(In millions) Balance at January 1, 2011 $ 594 Policyholder gains  (1) 114 Purchases, issuances, settlements: Purchases 257 Sales (51) Settlements (152) Total purchases, sales and settlements 54 Transfers into/(out of) Level 3: Transfers into Level 3 4 Transfers out of Level 3 (16) Total transfers into/(out of) Level 3: (12) Balance at December 31, 2011 $ 750 December 31, 2012 December 31, 2011 Classification in Fair Value Fair Carrying Fair Carrying (In millions) Hierarchy Value Value Value Value Commercial mortgage loans Level 3 $ 2,999 $ 2,851 $ 3,380 $ 3,301 Contractholder deposit funds, excluding universal life products Level 3 $ 1,082 $ 1,056 $ 1,056 $ 1,035 Long-term debt, including current maturities, excluding capital leases Level 2 $ 5,821 $ 4,986 $ 5,319 $ 4,984 (1) Included in this amount are gains of $96 million attributable to instruments still held at the reporting date. down to their fair values, resulting in realized investment losses of $15 million after-tax. Some financial assets and liabilities are not carried at fair value each reporting period, but may be measured using fair value only under certain conditions, such as investments in real estate entities and commercial mortgage loans when they become impaired. During 2012, impaired commercial mortgage loans representing less than 1% of total investments were written down to their fair values, resulting in realized investment losses of $7 million after-tax. Most financial instruments that are subject to fair value disclosure requirements are carried in the Company’s Consolidated Financial Statements at amounts that approximate fair value. The following table provides the fair values and carrying values of the Company’s financial instruments not recorded at fair value that are subject to fair value disclosure requirements at December 31, 2012 and December 31, 2011. During 2011, impaired commercial mortgage loans and real estate entities representing less than 1% of total investments were written The fair values presented in the table above have been estimated using market information when available. The following is a description of the valuation methodologies and inputs used by the Company to determine fair value. Commercial mortgage loans.  The Company estimates the fair value of commercial mortgage loans generally by discounting the contractual cash flows at estimated market interest rates that reflect the Company’s assessment of the credit quality of the loans. Market interest rates are derived by calculating the appropriate spread over comparable U.S. Treasury rates, based on the property type, quality rating and average life of the loan. The quality ratings reflect the relative risk of the loan, considering debt service coverage, the loan-to-value ratio and other factors. Fair values of impaired mortgage loans are based on the estimated fair value of the underlying collateral generally determined using an internal discounted cash flow model. The fair value measurements were classified in Level 3 because the cash flow models incorporate significant unobservable inputs. amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value. Most of the remaining contractholder deposit funds are reinsured by the buyers of the individual life and annuity and retirement benefits businesses. The fair value for these contracts is determined using the fair value of these buyers’ assets supporting these reinsured contracts. The Company had a reinsurance recoverable equal to the carrying value of these reinsured contracts. These instruments were classified in Level 3 because certain inputs are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Long-term debt, including current maturities, excluding capital leases.  The fair value of long-term debt is based on quoted market prices for recent trades. When quoted market prices are not available, fair value is estimated using a discounted cash flow analysis and the Company’s estimated current borrowing rate for debt of similar terms and remaining maturities. These measurements were classified in Level 2 because the fair values are based on quoted market prices or other inputs that are market observable or can be corroborated by market data. Contractholder deposit funds, excluding universal life products. Generally, these funds do not have stated maturities. Approximately 55% of these balances can be withdrawn by the customer at any time without prior notice or penalty. The fair value for these contracts is the Fair values of off-balance-sheet financial instruments were not material. 100 CIGNA CORPORATION -  2012 Form  10-K Fair Value Disclosures for Financial Instruments Not Carried at Fair Value Assets and Liabilities Measured at Fair Value under Certain Conditions PART II ITEM 8 Financial Statements and Supplementary Data