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Brian Riley

Thank you, Jay. My commentary will focus on full year results. Of course, we can answer any questions you may have on the fourth quarter numbers. Net income was $43.2 million compared to $25.4 million in 2023. The combination of net income and a $12 million increase in market value of the fixed income portfolio. Book value per share increased from $47.53 at year-end 2023 to $49.98 at December 31, including dividends paid in 2024 of $1.40 per share, return to shareholders was 8.1% for 2024.
For '24, both underwriting income and investment reforms began to contribute to the improvement in net income. Starting with investments. Investment income increased 13% to $62.4 million from a year ago. Actions taken since early '22 to sell longer-dated securities and short duration and translated into much higher current book yields. Cash flows and maturities of fixed income securities of $1.1 billion, yielding 4.36% were reinvested at an average yield of 4.87%. Current full yield on the fixed income portfolio is down 4.4% with a duration of 0.8 years at December 31, 2024. Comparatively, at December 31, 2023, book yield was 4% with a duration of 1.1 years. At the end of December '22, book yield was 3.5% with a duration of 1.7 years. And at December 31, 2021, book yield was 2.2% with a duration of 3.2 years.
The average credit quality of the fixed income portfolio remains at AA minus. As a result of the low duration, we have $1 billion of investments maturing in 2025. We expect that a significant amount of those maturities to be reinvested on longer matured, ensuring fixed income investments to improve returns. Through February '25, approximately $320 million of the portfolio was reinvested in 5.2%, consisting of 2/3 in high-quality corporates and structured securities. We expect that this strategy will increase duration to about 1.25 years by the end of the first quarter of '25.
Now let's move to underwriting performance for '24 we continue to see good results as the current accident year consolidated underwriting income was $18.8 million compared to $14.3 million in 2023. This was driven by a consolidated accident year combined ratio of 95.4% in 2024 compared to 97.3% in '23. The improvement in the current extra underwriting income is due to the strong performance of our core business, Penn-America. Penn-America's acting year underwriting income was $22.1 million in '24 compared to $18.5 million in '23. As Jay noted, Penn-America's accident year combined ratio improved to 94.4% in '24 compared to 95.2% in '23.
The accident loss ratio of 56.4% was a point better than the 57.4% in '23. The property loss ratio close year of 53.9% compared to 53.4% in '23. Non-cat loss ratio remains strong. We posted a 46.3% in '24 and 43.6% in '23. Cat loss ratio improved to 7.6% in '24 compared to 9.8% in '23. Overall Cat losses declined to $12.7 million compared to $13.8 million in 2023. The casualty loss ratio was 58.4% in '24 compared to 59.9% in 2023. Unlike last year, our noncore operations have a diminished effect on our overall performance.
Our noncore operations and our premium has dropped to $7.2 million compared to $118.8 million in '23, mainly from an assumed retro session casualty treaty, which we did not renew. Further, the runoff of our exit and Specialty Property business resulted in no catastrophe losses in '24 compared to $3.4 million last year. The current accident year underwriting loss was $3.3 million for '24 compared to $4.2 million in '23. Combined ratio was 145.6%. The loss ratio was in line with expectations of 64.6% but runoff expenses remain a bit high as we wind down a number of the smaller underwriting portfolios.
As for the calendar year underwriting income, have consolidated calendar year underwriting income was $17.8 million compared to $3 million in 2023. Looking at prior accident year losses, book reserves remained solidly above our current actuarial indications. 2024 loss in LAE related to prior accident years was only a modest increase of $72,000.
Turning to premiums. Consolidated gross premiums was $389.8 million in '24 compared to $416.4 million in '23. This decrease is entirely due to the runoff business of our noncore segment, which declined $57 million year-over-year, offset partially by the growth of Penn-America. Pen America's gross written premium increased 80% to $400 million compared to $369.7 million in '23. As Jay noted, excluding terminated products, Penn-America's gross rate premiums grew from $2.4 million in '23 to $395.1 million in '24, a 12% increase.
Let me add a little color on each of those divisions. Wholesale commercial, which focused on our Main Street small business, grew 6% to $248.6 million compared to $234.9 million in '23. Excluding premium audit in these calendar year numbers, the underlying policy year premium trends, our best indicator of growth was 12%, which includes rate increases of 7%. InsurTech, which consists of vacant expressing collectibles grew 17% to $56.3 million in '24 compared to $48.3 million in '23.
Let me break down those two products a bit. One for Bacon Express grew 24% to $40.5 million, driven by organic growth from existing agents and agency appointments. New technical automation implemented in the third quarter of 2023 for our bank dwelling products, including the expansion of monoline general liability product contributed to the growth in premium our agents are producing. Collectibles gross rate premium of $15.8 million was slightly higher than 2023 by 2%. We've implemented underwriting action on past refund risk that is curtailed growth a bit but is expected to improve overall profitability. Our assumed reinsurance business continues to grow at a nice pace. We signed up eight new trees in 2024.
Gross written premiums grew to $25.4 million compared to $13.9 million in 2023. Specialty Products, excluding terminated products mentioned earlier, was $64.7 million compared to $55.3 million in '23. We signed on two new products in 2024 that contributed $1 million during the year. We expect to have four new products signed on over the next 6 to 12 months.
In closing, we are pleased with the '24 results. Further, despite the impact of the first quarter wildfires, as Jay mentioned, our outlook for 2025 is very positive. We continue to expect revenue growth of 10% from Penn-America Further, we expect to see continued improvement in our non-catastrophe accident year loss ratios. Book reserves remained solidly above current actuarial locations. We believe premium pricing is continuing to track with loss inflation.
Discretionary capital, which is considered -- the amount of consolidated equity in excess of that amount required to maintain the strongest levels with our rating agencies, increased to $255 million at December 31, 2024, and compared to $200 million in December 31, 2023, due to growth in equity and the reduced capital needed to run off the noncore business. As Jay noted earlier, this will support the efforts to invest in the growth of the Penn-America underwriters. Lastly, our portfolio is well positioned to invest in longer-term duration maturities and higher yields.
Thank you. We'll now take your questions.

Question and Answer Session

Operator

(Operator Instructions)
Tom Kerr, Zacks Small-Cap Research.

Tom Kerr

Real quick on the California fires, was that just the underwriting type issues? Or have you guys been trying to get rate increases and deal with that issue?

Joseph Brown

We've had an outstanding rate increase for our vacant express probably for a year plus at this point in time. Like most carriers, it just stalled completely in the regulatory environment. But otherwise, it was a -- it's obviously a sizable loss for us, but involved very few number of properties. I think it was less than 10 properties. Overall, we're involved in the fire.

Tom Kerr

Okay. Great. And could you provide a little more color on the reinsurance segment and that growth in that? And what is the plan? I mean, could that continue its strong growth in 2025?

Joseph Brown

Yes. The -- our growth there is if you recall, two years ago, when we cut back dramatically when I first arrived at the company. Obviously, our view at that point in time with the reduced volume we were doing in other sectors that we had a lot of capacity available. We had a history of doing some reinsurance, but we decided over the near term being two years ago and a couple of years forward that the best use of our internal capital was to develop some existing especially product relationships into assumed reinsurance. So we're up to Brian, how many?

Brian Riley

16.

Joseph Brown

16 treaties at this point in time. roughly $45 million in force, and we expect that we're going to have a nice increase in '25 and '26. At that point, we'll be looking at our other lines of business and allocation of capital across our businesses to decide if we want to grow it much beyond that.

Tom Kerr

Got it. Two more quick ones for me. On the project manifest, do you see any benefits yet on the destocking of the organization in terms of ability to move capital between organizations? Has that kind of started yet?

Brian Riley

Yes. We picked up dividends to the holding company, about $50 million. So we're -- our statutory surplus is right around $500 million. as we get above that, that will give us more capacity in the insurance market.

Tom Kerr

Got it. And last one, I have to ask the standard share buyback question with $255 million in discretionary capital any portion of that could be used to buy back the stock at a discount to book value?

Joseph Brown

Of course, could be used to buy back stock at a discount. But right now, the Board feels more enthusiastic about our prospects for adding additional products and different types of underwriting into our company through the Penn-America. Our decision to hire Praveen is very much focused on this, and we expect that we can get better returns on growing our insurance business in the short term than just buying back stock.

Operator

Ross Haberman, Rlh Investments.

Ross Haberman

I have a quick question. Could you go back to the California. Could you tell us what your total exposure is there? And is it on the direct commercial side? Or is it mostly on the reinsurance side?

Joseph Brown

The -- our total exposure in California is about 6 basis points of the total property market. I don't have it at my fingertips exactly how much premium was. It was all on our direct book. It was not on any assumed reinsurance.

Ross Haberman

And the $15 million, could that be a bigger number as time goes on? Or that's your best guess at least as of today.

Joseph Brown

We're -- we paid over half the losses at this point because of the small numbers, it's -- as I said, it's less than 10 losses, 10 individual properties that were involved. So we're pretty confident the number is not going to move too much at this point.

Ross Haberman

Okay. And your total fire or wildfire exposure, which you said you're reassessing what is that number today?

Joseph Brown

Well, it depends on the frequency and the location of loss. It's -- we have wildfire exposure in California and other states. My comment there was really focused on the fact that we use catastrophe models to estimate our exposure and manage how much we'll do in particular areas. They -- one of the ways those models work is to assess the frequency of a cat loss of a particular size. And so we typically manage to a one in 250 or one in 500 kind of level. as the maximum that we expect from a loss, this one won almost double that in terms of against what the model estimated. And so what I'm saying is that we're like a lot of people wondering at the tail of the individual models that we're using, are they that inaccurate? Why are they off that much?
Now this was an unusual fire, but it is -- it is something that we expect in California. We have different zones that we have fire exposure. One of the two fires was in a more exposed area. That was the Eaton fire. We actually had no losses in the Eaton location. Pasadena, which was slightly better in terms of the rating and expected less frequency of loss actually turned out for us to be where all of the properties were burned in that particular situation.
So again, it's a modeling question for us. We're constantly trying to improve our models. And this one came in somewhat of a surprise, but we've all seen an escalation in the size of cat losses. Now in comparison, if we go back for the prior four years, there were cat losses, wildfire losses. And in each of the four years, we had no wildfire losses at all. And so we were very -- we're pretty comfortable and with the way we're managing that exposure. But again, the models for this type of loss don't seem to work very well.

Ross Haberman

So basically, you've got to reassess it and rejigger, I guess, the assumptions there.

Joseph Brown

Yes. We're looking at it. It's -- we're trying to -- there's a couple of minor adjustments that we're making very quickly in terms of what we would do in a Zone three versus a Zone 4 or 5, and we're trying to say, maybe we have to move that out a little bit to contain that exposure. But again, this size loss is not disproportionate for a company our size. I mean it's kind of the -- in the -- if you're going to write any property business, you're going to have some cat exposures in this for us. It always hurts more when it comes in the first quarter, but over the course of the year, we typically expect, as I mentioned, something like $16 million or $17 million in cat losses. Some years, it's more, some years, it's less. But that's what our current book would expect over time to see in a normal year.

Ross Haberman

Overall, just a follow-up question. Overall, given what happened in California, what kind of rate increases going forward, you expect in that state or in that general area, given what happened?

Joseph Brown

What we expect and what we get might be two different things. But I would say that we need at least 50% on the type of business that was affected by this particular wildfire and perhaps more depending on the types of individual exposures. But it's -- California has been tough on rates. And it's a real obstacle and they're creating a real problem for themselves in terms of not allowing carriers to get an adequate rate, which makes it much harder for people to obtain coverage. And that's obviously not the goal of the insurance industry. We want to provide coverage for every possible exposure that we feel we can wait appropriately.

Ross Haberman

I guess if I can't get an appropriately risk rate, whether it's 50% as you hope to, do you say hypothetically, if you can only get 20% or 25%, do you say it's not worth it to us, it's not worth the risk. We're just not going to write there anymore.

Joseph Brown

Typically, that will be a decision that we face selectively over time, and we try and manage it in line with what our customers are trying to achieve, meaning our agent partners. But the reality is we are a for-profit business. We're very, very focused on making good with our shareholders. And if we can't make it in California selling cat-exposed business, we'll find some place else in the United States to sell more business.

Ross Haberman

And just one last question. You brought in this new gentleman to expand your lines of business. Do you have a rough idea what kind of lines is he sort of going to be focused on?

Joseph Brown

Stay tuned.

Operator

Your next question comes from the line of Andrew Vindigni. That's from the web. Is there room to reduce the expense ratio without compromising underwriting quality any uses for excess capital may be a special dividend?

Joseph Brown

We don't currently plan any special dividends. And in terms of our expense ratio, there is room. We expect that as we've run off the remaining terminated business, there'll be a little bit of pickup in terms of that area not needing expenses. But the big lift for us in terms of where we are, given that we were $250 million higher a couple of years ago is really growing back to that size over the next couple of years and bringing the expense ratio down another 1 point, 1.5 points from where it currently exists.
It's -- the expense ratio is somewhat misleading, sometimes to look at. You see 30 -- 38% and kind of go wow, that's a big number. And then you have to realize that less than 12% or 13% of that is our internal expenses. And the remainder is commissions. We pay our agents licensing fees, et cetera. And so the actual costs that we're dealing with is out of that 38% is roughly 12% or 13% of that total. Not percent but a portion of. So about 1/3 of the expense is something that we're focused on managing down 1.5 points in the next couple of years.

Operator

Your next question comes from Justin Sanders of via web. Anything abnormal in the Q4 corporate and other operating expenses wraps to $7 million for the Q?

Brian Riley

Yes. Yes. For the year, corporate expenses are up $5 million professional fees related to project manifest and implementation drove most of that.

Operator

(Operator Instructions) Your next question comes from the line of Joel Straka via web. Regarding Project Manifest, GBLI has tried growth strategies in the past and failed. You were brought into the map of those out. Can you explain why your growth strategy will work this time?

Joseph Brown

Sure. One is that our new structure allows us to bring in additional underwriting teams coupled with the technology investment we're making. Our growth structure that we tried an attempted two or three years ago, our biggest problem was the underwriting teams were brought in and we're operating in essentially a manual environment with no technology support. That was a mistake on our part. We talked about it at the time, and it's certainly not a mistake we're going to make going forward. This time around, we feel much more comfortable that our technology investments are creating a platform that will allow a variety of products we don't currently sell to be offered to existing and new agency partners.
The other thing to, I guess, kind of reflect on is we made a very clear decision to bring in a particular individual with a lot of experience with products that we don't currently offer. And so we're looking to expand given his knowledge and contacts in the industry, some of which will be built internally, some of which will be by bringing in additional people. And finally, in some cases, by actually buying certain types of operations from other carriers. It's always hard to say if you didn't weren't successful in the past, why do you think you're going to be successful at this time.
But I would tell you that based on my last 2.5 years here, the team and the Board and particularly Fox Payne have focused very carefully about a comprehensive plan to bring this out where we can grow at a greater rate than we've been able to grow over the most recent past. And I think time will tell if we're successful with that. But I think now that we have a very stable, profitable underwriting base in place. We don't have any major decisions to make about staffing in the short term in terms of having too much and having approximately 15 months behind us in a 3-year technology spend, I feel very, very personally confident that this is going to be a successful strategy for Global to pursue.

Operator

I will now turn the call back over to Evan Kasowitz for closing remarks.

Evan Kasowitz

Thank you. This concludes our 2024 earnings call. We look forward to speaking with you about our first quarter 2025 results.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.