We currently lease approximately 10,131 square feet office space at 2900 South 70th Street, Suite 400, Lincoln, Nebraska 68506. This lease was executed October 17, 2013 and expires on January 31, 2024.
(1) $4,400,000 remains of the $23,500,000 Xenith has the right to loan to us, which if also fully converted would result in the issuance of an additional 220,000,000 shares of our voting common stock. Upon full conversion of all loans and preferred stock, Xenith would own approximately 98% of our issued and outstanding voting common stock.
Of the funds received from Xenith, we contributed $20,500,000 to American Life through capital contributions. See Note 2 - Change in Control in the Notes to Consolidated Financial Statements in this Report.
In the normal course of business, we seek to limit our risk exposure through the routine purchase of reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish our primary liability under the policies written.
Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due. Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts and other contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the consolidated statement of cash flows. Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy.
American Life closed a reinsurance agreement on December 10, 2018 with a third party insurance company to cede 100% of the remaining legacy block of business, with the transaction being effective July 1, 2018. See Note 3 Assets and Liabilities Held for sale in the Notes to Consolidated Financial Statements below. Due to the assumptive nature of this agreement, this transaction qualifies to be reported as Discontinued Operations under ASC 2014-08 Presentation of Financial Statements (Topic 205); therefore, our 2017 and 2018 income statement reflects net income from continuing operations and income from discontinued operations. The discussion below reflects the continuing operations changes year over year.
Net Loss: The change in net loss for continuing operations increased primarily due to a significant decrease in premiums, investment income, and an increase in operating expenses related to the new technology implementation and product development we completed in 2018. These were offset by decreases in all policyholder benefits.
Premium revenue: Premium revenue decreased primarily due to the ceding of 100% of legacy premiums under a reinsurance agreement we completed in 2017 relating to two blocks of business. The premium in 2018 was related to an assumed block of business which was commutated in July 2018 and the amortization of the deferred ceding commissions on the reinsurance transactions in 2018 and 2017. The introduction of our MYGA product discussed above should, in management’s opinion, generate a meaningful volume of premium; however, the premium income for this product will be considered an investment contract and will be deferred to deposit-type liabilities on our balance sheet. Therefore, we expect that premium income will not be a major source of income until American Life develops new life insurance products in the future and achieves significant additional product sales.
Net realized gains on investments: The increase was due primarily to the gain of $382,752 on the settlement of the surplus notes issued by American Life in exchange for 10 condominiums. These gains were offset by $334,928 losses on investments due to the increase in the interest rates during late 2017 throughout 2018. In 2017 and 2018, we sold investments at various times to meet American Life’s operating costs. With the reinsurance of our legacy block of business in 2018, the infusion of capital by Xenith, and our expected MYGA sales, we believe we will not sell any of our existing bond portfolio in 2019 term to cover operating expenses or policyholder liabilities.
Death and other benefits: Death and other benefits decreased due to 2017 reinsurance agreement. The death claims in 2018 were related to the benefits assumed on a block of business which was commutated on July 31, 2018.
Increase in benefit reserves: The decrease was primarily the result of our 2017 reinsurance agreement. The reserve change in 2018 was related to an assumed block of business that was commutated on July 31, 2018. We do not expect to see any reserves on the new MYGA product as all premiums and withdrawals are classified as deposit-type liabilities on the balance sheet.
Amortization of deferred acquisition costs: The decrease was primarily the result of our 2017 reinsurance agreement discussed above.
Other operating expenses: Other operating expenses increased primarily due to approximately $1,500,000 of expenses incurred to obtain new software and implement related technology to distribute products through IMOs, the costs incurred to develop the first MYGA product of American Life, including actuarial fees and rating agency fees to rate American Life. We realized a loss on the commutation of reinsurance transaction of $154,000 due to the difference between statutory and GAAP reserves plus the write-off of the remaining VOBA related to the transaction as discussed in Note 7 Reinsurance in the Notes to Consolidated Financial Statements. These increases were offset by a decrease in the VOBA amortization related to a block of business which was written off in 2017 as a result of our 2017 coinsurance agreement. American Life incurred Nebraska Department of Insurance examination fees in 2017 of $140,000 and had no such fees in 2018.
We hold a diversified portfolio of investments that primarily includes cash, bonds, stocks, and notes receivable. Each of these investments is subject to market risks that can affect their return and their fair value. A majority of the investments are fixed maturity securities including debt issues of corporations, U.S. Treasury securities, mortgage-backed securities, or securities issued by government agencies. The primary market risks affecting the investment portfolio are interest rate risk, credit risk, equity risk, and liquidity risk.