The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
Underwriting income excluding the effects of the MLQS, was $35.0 million for the year ended December 31, 2016 compared to $32.0 million for the year ended December 31, 2015, an increase of $3.0 million, or 9.3%. The corresponding adjusted combined ratio was 76.8% for the year ended December 31, 2016 compared to 77.5% for the year ended December 31, 2015. The decrease in the adjusted combined ratio was attributable to improvement in the adjusted loss ratio of 50.0% in 2016 compared to 51.5% in 2015, primarily from favorable prior year loss development. The adjusted expense ratio was 26.8% in 2016 compared to 26.0% in 2015, which reflected higher employee compensation and public company costs for 2016 compared to 2015.
In addition, excluding the effects of the MLQS, our underwriting income was $32.0 million for the year ended December 31, 2015 compared to $19.0 million for the year ended December 31, 2014, an increase of $13.0 million, or 68.2%. The corresponding adjusted combined ratio was 77.5% for the year ended December 31, 2015 compared to 84.1% for the year ended December 31, 2014. The adjusted combined ratio reflected a 7.9 point decrease in the adjusted loss ratio in 2015 offset in part by a slight increase in the adjusted expense ratio of 1.3 points.
Net earned premiums increased by $15.3 million, or 26.0%, to $74.3 million for the year ended December 31, 2015 from $59.0 million for the year ended December 31, 2014 due to higher net written premiums in 2015 compared to
The following table summarizes the components of net investment income and net investment gains for the years ended December 31, 2015 and 2014:
On June 28, 2016, the Credit Agreement was amended and restated, among other things, to (1) increase the materiality thresholds and grace periods for events of default thereunder, (2) add additional permitted categories to the debt, lien, restricted payments, mergers, disposals, transactions with affiliates and investment covenants, as well as to increase the general permitted baskets under the debt, lien, restricted payments and investment covenants, (3) remove certain representations and warranties and affirmative covenants, (4) add materiality qualifiers to certain
At December 31, 2016, the amortized cost and fair value on available-for-sale securities were as follows:
Additionally, during the loss settlement period, it often becomes necessary to refine and adjust the estimates of liability on a claim either upward or downward. Even after such adjustments, ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimate included in our consolidated financial statements.
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management periodically reviews its estimates and assumptions. These reviews include evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses, allowance for doubtful accounts, fair value of investments, as well as evaluating the investment portfolio for other-than-temporary declines in fair value.
Fixed maturity and equity securities are classified as available-for-sale and reported at fair value. The Company’s equity securities consist of selected ETFs. Unrealized gains and losses on these securities are excluded from net earnings but are recorded as a separate component of comprehensive income (loss) and stockholders’ equity, net of deferred income taxes.
The Company recognized total equity-based compensation expense of $0.5 million, $0.1 million and $0.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.