Net Investment Income. Net investment income includes the gross investment income earned on investments supporting fixed annuities and certain life insurance products as well as the yield on the Company's general account invested assets which are not allocated to product segments. Net investment income was $1.36 billion in 1996, $1.29 billion in 1995 and $1.21 billion in 1994. Net investment income has increased as a result of growth in the Company's general account invested assets. General account invested assets were $18.31 billion, $17.78 billion and $15.18 billion as of December 31, 1996, 1995 and 1994, respectively.
Realized Gains/(Losses) on Investments. Realized gains (losses) on investments are not considered by the Company to be a recurring source of earnings (operations). The Company makes decisions concerning the sale of invested assets based on a variety of market, business, tax and other factors. All realized gains and losses are reported in the Corporate and Other segment. Net realized losses on investments were $0.3 million in 1996, $1.7 million in 1995 and $16.5 million in 1994.
Pursuant to a cost sharing agreement among NMIC and certain of its direct and indirect subsidiaries, including the Company, NMIC provides certain operational and administrative services, such as sales support, advertising, personnel and general management services, to those subsidiaries. Expenses covered by such agreement are subject to allocation among NMIC and such subsidiaries. Amounts allocated to the Company were $101.6 million, $107.1 million and $100.6 million for the years ended December 31, 1996, 1995 and 1994, respectively. Under the cost sharing agreement, expenses are allocated in accordance with NAIC guidelines and are based on standard allocation techniques and procedures acceptable under general cost accounting practices. Measures used to allocate expenses include individual employee estimates of time spent, special cost studies, salary expense, commissions expense and other measures that are agreed to by the participating companies and are within regulatory and industry guidelines and practices. The cost sharing agreement will remain in effect until terminated upon the consent of both NMIC and the Company. See Item 13 - Certain Relationships and Related Transactions-Existing Arrangements with the Enterprise-Cost Sharing Agreement.
NLIC paid the dividend by transferring primarily fixed maturity investments with an aggregate market value on February 24, 1997 of $850.0 million from the Corporate and Other segment. NLIC recognized a gain of $14.4 million on the transfer of the securities. The related tax impact of the gain will be recognized but will not be paid as long as the securities are held by NMIC and NLIC remains within the consolidated federal tax return of NMIC.
The National Association of Insurance Commissioners (NAIC) assigns securities quality ratings and uniform valuations called "NAIC Designations" which are used by insurers when preparing their annual statements. The NAIC assigns designations to publicly traded as well as privately placed securities. The designations assigned by the NAIC range from class 1 to class 6, with a designation in class 1 being of the highest quality. Of the Company's general account fixed maturity securities, 98.2% by the carrying value were in the highest two NAIC Designations as of December 31, 1996.