Our underlying underwriting income of $572 million pre-tax was up $254 million over the prior-year quarter, benefiting from solid net earned premium and a 3.5 point improvement in the underlying combined ratio to a strong 91.4%.
For us in the quarter, $114 million of direct losses and $63 million of audit premium adjustments were about offset by initial estimates of favorable loss activity, most of which is in short-tail lines.
As I shared last quarter, our high quality surety book was effectively stress tested in the 2008 financial crisis and performed well.
We're very pleased with our production results, excluding the other premium refunds we provided to our customers, net written premiums grew by 2% as the impact of COVID-19 on insurance exposures was more than offset by strong renewal rate change in all three segments.
In Business Insurance, we achieved renewal rate change of 7.4%, the highest level since 2013 and close to the record level we achieved that year.
In Bond & Specialty Insurance, net written premiums increased by 3%, as our domestic management liability business achieved a record renewal rate change while maintaining strong retention.
In Personal Insurance, excluding the auto premium refund, net written premiums increased by 6% driven by strong retention and new business in both Agency Auto and Agency Homeowners.
In our Agency Homeowners business, renewal premium change remained strong at 7.7% and we hit a record for new business.
And on top of that, the pandemic and related economic fallout, added sense of incremental uncertainty making this feel like one of those times, not unlike in the wake of 9/11 and Hurricane Katrina when the market recalibrates risk.
Our core loss for the second quarter was $50 million compared to core income of $537 million in the prior year quarter.
Our second quarter results include $854 million of pre-tax cat losses compared to only $367 million in last year second quarter.
This quarter's cat's includes severe storms in several regions of the United States as well as $91 million of losses related to civil unrest.
Regarding our property aggregate catastrophe XOL treaty for 2020, as of June 30th, we have accumulated about $1.4 billion of qualifying losses toward the aggregate retention of $1.55 billion.
The treaty provides aggregate coverage of $280 million out of $500 million of losses, above that $1.55 billion retention.
The underlying combined ratio was 91.4%, which excludes the impacts of cats and PYD improved by 3.5 points compared to 94.9% in last year's second quarter.
The underlying loss ratio improved by more than 4 points and benefited from a lower level of non-cat weather losses, favorable frequency in personal auto from the shelter-in-place environment, net of related premium refunds and the impact of earned pricing in excess of loss trend.
The expense ratio of 31% is 0.8 of a point higher than the prior year quarter and above our recent run rate.
The net impact of COVID-19 and its related effects on the economy were modest in terms of our overall second quarter underwriting result.
Our top-line was resilient, excluding the premium refunds in Personal Insurance, net written premiums increased by 2% driven by strong renewal rate change in all three segments that more than offset lower insured exposures.
For example, losses directly related to COVID-19 totaled $114 million, primarily workers' comp in Business Insurance and management liability losses in our Bond & Specialty business.
Taking a step back, on a year-to-date basis, the impact on our results excluding net investment income from COVID-19 and its related effects is a net charge of about $50 million pre-tax.
In Bond & Specialty Insurance, we saw larger losses than expected in management liability, resulting in prior year strengthening of $33 million, largely offsetting the favorable development in Personal Insurance.
After-tax net investment income decreased by 54% from the prior year quarter to $251 million, somewhat better result than we had previewed in our call last quarter.
Fixed income returns decreased by $24 million after tax as the benefit from higher levels of invested assets was more than offset by the decline in interest rates and the mix change, as we chose to maintain a somewhat higher level of liquidity and held more short-term investments than in prior quarters.
For the remainder of 2020, we expect that fixed income NII will decrease by approximately $35 million to $40 million after-tax per quarter compared to the corresponding periods of 2019.
Turning to capital management, Operating cash flows for the quarter of $1.7 billion were again, very strong.
All our capital ratios were at or better than target levels and we ended the quarter with holding company liquidity of slightly more than $2 billion, well above our target level.
Recall that in April, we pre-funded as we normally do, $500 million of debt coming due in November, with the new 30-year $500 million debt issuance at 2.55%.
Investment yields decreased as credit spreads tightened during the second quarter and accordingly, our net unrealized investment gains increased from $1.8 billion after tax as of March 31st, to $3.6 billion after tax at June 30th.
Adjusted book value per share, which excludes net unrealized investment gains and losses was $92.01 at quarter end, down less than 1% from year-end and up 2% year-over-year.
We returned $218 million of capital to our shareholders this quarter via dividends.
In the annual reset for the 2020 hurricane season the attachment point was adjusted from $1.79 billion to $1.87 billion, while the total cost of the program was flat year-over-year.
As for the quarter's results, business Insurance had a loss for the quarter of $58 million due to lower net investment income and higher catastrophe losses, as both Alan and Dan discussed.
The combined ratio of 107.1% included more than 10 points of catastrophes, impacted by both weather related losses and civil unrest.
The underlying combined ratio of 97% improved by 0.4 points, reflecting a 0.2 point improvement in each of the underlying loss ratio and expense ratio.
Turning to the top line, net written premiums were 3% lower than the prior-year quarter due to the impact of the economic disruption on insured exposures.
Turning to domestic production, we achieved strong renewal rate change of 7.4% while retention remained high at 83%.
The renewal rate change of 7.4% was up almost 4 points from the second quarter of last year and more than a point from the first quarter of this year, not withstanding the persistent downward pressure in workers' compensation pricing.
We achieved positive rate at about 80% of our middle market accounts this quarter, which was up from about two-third in the second quarter of last year.
At these rate levels, our rate change continues to exceed loss trend even after about a 0.5 point increase toward loss trend assumption.
New business of $473 million was down 10% from the prior-year quarter.
As for the individual businesses, in Select, renewal rate change was up to 2.1% making the sixth consecutive quarter where renewal rate was higher than the corresponding prior-year quarter while retention was strong at 82%.
In Middle Market renewal rate change was up to 7.9% while retention remained strong at 86%.
The 7.9% was up almost 4.5 points from the second quarter of 2019 and 1.5 points from the first quarter of 2020.
New business of $255 million was down from the prior-year quarter, driven by both economic disruption and our continued focus on disciplined risk selection underwriting and pricing.
Segment income was $72 million, a decrease of $102 million from the prior-year quarter.
As Dan mentioned, the combined ratio of 93.8% reflects unfavorable prior-year reserve development in the quarter as compared to favorable PYD in the prior-year quarter and a higher underlying combined ratios.
The underlying combined ratio of 88.1% increased 7.1 points from the prior-year quarter, primarily driven by the impacts of higher loss estimates for management liability coverages, about half of which was due to COVID-19 and related economic conditions.
Turning to the top line, net written premiums grew 3% for the quarter, reflecting strong growth in our management liability and international businesses, partially offset by lower surety production.
In our domestic management liability business, we are pleased that renewal premium change increased to 7.8%.
As Alan noted, renewal rate change was a record for the quarter, while retention remained at a historically high 89%.
Domestic management liability new business for the quarter decreased $13 million reflecting a disruption associated with COVID-19 and our thoughtful underwriting in this elevated risk environment.
Domestic surety net premium, net written premium was down $24 million in the quarter, reflecting the impact of COVID-19, which slowed public project procurement and related bond demand.
Personal Insurance segment income for the second quarter of 2020 was $10 million down from $88 million in the prior year quarter, driven by a higher level of catastrophe losses and lower net investment income.
Our combined ratio for the quarter was 101.3%, an increase of 1.1 points, and a 12.5 point increase in catastrophe losses was largely offset by a 10.6 point improvement in the underlying combined ratio.
The increase of 2.6 points on the underwriting expense ratio was primarily driven by the reduction in net earned premiums resulting from the auto premium refunds.
Excluding the impact of premium refunds of $216 million, net written premiums grew 6%.
Agency homeowners and other net written premiums were up an impressive 13% and agency automobile net written premiums were up 3% excluding premium refunds.
Agency automobile delivered strong results with a combined ratio of 85.7% for the quarter.
The loss ratio improved over 12 points while the underwriting expense ratio increased by about 4 points.
The underlying combined ratio of 84.2% improved 9.6 points relative to the prior year quarter, continuing to reflect improvements in frequency, primarily due to fewer miles driven as a result of the pandemic.
In the U.S., the program provided a 15% premium refund on April, May and June premiums.
In agency homeowners and other, the second quarter combined ratio was 113.9%, 9.4 points higher than the prior year quarter due primarily to higher catastrophes, partially offset by a lower underlying combined ratio.
This quarter, we experienced significant storm activity, resulting in 34 points of catastrophe losses, an increase of 21 points compared to the prior year quarter where catastrophes were relatively low.
The underlying combined ratio for the quarter was 81.4%, down over 11 points from the prior year quarter, driven primarily by lower non-catastrophe weather-related losses.
Agency automobile retention was 85% and new business increased 7% from the prior year quarter.
Renewal premium change was 1.5% as we continue to moderate pricing given the improved performance in our book over the past few years.
Agency homeowners and other delivered another very strong quarter, with retention of 87%, renewal premium change of 7.7% and a 17% increase in new business as we continue to seek to improve returns while growing the business.
Higher new business levels again benefited from the successful roll out of our Quantum Home 2.0 product, now available in over 40 markets.
We introduced Quantum Home 2.0 in four new states including California.
In addition, we launched IntelliDrive 2.0 which add distracted driving monitoring to our auto telematics product and delivers significant improvements to the user experience.
And after reaching our goal of planting one million trees for customer enrollment in paperless billing, we extended our partnership with American Forests to plant another 500,000 trees by Earth Day 2021.
Finally, I'll remind you that on a year-to-date basis, setting aside net investment income, the impact on our results from COVID-19 and its related effects is a net charge of about $50 million pre-tax.

Summary:
Our second quarter results include $854 million of pre-tax cat losses compared to only $367 million in last year second quarter.
The underlying combined ratio was 91.4%, which excludes the impacts of cats and PYD improved by 3.5 points compared to 94.9% in last year's second quarter.
The expense ratio of 31% is 0.8 of a point higher than the prior year quarter and above our recent run rate.
The net impact of COVID-19 and its related effects on the economy were modest in terms of our overall second quarter underwriting result.
Adjusted book value per share, which excludes net unrealized investment gains and losses was $92.01 at quarter end, down less than 1% from year-end and up 2% year-over-year.