PART II ITEM 8 Financial Statements and Supplementary Data Impaired commercial mortgage loans.  The carrying value of the Company’s impaired commercial mortgage loans and related valuation reserves were as follows: During 2012, the Company recorded a $10 million pre-tax ($7 million after-tax) increase in valuation reserves on three impaired commercial mortgage loans collateralized by industrial properties and one impaired commercial mortgage loan collateralized by a retail property. The average recorded investment in impaired loans was $167 million during 2012 and $176 million during 2011. The Company recognizes interest income on problem mortgage loans only when payment is actually received because of the risk profile of the underlying investment. Additional interest income that would have been reflected in net income if interest on non-accrual commercial mortgage loans had been received in accordance with the original terms was not significant for 2012 or 2011. Interest income on impaired commercial mortgage loans was not significant for 2012 or 2011. See Note 2 for further information on impaired commercial mortgage loans. The following table summarizes the changes in valuation reserves for commercial mortgage loans: As of December 31, 2012 and 2011, real estate investments consisted primarily of office and industrial buildings in California. Investments with a carrying value of $49 million as of December 31, 2012 and 2011 were non-income producing during the preceding twelve months. As of December 31, 2012, the Company had commitments to contribute additional equity of $7 million to real estate investments. As of December 31, other long-term investments consisted of the following: Investments in real estate entities and securities partnerships with a carrying value of $199 million at December 31, 2012 and $171 million at December 31, 2011 were non-income producing during the preceding twelve months. As of December 31, 2012, the Company had commitments to contribute: The Company expects to disburse approximately 50% of the committed amounts in 2013. (In millions) 2012 2011 Real estate entities $ 823 $ 665 Securities partnerships 343 298 Interest rate and foreign currency swaps 6 12 Mezzanine loans 31 31 Other 52 52 TOTAL $ 1,255 $ 1,058 $312 million to entities that hold securities diversified by issuer and maturity date. GLYPH<127> $197 million to limited liability entities that hold either real estate or loans to real estate entities that are diversified by property type and geographic region; and GLYPH<127> C. Real Estate D. Other Long-Term Investments (In millions) 2012 2011 Reserve balance, January 1, $ 19 $ 12 Increase in valuation reserves 10 16 Charge-offs upon sales and repayments, net of recoveries (3) (1) Transfers to other long-term investments (16) - Transfers to foreclosed real estate (3) (8) RESERVE BALANCE, DECEMBER 31, $ 7 $ 19 2012 2011 (In millions) Gross Reserves Net Gross Reserves Net Impaired commercial mortgage loans with valuation reserves $ 72 $ (7) $ 65 $ 154 $ (19) $ 135 Impaired commercial mortgage loans with no valuation reserves 60 - 60 60 - 60 TOTAL $ 132 $ (7) $ 125 $ 214 $ (19) $ 195 CIGNA CORPORATION -  2012 Form  10-K 105