Impairment of title plants. Management uses estimated future cash flows (undiscounted and excluding interest) to measure the recoverability of title plants whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. If the undiscounted cash flow analysis indicates that the carrying amount is not recoverable, an impairment loss is recorded for the excess of the carrying amount over its fair value. The Company considers changes in such factors as the effects of obsolescence, duplication, demand and other economic factors as possible indicators of impairment.
The weighted-average discount rate assumptions used to determine net periodic benefit costs for the Company’s unfunded supplemental benefits plans for 2019, 2018 and 2017, were as follows:
Personnel costs increased $29.9 million, or 1.8%, in 2019 from 2018 and $35.4 million, or 2.2%, in 2018 from 2017. The increase in personnel costs in 2019 from 2018 was primarily attributable to higher incentive compensation, employee benefit and overtime expenses, partially offset by lower salary, payroll tax and severance expenses. The increase in incentive compensation expense was due to the Company’s higher profitability. The increase in employee benefit costs was due to a higher expected 401(k) savings plan match driven by improved financial results. The decrease in salary and payroll tax expense was driven by lower average headcount in 2019 when compared with 2018. The increase in personnel costs in 2018 from 2017 was driven by acquisitions. Excluding the $28.3 million impact of new acquisitions for the year ended December 31, 2018, personnel costs increased $7.1 million, or 0.4%, in 2018 compared to 2017. The slight increase in 2018 from 2017, adjusted for the impact of acquisitions, was primarily attributable to higher employee benefit, salary, severance and stock-based compensation expenses, partially offset by lower incentive compensation, overtime and temporary labor expenses. The increase in employee benefit costs was due to a higher 401(k) savings plan match. The higher salary expense was due to one additional payroll day and higher average headcount in our international operations. Personnel costs included severance expense of $6.5 million, $15.2 million and $10.1 million for 2019, 2018 and 2017, respectively.
Net investment income totaled $21.9 million and $15.3 million in 2019 and 2017, respectively, and net investment losses totaled $3.1 million in 2018. The change in net investment income for all three years was primarily attributable to fluctuations in earnings on investments associated with the Company’s deferred compensation plan.
V. Valuation and Qualifying Accounts for the years ended December 31, 2019, 2018 and 2017
Accounts and accrued income receivable, less allowances of $21,984 and $22,841
Equity securities are carried at fair value and consist primarily of investments in exchange traded funds, mutual funds and marketable preferred stocks of corporate entities. Changes in the fair values of the Company’s equity securities are recognized in net realized investment gains/losses on the consolidated statements of income.
The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various non-U.S. jurisdictions. The primary non-federal jurisdictions are California, Canada, India and the United Kingdom. As of December 31, 2019, the Company had concluded U.S. federal income tax examinations through 2015 and is generally no longer subject to state and non-U.S. income tax examinations for years prior to 2014.
The First American Financial Corporation 401(k) Savings Plan (the “Savings Plan”) allows for employee-elective contributions up to the maximum amount as determined by the Internal Revenue Code. The Company makes discretionary contributions to the Savings Plan based on profitability, as well as the contributions of participants. The Savings Plan held 2.0 million shares and 2.2 million shares of the Company’s common stock, representing 1.8% and 1.9% of the Company’s total common shares outstanding at December 31, 2019 and 2018, respectively. Effective July 1, 2015, participants in the Savings Plan can no longer make additional investments in common stock of the Company.
The Company’s Canadian operations provide certain services to lenders which it believes to be exempt from excise tax under applicable Canadian tax laws. However, in October 2014, the Canadian taxing authority provided internal guidance that the services in question should be subject to the excise tax. During July 2019, the Company received an assessment from the Canadian taxing authority. The amount of the assessment is $14.8 million, which is based on the exchange rate as of, and includes interest charges through, December 31, 2019. As the Company does not believe that the services in question are subject to excise tax, it intends to avail itself of avenues of appeal, and it believes it is reasonably likely that the Company will prevail on the merits. Based on the current facts and circumstances, the Company does not believe a loss is probable, therefore no liability has been recorded.
First American Financial Corporation is a holding company that conducts all of its operations through its subsidiaries. The Parent Company financial statements should be read in connection with the consolidated financial statements and notes thereto included elsewhere in this Form 10-K.