Available-for-sale Securities. The period-end amortized cost, gross unrealized gains and losses, and fair value of available-for-sale securities were as follows:

	June 30, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies	$	9,745	$	286	$	(19	)	$	10,012
Foreign government		132,101		7,926		(454	)		139,573
States and political subdivisions		156,071		8,112		(81	)		164,102
Corporates		1,595,476		96,995		(4,517	)		1,687,954
Residential mortgage-backed securities		244,658		7,832		(476	)		252,014
Commercial mortgage-backed securities		150,520		5,812		(66	)		156,266
Other asset-backed securities		102,686		2,118		(140	)		104,664
Total fixed-maturity securities		2,391,257		129,081		(5,753	)		2,514,585
Short-term investments		40,327		-		(2	)		40,325
Total fixed-maturity securities and short-term investments	$	2,431,584	$	129,081	$	(5,755	)	$	2,554,910

	December 31, 2020
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies	$	9,747	$	400	$	(3	)	$	10,144
Foreign government		169,967		13,324		(39	)		183,252
States and political subdivisions		161,058		9,632		(1	)		170,689
Corporates		1,506,549		124,164		(2,545	)		1,628,168
Residential mortgage-backed securities		261,376		11,419		(54	)		272,741
Commercial mortgage-backed securities		107,020		5,901		(56	)		112,865
Other asset-backed securities		85,521		1,816		(585	)		86,752
Total fixed-maturity securities	$	2,301,238	$	166,656	$	(3,283	)	$	2,464,611

All of our available-for-sale mortgage- and asset-backed securities represent variable interests in variable interest entities (“VIEs”). We are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact the entities’ economic performance. The maximum exposure to loss as a result of our involvement in these VIEs equals the carrying value of the securities.

The scheduled maturity distribution of the available-for-sale fixed-maturity portfolio as of June 30, 2021 was as follows:

	Amortized cost		Fair value
	(In thousands)
Due in one year or less	$	193,366	$	196,393
Due after one year through five years		813,251		868,694
Due after five years through 10 years		632,788		666,528
Due after 10 years		253,988		270,026
		1,893,393		2,001,641
Mortgage- and asset-backed securities		497,864		512,944
Total AFS fixed-maturity securities	$	2,391,257	$	2,514,585

Expected maturities may differ from scheduled contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties.

Trading Securities. The cost and fair value of the securities classified as trading securities were as follows:

Held-to-maturity Security. Concurrent with the execution of the Vidalia Re Coinsurance Agreement, Vidalia Re entered into a Surplus Note Purchase Agreement (the “Surplus Note Purchase Agreement”) with Hannover Life Reassurance Company of America and certain of its affiliates (collectively, “Hannover Re”) and a newly formed limited liability company (the “LLC”) owned by a third- party service provider. Under the Surplus Note Purchase Agreement, Vidalia Re issued a surplus note (the “Surplus Note”) to the LLC in exchange for a credit enhanced note from the LLC with an equal principal amount (the “LLC Note”). The principal amount of both the LLC Note and the Surplus Note will fluctuate over time to coincide with the amount of reserves contractually supported under the Vidalia Re Coinsurance Agreement. Both the LLC Note and the Surplus Note mature on December 31, 2030 and bear interest at an annual interest rate of 4.50%. The LLC Note is guaranteed by Hannover Re through a credit enhancement feature in exchange for a fee, which is reflected in interest expense on our unaudited condensed consolidated statements of income.

The LLC is a VIE as its owner does not have an equity investment at risk that is sufficient to permit the LLC to finance its activities without Vidalia Re or Hannover Re. The Parent Company, Primerica Life, and Vidalia Re share the power to direct the activities of the LLC with Hannover Re, but do not have the obligation to absorb losses or the right to receive any residual returns related to the LLC’s primary risks or sources of variability. Through the credit enhancement feature, Hannover Re is the ultimate risk taker in this transaction and bears the obligation to absorb the LLC’s losses in the event of a Surplus Note default in exchange for the fee. Accordingly, the Company is not the primary beneficiary of the LLC and does not consolidate the LLC within its unaudited condensed consolidated financial statements.

The LLC Note is classified as a fixed-maturity held-to-maturity security in the Company’s invested asset portfolio as we have the positive intent and ability to hold the security until maturity. As of June 30, 2021, the LLC Note had an estimated unrealized holding gain of $204.1 million based on its amortized cost and estimated fair value. The estimated fair value of the LLC Note is expected to be at least equal to the estimated fair value of the offsetting Surplus Note. See Note 12 (Debt) for more information on the Surplus Note.

As of June 30, 2021, no credit losses have been recognized on the LLC Note held-to-maturity security.

Investments on Deposit with Governmental Authorities. As required by law, we have investments on deposit with governmental authorities and banks for the protection of policyholders. The fair values of investments on deposit were $7.6 million and $7.7 million as of June 30, 2021 and December 31, 2020, respectively.

Securities Lending Transactions. We participate in securities lending transactions with broker-dealers and other financial institutions to increase investment income with minimal risk. We require minimum collateral on securities loaned equal to 102% of the fair value of the loaned securities. We accept collateral in the form of securities, which we are not able to sell or encumber, and to the extent the collateral declines in value below 100%, we require additional collateral from the borrower. Any securities collateral received is not reflected on our unaudited condensed consolidated balance sheets. We also accept collateral in the form of cash, all of which we reinvest. For loans involving unrestricted cash collateral, the collateral is reported as an asset with a corresponding liability representing our obligation to return the collateral. We continue to carry the loaned securities as invested assets on our unaudited condensed consolidated balance sheets during the terms of the loans, and we do not report them as sales. Cash collateral received and reinvested was $80.6 million and $72.2 million as of June 30, 2021 and December 31, 2020, respectively.

	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
	(In thousands)
Fixed-maturity securities (available-for-sale)	$	20,155		$	20,213		$	40,175		$	40,997
Fixed-maturity security (held-to-maturity)		15,495			14,074			30,642			27,546
Equity securities		411			461			803			912
Policy loans and other invested assets		98			541			329			730
Cash and cash equivalents		156			143			275			986
Total return on deposit asset underlying 10% coinsurance agreement⁽¹⁾		1,068			3,653			1,643			(896	)
Gross investment income		37,383			39,085			73,867			70,275
Investment expenses		(1,353	)		(2,301	)		(2,637	)		(4,599	)
Investment income net of investment expenses		36,030			36,784			71,230			65,676
Interest expense on surplus note		(15,495	)		(14,074	)		(30,642	)		(27,546	)
Net investment income	$	20,535		$	22,710		$	40,588		$	38,130

The components of net realized investment gains (losses) recognized in net income as well as details on gross realized investment gains and losses were as follows:

	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
	(In thousands)
Net realized investment gains (losses):
Gross gains from sales of available-for-sale securities	$	3,213		$	827		$	3,978		$	1,183
Gross losses from sales of available-for-sale securities		(1,804	)		(51	)		(1,947	)		(116	)
Credit losses on available-for-sale securities		(704	)		(545	)		(858	)		(4,246	)
Net gains (losses) recognized in net income during the period on equity securities		112			1,547			1,536			(5,125	)
Gains (losses) from bifurcated options		(33	)		(36	)		(50	)		16
Gains (losses) on trading securities		(83	)		-			(192	)		-
Net realized investment gains (losses)	$	701		$	1,742		$	2,467		$	(8,288	)

The proceeds from sales or other redemptions of available-for-sale securities were as follows:

The components of net gains (losses) recognized in net income on equity securities still held as of period-end were as follows:

	Three months ended June 30,					Six months ended June 30,
	2021		2020			2021		2020
	(In thousands)
Net gains (losses) recognized in net income during the period on equity securities	$	112	$	1,547		$	1,536	$	(5,125	)
Less: Net gains (losses) recognized on equity securities sold		-		(191	)		-		(191	)
Net gains (losses) recognized in net income on equity securities still held as of period-end	$	112	$	1,738		$	1,536	$	(4,934	)

Accrued Interest. Accrued interest is recorded in accordance with the original interest schedule of the underlying security. In the event of default, the Company’s policy is to no longer accrue interest on these securities and any remaining accrued interest will be written off. As a result, the Company has made the policy election to not record an allowance for credit losses on accrued interest.

Credit Losses for Available-for-sale Securities. The following table summarize all AFS securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of June 30, 2021, aggregated by major security type and length of time such securities have continuously been in an unrealized loss position:

	June 30, 2021
	Less than 12 months					12 months or longer
	Fair value		Unrealized losses			Fair value		Unrealized losses
	(Dollars in thousands)
Fixed-maturity securities:
U.S. government and agencies	$	1,587	$	(19	)	$	-	$	-
Foreign government		8,660		(454	)		-		-
States and political subdivisions		9,747		(81	)		-		-
Corporates		177,513		(4,299	)		14,239		(218	)
Residential mortgage-backed securities		46,207		(475	)		441		(1	)
Commercial mortgage-backed securities		10,419		(65	)		129		(1	)
Other asset-backed securities		12,569		(44	)		4,512		(96	)
Total fixed-maturity securities		266,702		(5,437	)		19,321		(316	)
Short-term investments:
U.S. government and agencies		40,325		(2	)		-		-
Total short-term investments		40,325		(2	)		-		-
Total fixed-maturity securities and short-term investments	$	307,027	$	(5,439	)	$	19,321	$	(316	)

	December 31, 2020
	Less than 12 months					12 months or longer
	Fair value		Unrealized losses			Fair value		Unrealized losses
	(Dollars in thousands)
Fixed-maturity securities:
U.S. government and agencies	$	1,619	$	(3	)	$	-	$	-
Foreign government		4,034		(39	)		-		-
States and political subdivisions		449		(1	)		-		-
Corporates		68,057		(1,628	)		11,964		(917	)
Residential mortgage-backed securities		1,672		(35	)		862		(19	)
Commercial mortgage-backed securities		10,200		(50	)		2,168		(6	)
Other asset-backed securities		11,988		(536	)		3,150		(49	)
Total fixed-maturity securities	$	98,019	$	(2,292	)	$	18,144	$	(991	)

The amortized cost of available-for-sale fixed-maturity securities with a cost basis in excess of their fair values were $332.1 million and $119.4 million as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021, we did not recognize credit losses in the unaudited condensed consolidated statements of income on available-for-sale securities with unrealized losses that were due to interest rate sensitivity and changes in credit spreads. We believe that fluctuations caused by movement in interest rates and credit spreads generally have little bearing on the recoverability of our investments. For those that remain in an unrealized loss position we have the ability to hold these investments until maturity or a market price recovery, and we have no present intention to dispose them.

For the three and six months ended June 30, 2021, we recorded a total of $0.7 million and $0.9 million, respectively, and for the three and six months ended June 30, 2020, we recorded a total of $0.5 million and $4.2 million, respectively, for credit losses in the unaudited condensed consolidated statements of income on available-for-sale securities. Of these credit losses, there were no adjustments made to the amortized cost basis for the three and six months ended June 30, 2021, and approximately $0.1 million and $3.8 million were recorded as an adjustment to amortized costs due to our intent to sell securities of specific issuers that operate in distressed industry sectors for the three and six months ended June 30, 2020, respectively. We recognized credit losses on securities due to: (i) our intent to sell them; (ii) adverse credit events indicating that we will not receive the security’s contractual cash flows when contractually due, such as news of an impending filing for bankruptcy; (iii) analyses of the issuer’s most recent financial statements or other information indicating that significant liquidity deficiencies, significant losses and large declines in capitalization exist; and (iv) analyses of rating agency information for issuances with severe ratings downgrades indicating a significant increase in the possibility of default.

The rollforward of the allowance for credit losses on available-for-sale securities were as follows:

	Three months ended June 30,					Six months ended June 30,
	2021		2020			2021		2020
	(In thousands)
Allowance for credit losses, beginning of period	$	154	$	37		$	-	$	-
Additions to the allowance for credit losses on securities for which credit losses were not previously recorded		-		465			154		502
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period		704		(37	)		704		(37	)
Allowance for credit losses, end of period	$	858	$	465		$	858	$	465

Derivatives. We carry a deferred loss related to closed forward contracts, which were settled several years ago, that were used to mitigate our exposure to foreign currency exchange rates that resulted from the net investment in our Canadian operations. The amount of deferred loss included in accumulated other comprehensive income was $26.4 million as of June 30, 2021 and December 31, 2020. These deferred losses will not be recognized until such time as we sell or substantially liquidate our Canadian operations; although we have no such intention.