THE AES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) DECEMBER 31, 2011, 2010, AND 2009 may require the government to acquire an ownership interest and the current expectation of future losses.
Our evaluation indicated that the long-lived assets were no longer recoverable and, accordingly, they were written down to their estimated fair value of $24 million based on a discounted cash flow analysis.
The long-lived assets had a carrying amount of $66 million prior to the recognition of asset impairment expense.
Kelanitissa is a Buildoperate-transfer (BOT) generation facility and payments under its PPA are scheduled to decline over the PPA term.
It is possible that further impairment charges may be required in the future as Kelanitissa gets closer to the BOT date.
Kelanitissa is reported in the Asia Generation reportable segment.
Asset impairment expense for the year ended December 31, 2010 consisted of:
## Table 0 ##
Southland—In September 2010, a new environmental policy on the use of ocean water to cool generation facilities was issued in California that requires generation plants to comply with the policy by December 31, 2020 and would require significant capital expenditure or plants’ shutdown.
The Company’s Huntington Beach gas-fired generation facility in California, which is part of AES’ Southland business, was impacted by the new policy.
The Company performed an asset impairment test and determined the fair value of the asset group using a discounted cash flow analysis.
The carrying value of the asset group of $288 million exceeded the fair value of $88 million resulting in the recognition of asset impairment expense of $200 million for the year ended December 31, 2010.
Southland is reported in the North America Generation reportable segment.
Tisza II—During the third quarter of 2010, the Company entered into annual negotiations with the offtaker of Tisza II.
As a result of these preliminary negotiations, as well as the further deterioration of the economic environment in Hungary, the Company determined that an indicator of impairment existed at September 30, 2010.
Thus, the Company performed an asset impairment test and determined that based on the undiscounted cash flow analysis, the carrying amount of the Tisza II asset group was not recoverable.
The fair value of the asset group was then determined using a discounted cash flow analysis.
The carrying value of the Tisza II asset group of $160 million exceeded the fair value of $75 million resulting in the recognition of asset impairment expense of $85 million during the year ended December 31, 2010.
Deepwater—In 2010, Deepwater, our 160 MW petcoke-fired merchant power plant located in Texas, experienced deteriorating market conditions due to increasing petcoke prices and diminishing power prices.
As a result, Deepwater incurred operating losses and was shut down from time to time to avoid negative operating margin.
In the fourth quarter of 2010, management concluded that, on an undiscounted cash flow basis, the carrying amount of the asset group was no longer recoverable.
The fair value of Deepwater was determined using a discounted cash flow analysis and $79 million of impairment expense was recognized.
Deepwater is reported in the North America Generation reportable segment.
Surrenders and partial withdrawals decreased 9.5% to $5.31 billion in 2008 from $5.87 billion in 2007 due to lower surrenders and partial withdrawals on market value adjusted annuities and traditional fixed annuities, partially offset by higher surrenders and partial withdrawals on interest-sensitive life insurance products and, to a lesser extent, increased withdrawals on Allstate Bank products.
The surrender and partial withdrawal rate on deferred fixed annuities, interest-sensitive life insurance products and Allstate Bank products, based on the beginning of period contractholder funds, was 12.2% in 2008 compared to 13.3% in 2007.
Surrenders and partial withdrawals decreased 1.2% in 2007 compared to 2006.
This decline was due to lower surrenders and partial withdrawals on interest-sensitive life insurance policies and the classification of the net change in variable annuity contractholder funds as ‘‘other adjustments’’ subsequent to the effective date of our reinsurance agreements with Prudential.
These declines were partially offset by an 11.2% increase in surrenders and partial withdrawals on fixed annuities.
The surrenders and partial withdrawals line in the table above, for 2006 includes $120 million related to the reinsured variable annuity business.
The surrender and partial withdrawal rate on deferred fixed annuities, interest-sensitive life insurance products and Allstate Bank products, based on the beginning of period contractholder funds, was 13.3% in 2007 compared to 13.9% in 2006.
The improvement in the surrender and partial withdrawal rate in 2007 compared to 2006 was primarily due to a block of corporate owned life insurance policies that terminated in 2006 due to the bankruptcy of the policyholder.
Net investment income decreased 11.3% in 2008 compared to 2007 and increased 3.0% in 2007 compared to 2006.
The decline in 2008 was primarily due to lower investment yields on floating rate securities, increased short-term investment balances reflecting liquidity management activities, lower average investment balances and lower income from limited partnership interests.
The increase in 2007 was primarily due to higher average portfolio balances, increased portfolio yields and higher income from limited partnership interests.
Net realized capital gains and losses are reflected in the following table for the years ended December 31.
## Table 1 ##
(1) To conform to the current period presentation, certain amounts in the prior periods have been reclassified.
(2) Impairment write-downs reflect issue specific other than temporary declines in fair value, including instances where we could not reasonably assert that the recovery period would be temporary.
(3) Change in intent write-downs reflect instances where we cannot assert a positive intent to hold until recovery.
(4) Beginning in the fourth quarter of 2008, income from EMA LP is reported in realized capital gains and losses.
EMA LP income for periods prior to the fourth quarter of 2008 is reported in net investment income.
For further discussion of realized capital gains and losses, see the Investments section of the MD&A.
Analysis of Costs and Expenses Total costs and expenses decreased 0.9% or $48 million in 2008 compared to 2007 due to lower interest credited to contractholder funds, partially offset by higher amortization of DAC, contract benefits and operating costs and expenses.
Total costs and expenses in 2007 were consistent with 2006 as increased interest credited to contractholder funds and life and annuity contract benefits were offset by lower amortization of DAC, operating costs and expenses, and restructuring and related charges.
Life and annuity contract benefits increased 1.5% or $23 million in 2008 compared to 2007 due primarily to higher contract benefits on life insurance products, partially offset by lower contract benefits on annuities.
The increase in contract benefits on life insurance products was primarily due to unfavorable mortality experience, partially offset by the recognition in the prior year period of litigation related costs in the form of additional policy benefits.
The decline in contract benefits on annuities was due to the impact of lower sales of immediate annuities with life contingencies, partially offset by unfavorable mortality experience.
Management’s Discussion and Analysis of Financial Condition and Results of Operations–(Continued) The following table summarizes fixed income and equity securities in a gross unrealized loss position according to significance, aging and investment grade classification.
## Table 2 ##
(1) For fixed income securities, cost represents amortized cost.
(2) At December 31, 2008, 93.0% of the fixed income securities portfolio was rated investment grade compared to 92.7% at December 31, 2007.
The largest individual unrealized loss was $17 million for category (I), $105 million for category (II), $38 million for category (III) and $27 million for category (IV) as of December 31, 2008.
Categories (I) and (II) have generally been adversely affected by overall economic conditions including interest rate increases and the market’s evaluation of certain sectors.
The degree to which and/or length of time that the securities have been in an unrealized loss position does not suggest that these securities pose a high risk of being other-than-temporarily impaired.
Categories (III) and (IV) have primarily been historically adversely affected by industry and issue specific, or issuer specific conditions.
At December 31, 2008, Category (III) for fixed income was comprised primarily of fair values of $361 million of ABS RMBS, $133 million of cash flow CLO, $130 million of corporate private and $94 million of CMBS, for a total of $718 million with unrealized losses of $444 million, $420 million, $139 million and $408 million, respectively, for a total of $1.41 billion unrealized losses.
No other security type individually represents more than $56 million of fair value within this category.
Of the unrealized losses on below investment grade securities, 17.2% were in significant unrealized loss positions (greater than or equal to 20% of amortized cost) for six or more consecutive months prior to December 31, 2008.
Included among the securities rated below investment grade are high-yield bonds and securities that were investment grade when originally acquired.
We mitigate the credit risk of investing in below investment grade fixed income securities by limiting the percentage of our fixed income portfolio invested in such securities, through diversification of the portfolio, active credit monitoring and portfolio management activities.
We continue to believe that the unrealized losses on these securities are not predictive of the ultimate performance.
CAPITAL RESOURCES AND LIQUIDITY Capital Resources consist of shareholders’ equity and debt, representing funds deployed or available to be deployed to support business operations or for general corporate purposes.
The following table summarizes our capital resources at December 31.
## Table 3 ##
Shareholders’ equity decreased in 2008, due to unrealized net capital losses on investments, net loss, share repurchases, dividends paid to shareholders and an increase in the unrecognized pension and other postretirement benefit cost.
Shareholders’ equity increased in 2007, due to net income and a decline in the unrecognized pension and other postretirement benefit cost, partially offset by share repurchases, decreases in unrealized net capital gains on investments and dividends paid to shareholders.
The decrease to shareholders’ equity resulting from the increase in the unrecognized pension and other postretirement benefit cost in 2008 was the result of unfavorable investment returns partially offset by the effects of higher discount rates.
The change to the unrecognized pension and other postretirement benefit cost had an impact on shareholders’ equity of $822 million unfavorable for pension, and $98 million favorable for other post employment benefits (‘‘OPEB’’).
For further information on the impact to unrecognized pension and other postretirement benefit cost, see Notes 2 and 16 of the consolidated financial statements.
The decline in the unrecognized pension and other postretirement benefit cost in 2007 was primarily related to favorable investment performance of the assets and an increase in the discount rate of the pension plans, and lower than assumed claims experience in the other postretirement employee benefit plans.
The favorable change to the unrecognized pension and other postretirement benefit cost had an impact on shareholders’ equity of $580 million for pension, and $185 million for OPEB.
Share repurchases We suspended our $2.00 billion share repurchase program in October 2008 and do not plan to complete it by the target date of March 31, 2009.
The number of shares repurchased under the program was 22.7 million shares for $1.07 billion for the year ended December 31, 2008.
Since 1995, we have acquired 457 million shares of our common stock at a cost of $19.08 billion, primarily as part of various stock repurchase programs.
We have reissued 95 million shares since 1995, primarily associated with our equity incentive plans, the 1999 acquisition of American Heritage Life Investment Corporation and the 2001 redemption of certain mandatorily redeemable preferred securities.
The impact of our repurchase programs on total shares outstanding since 1995 has been a net reduction of 360 million shares or 40.2%.
Debt increased $19 million in 2008 compared to 2007 and $978 million in 2007 compared to 2006 due to increases in long-term debt.
The $750 million of 7.20% Senior Notes due 2009 are scheduled to mature on December 1, 2009.
These Senior Notes are expected to be refinanced.
For further information on debt issuances, see Note 11 of the consolidated financial statements.
At December 31, 2008 and 2007, there were no outstanding commercial paper borrowings.

<table><tr><td></td><td>2010  (in millions)</td></tr><tr><td>Southland (Huntington Beach)</td><td>$200</td></tr><tr><td>Tisza II</td><td>85</td></tr><tr><td>Deepwater</td><td>79</td></tr><tr><td>Other</td><td>25</td></tr><tr><td>Total</td><td>$389</td></tr></table>
<table><tr><td> ($ in millions) </td><td>2008</td><td>2007</td><td>2006</td></tr><tr><td>Sales<sup>-1</sup></td><td>$178</td><td>$75</td><td>$-27</td></tr><tr><td>Impairment write-downs<sup>-2</sup></td><td>-1,256</td><td>-118</td><td>-21</td></tr><tr><td>Change in intent write-downs<sup>-1(3)</sup></td><td>-1,247</td><td>-93</td><td>-60</td></tr><tr><td>Valuation of derivative instruments</td><td>-985</td><td>-63</td><td>-17</td></tr><tr><td>EMA LP income<sup>-4</sup></td><td>-14</td><td>—</td><td>—</td></tr><tr><td>Settlements of derivative instruments</td><td>197</td><td>6</td><td>48</td></tr><tr><td>Realized capital gains and losses, pre-tax</td><td>-3,127</td><td>-193</td><td>-77</td></tr><tr><td>Income tax benefit</td><td>1,093</td><td>68</td><td>27</td></tr><tr><td>Realized capital gains and losses, after-tax</td><td>$-2,034</td><td>$-125</td><td>$-50</td></tr></table>
<table><tr><td> </td><td colspan="4">December 31, 2008</td><td colspan="4">December 31, 2007</td></tr><tr><td> </td><td colspan="2">Fixed income</td><td></td><td></td><td colspan="2">Fixed income</td><td></td><td></td></tr><tr><td> ($ in millions except number of issues) </td><td>Investment grade</td><td>Below investment grade</td><td>Equity</td><td>Total</td><td>Investment grade</td><td>Below investment grade</td><td>Equity</td><td>Total</td></tr><tr><td>Category (I): Unrealized loss less than 20% of cost<sup>(1)</sup></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Number of issues</td><td>4,303</td><td>275</td><td>112</td><td>4,690</td><td>4,058</td><td>379</td><td>322</td><td>4,759</td></tr><tr><td>Fair value</td><td>$29,070</td><td>$1,172</td><td>$1,269</td><td>$31,511</td><td>$31,489</td><td>$2,446</td><td>$884</td><td>$34,819</td></tr><tr><td>Unrealized</td><td>$-2,523</td><td>$-147</td><td>$-74</td><td>$-2,744</td><td>$-1,391</td><td>$-146</td><td>$-66</td><td>$-1,603</td></tr><tr><td>Category (II): Unrealized loss greater than or equal to 20% of cost for a period of less than 6 consecutive months<sup>(1)</sup></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Number of issues</td><td>1,216</td><td>356</td><td>221</td><td>1,793</td><td>176</td><td>21</td><td>192</td><td>389</td></tr><tr><td>Fair value</td><td>$8,445</td><td>$1,555</td><td>$676</td><td>$10,676</td><td>$1,096</td><td>$134</td><td>$102</td><td>$1,332</td></tr><tr><td>Unrealized</td><td>$-5,365</td><td>$-902</td><td>$-365</td><td>$-6,632</td><td>$-578</td><td>$-80</td><td>$-38</td><td>$-696</td></tr><tr><td>Category (III): Unrealized loss greater than or equal to 20% of cost for a period of 6 or more consecutive months, but less than 12consecutive months<sup>(1)</sup></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Number of issues</td><td>208</td><td>29</td><td>1</td><td>238</td><td>—</td><td>—</td><td>5</td><td>5</td></tr><tr><td>Fair value</td><td>$878</td><td>$136</td><td>$2</td><td>$1,016</td><td>$—</td><td>$—</td><td>$1</td><td>$1</td></tr><tr><td>Unrealized</td><td>$-1,686</td><td>$-197</td><td>$-1</td><td>$-1,884</td><td>$—</td><td>$—</td><td>$-2</td><td>$-2</td></tr><tr><td>Category (IV): Unrealized loss greater than or equal to 20% of cost for 12 or more consecutive months<sup>(1)</sup></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Number of issues</td><td>41</td><td>5</td><td>1</td><td>47</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Fair value</td><td>$79</td><td>$16</td><td>$3</td><td>$98</td><td>$—</td><td>$—</td><td>$—</td><td>$—</td></tr><tr><td>Unrealized</td><td>$-200</td><td>$-21</td><td>$-4</td><td>$-225</td><td>$—</td><td>$—</td><td>$—</td><td>$—</td></tr><tr><td>Total number of issues</td><td>5,768</td><td>665</td><td>335</td><td>6,768</td><td>4,234</td><td>400</td><td>519</td><td>5,153</td></tr><tr><td>Total fair value<sup>-2</sup></td><td>$38,472</td><td>$2,879</td><td>$1,950</td><td>$43,301</td><td>$32,585</td><td>$2,580</td><td>$987</td><td>$36,152</td></tr><tr><td>Total unrealized losses</td><td>$-9,774</td><td>$-1,267</td><td>$-444</td><td>$-11,485</td><td>$-1,969</td><td>$-226</td><td>$-106</td><td>$-2,301</td></tr></table>
<table><tr><td> ($ in millions) </td><td>2008</td><td>2007</td><td> 2006</td><td></td></tr><tr><td>Common stock, retained income and other shareholders' equity items</td><td>$17,442</td><td>$21,228</td><td>$20,855</td><td></td></tr><tr><td>Accumulated other comprehensive income</td><td>-4,801</td><td>623</td><td>991</td><td></td></tr><tr><td>Total shareholders' equity</td><td>12,641</td><td>21,851</td><td>21,846</td><td></td></tr><tr><td>Debt</td><td>5,659</td><td>5,640</td><td>4,662</td><td></td></tr><tr><td>Total capital resources</td><td>$18,300</td><td>$27,491</td><td>$26,508</td><td></td></tr><tr><td>Ratio of debt to shareholders' equity</td><td>44.8%</td><td>25.8%</td><td>21.3</td><td> %</td></tr><tr><td>Ratio of debt to capital resources</td><td>30.9%</td><td>20.5%</td><td>17.6%</td><td></td></tr></table>

Question: Which element has the second largest number in 2008 for Investment grade?
Answer: Fair value