In addition to net income, we have consistently utilized operating income, operating income per common share and operating income per common share-assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Operating income equals net income adjusted to eliminate the impact of net realized gains (losses) on investments including net OTTI losses recognized in operations and related deferred tax asset valuation allowance, fair value changes in derivatives and embedded derivatives, (gain) loss on extinguishment of convertible debt, the counterparty default on expired call options and litigation reserves. Because these items fluctuate from year to year in a manner unrelated to core operations, we believe measures excluding their impact are useful in analyzing operating trends. We believe the combined presentation and evaluation of operating income together with net income provides information that may enhance an investor's understanding of our underlying results and profitability.
Our investment spread in 2012 has been impacted by shortfalls in investment income from excess liquidity resulting from a lag in the reinvestment of proceeds of government agency bonds called for redemption (see Our Business and Profitability). The callable government agency securities have been a cornerstone of our investment portfolio since our formation. Through the years they have provided very acceptable yields that met our spread requirements without any risk-based capital charges. We have been through several cycles of calls on these securities and each time we have reinvested a portion of the call redemption proceeds into new callable government agency securities. This kept cash balances low but perpetuated the call risk. In 2011, we had $3.1 billion in such securities called and purchased $3.7 billion for a $600 million net purchase of callable government agency securities. However, in the current interest rate environment, we have been reluctant to reinvest the call redemption proceeds in government agency securities and have only purchased $948.9 million in 2012 compared to $4.3 billion in calls. Consequently, we have been managing excess cash and other short-term investments throughout 2012. We ended the year with $2.2 billion in excess cash and other short-term investments. While high levels of excess cash and other short-term investments may persist for several more quarters, the average quarterly balances should decline in 2013 due to reinvestment of year end cash and other short-term investments into longer term securities and reduced exposure to callable securities in 2013. See Results of Operations - Net investment income for additional information regarding our excess liquidity.
Annuity deposits by product type collected during 2012, 2011 and 2010, were as follows:
The amortized cost and fair value of fixed maturity securities and equity securities that were in an unrealized loss position were as follows:
Unrealized losses decreased $95.0 million from $178.9 million at December 31, 2011 to $83.9 million at December 31, 2012. We decreased unrealized losses by recognizing $9.5 million of credit OTTI losses on corporate securities and residential mortgage backed securities for the year ended December 31, 2012. The remaining unrealized loss decrease was primarily due to a narrowing of credit spreads in certain sectors of the corporate bond market during the year ended December 31, 2012.
At December 31, 2012, we have eight mortgage loans that are in the process of being satisfied by taking ownership of the real estate serving as collateral on the loan. These eight loans have a total outstanding principal balance of $26.2 million for which we have recorded specific loan loss allowances totaling $8.5 million ($5.7 million in 2012 and $2.8 million in 2011). We also have ten commercial mortgage loans at December 31, 2012 with a total outstanding principal balance of $26.7 million that have been given "workout" terms which generally allow for interest only payments. We recorded specific loan loss allowances on two of the "workout" loans (aggregate principal balance of $3.1 million) of $1.7 million ($0.9 million in 2012 and $0.8 million in 2011). At December 31, 2012, we have agreed to discounted payoffs on three commercial mortgage loans with outstanding principal of $8.5 million for which we have recorded specific loan loss allowances totaling $1.0 million in 2012. At December 31, 2012, we have no commercial mortgage loans that were delinquent (60 days or more at the reporting date) in their principal and interest payments. The total outstanding principal balance of these 21 loans is $61.4 million, which represents less than 5% of our total mortgage loan portfolio.
As discussed in note 9 to our consolidated financial statements, during 2011, we terminated the $150 million line of credit and entered into a $160 million revolving line of credit agreement. The new revolving line of credit terminates on January 28, 2014, and borrowings are available for general corporate purposes of the parent company and its subsidiaries.
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. We categorize our investments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value