PART II ITEM 8 Financial Statements and Supplementary Data Separate account assets The following tables summarize the change in separate account assets reported in Level 3 for the years ended December 31, 2012 and 2011. Separate account assets in Level 1 include exchange-listed equity securities. Level 2 assets primarily include: (1) As of December 31, 2011, non-guaranteed separate accounts included $3.0 billion in assets supporting the Company’s pension plans, including $702 million classified in Level 3. Separate account assets classified in Level 3 include investments primarily in securities partnerships, real estate and hedge funds generally valued based on the separate account’s ownership share of the equity of the investee including changes in the fair values of its underlying investments. actively-traded institutional and retail mutual fund investments and separate accounts priced using the daily net asset value that is the exit price. GLYPH<127> corporate and structured bonds valued using recent trades of similar securities or pricing models that discount future cash flows at estimated market interest rates as described above; and GLYPH<127> Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and are excluded from the Company’s revenues and expenses. At December 31, separate account assets were as follows: (1) Included in this amount are gains of $49 million attributable to instruments still held at the reporting date. CIGNA CORPORATION -  2012 Form  10-K 99 (1) As of December 31, 2012, non-guaranteed separate accounts included $3.4 billion in assets supporting the Company’s pension plans, including $956 million classified in Level 3. Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2012 (In millions) (Level 1) (Level 2) (Level 3) Total Guaranteed separate accounts (See Note 24) $ 245 $ 324 $ - $ 569 Non-guaranteed separate accounts  (1) 1,925 4,258 1,005 7,188 TOTAL SEPARATE ACCOUNT ASSETS $ 2,170 $ 4,582 $ 1,005 $ 7,757 Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2011 (In millions) (Level 1) (Level 2) (Level 3) Total Guaranteed separate accounts (See Note 24) $ 249 $ 1,439 $ - $ 1,688 Non-guaranteed separate accounts  (1) 1,804 3,851 750 6,405 TOTAL SEPARATE ACCOUNT ASSETS $ 2,053 $ 5,290 $ 750 $ 8,093 (In millions) Balance at January 1, 2012 $ 750 Policyholder gains  (1) 55 Purchases, issuances, settlements: Purchases 283 Sales (6) Settlements (90) Total purchases, sales and settlements 187 Transfers into/(out of) Level 3: Transfers into Level 3 17 Transfers out of Level 3 (4) Total transfers into/(out of) Level 3: 13 Balance at December 31, 2012 $ 1,005