4. Investments

(a) Fixed Maturities, Short-Term Investments and Equities

The cost, gross unrealized gains, gross unrealized losses and fair value of investments classified as trading securities at December 31, 2015 and 2014 were as follows (in thousands of U.S. dollars):



December 31, 2015	Cost ⁽¹⁾		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturities
U.S. government and government sponsored enterprises	$	2,887,000	$	4,253	$	(18,408	)	$	2,872,845
U.S. states, territories and municipalities	743,413		39,543		(4,630		)	778,326
Non-U.S. sovereign government, supranational and government related	1,271,416		71,399		(9,890		)	1,332,925
Corporate	5,035,006		138,678		(87,485		)	5,086,199
Asset-backed securities	1,040,144		13,341		(15,669		)	1,037,816
Residential mortgage-backed securities	2,287,173		41,154		(37,687		)	2,290,640
Other mortgage-backed securities	49,667		1,025		(1,181		)	49,511
Fixed maturities	$	13,313,819	$	309,393	$	(174,950	)	$	13,448,262
Short-term investments	46,689		33		(34		)	46,688
Equities	418,428		71,328		(45,895		)	443,861
Total	$	13,778,936	$	380,754	$	(220,879	)	$	13,938,811



December 31, 2014	Cost ⁽¹⁾		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturities
U.S. government and government sponsored enterprises	$	2,308,264	$	13,350	$	(6,192	)	$	2,315,422
U.S. states, territories and municipalities	511,228		21,058		(1,683		)	530,603
Non-U.S. sovereign government, supranational and government related	1,866,915		112,029		(2,742		)	1,976,202
Corporate	5,363,006		263,349		(22,195		)	5,604,160
Asset-backed securities	1,110,393		23,131		(2,104		)	1,131,420
Residential mortgage-backed securities	2,276,200		56,875		(26,599		)	2,306,476
Other mortgage-backed securities	53,627		1,487		(652		)	54,462
Fixed maturities	$	13,489,633	$	491,279	$	(62,167	)	$	13,918,745
Short-term investments	25,699		4		(25		)	25,678
Equities	843,429		240,667		(27,582		)	1,056,514
Total	$	14,358,761	$	731,950	$	(89,774	)	$	15,000,937


(1)	Cost is amortized cost for fixed maturities and short-term investments and cost for equity securities.

(b) Maturity Distribution of Fixed Maturities and Short-Term Investments

The distribution of fixed maturities and short-term investments at December 31, 2015, by contractual maturity date, is shown below (in thousands of U.S. dollars). Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.



	Amortized Cost		Fair Value
One year or less	$	556,422	$	555,956
More than one year through five years	4,552,338		4,608,744
More than five years through ten years	3,336,663		3,341,696
More than ten years	1,538,101		1,610,587
Subtotal	$	9,983,524	$	10,116,983
Mortgage/asset-backed securities	3,376,984		3,377,967
Total	$	13,360,508	$	13,494,950

The components of the net realized and unrealized investment (losses) gains for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands of U.S. dollars):



	2015			2014			2013
Net realized investment gains on fixed maturities and short-term investments	$	66,296		$	120,734		$	118,575
Net realized investment gains on equities	137,609			98,733			75,217
Net realized investment (losses) gains on other invested assets	(33,317		)	(20,686		)	20,497
Change in net unrealized investment gains (losses) on other invested assets	844			(58,180		)	56,652
Change in net unrealized investment (losses) gains on fixed maturities and short-term investments	(276,776		)	228,781			(525,787		)
Change in net unrealized investment (losses) gains on equities	(187,561		)	2,605			118,010
Net other realized and unrealized investment gains (losses)	1,053			(3,624		)	(2,107		)
Net realized and unrealized investment (losses) gains on funds held – directly managed	(5,627		)	3,433			(21,792		)
Total net realized and unrealized investment (losses) gains	$	(297,479	)	$	371,796		$	(160,735	)

(d) Net Investment Income

The components of net investment income for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands of U.S. dollars):



	2015			2014			2013
Fixed maturities	$	425,541		$	443,414		$	446,299
Short-term investments and cash and cash equivalents	854			868			1,886
Equities	30,739			40,326			32,989
Funds held and other	27,406			33,192			34,215
Funds held – directly managed	11,676			13,841			20,502
Investment expenses	(46,432		)	(51,945		)	(51,524		)
Net investment income	$	449,784		$	479,696		$	484,367

Other than the funds held – directly managed account, the Company generally earns investment income on funds held by reinsured companies based upon a predetermined interest rate, either fixed contractually at the inception of the contract or based upon a recognized index (e.g., LIBOR). Interest rates ranged from 0.1% to 8.0% for the year ended December 31, 2015, from 2.1% to 5.4% for the year ended December 31, 2014 and from 1.8% to 4.3% for the year ended December 31, 2013. See Note 5 for additional information on the funds held – directly managed account.

(e) Pledged and Restricted Assets

At December 31, 2015 and 2014, approximately $164.8 million and $172.3 million, respectively, of cash and cash equivalents and approximately $2,168.3 million and $2,455.6 million, respectively, of securities were deposited, pledged or held in escrow accounts in favor of ceding companies and other counterparties or government authorities to comply with reinsurance contract provisions and insurance laws.

(f) Net Payable for Securities Purchased

Included within Accounts payable, accrued expenses and other in the Consolidated Balance Sheets at December 31, 2015 and 2014 were amounts of gross receivable balances for securities sold and gross payable balances for securities purchased as follows (in thousands of U.S. dollars):



	2015			2014
Receivable for securities sold	$	34,497		$	51,586
Payable for securities purchased	(219,707		)	(63,779		)
Net payable for securities purchased	$	(185,210	)	$	(12,193	)