The operating results of the property-casualty insurance industry are subject to significant fluctuations from quarter to quarter and from year to year due to the effects of the competition on pricing, the frequency and severity of losses incurred in connection with weather-related and other catastrophic events, the general economic conditions, and other factors such as changes in tax laws and the regulatory environment.
In 1997, operating activities generated cash flows of $94.2 million; in 1996, the total was $95.1 million; in 1995, the total was $97.9 million. For each year, the primary source of funds was from premiums written in the property-casualty insurance operations. In 1997, the funds generated from operating activities were primarily used to purchase fixed maturities and equity securities, repurchase the Company's common stock, and pay cash dividends. In 1996 and 1995, the funds generated from operating activities in those years were primarily used to purchase investment-grade securities and to repurchase the Company's common stock. The net cash used in investing activities in 1997, 1996, and 1995 was $79.2 million, $65.7 million, and $88.8 million, respectively.
The Company's mortgage banking subsidiary, ALLIED Group Mortgage Company (ALLIED Mortgage), has separate credit agreements to support its operations. Short-term and long-term notes payable to nonaffiliated companies are used by ALLIED Mortgage to finance its mortgage loans held for sale, to purchase servicing rights, and to purchase short-term investments. These notes payable are not guaranteed by the Company. At December 31, 1997, ALLIED Mortgage had short-term borrowings of $39 million, which are to be repaid through the subsequent sale of its mortgage loan inventory. The amount of short-term borrowings fluctuates daily depending on the level of inventory being financed. Long-term borrowings amounted to $10.5 million to be repaid over the next seven years. See note 8 of Notes to Consolidated Financial Statements for a further discussion of ALLIED Mortgage's finance arrangements. In the normal course of its business, ALLIED Mortgage also makes commitments to buy and sell securities that may result in credit and market risk in the event the counterparty is unable to fulfill its obligation. See note 14 of Notes to Consolidated Financial Statements for a further discussion of such commitments.
At year-end 1997, the ALLIED Group Employee Stock Ownership Trust (ESOP Trust) owned 24.9% and ALLIED Mutual Insurance Company (ALLIED Mutual), an affiliated property-casualty insurance company, controlled 18.2% of the outstanding voting stock of the Company.
Following is a schedule of amortized costs and estimated fair values of investments in fixed maturities and equity securities as of December 31, 1997 and 1996. The estimated fair values for fixed maturities and equity securities are based on quoted market prices for the same or similar issues or from independent pricing services.
The following table presents the plan's postretirement benefit obligations as of December 31, 1997 and 1996 reconciled with the plan's funded status and the amount recognized in the Company's consolidated balance sheets: