In 1997, CNA filed a Registration Statement on Form S-3 with the Securities and Exchange Commission relating to $1.0 billion of debt and preferred stock that became effective on October 22, 1997. On January 8, 1998, CNA issued $150.0 million principal amount of 6.45% senior notes due January 15, 2008 and $150.0 million principal amount of 6.95% senior notes due January 15, 2018. The net proceeds were used to pay down bank loans drawn under a revolving credit facility. Concurrent with the reduction in bank debt, CNA terminated $300.0 million notional amount of interest rate swaps.
CNA's life insurance subsidiaries' net income excluding net investment gains was $85.8 million for 1997, compared to $94.4 and $91.3 million for 1996 and 1995, respectively. The decline in net operating income is primarily due to poor experience in certain group accident and health contracts and increased expenses related to new business initiatives. Net investment gains for 1997 were $81.4 million, compared to $80.5 and $71.9 million for 1996 and 1995, respectively.
Exclusive of these transactions, revenues increased by $23.0 million, or 11.5%, and net income increased by $14.0 million, as compared to 1995.
(1) Includes losses on short sales, equity index futures and options aggregating $936.6, $285.7 and $122.6 for the years ended December 31, 1997, 1996 and 1995, respectively. The Company continued to experience significant losses from these short sales and its open contracts on equity index positions in 1998. (2) See Note 14 of the Notes to Consolidated Financial Statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which establishes standards for the way that public business enterprises report information about operating segments in interim and annual financial statements. It requires that those enterprises report a measure of segment profit or loss, certain specific revenue and expense items, and segment assets, and that the enterprises reconcile the total of those amounts to the general-purpose financial statements. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. This Statement is effective for fiscal years beginning after December 15, 1997 and will require the Company to expand its segment disclosure.
Investment gains of $837.6, $716.0 and $1,131.8 and losses of $264.4, $165.1 and $367.6 were realized on securities available for sale for the years ended December 31, 1997, 1996 and 1995, respectively. Investment gains in 1997 and 1996 also include $58.6 and $2.7 of net unrealized losses on equity securities in the Company's trading portfolio.
In cases where quoted market prices are not available, fair values may be based on estimates using present value or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rates and estimates of future cash flows. Accordingly, the estimates presented herein are subjective in nature and are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The amounts reported in the consolidated balance sheet for fixed maturities securities, equity securities, derivative instruments, short-term investments and securities sold under agreements to repurchase are at fair value. As such, these financial instruments are not shown in the table above. See Note 4 for the fair value of derivative instruments. Since the disclosure excludes certain financial instruments and all nonfinancial instruments such as real estate and insurance reserves, the aggregate fair value amounts cannot be summed to determine the underlying economic value of the Company.
CNA has entered into interest rate swap agreements to convert the variable rate of the borrowing under the bank credit facility and the commercial paper program to a fixed rate. Since these interest rate swaps are not held for trading purposes, they are not included in the preceding tables. The outstanding interest rate swap agreements had a total notional principal amount of $950.0, and a fair value liability of $4.0 and fair value asset of $3.0 at December 31, 1997 and 1996, respectively. These agreements, which terminate from May to December 2000, effectively fix the Company's interest rate exposure on $950.0 of variable rate debt.