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, 2022
	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	$	32,924	$	46	$	(718	)	$	32,252
Foreign government		159,464		623		(10,255	)		149,832
States and political subdivisions		143,750		247		(14,457	)		129,540
Corporates		1,650,504		3,338		(136,869	)		1,516,973
Residential mortgage-backed securities		484,034		701		(45,673	)		439,062
Commercial mortgage-backed securities		145,360		6		(9,861	)		135,505
Other asset-backed securities		161,784		182		(10,665	)		151,301
Total fixed-maturity securities		2,777,820		5,143		(228,498	)		2,554,465
Short-term investments		3,311		-		-			3,311
Total fixed-maturity securities and short-term investments	$	2,781,131	$	5,143	$	(228,498	)	$	2,557,776

	December 31, 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	$	32,292	$	187	$	(79	)	$	32,400
Foreign government		147,288		6,283		(595	)		152,976
States and political subdivisions		147,455		6,326		(254	)		153,527
Corporates		1,649,334		72,418		(8,068	)		1,713,684
Residential mortgage-backed securities		373,753		5,108		(3,230	)		375,631
Commercial mortgage-backed securities		142,631		3,314		(420	)		145,525
Other asset-backed securities		128,635		1,409		(1,220	)		128,824
Total fixed-maturity securities		2,621,388		95,045		(13,866	)		2,702,567
Short-term investments		85,246		1		(4	)		85,243
Total fixed-maturity and short-term investments	$	2,706,634	$	95,046	$	(13,870	)	$	2,787,810

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, 2022 was as follows:

	Amortized cost		Fair value
	(In thousands)
Due in one year or less	$	210,474	$	210,206
Due after one year through five years		762,311		737,052
Due after five years through 10 years		737,704		649,755
Due after 10 years		276,153		231,584
		1,986,642		1,828,597
Mortgage- and asset-backed securities		791,178		725,868
Total AFS fixed-maturity securities	$	2,777,820	$	2,554,465

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. See Note 5 (Reinsurance) for Hannover Re’s financial strength rating.

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, 2022, the LLC Note had an estimated unrealized holding loss of $37.2 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.

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 $7.3 million and $7.6 million as of June 30, 2022 and December 31, 2021, 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 $96.6 million and $94.5 million as of June 30, 2022 and December 31, 2021, respectively.

	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(In thousands)
Fixed-maturity securities (available-for-sale)	$	22,414		$	20,155		$	43,303		$	40,175
Fixed-maturity security (held-to-maturity)		15,815			15,495			31,330			30,642
Equity securities		371			411			758			803
Policy loans and other invested assets		58			98			160			329
Cash and cash equivalents		498			156			623			275
Total return on deposit asset underlying 10% coinsurance agreement⁽¹⁾		(769	)		1,068			(2,279	)		1,643
Gross investment income		38,387			37,383			73,895			73,867
Investment expenses		(1,288	)		(1,353	)		(2,376	)		(2,637	)
Investment income net of investment expenses		37,099			36,030			71,519			71,230
Interest expense on surplus note		(15,815	)		(15,495	)		(31,330	)		(30,642	)
Net investment income	$	21,284		$	20,535		$	40,189		$	40,588

The components of investment gains (losses), as well as details on gross realized investment gains (losses) and other investment gains (losses) were as follows:

	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(In thousands)
Realized investment gains (losses):
Gross gains from sales of available-for-sale securities fixed maturity securities	$	420		$	3,213		$	1,022		$	3,978
Gross losses from sales of available-for-sale fixed maturity securities		(364	)		(1,804	)		(390	)		(1,947	)
Net realized investment gains (losses):		56			1,409			632			2,031
Other investment gains (losses):
Credit losses impairment of available-for-sale securities		-			(704	)		81			(858	)
Market gains (losses) recognized in net income during the period on equity securities		(1,949	)		112			(1,833	)		1,536
Gains (losses) from bifurcated options		-			(33	)		-			(50	)
Gains (losses) on trading securities		1			(83	)		(21	)		(192	)
Other investment gains (losses):		(1,948	)		(708	)		(1,773	)		436
Investment gains (losses)	$	(1,892	)	$	701		$	(1,141	)	$	2,467

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

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 summarizes all available-for-sale securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of June 30, 2022, aggregated by major security type and length of time such securities have continuously been in an unrealized loss position:

	June 30, 2022
	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	$	28,438	$	(614	)	$	1,472	$	(104	)
Foreign government		122,160		(7,938	)		6,517		(2,317	)
States and political subdivisions		113,680		(14,386	)		969		(71	)
Corporates		1,192,279		(117,546	)		81,221		(19,323	)
Residential mortgage-backed securities		393,787		(42,970	)		22,195		(2,703	)
Commercial mortgage-backed securities		126,131		(9,235	)		8,004		(626	)
Other asset-backed securities		137,920		(10,154	)		4,317		(511	)
Total fixed-maturity securities		2,114,395		(202,843	)		124,695		(25,655	)
Short-term investments:
U.S. government and agencies		837		-			-		-
Total short-term investments		837		-			-		-
Total fixed-maturity securities and short-term investments	$	2,115,232	$	(202,843	)	$	124,695	$	(25,655	)

	December 31, 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	$	24,928	$	(45	)	$	1,557	$	(34	)
Foreign government		18,894		(384	)		3,335		(211	)
States and political subdivisions		15,909		(254	)		-		-
Corporates		341,963		(5,035	)		59,414		(3,033	)
Residential mortgage-backed securities		234,911		(3,131	)		2,707		(99	)
Commercial mortgage-backed securities		47,220		(419	)		117		(1	)
Other asset-backed securities		80,509		(1,037	)		3,779		(183	)
Total fixed-maturity securities		764,334		(10,305	)		70,909		(3,561	)
Short-term investments:
U.S. government and agencies		34,967	*				-		-
Foreign government		4,995	*				-		-
States and political subdivisions		11,394		(1	)		-		-
Corporates		23,891		(3	)		-		-
Total short-term investments		75,247		(4	)		-		-
Total fixed-maturity securities and short-term investments	$	839,581	$	(10,309	)	$	70,909	$	(3,561	)

The amortized cost of available-for-sale fixed-maturity securities with a cost basis in excess of their fair values were $2.5 billion and $924.4 million as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022, 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. The sharp increase in interest rates during the six months ended June 30, 2022 was the primary driver of the increase in unrealized losses on available-for-sale securities.

For the three months ended June 30, 2022, we did not recognize any credit (gains) losses in the unaudited condensed consolidated statements of income on available-for-sale securities. For the six months ended June 30, 2022, we recorded a total of $(0.1) million for credit (gains) losses in the unaudited condensed consolidated statements of income on available-for-sale securities. For the three and six months ended June 30, 2021, we recorded a total of $0.7 million and $0.9 million, respectively, for credit (gains) losses in the unaudited condensed consolidated statements of income on available-for-sale securities. 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,
	2022			2021		2022			2021
	(In thousands)
Allowance for credit losses, beginning of period	$	735		$	154	$	816		$	-
Additions to the allowance for credit losses on securities for which credit losses were not previously recorded		-			-		-			154
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period		-			704		(81	)		704
Write-offs charged against the allowance, if any		(735	)		-		(735	)		-
Allowance for credit losses, end of period	$	-		$	858	$	-		$	858

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, 2022 and December 31, 2021. These deferred losses will not be recognized until such time as we sell or substantially liquidate our Canadian operations. We have no such intention.