During 1999 the Company also recognized $327.8 million of before-tax charges related to its reinsurance operations. These charges were as follows (in millions):
Group disability revenue was $3,200.4 million in 2000 compared to $3,029.0 million in 1999. New annualized sales for group long-term disability on a submitted date basis were $333.8 million in 2000 and $385.2 million in 1999. New annualized sales for group short-term disability were $148.5 million in 2000 compared to $172.0 million in 1999. On an effective date basis, new annualized sales for long-term disability and short-term disability were $318.0 million and $125.4 million in 2000 and $466.9 million and $203.1 million in 1999. A critical part of the Company's strategy for group disability during 2000 involved executing its renewal program and managing persistency, both of which management expects will have a positive impact on future premium growth and profitability. However, the high terminations and slow sales have decreased the earned premium growth compared to that experienced during 1999 and 1998. The Company is implementing pricing changes in the group disability line. Prices will increase or decrease by market segment, as appropriate, to respond to current claim experience and other factors and assumptions. Net investment income is expected to continue to increase due to the increase in the level of invested assets allocated to this line of business and the increased duration on new investments.
Net investment income increased during 1999 due to the increase in the level of invested assets allocated to this line of business and also due to the portfolio restructuring which occurred subsequent to the merger.
managed the run-off of its risk participation in open years of account of Lloyd's reinsurance syndicates. During the first quarter of 2001, the Company entered into an agreement in principle to limit its liabilities pertaining to the Lloyd's syndicate participations. See Note 13 of the "Notes to Consolidated Financial Statements" for further discussion of the reinsurance operations.
During 2000, the reinsurance pools and management operations reported a loss of $32.7 million compared to a loss of $279.7 million in 1999. Included in the 2000 results were $37.4 million of charges related to the Company's London accident reinsurance pool participation. During 1999, the Company recorded charges resulting from its decision to exit these pools, but at that time there was insufficient information to fully evaluate all of the exposures. Working with the pool managers in London, the Company now has a clearer view of the potential cost to fund these exposures and provide for the run-off of its participation. The 2000 charges included a claim reserve adjustment of $21.9 million and uncollectible receivables and loss provisions of $15.5 million.
The Company utilizes interest rate futures contracts, current and forward interest rate swaps, interest rate forward contracts, and options on forward interest rate swaps, forward treasuries, or specific fixed income securities to manage duration and increase yield on cash flows expected from current holdings and products. All transactions are hedging in nature and not speculative. Almost all transactions are associated with the individual and group disability product portfolios. All other product portfolios are periodically reviewed to determine if hedging strategies would be appropriate for risk management purposes. See Note 5 of the "Notes to Consolidated Financial Statements" for further discussion of the Company's derivative financial instruments.
Fair value hedge. Changes in the fair value of both the derivative and the hedged item attributable to the risk being hedged are recognized in operating earnings.
At December 31, 2000, the total investment in below-investment-grade fixed maturity securities (securities rated below Baa3 by Moody's Investors Service or an equivalent internal rating) was $1,760.8 million or 6.6 percent of invested assets. The amortized cost of these securities was $2,161.1 million.
Effective July 1, 2000, the Company entered into various reinsurance agreements with Reassure America Life Insurance Company (Reassure America), an affiliate of Swiss Re Life & Health America Inc., under which Reassure America reinsured on a 100 percent indemnity coinsurance basis substantially all of the individual life insurance and corporate-owned life insurance policies written by the Company's insurance subsidiaries, as well as a small block of individually underwritten group life insurance. Reassure America has a current A.M. Best rating of A++ (superior). In consideration of the transfer of reserves, the Company received a ceding commission of $601.0 million. Total liabilities of $3,346.8 million and policy loans of $2,040.9 million were assumed by Reassure America. The $388.2 million before-tax and $252.3 million after-tax gain on these transactions was deferred and is being amortized into income based upon expected future premium income on the traditional insurance policies ceded and estimated future gross profits on the interest-sensitive insurance policies ceded.
In 1996, the Company executed a definitive reinsurance agreement with Centre Life Reinsurance Limited (Centre Re), a Bermuda-based reinsurance specialist, for reinsurance coverage of the existing United States non-cancellable individual disability active life reserves of one of the Company's insurance subsidiaries, Unum Life Insurance Company of America. This agreement reinsures all claims incurred on or after January 1, 1996. The Company has the right, but no obligation, to recapture the business after six years without penalty. Under the agreement, Centre Re has an obligation to absorb losses within a defined risk layer. The Company retains the risk for all experience up to Centre Re's defined risk layer, or attachment point. Once the attachment point is reached, Centre Re assumes the risk for all experience up to a contractually defined risk limit. Any experience above Centre Re's defined risk limit reverts back to the Company. As of December 31, 2000, the attachment point had not been reached.
During 2000, the Company entered into an agreement to sell Provident National Assurance Company, an inactive subsidiary of the Company. The transaction, which was subject to regulatory approval, closed in the first quarter of 2001.
costs. During the first quarter of 1999, the Company incurred net charges of $101.1 million before tax ($88.0 million after tax) related to reserve increases and reinsurance operation activities. See notes preceding for further discussion.