Policy reserves are established in the same period we issue a policy and equal the difference between projected future policy benefits and future premiums, allowing a margin for expenses and profit. These reserves relate primarily to our non-interest sensitive products, including our individual disability and voluntary benefits products in our Unum US segment; individual disability products in our Unum UK segment; disability and cancer and critical illness policies in our Colonial Life segment; and individual disability, long-term care, and other products in our Closed Block segment. The reserves are calculated based on assumptions that were appropriate at the date the policy was issued and are not subsequently modified unless the policy reserves become inadequate (i.e. loss recognition occurs).
balance sheets as a reinsurance recoverable. We continue to service a block of group pension products, which we have not ceded, and the policy reserves for these products are based on expected mortality rates and retirement rates. Expected future payments are discounted at interest rates reflecting the anticipated investment returns for the assets supporting the liabilities.
Claim reserves supporting the group and individual dental and vision products reported in our Unum US segment have a short claim payout period. As a result, the reserves, which primarily represent IBNR and a small amount of claims pending payment, are calculated using the paid loss development method.
The U.S. defined benefit pension plans were closed to new entrants and were amended to freeze participation as of December 31, 2013. The U.K. defined benefit pension plan was closed to new entrants effective December 31, 2002 and was subsequently amended to freeze participation effective June 30, 2014. The OPEB plan was closed to new entrants effective December 31, 2012.
Benefits experience was favorable compared to 2014 due as a result of favorable experience in both the group long-term disability and group life product lines. The favorable group long-term disability benefits experience was due primarily to favorable claim recoveries, partially offset by unfavorable mortality experience. The favorable group life experience was due to a lower claim incidence rate and a lower average claim size.
Approximately $110 million of the amount held at December 31, 2016 was held in certain of our U.K. subsidiaries. No significant restrictions exist on our ability to use or access these funds. We currently have no intent, nor do we foresee a need, to repatriate funds from our foreign subsidiaries in the U.K. We believe we hold domestic resources sufficient to fund our liquidity requirements for the next 12 months. If we repatriate additional funds from our subsidiaries in the U.K., the amounts repatriated would be subject to repatriation tax effects which generally equal the difference in the U.S. tax rate and the U.K. tax rate.
Northwind Holdings made principal payments on its floating rate, senior secured notes of $64.0 million, $74.4 million, and $41.6 million in 2016, 2015, and 2014, respectively.
Property and Equipment: Property and equipment is reported at cost less accumulated depreciation, which is calculated on the straight-line method over the estimated useful life. The accumulated depreciation for property and equipment was $989.4 million and $902.6 million as of December 31, 2016 and 2015, respectively.
The adoption of this update will result in reclassifications to certain cash receipts and payments within our consolidated statements of cash flows but will have no effect on our financial position or results of operations.
We are the sole beneficiary of a special purpose entity which is consolidated in our financial statements. This entity is a securitized asset trust containing a highly rated bond for principal protection and a private equity partnership investment which we contributed into the trust at the time it was established. There are no restrictions on the assets held in this trust, and the trust is free to dispose of the assets at any time. The fair values of the bond and partnership were $151.9 million and $1.0 million, respectively, as of December 31, 2016 and $148.0 million and $0.9 million, respectively, as of December 31, 2015. The bond is reported as a component of fixed maturity securities, and the partnership is reported as a component of other long-term investments in our consolidated balance sheets. At December 31, 2016, we had no commitments to fund the underlying partnership, nor did we fund any amounts to the partnership during the years ended December 31, 2016, 2015, and 2014.
Our average investment in impaired mortgage loans was $2.2 million, $8.6 million, and $26.7 million for the years ended December 31, 2016, 2015, and 2014, respectively. Interest income recognized on mortgage loans subsequent to impairment was
As of December 31, 2016, we are hedging the variability of future cash flows associated with forecasted transactions through the year 2038.
Included in the balance at December 31, 2014 was $10.4 million of unrecognized tax benefits for tax positions for which the ultimate deductibility was highly certain but for which there was uncertainty about the timing of such deductibility. Other than potential interest and penalties, the disallowance of the shorter deductibility period would not have affected our results of operations but would have accelerated the payment of cash to the taxing authority.
We recognize interest expense and penalties, if applicable, related to unrecognized tax benefits in tax expense net of federal income tax. We recognized a de minimis amount of interest expense related to unrecognized tax benefits during 2016. We recognized an increase (reduction) in interest expense related to unrecognized tax benefits of $(1.0) million and $0.2 million during 2015 and 2014, respectively. We held a de minimis liability in our consolidated balance sheets for accrued interest and penalties related to unrecognized tax benefits at December 31, 2016 and 2015. At December 31, 2014, we held a liability of $1.0 million. There are no positions for which it is reasonably possible that unrecognized tax benefits could materially increase or decrease within the next 12 months.
Tax years subsequent to 2012 remain subject to examination by the IRS, and tax years subsequent to 2014 remain subject to examination in major foreign jurisdictions. We believe sufficient provision has been made for all potential adjustments for years that are not closed by the statute of limitations in all major tax jurisdictions and that any such adjustments would not have a material adverse effect on our financial position, liquidity, or results of operations.
The unrecognized net actuarial loss and the prior service credit included in accumulated other comprehensive income and expected to be amortized and included in net periodic pension cost during 2017 is $20.2 million and $0.7 million before tax, respectively.
We also offer a defined contribution plan to all eligible U.K. employees under which a portion of employee contributions is matched. Effective July 1, 2014, we increased benefits under the defined contribution plan wherein we match two pounds for every one pound on the first 1.0 percent of employee contributions into the plan and match additional employee contributions pound-for-pound up to 5.0 percent of base salary. We previously matched pound-for-pound up to 5.0 percent of base salary for employee contributions into the defined contribution plan and made an additional non-elective contribution of 5.0 percent of base salary. Also effective July 1, 2014, we increased the non-elective contribution to 6.0 percent of base salary for all eligible employees, and a separate transition contribution was made for all eligible employees through March 31, 2016.
The total fair value of shares vested during 2016, 2015, and 2014 was $18.3 million, $21.4 million, and $19.8 million, respectively. At December 31, 2016, we had $13.0 million of unrecognized compensation cost related to RSUs that will be recognized over a weighted average period of 0.9 years.
The following is a summary of our unaudited quarterly results of operations for 2016 and 2015: