We believe that reasonable changes in the interest spread, ranging from 20 basis points to 100 basis points, depending upon credit quality, would produce a total value ranging from $256.9 million to $271.4 million, as compared to the recorded amount of $261.2 million. Unrealized gains and losses on these securities are recorded directly in stockholders’ equity, net of offsets, as a component of accumulated other comprehensive income or loss.
Dividends on Series B and C preferred stock totaled $2.3 million in 2003, $4.3 million in 2002 and $4.2 million in 2001. The decrease in 2003 is due to dividends on our Series C preferred stock totaling $2.2 million being recorded as interest expense beginning in third quarter of 2003 as discussed in “Interest expense” above.
Included in the following discussion of our segments are details regarding premiums collected by product type and distribution source. Premiums collected is a non-GAAP financial measure for which there is no comparable GAAP financial measure. We use premiums collected to measure the productivity of our agency force.
The securities and indebtedness of related parties line on the consolidated balance sheet, which includes the investments that generate our equity income, is comprised of the following:
The liability for future policy benefits for direct participating traditional life insurance is based on net level premium reserves, including assumptions as to interest, mortality and other factors underlying the guaranteed policy cash values. Reserve interest assumptions are level and range from 2.00% to 6.00%. The average rate of assumed investment yields used in estimating gross margins was 6.87% in 2003, 7.47% in 2002 and 7.69% in 2001. Accrued dividends for participating business are established for anticipated amounts earned to date that have not been paid. The declaration of future dividends for participating business is at the discretion of the Board of Directors of Farm Bureau Life. Participating business accounted for 43% of direct receipts from policyholders during 2003 (2002 - 41%, 2001 - 40%) and represented 15% of life insurance in force at December 31, 2003 (2002 - 15%, 2001 -16%). The liability for future policy benefits for non-participating traditional life insurance is computed using a net level method, including assumptions as to mortality, persistency and interest and includes provisions for possible unfavorable deviations.
During 2003, we entered into three interest rate swaps to manage interest rate risk associated with a portion of our flexible premium deferred annuity contracts. Under the interest rate swaps, we pay a fixed rate of interest and receive a floating rate of interest on a notional amount totaling $150.0 million. Details regarding the interest rate swaps as of December 31, 2003 are as follows:
Other long-term investments: The fair values for investment deposits are generally estimated by discounting expected cash flows using interest rates currently being offered for similar investments. The fair values for investments held by broker/dealer subsidiaries and interest rate swaps are based on quoted market prices. We are not required to estimate the fair value of our other miscellaneous investments.
In total, insurance premiums and product charges have been reduced by $27.8 million in 2003, $26.8 million in 2002 and $22.1 million in 2001 and insurance benefits have been reduced by $15.4 million in 2003, $12.9 million in 2002 and $13.7 million in 2001 as a result of cession agreements.
Life insurance in force assumed on a consolidated basis totaled $1,977.1 million (7.0% of total life insurance in force) at December 31, 2003, $1,999.2 million (7.4% of total life insurance in force) at December 31, 2002 and $3,784.2 million (13.8% of total life insurance in force) at December 31, 2001. In total, premiums and product charges assumed totaled $18.1 million in 2003, $15.8 million in 2002 and $11.3 million in 2001. Insurance benefits assumed totaled $10.4 million in 2003, $10.3 million in 2002 and $9.0 million in 2001.
Net statutory premiums collected, which include premiums collected from annuities and universal life-type products that are not included in revenues for GAAP reporting, totaled $1,180.7 million in 2003, $1,349.4 million in 2002 and $672.1 million in 2001. Total premiums collected include premiums assumed from American Equity totaling $649.5 million in 2003 ($837.9 million in 2002, $280.0 million in 2001), premiums assumed from NTL totaling $18.7 million in 2003 ($20.8 million in 2002 and $13.3 million in 2001) and premiums written in our Farm Bureau marketing territory totaling $492.5 million in 2003 ($471.7 million in 2002 and $354.2 million in 2001).
Excluding reinsurance assumed, our total life and annuity collected premiums are concentrated in the following core Farm Bureau distribution states: Iowa (2003 - 29%, 2002 - 28%, 2001 - 27%), Kansas (2003 - 20%, 2002 - 24%, 2001 - 21%) and Oklahoma (2003 - 9%, 2002 - 8%, 2001 - 9%). Premiums collected in these states include premiums on products from all of our product segments.