Key assumptions used in the calculation of the amortization of deferred policy acquisition costs for participating life insurance and interest sensitive products include the following:
The following table sets forth the amortized cost, par value and carrying value of our mortgage and asset-backed securities at December 31, 2001, summarized by type of security.
We are also a party to other operating leases with total payments of approximately $1.0 million per year. Generally, these leases are renewable annually with similar terms. Although our current intention is to renew these leases, we are not obligated to do so.
o the feature of a convertible fixed maturity security that allows the conversion of a fixed maturity security into an equity security is considered an embedded derivative, o the rights of an equity-indexed annuity contract holder to participate in the index returns available under the contract are considered embedded derivatives and o our reinsurance recoverable as it relates to call options purchased to fund returns to equity-indexed annuity contract holders is considered a derivative.
Property and equipment, comprised primarily of furniture, equipment and capitalized software costs, are reported at cost less allowances for depreciation and amortization. Depreciation and amortization expense is computed primarily using the straight-line method over the estimated useful lives of the assets. Furniture and equipment had a carrying value of $33.4 million at December 31, 2001 and $38.8 million at December 31, 2000, and estimated useful lives that range from three to ten years. Capitalized software costs had a carrying value of $7.0 million at December 31, 2001 and $20.4 million at December 31, 2000, and estimated useful lives that range from two to five years. Depreciation expense was $7.4 million in 2001, $8.1 million in 2000 and $8.6 million in 1999. Amortization expense was $6.0 million in 2001, $4.8 million in 2000 and $2.6 million in 1999.
We had undiscounted reserves of $0.2 million at December 31, 2001 and $0.1 million at December 31, 2000 to cover estimated future assessments on known insolvencies. We had assets totaling $1.0 million at December 31, 2001 and December 31, 2000 representing estimated premium tax offsets on paid and future assessments. Expenses (credits) incurred for guaranty fund assessments, net of related premium tax offsets, totaled $0.2 million in 2001 and ($0.1) million in 2000 and 1999. It is anticipated that estimated future guaranty fund assessments on known insolvencies will be paid during 2002 and substantially all the related future premium tax offsets will be realized during the six year period ending December 31, 2007. We believe the reserve for guaranty fund assessments is sufficient to provide for future assessments based upon known insolvencies and projected premium levels.
OTHER LONG-TERM INVESTMENTS: The fair values for investment deposits are estimated by discounting expected cash flows using interest rates currently being offered for similar investments. The fair values for investments held by broker-dealer subsidiaries are based on quoted market prices.
Life insurance in force assumed on a consolidated basis totaled $3,784.2 million (13.8% of total life insurance in force) at December 31, 2001 and $2.4 million (less than 0.1% of total life insurance in force) at December 31, 2000. In total, premiums and product charges assumed totaled $11.3 million in 2001, $0.1 million in 2000 and less than $0.1 million in 1999. Insurance benefits assumed totaled $9.0 million in 2001.
Net amortization of the value of insurance in force acquired, based on expected future gross profits/margins, for the next five years and thereafter is expected to be as follows: 2002 - $3.0 million; 2003 - $3.0 million; 2004 - $2.9 million; 2005 - $2.9 million; 2006 - $2.7 million; and thereafter, through 2023 - $44.6 million.
The pro forma impact is likely to increase in future years as additional options are granted and amortized ratably over the vesting period.