4 points and 6.0 points, respectively, of the combined ratio. Net favorable prior year reserve development in 2018 and 2017 provided 1.0 points and 3.1 points of benefit, respectively, to the combined ratio. The underlying combined ratio in 2018 was 0.8 points higher than the 2017 ratio on the same basis, primarily reflecting higher loss estimates in the domestic commercial automobile product line for bodily injury liability coverages.
Middle Market. Net written premiums of $8.21 billion in 2018 increased by 6% over 2017. Business retention rates remained strong in 2018. Renewal premium changes in 2018 remained positive and were higher than in 2017. New business premiums in 2018 were lower than in 2017. Net written premiums of $7.76 billion in 2017 increased by 5% over 2016. Business retention rates remained strong in 2017. Renewal premium changes in 2017 remained positive and were higher than in 2016. New business premiums in 2017 increased slightly over 2016.
Domestic Agency Automobile net written premiums of $4.97 billion in 2018 were 7% higher than in 2017. Business retention rates remained strong in 2018. Renewal premium changes in 2018 remained positive but were lower than in 2017. New business premiums in 2018 decreased from 2017.
new claims and adverse development on existing policyholders in this category, as well as reserves for claims from policyholders reporting asbestos claims for the first time and for policyholders for which there is, or may be, litigation. Policyholders are identified for the annual home office review based upon, among other factors: a combination of past payments and current case reserves in excess of a specified threshold (currently $100,000), perceived level of exposure, number of reported claims, products/completed operations and potential “non-product” exposures, size of policyholder and geographic distribution of products or services sold by the policyholder. The assumed reinsurance and other category primarily consists of reinsurance of excess coverage, including various pool participations.
Included in commercial mortgage-backed securities and project loans at December 31, 2018 and 2017 were $456 million and $471 million of securities guaranteed by the U.S. government, respectively, and $2 million and $4 million of securities guaranteed by government sponsored enterprises, respectively.
The Company’s fixed maturity investment portfolio at December 31, 2018 and 2017 included $28.61 billion and $30.92 billion, respectively, of securities which are obligations of states, municipalities and political subdivisions (collectively referred to as the municipal bond portfolio). The municipal bond portfolio is diversified across the United States, the District of Columbia and Puerto Rico and includes general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers. Included in the municipal bond portfolio at December 31, 2018 and 2017 were $2.85 billion and $3.90 billion, respectively, of pre-refunded bonds, which are bonds for which states or municipalities have established irrevocable trusts, almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds. The irrevocable trusts are verified as to their sufficiency by an independent verification agent of the underwriter, issuer or trustee. All of the Company’s holdings of securities issued by Puerto Rico and related entities have been pre-refunded and therefore are defeased by U.S. Treasury securities.
International, through its operations in Canada, the United Kingdom, the Republic of Ireland and Brazil, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing and public services industry sectors. International also provides insurance for both the foreign exposures of United States organizations and the United States exposures of foreign organizations through Global Services. At its Lloyd’s syndicate (Syndicate 5000), for which the Company provides 100% of the capital, International underwrites six principal businesses - international marine, retail marine, global property, construction & special risks, energy and aviation.
The Company has a put/call option that was entered into in connection with a business acquisition that allows the Company to acquire the remaining shares of the acquired company at a future date. The fair value of the put/call at December 31, 2018 was $10 million and was determined using an internal model and is based on the acquired company's financial performance, adjusted for a risk margin and discounted to present value. The Company includes the fair value estimate of the put/call in Level 3.
Amortization expense of intangible assets was $17 million, $13 million and $11 million for the years ended December 31, 2018, 2017 and 2016, respectively. Amortization expense for all intangible assets subject to amortization is estimated to be $16 million in 2019, $15 million in 2020, $14 million in 2021, $13 million in 2022 and $12 million in 2023. Amortization expense for intangible assets arising from insurance contracts acquired in a business combination is estimated to be $6 million in 2019, $5 million in 2020, $4 million in 2021, $3 million in 2022 and $3 million in 2023.
There are also risks which impact the estimation of ultimate costs for catastrophes. For example, the estimation of reserves related to hurricanes can be affected by the inability of the Company and its insureds to access portions of the impacted areas, the complexity of factors contributing to the losses, the legal and regulatory uncertainties and the nature of the information available to establish the reserves. Complex factors include, but are not limited to: determining whether damage was caused by flooding versus wind; evaluating general liability and pollution exposures; estimating additional living expenses; the impact of demand surge; the potential impact of changing climate conditions, including higher frequency and severity of weather-related events; infrastructure disruption; fraud; the effect of mold damage and business income interruption costs; and reinsurance collectibility. The timing of a catastrophe’s occurrence, such as at or near the end of a reporting period, can also affect the information available to the Company in estimating reserves for that reporting period. The estimates related to catastrophes are adjusted as actual claims emerge.
2016 Debt Repayment. On June 20, 2016, the Company’s $400 million, 6.25% senior notes matured and were fully paid.
The Company’s overall investment strategy is to achieve a mix of approximately 35% to 65% of investments for long-term growth and 35% to 60% for near-term insurance payments with a wide diversification of asset types, fund strategies and fund managers. The current target allocations for plan assets are 25% to 75% fixed income securities, with the remainder allocated to short-term securities. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities and U.S. Treasuries.
Prior to the merger of TPC and The St. Paul Companies, Inc. in 2004, TPC fully and unconditionally guaranteed the payment of all principal, premiums, if any, and interest on certain debt obligations of its wholly-owned subsidiary, TIGHI. Concurrent with the merger, TRV fully and unconditionally assumed such guarantee obligations of TPC. TPC is deemed to have no assets or operations independent of TIGHI. Consolidating financial information for TIGHI has not been presented herein because such financial information would be substantially the same as the financial information provided for TPC.