The Corporate and Other business segment acts as the owner of all of the invested assets of the Company. The investment income from the invested assets is allocated to the insurance segments in accordance with the assets allocated to each insurance segment. Earnings of the Corporate and Other business segment are derived from income related to invested assets not allocated to the insurance segments and from our non-insurance businesses. All realized investment gains and losses, which includes other-than-temporary impairments (“OTTI”), are recorded in this segment.
Stability of future inflation rates and consistency with historical inflation norms;
The following sets forth the consolidated results of operations (in thousands):
Policyholder benefits consist of annuity payments and reserve increases for SPIA contracts. Reserve increases are highly correlated to the sales volume of SPIA contracts which explains the change in benefits over the past three years.
Commissions increased during 2017 compared to 2016 driven by an increase in sales of deferred annuity and equity-indexed products. Commissions increased during 2016 compared to 2015 primarily as a result of an increase in sales of higher commissionable products, such as equity-indexed and single premium immediate annuities.
The following table summarizes the Company’s catastrophe reinsurance coverage effective during 2018.
Our insurance and annuity products are generally supported by investment-grade bonds and commercial mortgage loans. We also invest in equity options as a hedge for our indexed products. We purchase fixed maturity securities and designate them as either held-to-maturity or available-for-sale considering our estimated future cash flow needs. We also monitor the composition of our fixed maturity securities classified as held-to-maturity and available-for-sale and adjust the mix within the portfolio as investments mature or new investments are purchased.
We have audited the accompanying consolidated statements of financial position of American National Insurance Company and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement schedules I to V (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.
Total mortgage loans were net of unamortized purchase discounts of $233,000 for December 31, 2016. There were no unamortized purchase discounts as of December 31, 2017. Total mortgage loans are also net of unamortized origination fees of $32,766,000 and $33,019,000 at December 31, 2017 and 2016, respectively. No unearned income is included in these amounts.
There are $5,000 of commitments to lend additional funds to debtors whose loans have been modified in troubled debt restructuring. One loan, that was determined to be a troubled debt restructuring in 2016, was in the process of foreclosure as of December 31, 2017 with a recorded investment of $4,610,000.
Note 12 - Liability for Unpaid Claims and Claim Adjustment Expenses
Management believes that a sufficient taxable income will be achieved over time to utilize the deferred tax assets in the consolidated federal tax return; therefore, no valuation allowance was recorded as of December 31, 2017 and 2016. There are no net operating or capital loss tax carryforwards that will expire by December 31, 2017.
* This includes the Company’s provisional impact of Tax Reform of $206.4 million, which may be adjusted for the current and future periods, possibly materially, due to, among other things, further refinement of the Company’s calculations, changes in interpretations and assumptions the Company has made, tax guidance that may be issued and actions the Company may take as a result of Tax Reform. Excluding the impact of Tax Reform, the Company’s net income for the three months ended December 31, 2017 would have been $138.2 million and net earnings per basic and diluted share of $5.14 and $5.12, respectively.