In the face of unprecedented challenges, our 4,300 employees and our company rose to the occasion in 2020.
For the year, we reported operating earnings per share of $9.32, up 14% from 2019 and a strong operating return on equity of 13.1%, in line with our long-term target.
Despite the many economic challenges related to widespread business limitations and restrictions, we delivered net written premiums of $4.6 billion for the year, up from 2019.
Second, we delivered strong underwriting results with an all-in combined ratio of 94.4% for the year and 88.1%, excluding catastrophes.
In addition, during the year, we repurchased approximately 2.2 million shares of our company's common stock, deploying $212 million in underscoring the confidence we have in our company's financial earnings and growth prospects.
We added more than 7,000 new Hanover Prestige customer accounts during the year and exceeded our full year 2020 new business target, with new business growth nearly 30% higher than in the prior year.
We also expanded our Personal Lines footprint to 20 states in 2020, beginning to write business in Maryland on the heels of adding Vermont and Pennsylvania over the last couple of years.
Commercial Lines net written premiums were up both for the year and the quarter, as we capitalize on the hardening market to obtain rate, with fourth quarter Core Commercial rate increases of 6.4% and Specialty increases of 8.9%, up sequentially from 5.7% and 7.2% in the third quarter, respectively.
Global 360, our downloadable self-service application with virtual interactive inspection capabilities, now processes more than half of the losses that previously would have been adjusted in person.
For the quarter, we reported net income of $164.6 million or $4.43 per diluted share compared with $109.8 million or $2.76 per diluted share in 2019.
After-tax operating income for the quarter was $112 million, or $3.02 per diluted share compared with $80.2 million or $2.01 per diluted share in the prior year quarter.
For the year, net income was $358.7 million or $9.42 per diluted share compared with $425.1 million or $10.46 per diluted share in 2019.
Operating income for the year was $355 million or $9.32 per diluted share compared with $331.6 million or $8.16 per diluted share in 2019.
Our fourth quarter earnings reflected a combined ratio of 92.4%, an improvement from 96.2% in the fourth quarter of 2019 due to prior underwriting and rate actions, favorable loss frequency and favorable prior year development.
Our combined ratio for the full year improved to 94.4% from 95.6% in 2019, again, reflecting mix improvements and favorable loss frequency, partially offset by higher cats.
Fourth quarter 2020 catastrophes totaled $35.1 million or 3% of earned premium, which was below our catastrophe load assumption of 3.6%.
Full year catastrophes totaled $286.7 million or 6.3% of earned premium.
That being said and considering changes in weather patterns in certain geographies in the U.S., we believe it is prudent to increase our catastrophe load for 2021 from 4.6% to 4.9%.
Excluding catastrophes, we delivered a full year combined ratio of 88.1%, well below our original guidance of 91% to 92%.
Our full year 2020 expense ratio of 31.6% was flat with 2019, short of our original expectations due to higher variable agent and employee compensation costs from better-than-expected profits.
We expect to achieve a 30 basis point expense ratio improvement for full year 2021, which puts us right on track with our long-term expense ratio savings target of 20 basis points per year.
For the most part, these savings are permanent in nature, giving us confidence in our expected 31.3% expense ratio in 2021.
For the year, we recorded favorable prior year reserve development of $15.5 million or 0.3 points of the combined ratio.
Personal Lines reported a full year combined ratio, excluding catastrophes, of 84%, down from 91.6% in 2019.
Our personal auto ex-cat accident year loss ratio was 61.3% in 2020, an improvement of 10.3 points from the prior year, as a result of the claims frequency benefit associated with the pandemic.
In homeowners, our 2020 ex-cat current accident year loss ratio was 49.1%, up 1.2 points from 2019 due to some elevated fire and property losses.
We continue to take strong rate of 5% in homeowners, not including the inflation adjustment in the year, and we expect profitability in 2021 to be relatively in line with ex-cat results in 2020.
Personal Lines net premiums written declined 0.5% for the full year, including the impact of the premium refunds issued in the second quarter.
During the year, we appointed 170 new agents and achieved record consolidation signings.
Our full year combined ratio, excluding catastrophes, improved 1.2 points to 90.9%, primarily reflecting a decrease in our current accident year loss ratio due to meaningful underlying improvement in other Commercial Lines and temporary frequency benefits in commercial auto.
The loss ratio in our commercial auto book improved 5.8 points to 63.8%.
Our commercial multi-payroll loss ratio increased 1.5 points to 57.7% due to some elevated large property loss activity in the first and third quarters of 2020 and to a lesser extent, in the fourth quarter.
Our workers' comp loss ratio remained essentially flat at 60.9%.
Other Commercial Lines loss ratio improved 2.9 points to 53.6%, which underscores the success of prior year profit improvement actions in our Specialty property and programs businesses.
Commercial lines net premiums written grew 1% in 2020, driven by solid momentum in our Specialty Lines, where rates remained on a strong upward trajectory with sequential increases each quarter of the year.
Core Commercial retention remains at historical highs at 86.2%, while cancellation and endorsement activity moderated.
We generated net investment income of $70.2 million for the fourth quarter and approximately $265 million for the year.
Cash and invested assets at year-end were $9 billion, with fixed income securities and cash representing 85% of the total.
Our fixed maturity investment portfolio has a duration of 4.8 years and is 96% investment grade.
In October, we executed $100 million accelerated share repurchase agreement, which closed last week, underlining our commitment to be responsible and prudent managers of capital.
Combined with activity earlier in the year, we returned approximately $212 million to shareholders in 2020 through share repurchases, including the final delivery of all shares.
Under the ASR agreement, we repurchased 2.2 million shares or 6% of the outstanding shares since the beginning of 2020.
Underscoring the confidence that we have in our strategy and growth prospects, we paid $99.5 million in dividends to our shareholders throughout the year and increased our recurring dividend payment in December 2020 by 7.7%.
With broad-based profitability, expense discipline and an effective capital allocation strategy, we continue to target a return on equity of 13% or higher over the longer term.
Our book value per share of $87.96 increased 4.3% during the quarter, and 15.8% from December 31, 2019, driven by operating income and both realized and unrealized gains in our investment portfolio, partially offset by the payment of our regular quarterly dividends.
Our expense ratio should decrease by approximately 30 basis points in 2021 to 31.3%.
The combined ratio, excluding catastrophes, should be in the range of 90% to 91%.
We've set our cat load for the year at 4.9%, as I mentioned earlier.
And we expect an effective tax rate to approximate the statutory rate, which is 21%.
Our first quarter cat load is expected to be 4.7%, slightly below our full year ratio.

Summary:
Second, we delivered strong underwriting results with an all-in combined ratio of 94.4% for the year and 88.1%, excluding catastrophes.
For the quarter, we reported net income of $164.6 million or $4.43 per diluted share compared with $109.8 million or $2.76 per diluted share in 2019.
After-tax operating income for the quarter was $112 million, or $3.02 per diluted share compared with $80.2 million or $2.01 per diluted share in the prior year quarter.
For the year, net income was $358.7 million or $9.42 per diluted share compared with $425.1 million or $10.46 per diluted share in 2019.
Our combined ratio for the full year improved to 94.4% from 95.6% in 2019, again, reflecting mix improvements and favorable loss frequency, partially offset by higher cats.