The fair value of plan assets in our U.S. qualified defined benefit pension plan was $1,454.9 million at December 31, 2018, compared to $1,582.6 million at December 31, 2017. The plan was in an underfunded position of $294.2 million and $348.8
Commissions and the deferral of acquisition costs were higher relative to 2016 due to overall sales growth. The amortization of deferred acquisition costs increased compared to 2016 due primarily to growth in the level of the deferred asset. The other expense ratio improved relative to 2016 due to growth in premium income and our continued focus on operating effectiveness and expense management.
Premium income for individual disability decreased compared to 2017 due to policy terminations and maturities. Premium income for long-term care was generally consistent with the prior year, with rate increases offsetting policy terminations. We continue to file requests with various state insurance departments for premium rate increases on certain of our individual and group long-term care policies which reflect assumptions as of the date of filings. In states for which a rate increase is submitted and approved, we routinely provide customers options for coverage changes or other approaches that might fit their current financial and insurance needs.
Interest and other expenses were higher relative to 2016 due primarily to the 2017 guaranty fund assessment and an increase in the amortization of prior period actuarial losses for our pension and other postretirement benefit plans, partially offset by lower levels of outstanding debt and expenses incurred in 2016 related to the acquisition of Starmount.
We expect to continue to generate excess capital on an annual basis through the statutory earnings in our insurance subsidiaries, aided in part by the reduction in the corporate tax rate resulting from tax reform. We believe we are well positioned with flexibility to preserve our capital strength while also continuing to return capital to our shareholders.
We have a formal investment policy that includes overall quality and diversification objectives and establishes limits by asset class, investment rating, and single issuer. The majority of our investments are in investment-grade publicly traded securities. This ensures the desired liquidity and preserves the capital value of our portfolios, although due to the long-term nature of our insurance liabilities we are also able to invest in less liquid investments to obtain superior returns within the limits of our investment policy. Our asset mix guidelines and limits are established by us, reviewed by the risk and finance committee of Unum Group's board of directors, and approved by the boards of directors of our insurance subsidiaries. We review our policies and guidelines annually, or more frequently if deemed necessary, and recommend adjustments as appropriate.
valuations supplied by the brokerage firms that are dealers in these securities as well as independent pricing services. One of the risks involved in investing in mortgage/asset-backed securities is the uncertainty of the timing of cash flows from the underlying loans due to prepayment of principal with the possibility of reinvesting the funds in a lower interest rate environment. We use models which incorporate economic variables and possible future interest rate scenarios to predict future prepayment rates. The timing of prepayment cash flows may also cause volatility in our recognition of investment income. We recognize investment income on these securities using a constant effective yield based on projected prepayments of the underlying loans and the estimated economic life of the securities. Actual prepayment experience is reviewed periodically, and effective yields are recalculated when differences arise between prepayments originally projected and the actual prepayments received and currently projected. The effective yield is recalculated on a retrospective basis, and the adjustment is reflected in net investment income.
Where applicable, gains or losses on reinsurance transactions are deferred and amortized into earnings based upon expected future premium income for non-interest sensitive insurance policies and estimated future gross profits for interest sensitive insurance policies. The deferred gain on reinsurance included in other liabilities in our consolidated balance sheets at December 31, 2018 and 2017 was $12.5 million and $17.7 million, respectively.
December 31, 2018 for the removal and modification of certain disclosures and January 1, 2020 for the addition of certain disclosures.
We consider transactions in inactive markets to be less representative of fair value. We use all available observable inputs when measuring fair value, but when significant unobservable inputs are used, we classify these assets or liabilities as Level 3.
Policy Loans: Fair values for policy loans, net of reinsurance ceded, are estimated using discounted cash flow analyses and interest rates currently being offered to policyholders with similar policies. Carrying amounts for ceded policy loans, which equal $3,449.3 million and $3,307.5 million as of December 31, 2018 and 2017, respectively, approximate fair value and are reported on a gross basis in our consolidated balance sheets. A change in interest rates for ceded policy loans will not impact our financial position because the benefits and risks are fully ceded to reinsuring counterparties.
Mortgage loans, sorted by the applicable credit quality indicators, are as follows:
The net unrealized gain (loss) on securities consists of the following components:
Under the TCJA, a modified territorial tax system was adopted that required a one-time deemed repatriation tax on accumulated foreign E&P. Future repatriation of foreign E&P subject to the one-time deemed repatriation tax will not be subject to further U.S. taxation other than tax on foreign currency translation gain or loss. As of December 31, 2018, our plans for the future repatriations of cash from our foreign subsidiaries include only the amount of capital above that which is required by Solvency II. The remainder of our investment in our foreign subsidiaries is indefinitely reinvested and we have not recorded any deferred taxes on the approximately $0.7 billion of the excess of the U.S. GAAP carrying values over the tax basis of investments in our foreign subsidiaries.
Total income taxes paid net of refunds during 2018, 2017, and 2016 were $139.7 million, $377.0 million, and $384.3 million, respectively.
We believe our investment portfolios are well diversified by asset class and sector, with no undue risk concentrations in any one category.
During the years ended December 31, 2018, 2017, and 2016, we recognized costs of $72.7 million, $78.4 million, and $72.2 million, respectively, for our U.S. defined contribution plan. We recognized costs of $4.2 million in both 2018 and 2017, and $4.9 million in 2016 for our U.K. defined contribution plan.
Note 10 - Stockholders' Equity and Earnings Per Common Share - Continued
PSU shares in the preceding table represent aggregate initial target awards and accrued dividend equivalents and do not reflect potential increases or decreases resulting from the application of the performance factor determined after the end of the performance periods. At December 31, 2018, the three-year performance period for the 2016 PSU grant was completed and the related shares vested, but the performance factor had not yet been applied. The performance factor will be applied during the first quarter of 2019, with distribution of the stock thereafter. Granted and vested amounts in the preceding table also include the additional shares awarded as a result of the application of the performance factor to the 2015 PSU grant, which occurred during the first quarter of 2018.
We have noncancelable lease obligations on certain office space and equipment. As of December 31, 2018, the aggregate net minimum lease payments were $157.7 million payable as follows: $30.4 million in 2019, $26.3 million in 2020, $22.2 million in 2021, $18.2 million in 2022, $12.3 million in 2023, and $48.3 million thereafter. Rental expense for the years ended December 31, 2018, 2017 and 2016 was $64.3 million, $54.2 million, and $51.4 million, respectively.
Third quarter of 2018 reserve increase of $750.8 million before tax and $593.1 million after tax related to long-term care.