However, this segment remains profitable through 9/30, and we remain confident in our ability to succeed across economic and insurance cycles.
It was another solid quarter, and we reported net income of $12.2 million or $0.23 per share and operating income of $13.8 million or $0.25 per share.
Consolidated gross premiums written increased nearly 26% year-over-year, driven primarily by the addition of NORCAL's premium to our Specialty P&C results as well as $15.5 million of new business written in the quarter from our core operating segments.
Our consolidated current accident year net loss ratio was 85.2%, a year-over-year increase of 4.5 points as improvements in our legacy Specialty P&C business were offset by higher average loss ratios in the NORCAL book of business and a higher net loss ratio in our Workers' Compensation business.
We recognized net favorable development of $8.6 million in the current quarter, driven largely by the Specialty P&C segment at $6.8 million, which includes $2.3 million related to the amortization of the purchase accounting fair value adjustment on NORCAL's assumed reserve.
We also recorded $1.5 million and $1.6 million of favorable development in the workers' compensation insurance and segregated portfolio sale reinsurance segments, respectively.
The Lloyd's segment recorded unfavorable development of $1.3 million, primarily related to natural catastrophe losses.
Excluding onetime transaction-related costs, our consolidated underwriting expense ratio decreased approximately seven points in the quarter to 23.3%.
From an investment perspective, our consolidated net investment result increased nearly 60% year-over-year to $34.5 million.
This includes $15.2 million of equity in earnings from our unconsolidated subsidiaries due to the results of our investments in LPs and LLCs.
Consolidated net investment income was $19.3 million in the quarter, up significantly from the year ago period and primarily due to higher investment balances following the NORCAL transaction.
We successfully integrated reinsurance programs, financial and investment operations and retained 87% NORCAL's business, while achieving average rate increases of approximately 11% on the book since the close of the transaction.
We are ahead of plan on targeted expense synergies, achieving $17.2 million through the end of the third quarter on an overall plan of $18 million.
Gross premiums written during the quarter increased by over 48% or approximately $77 million.
NORCAL contributed just over $72 million of that increase.
Premium retention for the segment was 84% in the quarter, driven by retention rates that have either improved or remained consistent in all lines of business.
Furthermore, we achieved average renewal pricing increases of 9% in the segment this quarter, driven by 9% in standard physicians and 13% in specialty healthcare.
Both our small business unit and medical technology liability business achieved average rate gains of 8%.
New business written in the quarter totaled $11.2 million, an increase of $2.5 million from the year ago quarter and primarily driven by $6.4 million written in our HCPL specialty business.
The segment net loss ratio decreased to 86.6% due to a higher net favorable reserve development, which was $6.8 million in the quarter.
His includes $2.9 million related to the amortization of the purchase accounting fair value adjustment on NORCAL's reserves.
The segment reported an expense ratio of 17.7% for the first -- third quarter, a year-over-year improvement of 6.1 points driven by significantly higher earned premiums, the impact of transaction accounting and benefits from prior organizational restructuring and expense management efforts.
The Workers' Compensation Insurance segment recorded an underwriting loss of $2.2 million and a combined ratio of 106.3% in the third quarter of 2021.
The combined ratio, excluding these items for 2021 was 103% for the quarter and 97.4% year-to-date, an indicator of the results of our ongoing business performance.
During the quarter, the segment booked $64.6 million of gross premiums written, an increase of 2.5% quarter-over-quarter.
Renewal pricing increased 1% in our traditional book of business in 2021 compared to a decrease of 3% in 2020 and premium renewal retention was 87% for the third quarter of 2021 compared to 84% in 2020.
Traditional new business writings for 2021 were $3.5 million compared to $6.2 million in 2020.
Audit premium in our traditional book of business improved $700,000 quarter-over-quarter to an audit premium return to customers of $100,000, a significant improvement over recent quarters.
The increase in the calendar year loss ratio from 62.2% in 2020 to 74.3% in 2021 reflects an increase in the current accident year loss ratio.
Favorable prior year reserve development was $1.5 million in 2021 compared to $2 million in 2020.
We recorded a current accident year loss ratio of 77.8% for the third quarter of 2021, which brings the ratio for the nine months ended September 30 to 74%.
Despite the increase in claim activity in our small book of business, overall frequency continues to be below pre-pandemic levels and the lowest in 10 years with the exception of accident year 2020.
The claims operation closed 12.2% of 2020 and prior claims during the 2021 quarter consistent with third quarter historical trends.
There were 160 reported COVID claims with accident dates in the third quarter of 2021 with a total recorded incurred loss expense of $127,000, which management relates to the spread of the Delta variant.
The 2021 underwriting expense ratio decreased to 32% from 35.2% in 2020 and primarily due to the realization of the restructuring initiatives implemented in August of 2020 and the recording of $900,000 in employee severance costs in the third quarter of 2020.
Other underwriting and operating expenses were $8.6 million in the third quarter of 2021, a decrease of 13.7%.
The Segregated Portfolio Cell Reinsurance segment produced income of $539,000 and a combined ratio of 87.7% for the third quarter of 2021.
The SPC Re segment calendar year loss ratio increased from 42.7% in 2020 to 56.7% in 2021, driven largely by a decrease in prior year favorable development quarter-over-quarter.
The 2021 accident year loss ratio was 67.2% compared to 67.3% in 2020.
Favorable loss reserve development was $1.6 million in the third quarter of 2021 compared to $4 million in 2020.
Despite the increase in loss activity in the Workers' Compensation Insurance segment, I want to emphasize that there were several positive indications for the quarter, including a decreased expense ratio, gross written premium growth of 2.5%, strong premium renewal retention, improved audit premium and rate increases of 1%, the first rate increase in many years.
As you know, for the 2021 underwriting year, we reduced our participation in Syndicate 1729 from 29% to 5%.
And our participation in Syndicate 6131 from 100% to 50%.

Summary:
It was another solid quarter, and we reported net income of $12.2 million or $0.23 per share and operating income of $13.8 million or $0.25 per share.