Also in 2001, the Company sold Provident National Assurance Company, an inactive insurance subsidiary. Provident National Assurance Company's general account liabilities were reinsured by another subsidiary of the Company, and the excess capital and surplus was transferred to the parent to reduce short-term borrowings.
Group life, accidental death and dismemberment, and long-term care reported income of $179.2 million in 2001 compared to $214.0 million in 2000. Included in 2001 income is additional benefit expense of $6.7 million related to the September 11, 2001 tragedy.
The Company reported a before-tax net realized investment loss of $40.6 million in 2001. The loss was the net of gains of $150.6 million and losses of $191.2 million, including write-downs of $153.8 million recognized as a result of management's determination that the value of certain fixed maturity securities had other than temporarily declined.
Loss recognition is performed when, in the judgment of management, adverse deviations from original assumptions have occurred and may be likely to continue such that recoverability of deferred policy acquisition costs on a line of business is questionable. Insurance contracts are grouped on a basis consistent with the Company's manner of acquiring, servicing, and measuring profitability of the contracts. If loss recognition testing indicates that deferred policy acquisition costs are not recoverable, the deficiency is charged to expense. Once a loss recognition adjustment is required, loss recognition testing is generally performed on an annual basis using then current assumptions until the line
Goodwill: Goodwill is the excess of the amount paid to acquire a business over the fair value of the net assets acquired. Goodwill, prior to January 1, 2002, was amortized on a straight-line basis over a period not to exceed 40 years. The accumulated amortization for goodwill was $101.2 million and $85.9 million as of December 31, 2001 and 2000, respectively. The carrying amount of goodwill is reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. If the fair value of the operations to which the goodwill relates is less than the carrying amount of the unamortized goodwill, the carrying amount is reduced with a corresponding charge to expense.
Deferred Gain or Loss on Reinsurance: The Company is a party to various reinsurance agreements. Where applicable, gains or losses on these transactions are deferred and amortized into earnings based upon expected future premium income for traditional insurance policies and estimated future gross profits for interest-sensitive insurance policies. The deferred gain on reinsurance included in other liabilities in the consolidated statements of financial condition at December 31, 2001 and 2000 was $360.2 million and $373.5 million, respectively.
Employee related expense consists of employee severance costs, change in control costs, restricted stock costs which fully vested upon stockholder adoption of the merger agreement or upon completion of the merger, and outplacement costs to assist employees who have been involuntarily terminated. Severance benefits and change in control costs were $60.2 million, and costs associated with the vesting of restricted stock were $17.5 million.