The U.S. life insurance sector is faced with an interest rate, economic and regulatory environment making strategic long-term planning decisions more challenging and vulnerable to inaccurate assessments. In an environment such as this, the need for a strong capital position that can cushion against unexpected bumps is critical for stability and ongoing business activity. The Company's operating strategy continues to be focused on maintaining capital levels substantially above regulatory and rating agency requirements. Our business model is predicated upon steady growth in invested assets while managing the block of business within profitability objectives. A key premise of our financial management is maintaining a high quality investment portfolio, well matched in terms of duration with policyholder obligations, that continues to outperform the industry with respect to adverse impairment experience. This discipline enables the Company to sustain resources more than adequate to fund future growth and absorb abnormal periods of cash outflows.
The Company sold its Reno nursing home operations effective February 1, 2019 and its San Marcos nursing home operations effective May 1, 2019. Revenues associated with these operations were $4.3 million, $17.2 million and $18.2 million in 2019, 2018 and 2017, respectively. Revenues for each nursing home entity are included in the 2019 amount through their respective dates of sale.
Generally, the impact of the market value change of index options on asset values aligns closely with the movement of the embedded
As part of the 2019 and 2018 unlockings discussed above, the Company's excess benefit reserve was also unlocked. Changes in the excess benefits reserve are a component of contract interest expense. The unlockings in each year increased its excess benefit reserve, by $7.9 million in 2019 and by $14.1 million in 2018, which served to increase contract interest expense by a like amount.
Since the embedded derivative option in the policies is bifurcated when determining the contract reserve liability, the impact of the market value change of index options on asset values generally aligns closely with the movement of the embedded derivative liability such that the net effect upon pretax earnings is negligible (i.e. net realized and unrealized gains/(losses) included in net investment income approximate the change in contract interest associated with the corresponding embedded derivative liability change). See further discussion below regarding contract interest activity.
Pre-tax operating amounts for these periods also include the results of BP III, the entity owning and operating the Company's home office facility in Austin, Texas. BP III commenced operations at the beginning of 2017 and National Western relocated to this facility in the fourth quarter of 2017. BP III incurred pre-tax losses of $(1.4) million, $(1.9) million and $(1.5) million in 2019, 2018 and 2017, respectively. Rent and rental expenses paid by National Western to BP III have been eliminated in consolidation.
Invested assets at December 31, 2019 include Ozark National amounts as follows: Debt securities of $722.9 million; Policy loans of $27.1 million; and Real estate of $4.6 million.
The Company is required to classify its investments in debt securities into one of three categories: (a) trading securities; (b) securities available for sale; or (c) securities held to maturity. The Company purchases securities with the intent to hold to maturity and accordingly does not maintain a portfolio of trading securities. Of the remaining two categories, available for sale and held to maturity, the Company makes a determination on categorization based on various factors including the type and quality of the particular security and how it will be incorporated into the Company's overall asset/liability management strategy. As shown in the table below, at December 31, 2019, approximately 31.2% of the Company's total debt securities, based on fair values, were classified as securities available for sale. These holdings in available for sale provide flexibility to the Company to react to market opportunities and conditions and to practice active management within the portfolio to provide adequate liquidity to meet policyholder obligations and other cash needs.
The Company's direct investments in real estate are not a significant portion of its total investment portfolio. For the years ended December 31, 2019 and 2018, there were no real estate properties acquired through mortgage loan foreclosure. The Company also participates in several real estate joint ventures and limited partnerships that invest primarily in income-producing retail properties.
The National Association of Insurance Commissioners ("NAIC") has established risk-based capital ("RBC") standards for U.S. life insurers as well as a risk-based capital model act ("RBC Model Act"). The RBC Model Act requires that life insurers annually submit a report to state regulators regarding their RBC amounts based upon four categories of risk (asset risk, insurance risk, interest rate risk, and business risk). The capital requirement for each is determined by applying factors that vary based upon the degree of risk to various asset, premium and policy benefit reserve items. The formula is an early warning tool to identify potential weakly capitalized companies for purposes of initiating further regulatory action. Independent rating agencies utilize proprietary versions similar to the NAIC RBC model incorporating additional risk factors identified in their respective rating methodology. At December 31, 2019, National Western and Ozark National each maintained statutory capital substantially in excess of applicable statutory requirements.