In presenting our results in the following discussion and analysis of our results of operations, we have included certain non-generally accepted accounting principles (“non-GAAP”) financial measures within the meaning of Regulation G as promulgated by the SEC. We believe that these non-GAAP measures, specifically the current accident year non-catastrophe loss, expense and combined ratios, which may be defined differently by other companies, better explain our results of operations in a manner that allows for a more complete understanding of the underlying trends in our business. However, these measures should not be viewed as a substitute for those determined in accordance with United States generally accepted accounting principles (“GAAP”). Reconciliations of these financial measures to their most directly comparable GAAP measures are included in the table below.
Gross written premiums increased $174.0 million, or 5.9%, for the year ended December 31, 2019, as compared to the year ended December 31, 2018. Our U.S. Operations experienced growth in all major lines of business during 2019, as its gross written premiums increased $167.1 million, or 9.9%, during the comparative periods. International Operations gross written premiums increased a modest $7.0 million, or 0.6%, in 2019 as compared to 2018, primarily due to growth in our Professional, Property and Liability lines, partially offset by reductions in Specialty lines. Both U.S. Operations and International Operations saw overall rate increases for the year ended December 31, 2019.
Gross written and earned premiums increased for the year ended December 31, 2018 as compared to the same period ended 2017, driven by the growth in all major lines of our U.S. Operations, led by our Liability and Professional lines. International Operations experienced increases in both gross written and earned premiums during 2018 as compared to 2017, primarily due to growth in our Property, Liability and Professional lines, as well as the timing of the Ariel Re acquisition. Ariel Re has a significant property contract that is subject to renewal in January of each year. The Ariel Re transaction closed in February 2017; as such the January 2017 gross written premiums for Ariel Re is not included while the 2018 renewal is included in our gross written premiums.
Total invested assets at December 31, 2019 were $4,940.8 million, net of $158.6 million of invested assets attributable to our Syndicate 1200 and 1910 trade capital providers. Total invested assets at December 31, 2018 were $4,653.6 million, net of $133.4 million of invested assets attributable to our Syndicate 1200 and 1910 trade capital providers. Total invested assets at December 31, 2017 were $4,612.1 million, net of $130.8 million of invested assets attributable to Syndicate 1200’s trade capital providers.
Consolidated net realized investment gains for the year ended December 31, 2019 consisted of $142.0 million in realized gains from the sale of invested assets, including $129.0 million from the sale of equity securities. The majority of these asset sales were recognized during the fourth quarter of 2019, primarily as a result of a shift in capital management and tax planning strategies, and were partially offset by an associated $40.8 million decrease in the fair value of equity securities. During the year ended December 31, 2019, we recognized $20.3 million in other-than-temporary impairment losses related to fixed maturity securities. The remaining $0.9 million net realized investment loss related to net foreign currency exchange losses.
Consolidated losses and loss adjustment expenses were $1,220.7 million, $1,040.8 million and $1,050.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The consolidated loss ratio for the year ended December 31, 2019 was 70.6%, compared to 60.1% for the same period in 2018, driven by higher net unfavorable prior-year reserve development in 2019, as compared to net favorable prior-year reserve development in 2018 (9.0 percentage points), as well as an increased current accident year non-catastrophe loss ratio (2.8 percentage points), partially offset by decreased catastrophe losses (1.3 percentage points).
The following table summarizes the above referenced prior-year loss reserve development for the year ended December 31, 2019 with respect to net loss reserves by line of business as of December 31, 2018. Our loss and loss adjustment expenses, including the prior-year loss reserve development shown in the following table, are further discussed by reporting segment under the heading “Segment Results” below.
In determining appropriate reserve levels for the year ended December 31, 2019, we maintained the same general processes and disciplines that were used to set reserves at prior reporting dates. No significant changes in methodologies were made to estimate the reserves since the last reporting date; however, at each reporting date we reassess the actuarial estimate of the reserve for loss and loss adjustment expenses and record our best estimate. Consistent with prior reserve valuations, as claims data becomes more mature for prior accident years, actuarial estimates were refined to weigh certain actuarial methods more heavily in order to respond to any emerging trends in the paid and reported loss data. While prior accident years’ net reserves for losses and loss adjustment expenses for some lines of business have developed favorably in recent years, this does not imply that more recent accident years’ reserves also will develop favorably; pricing, reinsurance costs, legal environment, general economic conditions including changes in inflation and many other factors impact our ultimate loss estimates.
Consolidated underwriting, acquisition and insurance expenses were $665.8 million, $654.7 million and $635.4 million for the years ended December 31, 2019, 2018 and 2017, respectively. The consolidated expense ratios were 38.5%, 37.8% and 40.4% for the years ended December 31, 2019, 2018 and 2017, respectively. The increase in expenses in 2019 compared to 2018 includes additional operating expenses of approximately $9 million related to costs associated with a reduction in workforce, an allowance for doubtful accounts related to our European business unit, and adjustments to underwriting expenses based on certain costs previously allocated to investment income and trade capital providers.
For the year ended December 31, 2019, the foreign currency exchange gain was driven by the U.S. Dollar strengthening against the Euro and the Australian Dollar, partially offset by the U.S. Dollar weakening against British Pound and the Canadian Dollar. For the year ended December 31, 2018, the small foreign currency exchange gain was driven by the U.S. Dollar strengthening against the British Pound. For the year ended December 31, 2017, the foreign currency exchange losses were driven by the U.S. Dollar weakening against the British Pound, the Euro, the Canadian Dollar and the Australian Dollar.
The consolidated provision for income taxes was $8.6 million for the year ended December 31, 2019, compared to $4.1 million for the year ended December 31, 2019, and an income tax benefit of $10.4 million for the year ended December 31, 2017. The consolidated income tax provision represents the income tax expense or benefit associated with our operations based on the tax laws of the jurisdictions in which we operate. Therefore, the consolidated provision for income taxes represents taxes on net income for our Belgium, Brazil, Ireland, Italy, Malta, Switzerland, United Kingdom and United States operations. The consolidated effective tax rates were not meaningful, 6.1% and -26.1% for the years ended December 31, 2019, 2018 and 2017, respectively.
The increase in the effective tax rate for the year ended December 31, 2019 as compared to the same period in 2018 was primarily related to the change in concentration of jurisdictional mix of taxable income in 2019 compared to 2018. Additionally, the 2018 effective tax rate includes a favorable impact related to the new reporting requirement for the change in the fair value of our equity securities that was effective January 1, 2018, which lowered our pre-tax income by $105.1 million for the year ended December 31, 2018. The change in the fair value of equity securities for years prior to 2018 is not presented as a component of net income. The 2017 effective tax rate benefited from the impact of the U.S. tax reform legislation enacted during that period.
The increase in gross written premium for the year ended December 31, 2019 compared to the same period in 2018 was due to growth realized by the general casualty, transportation and environmental divisions. There was a planned decrease in premium from the fronted workers compensation programs, which partially offset the growth in this line as a result. Net earned premium decreased for the year ended December 31, 2019 compared to the same period in 2018, as the gross premium production growth during the year was offset by the reduction in net earned premiums associated with the impact from the ongoing strategic use of reinsurance programs, as a part of overall risk management.
The gross written and earned premiums for the year ended December 31, 2018 increased compared to the same period in 2017 due to significant growth in the general casualty lines, as planned. Economic growth in the coal market also continued to drive an increase in workers compensation lines. We experienced growth in environmental and transportation lines, as well as a new fronted program which increased gross written premiums in auto liability. Partially offsetting the growth was a planned reduction in our allied medical business.
Fee and other income, and the associated fee and other expense, improved on a net basis for the year ended December 31, 2019 as compared to the same period in 2018, as our operations for third party claims handling showed improved results, which offset an adverse profit commission adjustment recognized on the runoff of the discontinued brokerage book of business that was sold during the year ended 2017.
The following table contains a reconciliation of certain non-GAAP financial measures, specifically the current accident year non-catastrophe loss, expense and combined ratios, to their most directly comparable GAAP measures for our International Operations.
(2) Catastrophe losses’ percentage point impact are calculated as the difference between the reported combined ratio and the combined ratio excluding incurred catastrophe losses and associated reinstatement and other catastrophe-related premium adjustments.
The increase in gross written premiums for the year ended December 31, 2019 as compared to the same period in 2018 was due to an improved rate environment and increased new business accounts in our Bermuda Insurance operation. Net earned premiums declined in 2019 as compared to 2018 due to an increase in the ongoing strategic use of reinsurance programs as part of overall risk management initiatives, as well as increasing our use of third-party capital at Lloyd’s.
The increase in gross written and net earned premiums for the year ended December 31, 2019 as compared to the same period in 2018 was primarily driven by Syndicate 1200 due to current and prior year (binder) growth within Professional Indemnity and Directors & Officers. Increased rate and business flow in our Bermuda Insurance operation also contributed to the year-over-year growth.
The loss ratios for the years ended December 31, 2019, 2018 and 2017 were 85.0%, 61.3% and 79.4%, respectively. The higher loss ratio in 2019, as compared to 2018, was driven by a deterioration of 19.6 percentage points from net unfavorable prior-year reserve development in 2019, as compared to net favorable prior-year reserve development in 2018, as well as an increase in the current accident year non-catastrophe loss ratio of 6.7 percentage points. The improvement in the loss ratio in 2018, as compared to 2017, was primarily attributable to a decline in catastrophe losses by 12.8 percentage points, net favorable development on prior accident year loss reserves in 2018 (compared to net unfavorable development on prior accident year loss reserves in 2017) by 3.5 percentage points, and a 1.8 percentage point improvement in the current accident year non-catastrophe loss ratio.
The current accident year non-catastrophe loss ratio for the years ended December 31, 2019, 2018 and 2017 were 63.7%, 57.0% and 58.8%, respectively. The deterioration in 2019 related to property, liability and marine lines. The adjustment reflected a change in actuarial estimates based on a more frequent occurrence of large losses and the recalibration of the current year based on prior year adjustments. The improvement in the current accident year non-catastrophe loss ratio during the year ended December 31, 2018, compared to the same period in 2017, was primarily due to the year-over-year impact of the additional reinsurance purchases in 2017 as part of integrating Ariel Re into our corporate reinsurance and risk management program, which adversely affected the loss ratios due to lowering the net earned premium base. Additionally, there were improvements in Syndicate 1200 property lines during 2018.
Net favorable prior-year reserve development for the year ended December 31, 2018 was $9.5 million (1.5 percentage points) and was concentrated in the specialty and liability lines. Net unfavorable prior-year reserve development for the year ended December 31, 2017 was $13.2 million (2.0 percentage points) and was concentrated in the property and liability lines, primarily due to the first quarter 2017 Ogden rate change and newly reported claims from Hurricane Matthew.
The increase in the expense ratio for the year ended December 31, 2019 as compared to the same period in 2018 was primarily attributable to an allowance for doubtful accounts related to our European business unit, adjustments for certain costs previously allocated to trade capital providers and increased IT and other operating costs. Our 2019 expense ratio was also unfavorably impacted by an increase in the ongoing strategic use of reinsurance programs as part of overall risk management initiatives.
The decrease in the expense ratio for the year ended December 31, 2018 as compared to the same period in 2017 was primarily attributable to the increase in earned premiums related to growth from the expansion of our European operations. We also saw a favorable impact on our expense ratio compared to the same period in 2017 as a result of the aforementioned change in capital structure for Ariel Re and the use of certain third-party capital, as well as additional quota share reinsurance purchased in the current year which resulted in increased ceding and profit commissions.
Fee and other income represents amounts we receive in connection with the management of third-party capital for our underwriting Syndicates at Lloyd’s. Fee and other income increased for the year ended December 31, 2019 as compared to the same period ended 2018 primarily due to increased use of third-party capital and additional managing agent fee income.
Fee and other income increased for the year ended December 31, 2018 as compared to the same period ended 2017 primarily due to fee income earned by Syndicate 1910, particularly from fees earned from third-party capital providers introduced in 2018, as previously discussed.
Losses and loss adjustment expenses for the year ended December 31, 2018 included $12.3 million of net unfavorable loss reserve development on prior accident years, of which $7.4 million was in asbestos and environmental lines, with the remainder concentrated in other run-off lines.
Because of the types of coverage within the Run-off Lines of business still being serviced by Argonaut Insurance Company, a significant amount of subjectivity and uncertainty exists in establishing the reserves for losses and loss adjustment expenses. Factors that increase these uncertainties are: (1) lack of historical data, (2) inapplicability of standard actuarial projection techniques, (3) uncertainties regarding ultimate claim costs, (4) coverage interpretations and (5) the judicial, statutory and regulatory environments under which these claims may ultimately be resolved. Significant uncertainty remains as to our ultimate liability due to the potentially long waiting period between exposure and emergence of any bodily injury or property damage and the resulting potential for involvement of multiple policy periods for individual claims. Due to these uncertainties, the current trends may not be indicative of future results. Although we have determined and recorded our best estimate of the reserves for losses and loss adjustment expenses for Run-off Lines, current judicial and legislative decisions continue to broaden liability, expand the scope of coverage and increase the severity of claims payments. As a result of these and other recent developments, the uncertainties inherent in estimating ultimate loss reserves are heightened, further complicating the already complex process of determining loss reserves. The industry as a whole is involved in extensive litigation over coverages and liability issues continue to make it difficult to quantify these exposures.
For the years ended December 31, 2019, 2018 and 2017, net cash (used in) provided by financing activities was $(41.8) million, $(67.6) million, and $48.0 million, respectively. During 2019, we did not repurchase any common shares. During 2018 and 2017, we repurchased approximately 0.5 million, and 0.8 million shares, respectively, of our common shares for a total cost of $31.7 million, $45.2 million, respectively. We paid dividends to our shareholders totaling $43.1 million, $37.5 million and $33.2 million during the years ended December 31, 2019, 2018 and 2017, respectively.
Under certain insurance programs (i.e., large deductible programs and surety bonds) and various reinsurance agreements, collateral and letters of credit (“LOCs”) are held for our benefit to secure performance of insureds and reinsurers in meeting their obligations. At December 31, 2019, the amount of such collateral and LOCs held under insurance and reinsurance agreements was $577.2 million and $1,184.7 million, respectively. Collateral can also be provided in the form of trust accounts. As we are the beneficiary of these trust accounts only to secure future performance, these amounts are not reflected in our consolidated balance sheets. Collateral provided by an insured or reinsurer may exceed or fall below the amount of their total outstanding obligation.
Argo Re is the primary direct subsidiary of Argo Group and is subject to Bermuda insurance laws. As part of the Maybrooke liquidation, Ariel Reinsurance, Ltd. was merged into Argo Re, Ltd effective December 31, 2017. Argo Ireland is indirectly owned by Argo Re and is a mid-level holding company subject to Irish laws, and its primary subsidiary is Argo Group U.S., Inc. Argo Group U.S., Inc. is a mid-level holding company subject to Delaware laws. Argo Group U.S., Inc. is the parent of all of our U.S. insurance subsidiaries.
The payment of dividends by Argo Re is limited under Bermuda insurance laws which require Argo Re to maintain certain measures of solvency and liquidity. As of December 31, 2019, the unaudited statutory capital and surplus of Argo Re was $1,460.8 million, and the amount required to be maintained was $242.9 million, thereby allowing Argo Re the potential to pay dividends or capital distributions within the parameters of the solvency and liquidity margins. We believe that the dividend and capital distribution capacity of Argo Re will provide us with sufficient liquidity to meet the operating and debt service commitments, as well as other obligations.
During 2020, Argo Group U.S., Inc. may be permitted to receive dividends from its subsidiaries as follows: Argonaut Insurance Company - $110.2 million and Rockwood - $13.0 million. Business and regulatory considerations may impact the amount of dividends actually paid and prior approval of dividend payments may be required.
Included in the Credit Agreement is a provision that allows up to $200.0 million of the revolving credit facility to be used for LOCs, subject to availability. As of December 31, 2019, there was no borrowings outstanding and $70.5 million in LOCs against the revolving credit facility.
Floating Rate Loan Stock. We assumed debt through the acquisition of Syndicate 1200. These notes are unsecured. All are redeemable subject to certain terms and conditions at a price up to 100% of the principal plus accrued and unpaid interest. Interest on the U.S. Dollar and Euro notes is due semiannually and quarterly, respectively. A summary of the notes outstanding at December 31, 2019 is presented below:
Letter of Credit Facilities. Argo Re may be required to secure its obligations under various reinsurance contracts in certain circumstances. In order satisfy these requirements, Argo Re has entered into two secured, bilateral committed LOC facilities with commercial banks and generally uses these facilities to issue LOCs in support of non-admitted reinsurance obligations in the U.S. and other jurisdictions. These facilities have a term of one year and include customary conditions and event of default provisions. The availability of letters of credit under these secured facilities are subject to a borrowing base requirement, determined on the basis of specified percentages of the market value of eligible categories of securities pledged to the lender. On December 31, 2019 these committed letter of credit facilities totaled $210 million.
Preferred Stock. Throughout 2019, 2018 and 2017, we had no preferred shares outstanding.
For the year ended December 31, 2019, the Board declared quarterly dividends in the aggregate amount of $1.24 per share. Cash dividends paid for the year ended December 31, 2019 totaled $43.1 million.
On May 3, 2016, the Board authorized the repurchase of up to $150.0 million of our common shares (“2016 Repurchase Authorization”). The 2016 Repurchase Authorization supersedes all the previous repurchase authorizations. As of December 31, 2019, availability under the 2016 Repurchase Authorization for future repurchases of our common shares was $53.3 million.
The discussion of transactions with related parties is included in Note 21, “Transactions with Related Parties” in the Notes to the Consolidated Financial Statements, included in Item 8, “Financial Statements and Supplementary Data” beginning on page.
Other than as described in the immediately preceding paragraph, we have not entered into any off-balance sheet arrangements, as defined by Item 303(a)(4) of Regulation S-K at December 31, 2019.
(3) Interest only on Floating Rate Loan Stock through 2034. Interest calculated based on the rate in effect at December 31, 2019. Principal due beginning November 2034.
(5) Purchase obligations consist primarily of software, hardware and equipment servicing and software licensing fees.
(7) Base premium for the final year of a multi-year corporate reinsurance contract.
The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within the year of adoption. The guidance requires a modified retrospective transition method and early adoption is permitted. We are finalizing our evaluation of the impact to our financial statements and are developing the required internal controls. We do not expect the impact to our statement of financial position to be material.
We establish reserves for the estimated total unpaid costs of losses including LAE, for claims that have been reported as well as claims that have been incurred but not yet reported. Unless otherwise specified below, the term “loss reserves” encompasses reserves for both losses and LAE. Loss reserves reflect management’s best estimate. Loss reserves established are not an exact calculation of our liability. Rather, loss reserves represent management’s best estimate of our liability based on application of actuarial techniques and other projection methodologies and taking into consideration other facts and circumstances known at the balance sheet date. The process of establishing loss reserves is complex and necessarily imprecise, as it involves using judgment that is impacted by many internal and external variables such as past loss experience, current claim trends and the prevailing social, economic and legal environments. In determining loss reserves, we give careful consideration to all available data and applicable actuarial analyses.
The relevant factors and methodologies used to estimate loss reserves vary significantly by product line due to differences in loss exposure and claim complexity. Much of our business is underwritten on an occurrence basis, which can lead to a significant time lag between the event that gives rise to a claim and the date on which the claim is reported to us. Additional time may be required to resolve the claim once it is reported to us. During these time lags, which can span several years for complex claims, new facts and information specific to the claim become known to us. In addition, general econometric and societal trends including inflation may change. Any one of these factors may require us to refine our loss reserve estimates on a regular basis. We apply a strict regimen to assure that review of these facts and trends occurs on a timely basis so that this information can be factored into our estimate of future liabilities. However, due to the number and potential magnitude of these variables, actual paid losses in future periods may differ materially from our estimates as reflected in current reserves. These differences can be favorable or unfavorable. A more precise estimation of loss reserves is also hindered by the effects of growth in a line of business and uncertainty as to how new business performs in relation to expectations established through analysis of the existing portfolio. In addition to reserving for known claim events, we also establish loss reserves for IBNR. Loss reserves for IBNR are set using our actuarial estimates for events that have occurred as of the balance sheet date but have not yet been reported to us. Estimation of IBNR loss reserves is subject to significant uncertainty.
The following is a summary of gross and net loss reserves we recorded by line of business:
difficulty in identifying sources of environmental or asbestos contamination and in properly allocating responsibility and/or liability for damage;
historical data concerning asbestos and environmental losses which is more limited than historical information on other types of claims;
The following section details reserving considerations and loss and LAE risk factors for the lines representing most of our loss reserves. Each risk factor presented will have a different impact on required loss reserves. Also, risk factors can have offsetting or compounding effects on required loss reserves. For example, introduction and approval of a more expensive medical procedure may.
Commercial multiple peril lines insure a combination of property and liability exposures, and therefore, include both short and long-tail coverage. Property coverage claims are generally resolved in a short period of time, while liability coverage claims generally require more time to resolve. The risk of fluctuation in loss reserves for this line is predominately associated with liability coverage with risk factors similar to other general liability lines described above.
Similar to general liability, commercial multiple peril reserves are affected by reported loss development pattern assumptions. Recorded gross reserves for commercial multiple peril business were $227.9 million as of December 31, 2019. If the development patterns underlying our net reserves for this line of business change by 15%, the estimated net reserve could change by $15.0 million, in either direction.
In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks inherent in major litigation and inconsistent emerging legal outcomes. Furthermore, over time, insurers, including Argo Group, have experienced significant changes in the rate at which asbestos claims are brought, claims experience of particular insureds and value of claims, making predictions of future exposure from past experience uncertain. For example, in the past, insurers in general, including Argo Group, have experienced an increase in the number of asbestos-related claims due to, among other things, plaintiffs’ increased focus on new and previously peripheral defendants and an increase in the number of insureds seeking bankruptcy protection as a result of asbestos-related liabilities. Plaintiffs and insureds have sought to use bankruptcy proceedings, including “pre-packaged” bankruptcies, to accelerate the funding and amount of loss payments by insurers. In addition, some policyholders continue to assert new classes of claims for coverage to which an aggregate limit of liability may not apply. Further uncertainties include insolvencies of other insurers and reinsurers, delays in the reporting of new claims by insurers and reinsurers and unanticipated issues influencing our ability to recover reinsurance for asbestos and environmental claims. Management believes these issues are not likely to be resolved in the near future.
After reviewing the output from various loss reserving methodologies, we select our best estimate of reserves. We believe that the aggregate loss reserves at December 31, 2019 were adequate to cover claims for losses that have occurred, including both known claims and claims yet to be reported. As of December 31, 2019, we recorded gross loss reserves of $5,157.6 million and loss reserves net of reinsurance of $2,722.7 million. Although our financial reports reflect our best estimate of reserves, it is unlikely that the final amount paid will exactly equal our best estimate. In order to provide an indication of the variability in loss reserve estimates, we develop reserve ranges by evaluating the variability implied by the results of the various methods and impact of changing the assumptions and factors used in the loss reserving process.
We estimate our range of reserves, net of reinsurance, at approximately $2,495.0 million to $3,005.0 million as of December 31, 2019. In determining this range, we evaluated the variability of the loss reserves for each of our major operating segments, comprising both ongoing operations and run-off businesses. Our estimated range does not make a specific provision for sources of unknown or unanticipated correlated events such as potential sources of liability not anticipated at the time coverage was afforded, such as asbestos. These events in combination with other events which may not be contemplated by management in developing our range may cause reserves to develop either more or less favorably than indicated by assumptions that we consider reasonable. This means that the range of reserve values does not represent the range of all possible favorable or unfavorable reserve outcomes, and actual ultimate paid losses may fall outside this range. No one risk factor has been isolated for the purpose of performing a sensitivity or variability analysis on that particular risk factor.
Our investments in fixed maturities and stocks are classified as available-for-sale and reported at fair value under GAAP. Changes in the fair value of investments classified as available-for-sale are not recognized in income during the period, but rather are recognized as a separate component of shareholders’ equity until realized. Fair values of these investments are estimated using prices obtained from third-party pricing services, where available. For securities where we are unable to obtain fair values from a pricing service or broker, fair values are estimated using information obtained from investment advisors. Management performed several processes to ascertain the reasonableness of investment values included in our consolidated financial statements at December 31, 2019, including i) obtaining and reviewing internal control reports for our accounting service providers that obtain fair values from third-party pricing services, ii) discussing with our investment managers their process for reviewing and validating pricing obtained from outside services and obtained values for all securities from our investment managers and iii) comparing the security pricing received from the investment managers with the prices used in our consolidated financial statements and obtained additional information for variances that exceeded a certain threshold. As of December 31, 2019, investments classified as available-for-sale for which we did not receive a fair value from a pricing service or broker accounted for less than 1% of our investment portfolio. The actual value at which such securities could be sold or settled with a willing buyer or seller may differ from such estimated fair values depending on a number of factors including, but not limited to, current and future economic conditions, the quantity sold or settled, the presence of an active market and the availability of a willing buyer or seller. Our investments in hedge and private equity funds and other private equity direct investments are accounted for under the equity method of accounting, with changes in the value of investments recognized in net investment income during the period. We have one available-for-sale private equity investment with changes in the value of investment recognized as a separate component of shareholders’ equity. We also have three small private equity investments accounted for at cost.
We regularly monitor the difference between the estimated fair values of our investments and their cost or book values to identify underperforming investments and whether declines in value are temporary in nature or “other-than-temporary.” If a decline in the value of a particular investment is believed to be temporary, the decline is recorded as an unrealized loss, net of tax, in other comprehensive income as a separate component of shareholders’ equity. If the decline is believed to be “other-than-temporary,” the carrying value of the investment is written down and recorded as a realized loss in our consolidated statements of income (loss). We evaluate our investments for impairment. For fixed maturities securities, the evaluation for a credit loss is generally based on the present value of expected cash flows of the security as compared to the amortized book value. For mortgage-backed securities, frequency and severity inputs are used in projecting future cash flows of the securities. Loss frequency is measured as the credit default rate, which includes such factors as loan-to-value ratios and credit scores of borrowers. Loss severity includes such factors as trends in overall housing prices and house prices that are obtained at foreclosure. Effective January 1, 2018, the Company adopted ASU 2016-1. As a result, all changes in the fair value of equity securities, whether temporary or other-than-temporary, are recognized in net realized investment (losses) gains in the Consolidated Statement of Income. For the years ended December 31, 2019, 2018 and 2017, we recorded $20.3 million, $7.6 million and $2.5 million, respectively, of realized losses due to the recognition of other-than-temporary impairments.
Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of Argo Group’s United States, Brazil, Ireland, Italy, Switzerland, Belgium, Malta and United Kingdom subsidiaries’ assets and liabilities. Deferred tax liabilities are recognized for temporary differences that will result in taxable amounts in future years. Deferred tax assets are recognized for deductible temporary differences and tax operating loss and tax credit carryforwards. The deferred tax assets and liabilities are measured by applying the enacted tax rates and laws in effect for the years in which such differences are expected to reverse. The components of our deferred tax asset are temporary differences primarily attributable to loss reserve discounting and unearned premium reserves. Our deferred tax liabilities resulted primarily from unrealized gains in the investment portfolio, deferred acquisition costs and depreciable fixed assets.
On December 22, 2017, the TCJA was signed into law making significant changes to the Internal Revenue Code. The company provided its best estimate of the impact of the TCJA at December 31, 2017 and during 2018 completed its analysis as provided by SAB 118.
At December 31, 2019, we had goodwill of $161.4 million assigned to the following reporting units: U.S. Operations - $123.5 million, and International Operations - $37.9 million. Additionally, at December 31, 2019, we had other intangible assets totaling $91.8 million, including indefinite-lived intangible assets of $89.0 million relating to our Lloyd’s Syndicates 1200 and 1910. Due to the nature of our Lloyd’s Syndicates’ business, for purposes of the annual impairment evaluation, we have aggregated the fair values between the indefinite-lived intangible asset and goodwill.