Cigna 2013 Annual Report Download - page 129

PART II
ITEM 8. Financial Statements and Supplementary Data
The average recorded investment in impaired loans was $127 million mortgage loans had been received in accordance with the original
during 2013 and $167 million during 2012. The Company terms was not significant for 2013 or 2012. Interest income on
recognizes interest income on problem mortgage loans only when impaired commercial mortgage loans was not significant for 2013 or
payment is actually received because of the risk profile of the 2012. See Note 2 for further information on impaired commercial
underlying investment. Interest income that would have been mortgage loans.
reflected in net income if interest on non-accrual commercial
The following table summarizes the changes in valuation reserves for commercial mortgage loans:
(In millions) 2013 2012
Reserve balance, January 1, $7$19
Increase in valuation reserves 410
Charge-offs upon sales and repayments, net of recoveries (3) (3)
Transfers to other long-term investments – (16)
Transfers to foreclosed real estate – (3)
RESERVE BALANCE, DECEMBER 31, $8$7
C. Real Estate
As of December 31, 2013 and 2012, real estate investments consisted primarily of office and industrial buildings in California. Investments with a
carrying value of $63 million as of December 31, 2013 and $49 million as of December 31, 2012 were non-income producing during the
preceding twelve months. As of December 31, 2013, the Company had commitments to contribute additional equity of $3 million to real estate
investments.
D. Other Long-Term Investments
As of December 31, other long-term investments consisted of the following:
(In millions) 2013 2012
Real estate entities $ 812 $ 823
Securities partnerships 357 343
Other 104 89
TOTAL $ 1,273 $ 1,255
Investments in real estate entities and securities partnerships with a
E. Short-Term Investments and Cash
carrying value of $154 million at December 31, 2013 and
Equivalents
$199 million at December 31, 2012 were non-income producing
Short-term investments and cash equivalents included corporate
during the preceding twelve months.
securities of $2.2 billion, federal government securities of
As of December 31, 2013, the Company had commitments to $323 million and money market funds of $35 million as of
contribute: December 31, 2013. The Company’s short-term investments and cash
$305 million to limited liability entities that hold either real estate equivalents as of December 31, 2012 included corporate securities of
or loans to real estate entities that are diversified by property type $1.1 billion, federal government securities of $167 million and money
and geographic region; and market funds of $217 million.
$338 million to entities that hold securities diversified by issuer and
maturity date.
F. Concentration of Risk
The Company expects to disburse approximately 63% of the As of December 31, 2013 and 2012, the Company did not have a
committed amounts in 2014. concentration of investments in a single issuer or borrower exceeding
10% of shareholders’ equity.
Derivative Financial Instruments
The Company uses derivative financial instruments to manage the Reinsurance segment that are accounted for as freestanding
characteristics of investment assets to meet the varying demands of the derivatives. The Company also used derivative financial instruments
related insurance and contractholder liabilities. The Company has to manage the equity, foreign currency, and certain interest rate risk
written and purchased reinsurance contracts under its Run-off exposures of its Run-off Reinsurance segment until February 4, 2013
CIGNA CORPORATION - 2013 Form 10-K 97
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NOTE 12