Net operating income improved $391.0 million for 2000 as compared with 1999. This improvement was primarily driven by the improved underwriting results discussed above, partially offset by decreased investment income and increased expenses, including increased interest expense related to the cost of reinsurance. In addition, net operating income in both 2000 and 1999 benefited from a change in estimate for certain insurance-related assessments resulting from regulatory changes in the basis on which certain of these assessments are calculated. The after-tax and minority interest impact of this change was $52.0 million in 2000 and $44.0 million in 1999.
The net operating loss for 1999 was $169.6 million, approximately $12.4 million less than 1998. The improvement was primarily attributable to decreased interest expense and decreased losses of $17.1 million from AMS Services, Inc. ("AMS"), an information technology and agency software development company sold in the fourth quarter of 1999 (see Note 12 of the Notes to Consolidated Financial Statements), partially offset by increased losses from run-off insurance operations.
During 2000, Diamond Offshore purchased 2.7 million shares of its common stock at an aggregate cost of $93.0 million. Depending on market conditions, Diamond Offshore may, from time to time, purchase shares of its common stock in the open market.
CNA's investment policies for both the general and Separate Accounts portfolios emphasize high credit quality and diversification by industry, issuer and issue. Assets supporting interest rate sensitive liabilities are segmented within the general account to facilitate asset/liability duration management.
Effective January 1, 2001, CNA is required to adopt statutory basis accounting changes related to the NAIC codification of statutory accounting principles. CNA estimates that the adoption of this codification, as modified, will increase statutory capital and surplus as of January 1, 2001 by approximately $77.0, which primarily relates to deferred tax assets offset by insurance- related assessments and pension liabilities.
Intangible assets are periodically reviewed to determine whether an impairment in value has occurred.
Changes in CNA's investment in Global Crossing, on a pre-tax basis, were as follows:
The fair value of the liability for financial guarantee contracts were estimated on discounted cash flows utilizing interest rates currently being offered for similar contracts.
Under these agreements, CNA will pay approximately $64.0 for 2000. In 1999 and 1998 CNA received $288.0 and $83.0, respectively. Each agreement may be canceled by either of the parties upon thirty days' written notice.
The following table sets forth the major categories of the restructuring accrual and changes therein during the years ended December 31, 2000, 1999 and 1998.
The fair value of granted options was estimated at the grant date using the Black-Scholes option pricing model. The weighted average fair value of options granted during 2000 was $21.46. The following weighted average assumptions were used for the year ended December 31, 2000: risk free interest rate of 6.7%; expected dividend yield of 1.6%; expected option life of 5 years; and expected stock price volatility of 33.4%.
In the above tables, life premiums are from primarily long duration contracts, property and casualty premiums, and accident and health premiums are from primarily short duration contracts.