Net income in the second quarter was $228.2 million or $4.12 per share, which includes a $125.2 million of after-tax gains on our investment portfolio.
The rebound in the markets in the second quarter, helped to partially offset first quarter after-tax losses of $198.5 million on our investment portfolio.
Year-to-date, net income was $89 million or $1.61 per share, which includes $73.4 million of after-tax losses on our investment portfolio.
Our second quarter operating earnings were $1.86 per share compared to $0.74 per share in the second quarter of 2019.
The improvement in operating earnings was primarily due to a reduction in the combined ratio from 98.3% in the second quarter of 2019 to 88.2% in the second quarter of 2020.
Catastrophe losses in the quarter was $12 million compared to $9 million in the second quarter of 2019.
The Company recorded $12 million in unfavorable reserve development in the quarter compared to $9 million in the second quarter of 2019.
The lower frequency in the quarter was partially offset by an increase in severity and the give back of $100.3 million of premiums to personal auto customers as a result of less driving from the COVID-19 pandemic.
Although our commercial auto line of business also saw a decline in frequency in the quarter, increases in severity, unfavorable reserve development of $7 million and the give back of $5.5 million of premiums to commercial auto customers negatively impacted our commercial auto results in the quarter.
In addition, $3 million of unfavorable reserve development negatively impacted our homeowners results this quarter.
To improve our homeowners results, a 6.99% rate increase in our California homeowners line went into effect in April.
In addition, a 6.99% rate increase was recently approved by the California Department of Insurance.
California homeowners premiums earned represent about 87% of companywide direct homeowners premiums earned and 15% of direct companywide premiums earned.
Our commercial multi-payer results in the quarter were negatively impacted by a large $5 million fire loss net of reinsurance.
We also introduced Phase 1 of our new commercial multi payroll product and system in California in the second quarter.
The total reinsurance limit purchased increased from $600 million in the prior period to $717 million for the July 2020 through June 2021 period.
Our retention remains the same at $40 million.
Total annual premiums on a new reinsurance program are approximately $50 million.
For the prior reinsurance treaty, total premiums were $38 million.
The expense ratio was 27.2% in the second quarter of 2020 compared to 24.4% in the second quarter of 2019.
The higher expense ratio in the quarter was primarily due to the reduction of premiums earned of $106 million due to premium refunds and credits to eligible policyholders for reduced driving and business activities as a result of the COVID-19 pandemic.
Excluding the premium refunds and credits, the expense ratio would have been 24.1%.
Premiums written declined 12.5% in the quarter primarily due to the $106 million in premium refunds and credits.
Excluding the $106 million in premium refunds and credits, premiums written declined by 1.2%.
In addition, we plan on returning $22 million of July 2020 monthly premiums to eligible policyholders in August.
Accordingly, we expect third quarter premiums written and earned to be reduced by approximately $22 million.

Summary:
Net income in the second quarter was $228.2 million or $4.12 per share, which includes a $125.2 million of after-tax gains on our investment portfolio.
Our second quarter operating earnings were $1.86 per share compared to $0.74 per share in the second quarter of 2019.