Operating expenses. Non-deferred operating expenses increased by $48.6 million to $303.5 million in 2009, compared to $254.9 million in 2008. The increase was primarily driven by $36.0 million of non-deferred sales related costs due to lower sales volume and higher pension expenses of $25.7 million, partially offset with savings related to our workforce reduction and cost-savings initiative. In addition, 2009 expenses reflect the impairment of $18.7 million for capitalized costs including certain software components that were previously capitalized and not fully utilized.
As part of our analysis of separate account returns, we perform two sensitivity tests. If at December 31, 2009 we had used a 100 basis points lower separate account return assumption (after fund fees and mortality and expense charges) for both the variable annuity and the variable life businesses and used our current best estimate assumptions for all other assumptions to project account values forward from the current value to reproject EGPs, the estimated increase to amortization and decrease to net income would be approximately $1.3 million, before taxes.
See Note 9 to our consolidated financial statements under “Item 8: Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information on financing activities.
In 2009, we did not pay any stockholder dividends. In 2008, we paid dividends of $0.16 per share, totaling $18.8 million.
In 2009, in response to our ratings being downgraded and the loss of distribution relationships, surrenders of life insurance policies increased. Aggregate life surrenders in 2009 were 9.6% of related reserves, compared with 5.9% in 2008. We maintained additional liquid assets throughout the year to meet potential spikes in surrender activity. Cash, treasury securities and agency mortgage-backed securities accounted for 10.4% of fixed income investments at year end 2009, compared with 10.3% at year end 2008, both levels as much as two times the typical historical levels. These actions, along with resources we devote to monitoring and managing surrender activity, are key components of our liquidity management.
See Note 6 to our consolidated financial statements under “Item 8: Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional information.
We have entered into agreements with certain key executives of the Company that will, in certain circumstances, provide separation benefits upon the termination of the executive’s employment by the Company for reasons other than death, disability, cause or retirement, or by the executive for “good reason,” as defined in the agreements. The agreements provide this protection only if the termination occurs following (or is effectively connected with) the occurrence of a change of control, as defined in the agreements. As soon as reasonably possible upon a change in control, as so defined, we are required to make an irrevocable contribution to a trust in an amount sufficient to pay benefits due under these agreements.
As of December 31, 2009, we did not have any significant off-balance sheet arrangements as defined by Item 303(a)(4)(ii) of SEC Regulation S-K. See Note 12 to our consolidated financial statements under “Item 8: Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for more information on variable interest entities.