6. FINANCIAL GUARANTEES IN FORCE

Financial guarantees outstanding includes the exposures of policies that insure variable interest entities (“VIEs”) consolidated in accordance with ASC Topic 810, Consolidation. Financial guarantees outstanding includes the exposure of policies that insure capital appreciation bonds which are reported at the par amount at the time of issuance of the insurance policy as opposed to the current accreted value of the bonds. Financial guarantees outstanding exclude the exposures of policies that insure bonds which have been called, pre-refunded or refunded. The gross par amount of financial guarantees outstanding was $67,140,000 and $86,373,000 at December 31, 2017 and 2016, respectively. The par amount of financial guarantees outstanding, net of reinsurance, was $62,716,000 and $79,346,000 at December 31, 2017 and 2016, respectively.

As of December 31, 2017 and 2016, the guarantee portfolio was diversified by type of guaranteed bond as shown in the following table:



Net Par Outstanding December 31,	2017		2016
Public Finance:
Lease and tax-backed revenue	$	11,893,000	$	15,688,000
Housing revenue	6,312,000		6,508,000
General obligation	6,257,000		9,867,000
Utility revenue	2,212,000		4,298,000
Transportation revenue	2,002,000		3,860,000
Higher education	1,642,000		2,339,000
Health care revenue	807,000		1,484,000
Other	963,000		1,018,000
Total Public Finance	32,088,000		45,062,000
Structured Finance:
Mortgage-backed and home equity	7,267,000		9,383,000
Investor-owned utilities	3,274,000		3,833,000
Student loan	1,238,000		1,388,000
Asset-backed ⁽¹⁾	443,000		565,000
CDOs	33,000		132,000
Other	1,561,000		1,650,000
Total Structured Finance	13,816,000		16,951,000
International Finance:
Investor-owned and public utilities	5,696,000		6,168,000
Sovereign/sub-sovereign	5,664,000		5,211,000
Asset-backed ⁽¹⁾	2,609,000		2,951,000
Transportation	1,777,000		1,700,000
Mortgage-backed and home equity	246,000		254,000
CDOs	—		186,000
Other	820,000		863,000
Total International Finance	16,812,000		17,333,000
Total	$	62,716,000	$	79,346,000


(1)	At December 31, 2017 and 2016, all asset-backed net par amounts outstanding relate to commercial asset-based transactions.

As of December 31, 2017 and 2016, the International Finance guaranteed portfolio by location of risk was as outlined in the table below:



Net Par Outstanding December 31,	2017		2016
United Kingdom	$	13,554,000	$	12,798,000
Italy	877,000		898,000
Austria	770,000		696,000
Australia	608,000		1,393,000
France	329,000		286,000
Internationally diversified ⁽¹⁾	368,000		648,000
Other international	306,000		614,000
Total International Finance	$	16,812,000	$	17,333,000


(1)	Internationally diversified obligations represent pools of geographically diversified exposures which may include components of U.S. exposure.

Gross financial guarantees in force (principal and interest) were $108,550,000 and $137,745,000 at December 31, 2017 and 2016, respectively. Net financial guarantees in force (after giving effect to reinsurance) were $101,223,000 and $126,306,000 as of December 31, 2017 and 2016, respectively.

In the United States, California, New York and New Jersey were the states with the highest aggregate net par amounts in force, accounting for 10.1%, 5.8% and 5.2% of the total at December 31, 2017, respectively. No other state accounted for more than 5.0%. The highest single insured risk represented 2.6% of the aggregate net par amount guaranteed.