We compete in the U.S., Bermuda and international reinsurance and insurance markets with numerous global competitors. Our competitors include independent reinsurance and insurance companies, subsidiaries or affiliates of established worldwide insurance companies, reinsurance departments of certain insurance companies, domestic and international underwriting operations, including underwriting syndicates at Lloyd's of London and certain government sponsored risk transfer vehicles. Some of these competitors have greater financial resources than we do and have established long term and continuing business relationships, which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and recently, the securitization of reinsurance and insurance risks through capital markets provide additional sources of potential reinsurance and insurance capacity and competition.
Net Investment Income. Net investment income decreased by 0.1% to $473.1 million in 2016, compared with investment income of $473.5 million in 2015. Net pre-tax investment income, as a percentage of average invested assets, was 2.8% in 2016, compared to 2.9% in 2015. The slight decline in income and yield was primarily the result of lower reinvestment rates for the fixed income portfolios and lower dividends from equity securities, partially offset by higher income from our limited partnerships.
Net investment income decreased by 10.7% to $473.5 million in 2015 compared with investment income of $530.5 million in 2014. Net pre-tax investment income, as a percentage of average invested assets, was 2.9% in 2015 compared to 3.3% in 2014. The decline in income and yield was primarily the result of lower reinvestment rates for the fixed income portfolios and a decrease in our limited partnership income.
Net Realized Capital Gains (Losses). Net realized capital losses were $7.2 million and $184.1 million in 2016 and 2015, respectively, and net realized capital gains were $84.0 million in 2014. The net realized capital losses of $7.2 million in 2016 were comprised of $31.6 million of other-than-temporary impairments, realized capital loss of $28.0 million from the sale of our Heartland subsidiary and $6.7 million of net realized capital losses from sales on our fixed maturity and equity securities, partially offset by $59.1 million of net gains from fair value re-measurements. The net realized capital losses of $184.1 million in 2015 were comprised of $102.2 million of other-than-temporary impairments, $45.6 million of net losses from fair value re-measurements and $36.3 million of net realized capital losses from sales on our fixed maturity and equity securities. The net realized capital gains of $84.0 million in 2014 were comprised of $121.7 million of net gains from fair value re-measurements and $1.9 million of net realized capital gains from sales on our fixed maturity and equity securities, which were partially offset by $39.5 million of other-than-temporary impairments.
Net Derivative Gain (Loss). In 2005 and prior, we sold seven equity index put option contracts, which remain outstanding. These contracts meet the definition of a derivative in accordance with FASB guidance and as such, are fair valued each quarter with the change recorded as net derivative gain or loss in the consolidated statements of operations and comprehensive income (loss). As a result of these adjustments in value, we recognized net derivative gains of $18.6 million and $6.3 million in 2016 and 2015, respectively, and a net derivative loss of $11.6 million in 2014. The change in the fair value of these equity index put option contracts is indicative of the change in the equity markets and interest rates over the same periods.
development mainly related to the 2015 Chile earthquake, the 2011 Japan earthquake and the 2015 U.S. storms. The current year catastrophe losses of $387.9 million for the year ended December 31, 2016 related to Hurricane Matthew ($135.0 million), the Fort McMurray Canada wildfire ($115.8 million), 2016 U.S. storms ($51.6 million), the Ecuador earthquake ($23.2 million), the 2016 New Zealand earthquake ($18.9 million), the 2016 Taiwan earthquake ($15.1 million), the Tennessee wildfire ($14.7 million) and Hurricane Hermine ($13.5 million). The current year catastrophe losses of $87.2 million for the year ended December 31, 2015 related to the 2015 Chilean earthquake ($34.8 million), the Northern Chile storms ($19.5 million), the New South Wales storms ($16.7 million) and the 2015 U.S. storms ($16.2 million).
Incurred losses and LAE increased by 6.6% to $3,064.7 million for the year ended December 31, 2015 compared to $2,875.9 million for the year ended December 31, 2014, primarily due to an increase in current year attritional losses of $210.8 million resulting primarily from the impact of the increase in premiums earned, a $60.0 million loss from the explosion at the Chinese port of Tianjin and numerous weather-related losses that did not meet our $10.0 million catastrophe threshold, partially offset by $19.5 million of more favorable prior year attritional loss development. The $31.6 million of favorable prior years' attritional loss development is comprised of $183.7 million of favorable development in the reinsurance segments, partially offset by $152.1 million of development in the insurance segment. The $183.7 million of favorable development related primarily to casualty and property treaty business and was net of $38.4 million of development in asbestos reserves. The development in the insurance segment largely related to run-off umbrella program and construction liability business. The current year catastrophe losses of $87.2 million are outlined above. The $83.9 million of current year catastrophe losses for the year ended December 31, 2014 related to the Japan snowstorm ($27.8 million), the 2014 Chilean earthquake ($20.7 million), Hurricane Odile ($20.5 million) and the Brisbane hailstorm ($14.9 million). The $33.4 million of favorable development on prior years' catastrophes related primarily to the 2013 German hail storms, European floods, Typhoon Fitow and U.S, storms.
Commission, Brokerage, Taxes and Fees. Commission, brokerage, taxes and fees increased by 0.4% to $1,188.7 million for the year ended December 31, 2016 compared to $1,183.6 million for the year ended December 31, 2015. The change was primarily due to the impact of the increase in premiums earned.
Commission, brokerage, taxes and fees increased by 5.6% to $1,183.6 million for the year ended December 31, 2015 compared to $1,121.1 million for the year ended December 31, 2014. The change was primarily due to the impact of the increase in premiums earned and changes in the mix of business.
Other Underwriting Expenses. Other underwriting expenses were $302.7 million, $257.1 million and $233.1 million in 2016, 2015 and 2014, respectively. The increase in other underwriting expenses for 2016 compared to 2015 was mainly due to costs incurred related to the expansion of the insurance business. The increase in other underwriting expenses for 2015 compared to 2014 was mainly due to the impact of the increase in premiums earned and changes in the mix of business.
Corporate Expenses. Corporate expenses, which are general operating expenses that are not allocated to segments, were $27.2 million, $23.3 million and $23.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. The increase in corporate expenses for 2016 compared to 2015 was due to higher compensation costs.
Interest, Fees and Bond Issue Cost Amortization Expense. Interest, fees and other bond amortization expense was flat at $36.2 million in 2016 and 2015.
Our net income was $996.3 million, $977.9 million and $1,199.2 million in 2016, 2015 and 2014, respectively. The changes were primarily driven by the financial component fluctuations explained above.
Shareholders' equity increased by $466.8 million to $8,075.4 million at December 31, 2016 from $7,608.6 million at December 31, 2015, principally as a result of $996.3 million of net income, $72.7 million of unrealized appreciation on investments, net of tax and $37.1 million of share-based compensation transactions, partially offset by repurchases of 2.1 million common shares for $386.3 million, $195.4 million of shareholder dividends, $55.3 million of net foreign currency translation adjustments and $2.4 million of net benefit plan obligation adjustments
Shareholders' equity increased by $157.5 million to $7,608.6 million at December 31, 2015 from $7,451.1 million at December 31, 2014, principally as a result of $977.9 million of net income, share-based compensation transactions of $34.8 million and $11.9 million of net benefit plan obligation adjustments, partially offset by repurchases of 2.3 million common shares for $400.1 million, $180.4 million of unrealized depreciation on investments, net of tax, $175.1 million of shareholder dividends and $111.5 million of net foreign currency translation adjustments.
The pre-tax equivalent total return for the bond portfolio was approximately 5.0%, 1.4% and 3.6%, respectively, in 2016, 2015 and 2014. The pre-tax equivalent return adjusts the yield on tax-exempt bonds to the fully taxable equivalent.
For inter-affiliate reinsurance and business written through the Lloyd's Syndicate, business is generally reported within the segment in which the business was first produced, consistent with how the business is managed.
Gross written premiums decreased by 0.3% to $2,147.9 million in 2015 from $2,154.5 million in 2014, primarily due to a decrease in treaty casualty business resulting from the cancellation of some contracts. Net written premiums decreased by 6.4% to $1,855.9 million in 2015 compared to $1,983.8 million in 2014. The difference between the change in gross written premiums compared to the change in net written premiums was due to a higher utilization of reinsurance. Premiums earned decreased 1.7% to $1,952.7 million in 2015 compared to $1,986.8 million in 2014. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Incurred losses increased by 29.5% to $1,068.5 million in 2016 compared to $825.1 million in 2015, primarily due to an increase of $155.4 million in current year attritional losses, resulting mainly from the impact of the increase in premiums earned and the impact of the new crop reinsurance contract effective upon the sale of Heartland, and $117.4 million in current year catastrophe losses. The $126.4 million of favorable prior years attritional loss development in 2016 is primarily due to U.S property and marine business, partially offset by $47.1 million of adverse development on A&E reserves. There was also an increase in favorable development of $26.1 million on prior years' catastrophe losses in 2016 compared to 2015. The $35.3 million of favorable development on prior years catastrophes in 2016 mainly related to the 2011 Japan earthquake ($15.5 million), the 2015 U.S. storms ($11.6 million) and the 2013 U.S. storms ($9.6 million). The $134.1 million of current year catastrophe losses in 2016 related to Hurricane Matthew ($86.2 million), the 2016 U.S. storms ($20.4 million), 2016 Tennessee wildfire ($14.7 million) and Hurricane Hermine ($13.5 million). The $16.7 million of current year catastrophe losses in 2015 were mainly due to the US storms ($16.2 million).
Segment Expenses. Commission and brokerage expenses decreased by 5.5% to $466.0 million in 2016 compared to $493.3 million in 2015. The decrease is mainly due to the impact of the new crop reinsurance contract effective upon the sale of Heartland, the impact of quota share contracts and changes in the mix of business. Segment other underwriting expenses increased to $54.1 million in 2016 from $50.1 million in 2015. The increase was primarily due to the impact of changes in the mix of business and higher compensation costs.
Commission and brokerage expenses increased by 5.8% to $493.3 million in 2015 compared to $466.3 million in 2014. The variance was primarily due to the impact of changes in the mix of business. Segment other underwriting expenses increased to $50.1 million in 2015 from $45.6 million in 2014. The increase was primarily due to the impact of changes in the mix of business and higher employee benefit costs.
Premiums. Gross written premiums decreased by 7.8% to $1,230.7 million in 2016 compared to $1,334.2 million in 2015, primarily due to declines in Latin American, Middle East and Asian business and the negative impact of $40.7 million from the movement of foreign exchange rates. Net written premiums decreased by 10.4% to $1,082.7 million in 2016 compared to $1,209.0 million in 2015. The difference between the change in gross written premiums compared to the change in net written premiums is primarily due to varying utilization of reinsurance related to the quota share contracts. Premiums earned decreased 10.6% to $1,119.1 million in 2016 compared to $1,251.1 million in 2015. The change in premiums earned relative to net written premiums is primarily the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Incurred losses and LAE decreased by 35.1% to $486.6 million in 2016 compared to $749.9 million in 2015, primarily due to more favorable development on prior year attritional losses of $193.4 million, a decrease in current year attritional losses of $145.1 million, mainly due to lower Canadian, Latin American, Middle Eastern and African losses in 2016 and the impact of the decrease in premiums earned, as well as more favorable development of prior year catastrophe losses of $33.2 million, partially offset by an increase of $108.3 million in current year catastrophe losses. The $224.8 million of favorable development on prior years attritional losses was mainly related to property business. The $178.8 million of current year catastrophe losses in 2016 were due to the Fort McMurray Canada wildfire ($97.5 million), Hurricane Matthew ($27.4 million), the Ecuador earthquake ($23.6 million), the 2016 Taiwan earthquake ($15.2 million) and the New Zealand earthquake ($14.0 million). The $70.5 million of current year catastrophe losses in 2015 were due to the Chilean earthquake ($34.8 million), Northern Chile storms ($19.5 million) and the New South Wales storms ($16.2 million). The 2016 favorable development on prior years catastrophe losses related primarily to the 2015 Chilean earthquake.
Incurred losses and LAE increased by 0.2% to $749.9 million in 2015 compared to $748.2 million in 2014, primarily due to the increase in current year attritional losses of $11.8 million, mainly related to $29.7 million of losses from the explosion at the Chinese port of Tianjin, partially offset by the decline in premiums earned. This increase in current year attritional reserves was mostly offset by $11.0 million of favorable prior years' development in 2015 compared to 2014 mainly related to Latin American and Canadian business. Current year catastrophe losses for 2015 are outlined above. The $71.1 million of current year catastrophe losses in 2014 were due to the 2014 Chilean earthquake ($20.7 million), Japan snowstorm ($20.0 million), Hurricane Odile ($15.4 million) and the Brisbane hailstorm ($14.9 million).
Commission and brokerage decreased by 2.6% to $298.2 million in 2015 compared to $306.2 million in 2014. The decrease was mainly due to the impact of the decrease in premiums earned and changes in the mix of business. Segment other underwriting expenses decreased slightly to $34.3 million in 2015 compared to $34.6 million in 2014.
Premiums. Gross written premiums increased by 1.5% to $890.4 million in 2016 compared to $877.3 million in 2015, primarily due to an increased casualty writings through the Bermuda office, partially offset by lower casualty writings through the Ireland office and the negative impact of $31.1 million from the movement of foreign exchange rates. Net written premiums increased by 5.1% to $831.9 million in 2016 compared to $791.6 million in 2015. The difference between the change in gross written premiums compared to the change in net written premiums was due to varying utilization of reinsurance. Premiums earned increased 1.9% to $838.0 million in 2016 compared to $822.4 million in 2015. The change in premiums earned relative to net written premiums is the result of timing; premiums are earned ratably over the coverage period whereas written premiums are recorded at the initiation of the coverage period.
Incurred losses and LAE increased by 26.2% to $456.4 million in 2015 compared to $361.8 million in 2014, primarily due to an increase of $97.0 million in current year attritional losses primarily related to the increase in premiums earned and $15.0 million of losses related to the explosion at the Chinese port of Tianjin. There were no current year catastrophe losses in 2015. The $0.3 million of current year catastrophe losses in 2014 primarily related to Hurricane Odile.
Incurred losses and LAE increased by 8.7% to $1,122.7 million in 2016 compared to $1,033.3 million in 2015 mainly due to an increase of $49.4 million in current year catastrophe losses, an increase of $21.5 million in prior years' attritional losses mainly related to run-off construction liability and umbrella program business and an increase of $18.7 million in current year attritional losses primarily related to the impact of the increase in premiums earned. The $49.4 million of current year catastrophe losses in 2016 were due to the 2016 U.S. storms ($30.0 million), Hurricane Matthew ($11.0 million) and the Fort McMurray Canada wildfire ($8.4 million). There were no current year catastrophe losses in 2015.
Incurred losses and LAE increased by 27.3% to $1,033.3 million in 2015 compared to $811.4 million in 2014, mainly due to an increase of $127.2 million in prior years' attritional losses related to run-off umbrella program and construction liability business and an increase of $94.7 million in current year attritional losses related primarily to the impact of the increase in premiums earned. There were no current year catastrophe losses in 2015 and 2014.
Commission and brokerage increased by 17.7% to $176.2 million in 2015 compared to $149.8 million in 2014. The increase was primarily driven by the impact of the increase in premiums earned and the change in the mix of business. Segment other underwriting expenses increased to $136.7 million in 2015 compared to $118.0 million in 2014. The increase was primarily due to the impact of the increase in premiums earned and increased focus on insurance operations resulting in increased operating expenses, including new hires.
The detailed data required to evaluate ultimate losses for our insurance business is accumulated from our underwriting and claim systems. Reserving for reinsurance requires evaluation of loss information received from ceding companies. Ceding companies report losses to us in many forms dependent on the type of contract and the agreed or contractual reporting requirements. Generally, proportional/quota share contracts require the submission of a monthly/quarterly account, which includes premium and loss activity for the period with corresponding reserves as established by the ceding company. This information is recorded into our records. For certain proportional contracts, we may require a detailed loss report for claims that exceed a certain dollar threshold or relate to a particular type of loss. Excess of loss and facultative contracts generally require individual loss reporting with precautionary notices provided when a loss reaches a significant percentage of the attachment point of the contract or when certain causes of loss or types of injury occur. Our experienced claims staff handles individual loss reports and supporting claim information. Based on our evaluation of a claim, we may establish additional case reserves (ACRs) in addition to the case reserves reported by the ceding company. To ensure ceding companies are submitting required and accurate data, the Underwriting, Claim, Reinsurance Accounting and Internal Audit departments of the Company perform various reviews of our ceding companies, particularly larger ceding companies, including on-site audits.
Our reserves include an estimate of our ultimate liability for A&E claims. Our A&E liabilities emanate from Everest Re's assumed reinsurance business. Liabilities related to Mt. McKinley's direct business, which had been ceded to Bermuda Re previously, were retroceded to an affiliate of Clearwater Insurance Company in July, 2015, concurrent with the sale of Mt. McKinley to Clearwater Insurance Company. There are significant uncertainties surrounding our estimates of our potential losses from A&E claims. Among the uncertainties are: (a) potentially long waiting periods between exposure and manifestation of any bodily injury or property damage; (b) difficulty in identifying sources of asbestos or environmental contamination; (c) difficulty in
Reinsurance Receivables. We have purchased reinsurance to reduce our exposure to adverse claim experience, large claims and catastrophic loss occurrences. Our ceded reinsurance provides for recovery from reinsurers of a portion of losses and loss expenses under certain circumstances. Such reinsurance does not relieve us of our obligation to our policyholders. In the event our reinsurers are unable to meet their obligations under these agreements or are able to successfully challenge losses ceded by us under the contracts, we will not be able to realize the full value of the reinsurance receivable balance. To minimize exposure from uncollectible reinsurance receivables, we have a reinsurance security committee that evaluates the financial strength of each reinsurer prior to our entering into a reinsurance arrangement. In some cases, we may hold full or partial collateral for the receivable, including letters of credit, trust assets and cash. Additionally, creditworthy foreign reinsurers of business written in the U.S., as well as capital markets' reinsurance mechanisms, are generally required to secure their obligations. We have established reserves for uncollectible balances based on our assessment of the collectability of the outstanding balances. As of December 31, 2016 and 2015, the reserve for uncollectible balances was $15.0 million. Actual uncollectible amounts may vary, perhaps substantially, from such reserves, impacting income (loss) in the period in which the change in reserves is made. See also ITEM 8, "Financial Statements and Supplementary Data" - Note 11 of Notes to the Consolidated Financial Statements and "Financial Condition - Reinsurance Receivables" below.
At December 31, 2016, we had net unrealized gains, net of tax, of $115.6 million compared to $42.8 million at December 31, 2015. Gains and losses from market fluctuations for investments held at market value are reflected as comprehensive income (loss) in the consolidated balance sheets. Gains and losses from market fluctuations for investments held at fair value are reflected as net realized capital gains and losses in the consolidated statements of operations and comprehensive income (loss). Market value declines for the fixed income portfolio, which are considered credit other-than-temporary impairments, are reflected in our consolidated statements of operations and comprehensive income (loss), as realized capital losses. We consider many factors when determining whether a market value decline is other-than-temporary, including: (1) we have no intent to sell and, more likely than not, will not be required to sell prior to recovery, (2) the length of time the market value has been below book value, (3) the credit strength of the issuer, (4) the issuer's market sector, (5) the length of time to maturity and (6) for asset-backed securities, changes in prepayments, credit enhancements and underlying default rates. If management's assessments change in the future, we may ultimately record a realized loss after management originally concluded that the decline in value was temporary. See also ITEM 8, "Financial Statements and Supplementary Data" - Note 1 of Notes to the Consolidated Financial Statements.
Cash and Invested Assets. Aggregate invested assets, including cash and short-term investments, were $17,483.1 million at December 31, 2016, an increase of $806.7 million compared to $16,676.4 million at December 31, 2015. This increase was primarily the result of $1,373.0 million of cash flows from operations, $96.6 million of pre-tax unrealized appreciation, $37.9 million in equity adjustments of our limited partnership investments, $9.4 million of unsettled securities and $2.2 million in fair value re-measurements, partially offset by $386.3 million paid for share repurchases, $96.7 million due to fluctuations in foreign currencies, $195.4 million paid out in dividends to shareholders, $49.2 million of amortization bond premium and 31.6 million of other-than-temporary impairments.
Reinsurance receivables for both paid and recoverable on unpaid losses totaled $1,018.3 million at December 31, 2016 and $894.0 million at December 31, 2015. At December 31, 2016, $175.0 million, or 17.2%, was receivable from Resolution Group; $129.0 million, or 12.7%, was receivable from C.V. Starr; $109.4 million, or 10.7%, was receivable from Zurich; $78.2 million, or 7.7%, was receivable from Mt. Logan Re segregated accounts and $51.1 million, or 5.0%, was receivable from FCIC. The receivables from Resolution Group and C.V. Starr are fully collateralized by individual trust agreements. No other retrocessionaire accounted for more than 5% of our receivables.
Loss and LAE Reserves. Gross loss and LAE reserves totaled $10,312.3 million and $9,951.8 million at December 31, 2016 and 2015, respectively.
Depending on the specific segment, the range derived for the loss reserves, excluding reserves for A&E exposures, ranges from minus 10.1% to minus 18.8% for the low range and from plus 10.1% to plus 18.8% for the high range. Both the higher and lower ranges are associated with the Insurance segment. The size of the range is dependent upon the level of confidence associated with the outcome. Within each range, management's best estimate of loss reserves is based upon the point estimate derived by our actuaries in detailed reserve studies. Such ranges are necessarily subjective due to the lack of generally accepted actuarial standards with respect to their development. For the above presentation, we have assumed what we believe is a reasonable confidence level but note that there can be no assurance that our claim obligations will not vary outside of these ranges.
Asbestos and Environmental Exposures. A&E exposures represent a separate exposure group for monitoring and evaluating reserve adequacy. The following table summarizes the outstanding loss reserves with respect to A&E reserves on both a gross and net of retrocessions basis for the periods indicated.
Ultimate loss projections for A&E liabilities cannot be accomplished using standard actuarial techniques. We believe that our A&E reserves represent management's best estimate of the ultimate liability; however, there can be no assurance that ultimate loss payments will not exceed such reserves, perhaps by a significant amount.
(3) The 2016 BSCR calculation is not yet due to be completed; however, the Company anticipates that Bermuda Re's December 31, 2016 actual capital will exceed the targeted capital level.
During 2016, we repurchased 2.1 million shares for $386.3 million in the open market and paid $195.4 million in dividends to adjust our capital position and enhance long term expected returns to our shareholders. During 2015, we repurchased 2.3 million shares for $400.1 million in the open market and paid $175.1 million in dividends. We may at times enter into a Rule 10b5-1 repurchase plan agreement to facilitate the repurchase of shares. On November 19, 2014, our existing Board authorization to purchase up to 25 million of our shares was amended to authorize the purchase of up to 30 million shares. As of December 31, 2016, we had repurchased 28.0 million shares under this authorization.
Liquidity. Our liquidity requirements are generally met from positive cash flow from operations. Positive cash flow results from reinsurance and insurance premiums being collected prior to disbursements for claims, which disbursements generally take place over an extended period after the collection of premiums, sometimes a period of many years. Collected premiums are generally invested, prior to their use in such disbursements, and investment income provides additional funding for loss payments. Our net cash flows from operating activities were $1,373.0 million, $1,096.6 million and $1,054.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Additionally, these cash flows reflected net tax payments of $42.6 million, $164.9 million and $153.5 million for the years ended December 31, 2016, 2015 and 2014, respectively, and net catastrophe loss payments of $206.0 million, $167.7 million and $318.0 million for the years ended December 31, 2016, 2015 and 2014, respectively.
If disbursements for claims and benefits, policy acquisition costs and other operating expenses were to exceed premium inflows, cash flow from reinsurance and insurance operations would be negative. The
The Group Credit Facility requires Group to maintain a debt to capital ratio of not greater than 0.35 to 1 and to maintain a minimum net worth. Minimum net worth is an amount equal to the sum of $5,371.0 million plus 25% of consolidated net income for each of Group's fiscal quarters, for which statements are available ending on or after March 31, 2016 and for which consolidated net income is positive, plus 25% of any increase in consolidated net worth during such period attributable to the issuance of ordinary and preferred shares, which at December 31, 2016, was $5,584.4 million. As of December 31, 2016, the Company was in compliance with all Group Credit Facility covenants.
At December 31, 2016 and December 31, 2015, the Company had no outstanding short-term borrowings from the Group Credit Facility revolving credit line. The highest amount outstanding during 2016 was $175.0 million for the period of February 8, 2016 to March 8, 2016. At December 31, 2016, the Group Credit Facility had no outstanding letters of credit under tranche one and $478.2 million outstanding letters of credit under tranche two. At December 31, 2015, the Group Credit Facility had no outstanding letters of credit under tranche one and $449.7 million outstanding letters of credit under tranche two.
electronically internally and with our brokers, program managers, clients and third party vendors. Some of these electronic communications involve personal, confidential and proprietary information. We seek to ensure that all of our systems, data and electronic transmissions are appropriately protected from cybersecurity attacks with the latest technology safeguards. These include, but are not limited to, requiring an independent assessment of outside vendor's computing environment relative to the services they are providing us.
Disclosures about Short-Duration Contracts. In May 2015, the FASB issued ASU 2015-09, authoritative guidance regarding required disclosures associated with short duration insurance contracts. The new disclosure requirements focus on information about initial claim estimates and subsequent claim estimate adjustment, methodologies in estimating claims and the timing, frequency and severity of claims related to short duration insurance contracts. This guidance is effective for annual reporting periods beginning after December 15, 2015 and interim reporting periods beginning after December 15, 2016. The Company has included these disclosures within Footnote 3; Reserve for Losses, LAE and Future Policy Benefit Reserve, as part of the Notes to Consolidated Financial Statements.
Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share. In May 2015, the FASB issued Accounting Standards Update ("ASU") 2015-07, which removes the requirement to categorize, within the fair value hierarchy, investments for which fair values are estimated using the net asset value practical expedient provided by Accounting Standards Codification 820, Fair Value Measurement. The updated guidance is effective for annual reporting periods beginning after December 15, 2015. The adoption did not have a material impact on the Company's financial statements.
Debt Issuance Costs. In April 2015, The FASB issued ASU 2015-03, authoritative guidance on the presentation of debt issuance costs. This guidance requires that debt issuance costs be presented within the balance sheet as a reduction of the carrying value of the debt liability, rather than as a separate asset. This guidance is effective for annual reporting periods beginning after December 15, 2015 and related interim reporting periods. Based upon this guidance, the Company has adjusted prior financial statements and footnotes to conform with this new presentation.
Consolidation. In February 2015, the FASB issued ASU 2015-02, authoritative guidance regarding consolidation of reporting entities. The new guidance focuses on the required evaluation of whether certain legal entities should be consolidated. This guidance is effective for annual and interim reporting periods beginning after December 15, 2015. Based upon this guidance, the Company has determined that the separate segregated accounts associated with Mt. Logan Re, should not be consolidated. As a result, the Company has adjusted prior financial statements and footnotes to conform with this new consolidation presentation.
We had $10,312.3 million and $9,951.8 million of gross reserves for losses and LAE as of December 31, 2016 and 2015, respectively. These amounts are recorded at their nominal value, as opposed to present value, which would reflect a discount adjustment to reflect the time value of money. Since losses are paid out over a period of time, the present value of the reserves is less than the nominal value. As interest rates rise, the present value of the reserves decreases and, conversely, as interest rates decline, the present value increases. These movements are the opposite of the interest rate impacts on the fair value of investments. While the difference between present value and nominal value is not reflected in our financial statements, our financial results will include investment income over time from the investment portfolio until the claims are paid. Our loss and loss reserve obligations have an expected duration of approximately 4.2 years, which is reasonably consistent with our fixed income portfolio. If we were to discount our loss and LAE reserves, net of ceded reserves, the discount would be approximately $1.2 billion resulting in a discounted reserve balance of approximately $8.1 billion, representing approximately 56.0% of the value of the fixed maturity investment portfolio funds.
Equity Risk. Equity risk is the potential change in fair and/or market value of the common stock, preferred stock and mutual fund portfolios arising from changing prices. Our equity investments consist of a diversified portfolio of individual securities and mutual funds, which invest principally in high quality common and preferred stocks that are traded on the major exchanges, and mutual fund investments in emerging market debt. The primary objective of the equity portfolio is to obtain greater total return relative to our core bonds over time through market appreciation and income.
In June 2016, the United Kingdom approved a referendum to exit the European Union (commonly referred to as "Brexit") which resulted in volatility in global stock markets and currency exchange rates, and has increased political, economic and global market uncertainty. The formal process for the United Kingdom to exit the European Union would ultimately be triggered by the filing of a notice to withdraw and thereafter negotiations would occur as to the timing and terms of such an exit. The Company has a Lloyd's of London Syndicate and Bermuda Re has a branch operation in the United Kingdom. The nature and extent of the impact of Brexit on regulation, interest rates, currency exchange rates and financial markets is still uncertain and may adversely affect our operations.
This report contains forward-looking statements within the meaning of the U.S. federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as "may", "will", "should", "could", "anticipate", "estimate", "expect", "plan", "believe", "predict", "potential" and "intend". Forward-looking statements contained in this report include information regarding our reserves for losses and LAE, the adequacy of capital in relation to regulatory required capital, the adequacy of our provision for uncollectible balances, estimates of our catastrophe exposure, the effects of catastrophic events on our financial statements, the ability of Everest Re, Holdings, Holdings Ireland, Dublin Holdings, Bermuda Re and Everest International to pay dividends and the settlement costs of our specialized equity index put option contracts. Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause our actual events or results to be materially different from our expectations include those discussed under the caption ITEM 1A, "Risk Factors". We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.