Memorial Service Life Insurance Company leases approximately 25,000 square feet in an office building which houses our executive offices located at 10 S. Brentwood, St. Louis, Missouri under the terms of a lease that expires in June 2002. Memorial Service Life Insurance Company also leases approximately 10,000 square feet of property at 1250 Capital of Texas Highway, Building 3, Suite 100, Austin, Texas under the terms of a lease that expires in August 2002. We believe that the properties currently leased by Memorial Service Life Insurance Company are suitable for our current operations of the company and will allow for the expansion of our business in the near future. As our operation expands, the leasing of additional space in Austin, Texas and St. Louis, Missouri may be necessary. We currently do not foresee any material difficulties with leasing additional space that may be required in the foreseeable future.
(2) Other expenses for the years ended December 31, 1999, 1998 and 1997 are net of expense reimbursements from National Prearranged Services in the amount of $2,685, $2,254 and $2,695, respectively.
In connection with our acquisition of Forever Network, Inc. and its subsidiaries on March 9, 2000, we acquired three cemetery/funeral home properties located in Los Angeles, California and St. Louis and Independence, Missouri, a funeral home located in Kirkwood, Missouri that is leased to Service Corporation International, the Cremation Society of St. Louis, the Cremation Specialists of Los Angeles and Cremation Specialists of Kansas City. In addition, Forever Network is engaged in the business of selling, archiving and displaying digital interactive life stories viewed at the grave sites and on the Internet at www.forevernetwork.com. Forever Network currently maintains over 2,400 client biographies that are available for viewing on the Internet site. The acquisition of Forever Network was accounted for in a manner that is similar to a pooling-of-interests; however, the results of operations of Forever Network are not contained in our results of operations for the years ended December 31, 1999, 1998 and 1997.
Net realized investment gains decreased approximately $1.5 million, or 78%, in the year ended December 31, 1999 versus the previous year. Losses of approximately $3.2 million were incurred for the year ended December 31, 1999 reflecting management's recognition of a decline in market value associated with our investment in Autobond Acceptance Corporation. Management believes that the decline was other than temporary and due to reasons other than market fluctuations and has recognized losses sufficient to reduce the investment in Autobond to approximately $98,000 as of December 31, 1999.
Other revenue for the year ended December 31, 1999 of $1.2 million represented primarily a gain on the sale of a portion of our in-force life business.
General expenses, net of expenses reimbursed, increased approximately $1.6 million, or 32%, in the year ended December 31, 1999 compared to 1998. The increase was attributable to higher administrative expenses as a result of support for increased levels of regulatory reporting requirements, and approximately $330,000 related to the forfeiture of deposits and other expenses associated with our withdrawal of our proposal to acquire Harbourton Reassurance, Inc.
Net realized gains decreased $730,000, or 27%, from $2.7 million in the year ended December 31, 1997 to $1.9 million in the year ended December 31, 1998. Gains were recognized in the year ended December 31, 1998, on sales of invested assets. However, these gains were partially offset by losses of approximately $1.0 million realized on the sale of certain investments whose market values declined significantly due to announcements of operating and financial difficulties of the issuers of these securities.
Other revenue for the year ended December 31, 1998 of $748,000 represents primarily a gain on the sale of a portion of our in-force life business.
Commissions increased $5.7 million, or 51%, from $11.2 million in the year ended December 31, 1997 to $16.9 million in the year ended December 31, 1998 due primarily to higher volumes of new policies when compared to the year ended December 31, 1997.
General expenses, net of reimbursements, increased $2.5 million, or 100%, from $2.5 million in the year ended December 31, 1997 to $5.0 million in the year ended December 31, 1998 due primarily to increased policy administration and general and administration expenses as a result of increased volume of business from new policies written, acquisitions of blocks of policies such as the purchase of blocks of business from Woodmen Accident and Life Company and World Insurance Company, support for increased levels of acquisition activities and regulatory reporting requirements, and deferred compensation costs associated with our 1998 Long-Term Incentive Plan.
An increase in the amortization of the cost of policies purchased of $712,000 for the year ended December 31, 1998 compared to $262,000 for the year ended December 31, 1997 was primarily attributable to the purchase of blocks of business from Woodmen Accident and Life Company and World Insurance Company.
The increase in the change in deferred acquisition costs of $2.9 million from $1.4 million for the year ended December 31, 1997 to $4.3 million for the year ended December 31, 1998 was due to the capitalization of the costs of acquiring new business at a higher rate than the amortization of such costs due to a higher volume of new policies issued.
As a result of the foregoing, net income for the year ended December 31, 1998 was $2.0 million, or $0.49 and $0.48 per basic and diluted share, respectively, an increase of 22%, 20% and 17%, respectively, over the prior year.
Our insurance subsidiaries are restricted by state insurance laws as to the amount of dividends that they may pay to us without prior notice to, or in some cases prior approval from, their respective state insurance departments. These restrictions on dividend distributions are based on statutory capital and surplus and operating earnings. Statutory surplus and statutory operating results are determined according to statutes adopted by each state in which the subsidiaries do business. Statutory surplus bears no direct relationship to equity as determined under generally accepted accounting principles. No amounts are currently available for transfer to the parent company by dividend, loan, or advance without prior regulatory approval.
We expect to secure capital required for additional new cemetery properties and technology developments related to the digital biographies and the Internet through equity or debt financing. With new cemetery properties, the initial capital required for the purchase and working capital is anticipated to be sufficient to allow the property to cash flow within 6-12 months. Our cemetery property in St. Louis, Missouri currently generates positive cash flow from operations. We anticipate that the two cemetery properties in Independence, Missouri and Los Angeles, California acquired by Forever Network in the fourth quarter of 1999 will begin to internally meet their operating cash requirements within 6-12 months. Such operating cash requirements currently are funded by a $4 million note from our insurance companies, as discussed below.
Start-up capital will be required to fund the Internet/technology business plan. The Internet/technology segment is currently running a cash shortfall and may require some investment capital for a period of time until revenues can be built to cash flow. Margins are expected to be high and overhead relatively low once internet sales volumes achieve targeted levels.
On October 25, 1999, we entered into an agreement to purchase all the outstanding shares of Dixie Life Insurance Company for an estimated purchase price of approximately $10 million. Pursuant to the agreement, the actual purchase price will be based upon among other items, an adjusted value of Dixie Life Insurance Company's stockholder's equity. Dixie Life Insurance Company's insurance operation consists of a closed block of life and annuity policies. Dixie Life Insurance Company had approximately $35.5 million in assets and $32.0 million in liabilities as of September 30, 1999. The completion of the purchase is subject to regulatory approval and is expected to be accounted for using the purchase method. The acquisition is expected to be funded from existing working capital.
During 1998, we paid surrender benefits to National Prearranged Services or the Missouri trust of approximately $2.0 million. Upon surrender, National Prearranged Services purchased new policies for the same insureds using a portion of the surrendered funds. National Prearranged Services has committed to us to pay all future premiums due on the blocks of policies that were reissued.
In prior years, we discussed the nature and progress of our plans to become Year 2000 ready. In late 1999, we completed our remediation and testing of systems. As a result of those planning and implementation efforts, we experienced no significant disruptions in mission critical information technology and non-information technology systems and believe those systems successfully responded to the Year 2000 date change. We expensed less than $10,000 during 1999 in connection with remediating our systems. We are not aware of any material problems resulting from Year 2000 issues, either with our products, our internal systems, or the products and services of third parties. We will continue to monitor our mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly.
This report contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the beliefs of our management as well as on assumptions made by and information currently available to us at the time such statements were made. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of management's assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.
When used in this report, the words "anticipate," "believe," "estimate," "expect," "intends," and similar expressions, as they relate to us are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities. Statement of Financial Accounting Standards No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designed as part of a hedge transaction, and if it is, the type of hedge transaction. Statement of Financial Accounting Standards No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. We are assessing the impact that the adoption of Statement of Financial Accounting Statement No. 133 will have on our consolidated financial statements, but do not expect such implementation to have a material adverse effect on our financial position, results of operations or cash flows.