<PAGE>
Registration No. 33-63731
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust: ICMG Registered Variable Life Separate Account One
B. Name of depositor: ITT Hartford Life and Annuity Insurance Company
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and address of agent for service:
Scott K. Richardson, Esquire
ITT Hartford Life Insurance Companies
P.O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on May 1, 1996 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment
E. Title and amount of securities being registered:
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant is registering an indefinite amount of securities.
Registrant will file the Rule 24f-2 Notice upon completion of its first
complete fiscal year.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of Filing Fee: Paid
H. Approximate date of proposed public offering:
As soon as practicable after the effective date of this registration
statement.
<PAGE>
-3-
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ----------------------
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Policies
5. Summary; The Separate Account
6. The Separate Account
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Funds; Detailed
Description of Certificate Benefits and
Provisions; Other Matters - Voting Rights,
Dividends
11. Summary; The Funds
12. Summary; The Funds
13. Deductions and Charges from the Investment
Value; Distribution of the Policies;
Federal Tax Considerations
14. Detailed Description of Certificate Benefits
and Provisions - Enrollment for a Certificate
<PAGE>
-4-
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ----------------------
15. Detailed Description of Certificate Benefits
and Provisions - Allocation of Premium
Payments
16. The Funds; Detailed Description of
Certificate Benefits and Provisions -
Allocation of Premium Payments
17. Summary; Detailed Description of Certificate
Benefits and Provisions - Value Under the
Certificate and Surrender of the Certificate,
The Right to Examine the Certificate
18. The Funds; Detailed Description of
Certificate Benefits and Provisions -
Deduction and Charges from the Account
Value; Federal Tax Considerations
19. Other Matters - Statements to Owners
20. Not applicable
21. Detailed Description of Certificate Benefits
and Provisions - Loans
22. Not applicable
23. Safekeeping of the Separate Account's Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company; Executive Officers and
Directors
29. The Company
30. Not applicable
<PAGE>
-5-
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ----------------------
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of the Policies
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Policies
39. The Company; Distribution of the Policies
40. Not applicable
41. The Company; Distribution of the Policies
42. Not applicable
43. Not applicable
44. Detailed Description of Certificate Benefits
and Provisions - Allocation of Premium
Payments
45. Not applicable
46. Detailed Description of Certificate Benefits
and Provisions - Values Under the Certificate
47. The Funds
48. Cover page; The Company
49. Not applicable
<PAGE>
-6-
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
----------- ----------------------
50. The Separate Account
51. Summary; The Company; Detailed Description
of Certificate Benefits and Provisions
52. The Funds - General
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
ITT HARTFORD LIFE AND ENDEAVOR I
ANNUITY INSURANCE COMPANY Flexible Premium
P.O. Box 2999 Variable Life Insurance
Hartford, CT 06104-2999 Group Policies
Telephone (800) 243-5433
This Prospectus describes a group flexible premium variable life insurance
policy (the "Group Policies", and each individually a "Group Policy") and
certificates of insurance (the "Certificates," and each individually a
"Certificate") offered by ITT Hartford Life and Annuity Insurance Company
("ITT Hartford"). The Certificates are designed to provide lifetime insurance
coverage to the Insured(s) named in the Certificates, and maximum flexibility
in connection with premium payments and Death Benefits, together with an
opportunity to participate in the investment experience of ICMG Registered
Variable Life Separate Account One. For a given amount of Death Benefit
chosen, the Owner has considerable flexibility in selecting the timing and
amount of premium payments. In addition to the Initial Premium payment,
additional premium payments are also allowed.
Group Policies may be issued to a Participating Employer or to a trust that
is adopted by a Participating Employer. Eligible employees of Participating
Employers may own Certificates issued under their respective Participating
Employer's Group Policy. Unless the Certificate provides otherwise, the
persons covered under the Group Policy (the "Owners") possess all rights and
interests under the Group Policy. The Owners are provided with the
Certificates, which describe each Owner's rights, benefits, and options under
the Group Policy. The Owner of a Certificate is the Insured unless another
owner has been named in the enrollment form for the Certificate.
Sales agents can provide prospective purchasers with individualized sales
illustrations which reflect all the fees and charges associated with the
Certificate options selected.
The Certificates provide for a Death Benefit, pursuant to which Death
Proceeds are payable at the Insured's death. You may select one of two death
benefit options. Death Benefit option A is an amount equal to the larger of
(1) the Face Amount and (2) the Variable Insurance Amount. Death Benefit
option B is an amount equal to the larger of (1) the Face Amount plus the Cash
Value and (2) the Variable Insurance Amount. The Death Proceeds payable to the
Beneficiary equal the Death Benefit less any Debt outstanding under the
Certificate plus any rider benefits payable.
The Investment Value of a Certificate will also vary up or down to reflect
the investment experience of the Investment Divisions to which Net Premiums
have been allocated. The Owner bears the investment risk for all amounts so
allocated.
Depending upon the state of issuance of the Certificate and the applicable
provisions of the Certificate, Your initial Net Premium will, when Your
Certificate is issued, either be (i) invested in the HVA Money Market
Investment Division during the right to examine period or (ii) invested
immediately in Your chosen Investment Divisions, upon Our receipt thereof. If
Your initial Net Premium is invested immediately in Your chosen Investment
Divisions, You will bear full investment risk for any amounts allocated to the
Investment Divisions during the 10 day right to examine period. Please note
that this automatic immediate investment feature only applies if Your
Certificate so specifies. Please check with Your agent to determine the status
of Your Certificate. You must fill out and send Us the appropriate form or
comply with other designated ITT Hartford procedures if You would like to
change how subsequent Net Premiums are allocated.
The Portfolios underlying the Investment Divisions presently are: the
Hartford Bond Portfolio, Hartford Capital Appreciation Portfolio and HVA Money
Market Portfolio of the Hartford Funds; the N&B Partners Portfolio, N&B
Balanced Portfolio and N&B Limited Maturity Bond Portfolio of the Neuberger &
Berman Trust; the Fidelity Equity Income Portfolio, Fidelity High Income
Portfolio and Fidelity Overseas Portfolio of the VIP Fund; the Fidelity Asset
Manager Portfolio of the VIP Fund II; and the Alger American Small
Capitalization Portfolio and the Alger American Growth Portfolio of the Alger
American Fund.
------------------------------------------------------------------------------
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY
OWN A FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
------------------------------------------------------------------------------
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE APPLICABLE ELIGIBLE FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS.
ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
The date of this Prospectus is June xx, 1996.
------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SPECIAL TERMS........................................................... 4
SUMMARY................................................................. 6
THE COMPANY............................................................. 8
THE SEPARATE ACCOUNT.................................................... 9
THE FUNDS............................................................... 9
General............................................................... 9
Hartford Mutual Funds............................................... 10
The Neuberger & Berman Advisers Managers Trust...................... 10
Variable Insurance Products Fund and Variable Insurance Products
Fund II............................................................ 10
The Alger American Fund, Inc........................................ 10
The Portfolios........................................................ 11
DETAILED DESCRIPTION OF CERTIFICATE BENEFITS AND PROVISIONS............. 12
General............................................................... 12
Issuance of a Certificate............................................. 12
Premiums.............................................................. 13
Premium Payment Flexibility......................................... 13
Allocation of Premium Payments...................................... 13
Accumulation Units.................................................. 13
Accumulation Unit Values............................................ 14
Premium Limitation.................................................. 14
Values Under the Certificate.......................................... 14
Surrender of the Certificate.......................................... 14
Partial Withdrawals................................................. 15
Transfers Between the Investment Divisions............................ 15
Amount and Frequency of Transfers................................... 15
Transfers to or from Investment Divisions........................... 15
Procedures for Telephone Transfers.................................. 16
Valuation of Payments and Transfers................................... 16
Loans................................................................. 16
Loan Interest....................................................... 16
Credited Interest................................................... 16
Loan Repayments..................................................... 17
Termination Due to Excessive Debt................................... 17
Effect of Loans on Investment Value................................. 17
Death Benefit......................................................... 17
Death Benefit Options............................................... 17
Option Change....................................................... 17
Payment Options..................................................... 18
Legal Developments Regarding Income Payments........................ 18
Beneficiary......................................................... 18
Increases and Decreases in Face Amount.............................. 18
Benefits at Maturity.................................................. 19
Termination of Participation in the Group Policy...................... 19
Lapse and Reinstatement While the Group Policy is in Effect........... 19
Lapse and Grace Period.............................................. 19
Reinstatement....................................................... 20
Enrollment for a Certificate.......................................... 20
The Right to Examine the Certificate................................ 20
Deductions From the Premium........................................... 20
Front-end Sales Load................................................ 20
Premium Related Tax Charge.......................................... 21
DAC Tax Charge...................................................... 21
Deductions and Charges From the Investment Value...................... 21
Monthly Deduction Amounts........................................... 21
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Mortality and Expense Risk Charge................................... 22
Taxes............................................................... 22
OTHER MATTERS........................................................... 22
Additions, Deletions or Substitutions of Investments.................. 22
Voting Rights......................................................... 23
Our Rights............................................................ 23
Statements to Owners.................................................. 24
Limit on Right to Contest............................................. 24
Misstatement as to Age or Sex......................................... 24
Assignment............................................................ 24
Dividends............................................................. 24
Experience Credits.................................................... 24
SUPPLEMENTAL BENEFITS................................................... 25
Maturity Date Extension Rider......................................... 25
EXECUTIVE OFFICERS AND DIRECTORS........................................ 25
DISTRIBUTION OF THE GROUP POLICIES...................................... 27
SAFEKEEPING OF THE SEPARATE ACCOUNT ASSETS.............................. 27
FEDERAL TAX CONSIDERATIONS.............................................. 27
General............................................................... 27
Taxation of the Company and the Separate Account...................... 27
Income Taxation of Certificate Benefits............................... 28
Modified Endowment Contracts.......................................... 28
Diversification Requirements.......................................... 28
Federal Income Tax Withholding........................................ 29
Other Tax Considerations.............................................. 29
LEGAL PROCEEDINGS....................................................... 29
EXPERTS................................................................. 29
REGISTRATION STATEMENT.................................................. 29
APPENDIX A -- ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES..................................................... 30
FINANCIAL STATEMENTS.................................................... 31
</TABLE>
The Group Policies may not be available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
3
<PAGE>
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
an Investment Division.
ADJUSTABLE LOAN INTEREST RATE: The interest rate charged on Loans that is
adjusted from time to time by ITT Hartford. The method of calculation of the
Adjustable Loan Interest Rate is described later in this Prospectus.
ATTAINED AGE: The Issue Age plus the period since the Coverage Date.
CASH SURRENDER VALUE: The Cash Value, less Debt, less any charges accrued but
not yet deducted.
CASH VALUE: The Investment Value plus the Loan Account Value.
CERTIFICATE: The form evidencing and describing the Owner's rights, benefits,
and options under the Group Policy. The Certificate will describe, among other
things, (i) the benefits for the named Insured, (ii) to whom the benefits are
payable and (iii) the limits and other terms of the Group Policy as they pertain
to the Insured.
CERTIFICATE ANNIVERSARY: An anniversary of the Coverage Date.
CHARGE DEDUCTION DIVISION: An Investment Division from which all charges are
deducted if so designated in the enrollment form or later elected.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE DATE: The date insurance under the Certificate is effective as to an
Insured shown in the Specifications and is used to determine Coverage Years and
months from issue.
COVERAGE YEAR(S): The 12 month period following the Coverage Date and each
anniversary thereof.
CUSTOMER SERVICE CENTER: The service area of ITT Hartford Life and Annuity
Insurance Company.
DEATH BENEFIT: The Death Benefit option in effect determines how the Death
Benefit is calculated. The two Death Benefit options provided are described in
the Death Benefit section of this Prospectus.
DEATH PROCEEDS: The Death Benefit less outstanding Debt plus any rider benefits
payable.
DEBT: The aggregate amount of outstanding Loans, plus any interest accrued at
the Adjustable Loan Interest Rate.
FACE AMOUNT: The minimum Death Benefit as long as the Certificate is in force.
It is specified at issue and may be changed after issue on request, or due to a
change in Death Benefit option or a partial withdrawal.
FUNDS: The registered open-end management investment companies in which
assets of the Investment Divisions of the Separate Account may be invested.
Currently, the Funds include: (i) the Hartford Mutual Funds ("The Hartford
Funds"), managed by the Hartford Investment Management Company
("HIMCO"); (ii) the Neuberger & Berman Advisers Management Trust (the "Neuberger
& Berman Trust"), managed by Neuberger & Berman Management Incorporated ("N&B
Management"); (iii) the Variable Insurance Products Fund (the "VIP Fund"),
managed by Fidelity Management & Research Company ("FM&R"); (iv) the Variable
Insurance Products Fund II (the "VIP II Fund"), managed by FM&R; and (v) the
Alger American Fund (the "Alger Fund"), managed by Fred Alger Management, Inc.
("F.A. Management").
GENERAL ACCOUNT: The assets of ITT Hartford other than those allocated to the
Separate Account.
GRACE PERIOD: The 61 day period following the date We mail to the Owner notice
that the Cash Surrender Value is insufficient to pay the charges due. Unless the
Owner has given Us written notice of the termination in advance of the date of
termination of any Certificate, insurance will continue in force during this
period.
GROUP POLICY: The flexible premium variable life insurance contract issued by
ITT Hartford and described in this Prospectus.
ITT HARTFORD (ALSO REFERRED TO AS "WE," "US," "OUR," THE "COMPANY"): ITT
Hartford Life and Annuity Insurance Company.
IN WRITING: In a written form satisfactory to Us.
INITIAL PREMIUM: The amount of premium initially payable shown on Your
Certificate Specifications.
INSURED: The person on whose life the Certificate is issued. The Insured is
identified in the Certificate Specifications.
INVESTMENT DIVISION: A separate division of the Separate Account which invests
exclusively in the shares of a specified Portfolio of a Fund. The Separate
Account currently offers 12 Investment Divisions: (i) the Hartford Bond
Investment Division, (ii) the Hartford Capital Appreciation Investment Division,
(iii) the HVA Money Market Investment Division, (iv) the N&B Appreciation
Investment Division, (v) the N&B Balanced Investment Division, (vi) the N&B
Limited Maturity Bond Investment Division, (vii) the Fidelity Equity Income
Investment Division,
4
<PAGE>
(viii) the Fidelity High Income Investment Division, (ix) the Fidelity Overseas
Investment Division, (x) the Fidelity Asset Manager Investment Division, (xi)
the Alger American Small Capitalization and (xii) the Alger American Growth
Investment Division.
INVESTMENT VALUE: The sum of the values of assets in the Investment Divisions
under the Certificate.
ISSUE AGE: The Insured's age on the birthday nearest to the Coverage Date.
LOAN: Any amount borrowed against the Investment Value under a Certificate.
LOAN ACCOUNT: That portion of the Company's General Account to which amounts are
transferred as a result of a Loan. The Loan Account is credited with interest
and does not participate in the investment experience of the Separate Account.
LOAN ACCOUNT VALUE: The amounts of the Investment Value transferred to (or from)
the General Account to secure Loans, plus interest accrued at the daily
equivalent of an annual rate equal to the Adjustable Loan Interest Rate actually
charged, reduced by not more than 1%.
MATURITY DATE: The date on which an Insured's coverage matures as shown in the
Certificate Specifications. We will pay the Cash Surrender Value, if any, if the
Insured is living on the Maturity Date, upon surrender of the Certificate to ITT
Hartford.
MONTHLY DEDUCTION AMOUNT: The fees and charges deducted from the Investment
Value on the Processing Date.
NET PREMIUM: The amount of premium actually credited to the Investment
Divisions.
NET AMOUNT AT RISK: The Death Benefit less the Cash Value.
NYSE: The New York Stock Exchange.
OWNER (ALSO REFERRED TO AS "YOU" OR "YOUR"): The person or legal entity so
designated in the enrollment form or as subsequently changed. The Owner may be
someone other than the Insured. The Owner possesses all rights under the Group
Policy with respect to the Certificates.
PARTICIPATING EMPLOYER: A participating employer, or a trust sponsored by a
participating employer, to which ITT Hartford issues the Group Policy described
in this Prospectus.
PORTFOLIO: A separate mutual fund of The Hartford Fund or series or portfolio of
the remaining Funds. There are currently 12 Portfolios available under the
Policies: the Hartford Bond, Hartford Capital Appreciation and HVA Money Market
mutual funds of The Hartford Funds; the N&B Appreciation, N&B Balanced and N&B
Limited Maturity Bond portfolios of the Neuberger & Berman Trust; the Fidelity
Equity Income, Fidelity High Income and Fidelity Overseas portfolios of the VIP
Fund; the Fidelity Asset Manager portfolio of the VIP Fund II; and the Alger
American Small Capitalization and Alger American Growth portfolios of The Alger
American Fund.
PRO RATA BASIS: An allocation method based on the proportion of the Investment
Value in each Investment Division.
PROCESSING DATE(S): The day(s) on which We deduct charges from the Investment
Value. The first Processing Date is the Coverage Date. There is a Processing
Date each month. Later Processing Dates are on the same calendar day as the
Coverage Date, or on the last day of any month which has no such calendar day.
PROCESSING PERIOD: The period from the Coverage Date to the next Processing
Date, and thereafter, the period from one Processing Date to the next.
SEC: The Securities and Exchange Commission.
SEPARATE ACCOUNT: ICMG Registered Variable Life Separate Account One, an account
established by ITT Hartford Life and Annuity Insurance Company to separate the
assets funding the Group Policies from other assets of ITT Hartford Life and
Annuity Insurance Company.
VALUATION DAY: Each business day that ITT Hartford and each of the Funds value
their respective investment portfolios, unless the Certificate Specifications
indicate otherwise. A business day is any day the NYSE is open for trading or
any day the Securities and Exchange Commission (the "SEC") requires mutual
funds, unit investment trusts or other investment portfolios to be valued. The
value of the Separate Account is determined at the close of the NYSE (currently
4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE INSURANCE AMOUNT: The Cash Value multiplied by the applicable variable
insurance factor provided in the Certificate Specifications.
5
<PAGE>
SUMMARY
THE GROUP POLICY
The flexible premium variable life insurance Group Policies, and the
Certificates, offered by this Prospectus are funded by ICMG Registered Variable
Life Separate Account One (the "Separate Account"), a separate account
established by ITT Hartford pursuant to Connecticut insurance law and organized
as a unit investment trust registered under the Investment Company Act of 1940
(the "1940 Act"). The Separate Account is presently comprised of 12 Investment
Divisions, each of which invests exclusively in one of the underlying Portfolios
offered by the Funds.
Depending upon the state of issuance of Your Certificate and the applicable
provisions of Your Certificate, Your initial Net Premium will, when Your
Certificate is issued, either be (1) invested in the HVA Money Market Investment
Division during the right to examine period or (2) invested immediately in Your
chosen Investment Divisions, upon Our receipt thereof. IF YOUR INITIAL NET
PREMIUM IS INVESTED IMMEDIATELY IN YOUR CHOSEN INVESTMENT DIVISIONS, YOU WILL
BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE INVESTMENT DIVISIONS
DURING THE RIGHT TO EXAMINE PERIOD. Please note that this automatic immediate
investment feature only applies if Your Certificate so specifies. Please check
with Your agent to determine the status of Your Certificate. You must fill out
and send Us the appropriate form In Writing or comply with other designated ITT
Hartford procedures if You would like to change how subsequent Net Premiums are
allocated. See "Allocation of Premium Payments," page .
Pursuant to the Certificates, each selected Investment Division is credited
with Accumulation Units and each selected Investment Division's assets are
invested in the applicable underlying Portfolio. Subject to certain
restrictions, an Owner may transfer amounts among the available Investment
Divisions. See "Detailed Description of Certificate Benefits and Provisions --
Transfers Between Investment Divisions," page .
The Group Policies are first and foremost life insurance policies and the
Certificates evidencing an Owner's interest in the Group Policies provide for
death benefits, cash values, and other features traditionally associated with
life insurance. The Group Policies are called "flexible premium" because, once
the desired level and pattern of Death Benefits have been determined, a
purchaser has considerable flexibility in the selection of the timing and amount
of premium to be paid. The Group Policies are called "variable" because, unlike
the fixed benefits of an ordinary whole life insurance policy, the Investment
Value under a Certificate will, and the Death Benefit may, increase or decrease
depending on the investment experience of the Investment Divisions to which the
Net premiums have been allocated. See "Detailed Description of Certificate
Benefits and Provisions -- Death Benefit," page .
DEATH BENEFIT
The Certificates provide for two Death Benefit options. Under Death Benefit
option A, the Death Benefit is an amount equal to the larger of (1) the Face
Amount and (2) the Variable Insurance Amount. Under Death Benefit option B, the
Death Benefit is an amount equal to the larger of (1) the Face Amount plus the
Cash Value and (2) the Variable Insurance Amount. At the death of the Insured,
We will pay the Death Proceeds to the Beneficiary. The Death Proceeds equal the
Death Benefit less outstanding Debt plus any rider benefits payable under the
Certificate. See "Detailed Description of Certificate Benefits and Provisions -
Death Benefit," page .
PREMIUM
You have considerable flexibility as to when and in what amounts You pay
premiums.
No premium payment will be accepted which causes the Certificate to not meet
the tax qualification guidelines for life insurance under the Code.
GENERAL ACCOUNT
Amounts allocated to the Loan Account to secure a Loan become part of the
General Account assets of ITT Hartford. ITT Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
insurance company general accounts. See "Detailed Description of Certificate
Benefits and Provisions -- Loans" for a discussion of Loan repayments, page .
6
<PAGE>
DEDUCTIONS FROM PREMIUM
Prior to the allocation of premiums to the selected Investment Divisions, a
deduction as a percentage of premium is made for the front-end sales load, state
premium taxes, and the Deferred Acquisition Cost ("DAC") tax charge. The amount
of each premium allocated among the Investment Divisions is Your Net Premium.
FRONT-END SALES LOAD
When We receive a Premium Payment, We deduct a front-end sales load. The
current and maximum front-end sales load is 9% of any premium paid for Coverage
Years 1 through 7 and 7% of any premium paid in Coverage Years 8 and later.
Front-end sales loads which cover expenses relating to the sale and
distribution of the Certificates may be reduced for certain sales of the
Certificates under circumstances which may result in savings of such sales and
distribution expenses. For more information concerning the front-end sales load,
see "Deductions from the Premium", page .
LIMITS ON FRONT-END SALES LOADS
The aggregate front-end sales load will not exceed the sales load
limitations specified by the SEC. Certain Federal securities and State insurance
laws and regulations limit the front-end sales loads which can be assessed
against the Certificates. The front-end sales loads assessed in the Certificates
comply with these limitations.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against ITT
Hartford by various states and jurisdictions that are attributable to premiums.
The percentage actually deducted will vary by locale depending on the tax rates
in effect there. The range is generally between 0% and 4%.
DAC TAX CHARGE
The Company deducts 1.25% of each premium to cover a federal premium tax
assessed against the Company. This charge is reasonable in relation to the
Company's federal income tax burden, under Internal Revenue Code Section 848,
resulting from the receipt of premiums. We will adjust the charge based on
changes in the applicable tax law.
DEDUCTIONS AND CHARGES FROM THE INVESTMENT VALUE
As with many other types of insurance policies, each Certificate will have
an Investment Value. The Investment Value of the Certificate will increase or
decrease to reflect the investment experience of the chosen Investment
Divisions, deductions for the Monthly Deduction Amount and any amounts
transferred from the Investment Divisions into the Loan Account. There is no
minimum guaranteed Investment Value and the Owner bears the risk of the
investment in the underlying Fund Portfolios. See "Detailed Description of the
Certificate Benefits and Provisions -- Investment Value," page .
We will subtract amounts from Your Investment Value to provide for the
Monthly Deduction Amount. These will be taken from the Charge Deduction
Division, as specified in the Certificate Specifications, or if no Charge
Deduction Division is selected or if there is insufficient Investment Value in
the Charge Deduction Division, on a Pro Rata Basis from Your chosen Investment
Divisions on each Processing Date.
The Monthly Deduction Amount equals:
(a) the administrative expense charge; plus
(b) the charges for cost of insurance and additional benefits provided by
rider, if any.
ITT Hartford may also set up a provision for income taxes imposed on the
assets of the Separate Account. See "Deductions and Charges From the Investment
Value," page and "Federal Tax Considerations," page .
7
<PAGE>
A charge is made for mortality and expense risks assumed by ITT Hartford.
ITT Hartford deducts a daily charge at a maximum effective annual rate of .65%
of the value of each Investment Division's assets. For more information about
the Monthly Deduction Amount, see "Deductions and Charges From the Investment
Value," page .
CHARGES AGAINST THE FUNDS
The Separate Account purchases Fund shares at net asset value. The net asset
value of the portfolio shares reflects investment advisory fees and
administrative and other expenses deducted from the assets of the Funds.
Applicants should review the prospectuses for the Funds which accompany this
Prospectus for a description of the charges assessed against the assets of each
of the Funds.
Total fund operating expenses in 1995, including management fees, were .53%
for Hartford Bond Fund; .68% for Hartford Capital Appreciation Fund, .45% for
HVA Money Market Fund; 1.15% for Neuberger & Berman Partners Portfolio; 1.04%
for Neuberger & Berman Balanced Portfolio; .75% for Neuberger & Berman
Limited Maturity Bond Portfolio; .61% for Fidelity Equity-Income Portfolio;
.71% for Fidelity High Income Portfolio; .91% for Fidelity Overseas
Portfolio; .79% for Fidelity Asset Manager Portfolio; .92% for Alger American
Small Capitalization Portfolio; and .85% for Alger American Growth Portfolio.
LOANS
An Owner may obtain a cash Loan from ITT Hartford. The Loan is secured by
the Owner's Certificate. The maximum Loan amount is equal to the sum of the Cash
Surrender Value plus outstanding Debt, multiplied by .90, less outstanding Debt.
See "Detailed Description of Certificate Benefits and Provisions -- Loans," page
.
THE RIGHT TO EXAMINE THE CERTIFICATE
An applicant has a limited right to return his or her Certificate. Subject
to applicable state regulations, if the applicant returns the Certificate within
10 days after delivery of the Certificate ITT Hartford will return to the
applicant, within seven days thereafter, either (i) the premium paid or (ii) the
Cash Value under the Certificate plus charges deducted. See "The Right to
Examine the Certificate," page .
TAX CONSEQUENCES
The current Federal tax law generally excludes all Death Benefit payments
from the gross income of the Beneficiary under the Certificate. See "Federal Tax
Considerations," page .
There are circumstances when the Certificate may become a Modified Endowment
Contract under federal tax law. If it does, Loans and other pre-death
distributions are includable in gross income on an income-first basis. A 10%
penalty tax may be imposed on income distributed before the insured attains age
59 1/2. Prospective purchasers and Owners are advised to consult a qualified tax
adviser before taking steps that may affect whether the Certificate becomes a
Modified Endowment Contract. ITT Hartford has instituted procedures to monitor
whether a Certificate may become a modified endowment contract after issue. See
"Federal Tax Considerations -- Modified Endowment Contract" for a discussion of
the "seven pay test", page .
THE COMPANY
ITT Hartford Life and Annuity Insurance Company ("ITT Hartford"), formerly
ITT Life Insurance Corporation, was originally incorporated under the laws of
Wisconsin on January 9, 1956. ITT Hartford was redomiciled to Connecticut on
May 1, 1996. It is a stock life insurance company engaged in the business of
writing both individual and group life insurance and annuities in all states
including the District of Columbia, except New York. The offices of ITT
Hartford are located in Minneapolis, Minnesota; however, its mailing address
is P.O. Box 5085, Hartford, Connecticut 06102-5085.
ITT Hartford is a wholly-owned subsidiary of Hartford Life Insurance
Company. ITT Hartford is ultimately 100% owned by Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. On December 20, 1995, Hartford Fire Insurance Company became an
independent, publicly traded corporation.
ITT Hartford is rated A+ (superior) by A.M. Best and Company, Inc. on the
basis of its financial soundness and operating performance. ITT Hartford is
rated AA+ by both Standard & Poor's and Duff and Phelps on the basis of its
claims paying ability. However, the policy obligations under this variable
life insurance Group Policy are the general corporate obligations of ITT
Hartford. These ratings do apply to ITT Hartford's ability to meet its
insurance obligations under the Group Policy.
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ITT Hartford is subject to Connecticut law governing insurance companies and
is regulated and supervised by the Connecticut Commissioner of Insurance. Its
books and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted by
the National Association of Insurance Commissioners at least once in every four
years. In addition, ITT Hartford is subject to the insurance laws and
regulations of any jurisdiction in which it sells its insurance policies. ITT
Hartford is also subject to various Federal and state securities laws and
regulations.
THE SEPARATE ACCOUNT
ICMG Registered Variable Life Separate Account One is a separate account
established by ITT Hartford on October 9, 1995 under the insurance laws of the
State of Connecticut, pursuant to a resolution of ITT Hartford's Board of
Directors. The Separate Account is organized as a unit investment trust and is
registered with the SEC under the 1940 Act. Such registration does not signify
that the SEC supervises the management or the investment practices or policies
of the Separate Account. The Separate Account meets the definition of a
"separate account" under the federal securities laws.
Under Connecticut law, the assets of the Separate Account are held
exclusively for the benefit of Owners and persons entitled to payments under the
Group Policies and the Certificates and owners of any other policies which may
be available through the Separate Account. The assets of the Separate Account
are owned by the Company and the obligations under the Group Policies and the
Certificates are obligations of the Company. These assets are held separately
from the other assets of the Company and income, gains and losses incurred on
the assets in the Separate Account, whether or not realized, are credited to or
charged against the Separate Account without regard to other income, gains or
losses of the Company (except to the extent that assets in the Separate Account
exceed the reserves and other liabilities of the Separate Account). Therefore,
the investment performance of the Separate Account is entirely independent of
the investment performance of the General Account assets or any other separate
account maintained by the Company.
The Separate Account has 12 Investment Divisions dedicated to the Group
Policies, each of which invests solely in a corresponding Portfolio of the
Funds. Additional Investment Divisions may be established at the discretion of
the Company. The Separate Account may in the future include other divisions
which will not be available under the Group Policies.
THE FUNDS
GENERAL
The shares of the Portfolios are sold by the Funds to the Separate Account
and may be sold to other separate accounts of ITT Hartford or its affiliates
which fund similar variable annuity or variable life insurance products. The
assets of the Separate Account attributable to the Group Policies are invested
exclusively in one of the Investment Divisions. An Owner may allocate premium
payments among the Investment Divisions. Owners should review the following
brief descriptions of the investment objectives of each of the Portfolios in
connection with that allocation.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the relevant Portfolios. Such shares are
offered to separate accounts, including the Separate Account, established by ITT
Hartford or one of its affiliated companies specifically to fund the Group
Policies and other policies issued by ITT Hartford or its affiliates as
permitted by the 1940 Act.
All investment income of and other distributions to each Investment Division
arising from the applicable Portfolio are reinvested in shares of that Portfolio
at net asset value. ITT Hartford will purchase Fund shares in connection with
premium payments allocated to the applicable Investment Division in accordance
with Owners' directions and will redeem Fund shares to meet obligations under
the Group Policies and the Certificates or make adjustments in reserves, if any.
The Funds are required to redeem Portfolio shares at net asset value and
generally to make payment within 7 days.
Applicants should read the prospectuses for each of the Funds accompanying
this Prospectus in connection with the purchase of a Certificate. The investment
objectives of each of the Portfolios are as set forth in "The Portfolios," page
.
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HARTFORD MUTUAL FUNDS (COLLECTIVELY, THE "HARTFORD FUNDS")
The Separate Account currently invests in the Hartford Funds, which are
each diversified open-end management investment companies. The Hartford
Funds are each organized as corporations under the laws of the State of
Maryland and are registered as investment companies under the 1940 Act.
The investment adviser for the Hartford Funds is The Hartford Investment
Management Company ("HIMCO"), a wholly-owned subsidiary of Hartford Life
Insurance Company and a registered investment adviser under the Investment
Advisers Act of 1940. HIMCO was organized under the laws of the State of
Connecticut in October of 1981. HIMCO provides investment advice and, in
general, supervises the management and investment program of the Hartford
Bond and HVA Money Market Portfolios, pursuant to an Investment Advisory
Agreement entered into on behalf of each of these Portfolios for which HIMCO
receives a fee. HIMCO also supervises the investment program of the Hartford
Capital Appreciation Portfolio, pursuant to an Investment Management
Agreement for which HIMCO receives a fee. In addition, with respect to
the Hartford Capital Appreciation Portfolio, HIMCO has a Sub-Investment
Advisory Agreement with Wellington Management Company ("Wellington
Management") to provide an investment program to HIMCO for utilization by
HIMCO in rendering services to this Portfolio. Wellington Management is
a professional investment counseling firm which provides investment
services to investment companies, other institutions and individuals.
Wellington Management is organized as a private Massachusetts partnership
and its predecessor organizations have provided investment advisory
services to investment companies since 1933 and to investment counseling
clients since 1960. See the accompanying prospectuses for the Hartford
Funds for a more complete description of HIMCO and Wellington Management
and their respective fees.
THE NEUBERGER & BERMAN ADVISERS MANAGERS TRUST (THE "NEUBERGER & BERMAN TRUST")
The Separate Account currently invests in the Neuberger & Berman Trust,
a diversified open-end management investment company organized as a Delaware
business trust. The Neuberger & Berman Trust consists of seven portfolios,
including the N&B Partners, N&B Balanced and N&B Limited Maturity Bond
Portfolios available as part of Endeavor I. Each portfolio of the Neuberger
& Berman Trust invests its assets in a corresponding series of the Advisers
Managers Trust, which is also an open-end management investment company
registered under the 1940 Act and is organized as a New York common-law
trust. The investment performance of the N&B Partners,
N&B Balanced and N&B Limited Maturity Bond Portfolios will directly
correspond with the investment performance of the corresponding series
of the Advisors Management Trust. This "Master/feeder Fund" structure is
different from that of many other investment companies which directly
acquire and manage their own portfolios of securities.
The N&B Funds are advised by Neuberger & Berman Management Incorporated.
Neuberger & Berman, L.P. serves as the sub-adviser for the N&B Limited
Maturity Bond Portfolio.
VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II
(EACH, A "FIDELITY FUND" AND COLLECTIVELY, THE "FIDELITY FUNDS")
The Separate Account currently invests in both Fidelity Funds. The
Fidelity Funds are diversified, open-end management investment companies
organized as Massachusetts business trusts by Fidelity Management & Research
Company ("FMR") and registered under the 1940 Act. Each Fidelity Fund
consists of several investment portfolios, including the Equity-Income, High
Income, Overseas and Asset Manager Portfolios available as part of
Endeavor I.
The Fidelity Funds are each managed by FMR. FMR is one of America's
largest investment management organizations. It is composed of a number
of different companies, which provide a variety of financial services and
products. FMR is the original Fidelity company, founded in 1946. It provides
a number of mutual funds and other clients with investment research and
portfolio management services.
THE ALGER AMERICAN FUND, INC. (THE "ALGER AMERICAN FUND")
The Separate Account currently invests in shares of the Alger American
Fund, a diversified open-end management investment company registered under
the 1940 Act and organized as a Massachusetts business trust. The Alger
American Fund consists of six series, including the Alger American Small
Capitalization and Alger American Growth Portfolios available as part of
Endeavor I.
The Alger American Fund is managed by Fred Alger Management, Inc
("FAM"), a subsidiary of Alger Inc., which is in turn a subsidiary of Alger
Associates, Inc., a financial services holding company. FAM has been in the
business of providing investment advisory services since 1964.
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THE PORTFOLIOS
HARTFORD BOND FUND, INC. ("HARTFORD BOND PORTFOLIO")
The Hartford Bond Portfolio seeks to achieve maximum current income
consistent with preservation of capital. This Portfolio invests primarily in
fixed-income securities.
HARTFORD CAPITAL APPRECIATION FUND, INC. ("HARTFORD CAPITAL APPRECIATION
PORTFOLIO")
The Hartford Capital Appreciation Portfolio seeks to achieve growth of
capital by investing in securities selected solely on the basis of potential
for capital appreciation; income, if any, is an incidental consideration.
This Portfolio invests primarily in equity securities and securities
convertible into equity securities.
HVA MONEY MARKET FUND, INC. ("HVA MONEY MARKET PORTFOLIO")
The HVA Money Market Portfolio seeks to achieve maximum current income
consistent with liquidity and preservation of capital. This Portfolio
invests in short-term money market instruments.
NEUBERGER & BERMAN PARTNERS PORTFOLIO ("N&B PARTNERS PORTFOLIO")
The N&B Partners Portfolio seeks to achieve capital growth. This
Portfolio invests primarily in common stocks of established companies, using
a value-oriented investment approach designed to increase capital with
reasonable risk. Its investment program seeks securities believed to be
undervalued based on strong fundamentals such as low price-to-earnings
ratios, consistent cash flow and support from asset values.
NEUBERGER & BERMAN BALANCED PORTFOLIO ("N&B BALANCED PORTFOLIO")
The N&B Balanced Portfolio seeks to achieve long-term capital growth and
reasonable current income without undue risk to principal. Under normal
circumstances, this Portfolio will invest 50% to 70% of its assets in a
diversified portfolio of common stocks of companies that, although
potentially temporarily out of favor in the market, have strong balance
sheets and reasonable valuations relative to their growth rates. This
Portfolio will invest its remaining assets in a diversified portfolio of
short-term and intermediate-term U.S. government and agency securities and
other investment grade debt securities.
NEUBERGER & BERMAN LIMITED MATURITY BOND PORTFOLIO ("N&B LIMITED MATURITY BOND
PORTFOLIO")
The N&B Limited Maturity Bond Portfolio seeks to achieve the highest
current income consistent with low risk to principal and liquidity; and
secondarily, total return. This Portfolio invests in a diversified portfolio
of fixed and variable rate short-term and intermediate-term U.S. government
and agency securities and other investment grade debt securities.
FIDELITY EQUITY-INCOME PORTFOLIO ("FIDELITY EQUITY-INCOME PORTFOLIO")
The Fidelity Equity-Income Portfolio seeks reasonable income by
investing primarily in income-producing equity securities. In choosing these
securities, the Portfolio will also consider the potential for capital
appreciation. This Portfolio's goal is to achieve a yield which exceeds the
composite yield on the securities comprising the Standard & Poor's Daily
Stock Price Index of 500 Common Stocks. The Portfolio may invest in high
yielding, lower-rated securities (commonly referred to as "junk bonds")
which are subject to greater risk than investments in higher-rated
securities. For a further discussion of lower-rated securities, please see
"Risks of Lower-Rated Debt Securities" in the accompanying relevant Fund
prospectus.
FIDELITY HIGH INCOME PORTFOLIO ("FIDELITY HIGH INCOME PORTFOLIO")
The Fidelity High Income Portfolio seeks high current income primarily
through investments in all types of income-producing debt securities,
preferred stocks and convertible securities. The Portfolio's
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investments will include high yielding debt securities, with an emphasis on
lower-rated securities (commonly referred to as "junk bonds") which are
subject to greater risk than investments in higher-rated securities. For a
further discussion of lower-rated securities, please see "Risks of
Lower-Rated Debt Securities" in the accompanying relevant Fund prospectus.
FIDELITY OVERSEAS PORTFOLIO ("FIDELITY OVERSEAS PORTFOLIO")
The Fidelity Overseas Portfolio seeks long-term growth of capital
primarily through investments in foreign securities and provides a means for
aggressive investors to diversify their own portfolios by participating in
companies and economies outside of the United States.
FIDELITY ASSET MANAGER PORTFOLIO ("FIDELITY ASSET MANAGER PORTFOLIO")
The Fidelity Asset Manager Portfolio seeks high total return with
reduced risk over the long-term by allocating its assets among stocks, bonds
and short-term fixed-income instruments.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO ("ALGER AMERICAN SMALL
CAPITALIZATION PORTFOLIO")
The Alger American Small Capitalization Portfolio seeks long-term
capital appreciation by investing in a diversified, actively managed
portfolio of equity securities, primarily of companies with total market
capitalization of less than $1 billion.
ALGER AMERICAN GROWTH PORTFOLIO ("ALGER AMERICAN GROWTH PORTFOLIO")
The Alger American Growth Portfolio seeks long-term capital appreciation
by investing in a diversified, actively managed portfolio of equity
securities, primarily of companies with total market capitalization of $1
billion or greater.
There is no assurance that any Portfolio will achieve its stated
objectives. Owners are also advised to read the prospectuses for each of the
Funds accompanying this Prospectus for more detailed information. Each Fund
is subject to certain investment restrictions which may not be changed
without the approval of a majority of the shareholders of the Fund. See the
accompanying prospectuses for each of the Funds.
DETAILED DESCRIPTION OF CERTIFICATE
BENEFITS AND PROVISIONS
GENERAL
This Prospectus describes a flexible premium group variable life insurance
policy where the Owner has considerable flexibility in selecting the timing and
amount of premium payments.
ISSUANCE OF A CERTIFICATE
Certificates will only be offered to eligible employees when provided by the
Participating Employer. Individuals wishing to purchase a Certificate must
complete an enrollment form In Writing, which must be received by Our Customer
Service Center before a Certificate will be issued. A Certificate will not be
issued with a specified Face Amount of less than the minimum Face Amount.
Acceptance is subject to ITT Hartford's underwriting rules then in effect. ITT
Hartford reserves the right to reject an enrollment form for any reason
permitted by law.
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PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant feature of the Certificate is that once the desired level and
pattern of Death Benefits have been determined, the Owner has considerable
flexibility in the selection of the timing and amount of premiums to be paid and
You can choose the level of premiums, within a range determined by ITT Hartford,
based on the Face Amount of the Certificate, the Insured's sex (except where
unisex rates apply), Issue Age, and the Insured's risk classification.
A minimum Initial Premium is due on the Coverage Date. The amount of the
minimum Initial Premium is the amount which, after the deductions for sales
load, state premium tax, and DAC tax charge, is sufficient (disregarding
investment performance) to pay 12 times the first Monthly Deduction. Thereafter,
additional premiums may be paid at any time, subject to the premium limitations
set forth by the Internal Revenue Code as indicated in the section entitled
"Premium Limitation," page . You have the right to pay additional premiums of
at least $500.00 at any time.
ALLOCATION OF PREMIUM PAYMENTS
If the state of issue of Your Certificate requires that We return Your
Initial Premium, We will allocate the initial Net Premium submitted with Your
enrollment form to the HVA Money Market Investment Division, until the
expiration of the right to examine period. Upon the expiration of the right to
examine period, the initial Net Premium will, at a later date, be invested
according to Your initial allocation instructions (except that any accrued
interest will remain in the HVA Money Market Investment Division if it is
selected as an initial allocation option). This later date is the later of 10
days after We receive the premium and the date We receive the final requirement
to put the Certificate in force. The Certificates are credited with units
("Accumulation Units") in each selected Investment Division, the assets of which
are invested in the corresponding underlying Portfolio. An Owner may transfer
funds among the Investment Divisions subject to certain restrictions. See
"Detailed Description of Certificate Benefits and Provisions -- Transfers
Between Investment Divisions," page . Any additional Net Premiums received by
Us prior to such date will be allocated to the HVA Money Market Investment
Division.
Alternatively, if the state of issue of Your Certificate provides for Our
return of the Certificate's Cash Value to the Owner, We will allocate the
initial Net Premium immediately among Your chosen Investment Divisions. IN THAT
CASE YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE
INVESTMENT DIVISIONS DURING THE RIGHT TO EXAMINE PERIOD. (Please note that this
automatic immediate investment feature only applies if Your Certificate so
specifies. Please check with Your agent to determine the status of Your
Certificate.)
Upon written request, You may change the premium allocation. Portions
allocated to the Investment Divisions must be whole percentages of 10% or more.
Subsequent Net Premiums will be allocated among Investment Divisions according
to Your most recent instructions, subject to the following. The Investment Value
may be allocated to no more than five Investment Divisions at any one time. If
We receive a premium and Your most recent allocation instructions would violate
this requirement, We will allocate the Net Premium among the Investment
Divisions according to Your previous premium allocation.
The Owner will receive several different types of notification as to what
his or her current premium allocation is. The initial allocation chosen by the
Owner is shown in the Certificate. In addition, each transactional confirmation
received after a premium payment will show how that premium has been allocated.
In addition, each annual statement summarizes the current premium allocation in
effect for that Certificate.
ACCUMULATION UNITS
Net Premiums allocated to the Investment Divisions are used to credit
Accumulation Units under the Certificate.
The number of Accumulation Units in each Investment Division to be credited
under the Certificate (including the initial allocation to the HVA Money Market
Investment Division) will be determined first by multiplying the Net Premium by
the appropriate allocation percentage to determine the portion to be invested
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in the Investment Division. Each portion to be invested in an Investment
Division is then divided by the Accumulation Unit Value of that particular
Investment Division next computed following receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Investment Division will vary daily to
reflect the investment experience of the applicable Portfolio, as well as the
daily deduction for mortality and expense risks, and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Investment Division on the preceding Valuation Day by a net investment factor
for that Investment Division for the Valuation Period then ended. The net
investment factor for each of the Investment Divisions is equal to the net asset
value per share of the corresponding Portfolio at the end of the Valuation
Period (plus the per share amount of any dividend or capital gain distributions
paid by that Portfolio in the Valuation Period then ended) divided by the net
asset value per share of the corresponding Portfolio at the beginning of the
Valuation Period, less the daily deduction for the mortality and expense risks
assumed by ITT Hartford.
All valuations in connection with a Certificate, e.g., with respect to
determining Cash Value and Investment Value, or calculation of Death Benefits,
or with respect to determining the number of Accumulation Units to be credited
to a Certificate with each premium payment, other than the Initial Premium, will
be made on the date the request or payment is received by ITT Hartford at the
Customer Service Center if such date is a Valuation Day; otherwise such
determination will be made on the next succeeding date which is a Valuation Day.
PREMIUM LIMITATION
If premiums are received which would cause the Certificate to fail to meet
the definition of a life insurance policy in accordance with the Internal
Revenue Code, We will refund the excess premium payments. We will refund such
premium payments and interest thereon within 60 days after the end of a Coverage
Year.
A premium payment that results in an increase in the Death Benefit greater
than the amount of the premium will be accepted only after We approve evidence
of insurability.
VALUES UNDER THE CERTIFICATE
As with traditional life insurance, each Certificate will have a Cash
Surrender Value. The Cash Surrender Value is equal to the Cash Value, less Debt,
less any charges accrued but not deducted. There is no minimum guaranteed Cash
Surrender Value. The Cash Value equals the value in the Investment Divisions
plus the Loan Account Value.
Each Certificate will also have an Investment Value. The Investment Value of
a Certificate changes on a daily basis and will be computed on each Valuation
Day. The Investment Value will vary to reflect the investment experience of the
Investment Divisions, Monthly Deduction Amounts and any amounts transferred to
the Loan Account to secure a Loan.
The Investment Value of a particular Certificate is related to the net asset
value of the Portfolios associated with the Investment Divisions to which Net
Premiums on the Certificate have been allocated. The total Investment Value in
the Investment Divisions on any Valuation Day is calculated by multiplying the
number of Accumulation Units in each Investment Division as of the Valuation Day
by the current Accumulation Unit Value of that Investment Division and then
summing the result for all the Investment Divisions. The Investment Value equals
the sum of the values of the assets in the Investment Divisions. See "Premiums
- -- Accumulation Unit Values," page .
SURRENDER OF THE CERTIFICATE
At any time prior to the Maturity Date, provided the Certificate is in
effect and has a Cash Surrender Value, the Owner may choose, without the consent
of the Beneficiary (provided the designation of the Beneficiary is not
irrevocable) to surrender the Certificate and receive the full Cash Surrender
Value from Us. To surrender a
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<PAGE>
Certificate, You must submit a request for surrender In Writing. We will
determine the Cash Surrender Value as of the Valuation Day We receive the
request In Writing at Our Customer Service Center, or the date requested by the
Owner, whichever is later.
The Cash Surrender Value, which is the net amount available upon surrender
of the Certificate, equals the Cash Value, less Debt, less any charges accrued
but not yet deducted. The Certificate will terminate on the date of receipt of
the written request, or the date the Owner requests the surrender to be
effective, whichever is later.
The Cash Surrender Value may be paid in cash or allocated to any other
payment option agreed upon by Us.
PARTIAL WITHDRAWALS
At any time before the Maturity Date, and subject to ITT Hartford's
rules then in effect, up to twelve (12) partial withdrawals are allowed per
Coverage Year; however, only one (1) partial withdrawal is allowed between
any successive Processing Dates. The minimum partial withdrawal allowed is
$500.00. The maximum partial withdrawal is an amount equal to the sum
of the Cash Surrender Value plus outstanding Debt, multiplied by .90,
less outstanding Debt. ITT Hartford currently imposes a maximum $25.00
fee for processing partial withdrawals. A partial withdrawal will reduce
the Cash Surrender Value, Cash Value and Investment Value. Any
partial withdrawal will have a permanent effect on the Cash Surrender
Value and may have a permanent effect on the Death Benefits payable. If
Death Benefit option A is in effect, the Face Amount is reduced by the
amount of the partial withdrawal. Unless specified otherwise, partial
withdrawals will be deducted on a Pro Rata Basis from the Investment
Divisions. Requests for partial withdrawals must be made In Writing to Us.
The effective date of a partial withdrawal will be the Valuation Day We
receive the request In Writing at Our Customer Service Center. A 10% penalty
tax may be imposed on income distributed before the insured attains age
59-1/2. See "Federal Tax Considerations -- Modified Endowment Contracts,"
page _____.
TRANSFERS BETWEEN THE INVESTMENT DIVISIONS
AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as the Certificate is in effect, You may transfer
amounts among the Investment Divisions up to six times per Coverage Year.
Transfer requests must be in writing on a form approved by ITT Hartford or by
telephone in accordance with established procedures. The amounts which may be
transferred and the number of transfers will be limited by Our rules then in
effect. Currently, the minimum value of Accumulation Units that may be
transferred from one Investment Division to another is the lesser of (i) $500 or
(ii) the total value of the Accumulation Units in the Investment Division. The
value of the remaining Accumulation Units in the Investment Division must equal
at least $500. If, after an ordered transfer, the value of the remaining
Accumulation Units in an Investment Division would be less than $500, the entire
value will be transferred.
Currently there are no restrictions on transfers other than those described
herein and there is no charge for permitted transfers between Investment
Divisions. ITT Hartford reserves the right in the future to impose additional
restrictions on transfers, as a well as a charge for processing transfers.
TRANSFERS TO OR FROM INVESTMENT DIVISIONS
In the event of a transfer from an Investment Division, the number of
Accumulation Units credited to the Investment Division from which the transfer
is made will be reduced. The reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit Value for that Investment Division on the Valuation
Day We receive Your request for transfer In Writing.
In the event of a transfer to an Investment Division, We will increase the
number of Accumulation Units credited thereto. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit Value for that Investment Division determined on
the Valuation Day We receive Your request for transfer In Writing.
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PROCEDURES FOR TELEPHONE TRANSFERS
Owners may effect telephone transfers in two ways. All Owners may directly
contact a customer service representative. Owners may in the future also request
access to an electronic service known as a Voice Response Unit (VRU). The VRU
will permit the transfer of monies among the Investment Divisions and change of
the allocation of future payments. All Owners intending to conduct telephone
transfers through the VRU will be asked to complete a Telephone Authorization
Form.
ITT Hartford will undertake reasonable procedures to confirm that
instructions communicated by telephone are genuine. Before a customer service
representative accepts any request, the caller will be asked for his or her
social security number and address. All calls will also be recorded. A Personal
Identification Number (PIN) will be assigned to all Owners who request VRU
access. The PIN is selected by and known only to the Owner. Proper entry of the
PIN is required before any transactions will be allowed through the VRU.
Furthermore, all transactions performed over the VRU, as well as with a customer
service representative, will be confirmed by ITT Hartford through a written
letter. Moreover, all VRU transactions will be assigned a unique confirmation
number which will become part of the Certificate's history. ITT Hartford is not
liable for any loss, cost or expense for action on telephone instructions which
are believed to be genuine in accordance with these procedures.
VALUATION OF PAYMENTS AND TRANSFERS
We value the Certificate on every Valuation Day.
We will pay Death Proceeds, Cash Surrender Values, partial withdrawals, and
Loan amounts attributable to the Investment Divisions within seven (7) days
after We receive all the information needed to process the payment unless the
NYSE is closed for other than a regular holiday or weekend, trading is
restricted by the SEC or the SEC declares that an emergency exists.
ITT Hartford may defer payment of any amounts not attributable to the
Investment Divisions for up to six months from the date on which We receive the
request.
LOANS
As long as the Certificate is in effect, an Owner may obtain, without the
consent of the Beneficiary (provided the designation of Beneficiary is not
irrevocable), a cash Loan from ITT Hartford. The maximum Loan amount is equal to
the sum of the Cash Surrender Value plus outstanding Debt, multiplied by .90,
less outstanding Debt.
The amount of each Loan will be transferred on a Pro-Rata Basis from each of
the Investment Divisions (unless the Owner specifies otherwise) to the Loan
Account. The Loan Account is the mechanism used to ensure that any outstanding
Debt remains fully secured by the Investment Value.
LOAN INTEREST
Interest will accrue daily on outstanding Debt at the Adjustable Loan
Interest Rate indicated in the Certificate. The difference between the value of
the Loan Account and any outstanding Debt will be transferred from the
Investment Divisions to the Loan Account on each Processing Date.
The maximum Adjustable Loan Interest Rate We may charge for Loans is the
greater of 5% and the Published Monthly Average for the calendar month two
months prior to the date on which the Adjustable Loan Interest Rate is
determined. The Published Monthly Average means the "Moody's Corporate Bond
Yield Average -- Monthly Average Corporate" as published by Moody's Investors
Service, Inc. or any successor to that service. If that monthly average is no
longer published, a substitute average will be used.
CREDITED INTEREST
Amounts in the Loan Account will be credited with interest at a rate equal
to the Adjustable Loan Interest Rate then in effect, minus 1%.
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LOAN REPAYMENTS
You can repay any part of or the entire Loan at any time. The amount of the
Loan repayment will be allocated to Your chosen Investment Divisions on a Pro
Rata Basis, determined as of the date of the Loan repayment. Unless specified
otherwise, additional premium payments received by ITT Hartford during the
period when a Loan is outstanding will be treated as Loan repayments.
TERMINATION DUE TO EXCESSIVE DEBT
If total Debt outstanding equals or exceeds the Cash Surrender Value, the
Certificate will terminate 31 days after We have mailed notice to Your last
known address and that of any assignees of record. If sufficient Loan repayment
is not made by the end of this 31 day period, the Certificate will end without
value.
EFFECT OF LOANS ON INVESTMENT VALUE
A Loan, whether or not repaid, will have a permanent effect on the
Investment Value because the investment results of each Investment Division will
apply only to the amount remaining in such Investment Divisions. The longer a
Loan is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Investment Divisions earn more than the annual
interest rate for funds held in the Loan Account, an Owner's Investment Value
will not increase as rapidly as it would have had no Loan been made. If the
Investment Divisions earn less than the Loan Account, the Owner's Investment
Value will be greater than it would have been had no Loan been made. Also, if
not repaid, the aggregate amount of outstanding Debt will reduce the Death
Proceeds and Cash Surrender Value otherwise payable.
DEATH BENEFIT
As long as the Certificate remains in force, the Certificate provides for
the payment of the Death Proceeds to the named Beneficiary when the Insured
under the Certificate dies. The Death Proceeds payable to the Beneficiary equal
the Death Benefit less any Debt outstanding under the Certificate plus any rider
benefits payable. The Death Benefit depends on the Death Benefit option You
select and is determined as of the date of the death of the Insured.
DEATH BENEFIT OPTIONS
There are two Death Benefit options: Death Benefit option A and Death
Benefit option B:
1. Under the Death Benefit option A, the Death Benefit is the greater of (a)
the Face Amount and (b) the Variable Insurance Amount.
2. Under Death Benefit option B, the Death Benefit is the greater of (a) the
Face Amount plus the Cash Value and (b) the Variable Insurance Amount.
Regardless of which Death Benefit option You select, the maximum amount
payable under such option will be the Death Proceeds.
OPTION CHANGE
While the Certificate is in force, You may change the Death Benefit option
selected under a Certificate by making a request In Writing during the lifetime
of the Insured. If the change is from Death Benefit option A to Death Benefit
option B, satisfactory evidence of insurability must be provided to ITT
Hartford. The Face Amount after the change will be equal to the Face Amount
before the change, less the Cash Value on the effective date of the change. If
the change is from Death Benefit option B to Death Benefit option A, the Face
Amount after the change will be equal to the Face Amount before the change plus
the Cash Value on the effective date of change. Any change in the selection of a
Death Benefit option will become effective at the beginning of the Coverage
month following ITT Hartford's approval of such change. We will notify You that
the change has been made.
All or part of the Death Proceeds may be paid in cash or applied under one
of the payment options described below.
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<PAGE>
PAYMENT OPTIONS
Death Proceeds under the Certificate may be paid in a lump sum or may be
applied to one of ITT Hartford's payment options. The minimum amount that may be
placed under a payment option is $5,000 unless ITT Hartford consents to a lesser
amount. Once payments under payment options 2, 3 or 4 commence, no surrender of
the Certificate may be made for the purpose of receiving a lump sum settlement
in lieu of the life insurance payments. The following options are available
under the Certificates:
FIRST OPTION -- Interest Income
Payments of interest at the rate We declare, but not less than 3% per year,
on the amount applied under this option.
SECOND OPTION -- Income of Fixed Amount
Equal payments of the amount chosen until the amount applied under this
option, with interest of not less than 3% per year, is exhausted. The final
payment will be for the balance remaining.
THIRD OPTION -- Payments for a Fixed Period
An amount payable monthly for the number of years selected which may be from
1 to 30 years.
FOURTH OPTION -- Life Income
LIFE ANNUITY -- an annuity payable monthly during the lifetime of the
Annuitant and terminating with the last monthly payment due preceding the
death of the Annuitant. Under this option, it is possible that only one
monthly annuity payment would be made, if the Annuitant died before the
second monthly annuity payment was due.
LIFE ANNUITY WITH 120 MONTHLY PAYMENTS CERTAIN -- an annuity providing
monthly income to the Annuitant for a fixed period of 120 months and for
as long thereafter as the Annuitant shall live.
The fourth payment option is based on the 1983a Individual Annuity Mortality
Table set back one year and a net investment rate of 3% per annum. The amount of
each payment under this option will depend upon the age of the Annuitant at the
time the first payment is due. If any periodic payment due any payee is less
than $200, ITT Hartford may make payments less often. The first, second and
third payment options are based on a net investment rate of 3% per annum. ITT
Hartford may, however, from time to time, at Our discretion if mortality appears
more favorable and interest rates justify, apply other tables which will result
in higher monthly payments for each $1,000 applied under one or more of the four
payment options.
ITT Hartford will make any other arrangements for income payments as may be
agreed on.
LEGAL DEVELOPMENTS REGARDING INCOME PAYMENTS
In those states affected by the 1983 Supreme Court decision in Arizona
Governing Committee v. Norris, income payment options involving life income are
based on unisex actuarial tables. In addition, legislation has previously been
introduced in Congress which, had it been enacted, would have required the use
of tables that do not vary on the basis of sex for some or all annuities.
Currently, several states have enacted such laws.
BENEFICIARY
The Owner names the Beneficiary in the enrollment form for the Certificate.
The Owner may change the Beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to ITT Hartford. If no Beneficiary is
living when the Insured dies, the Death Proceeds will be paid to the Owner if
living; otherwise to the Owner's estate.
INCREASES AND DECREASES IN FACE AMOUNT
The minimum Face Amount of the Certificate is $50,000. At any time after
purchasing a Certificate, the Owner may request a change in the Face Amount by
making a request In Writing to ITT Hartford and directing such request to ITT
Hartford's Customer Service Center.
All requests to increase the Face Amount must be applied for on a new
enrollment form. All requests will be subject to evidence of insurability
satisfactory to the Company and subject to Our rules then in effect. Any
18
<PAGE>
increase approved by Us will be effective on the Processing Date following the
date We approve the request. The Monthly Deduction Amount on the first
Processing Date on or after the effective date of the increase will reflect a
charge for the increase.
A decrease in the Face Amount will be effective on the first Processing Date
following the date We receive the request. Decreases must reduce the Face Amount
by at least $25,000, and the remaining Face Amount must not be less than
$50,000. Decreases will be applied:
(a) to the most recent increase; then
(b) successively to each prior increase, and then
(c) to the initial Face Amount.
We reserve the right to limit the number of Face Amount increases or
decreases made under the Certificate to no more than one in any 12 month period.
BENEFITS AT MATURITY
If the Insured is living on the Maturity Date, on surrender of the
Certificate to ITT Hartford, ITT Hartford will pay to the Owner the Cash
Surrender Value on the date the Certificate is surrendered. However, on the
Maturity Date, the Certificate will terminate and ITT Hartford will have no
further obligations under the Certificate.
TERMINATION OF PARTICIPATION IN THE GROUP POLICY
Participation in the Group Policy may be terminated by ITT Hartford or the
Participating Employer. The party initiating the termination must provide notice
of such termination to each Owner of record, at his or her last known address,
at least 15 days prior to the date of termination. In the event of such
termination, no new enrollment forms for new Insureds will be accepted on or
after the date notice of discontinuance is received or sent by ITT Hartford,
whichever is applicable, nor will any new Certificates be issued. If premium
payments are discontinued, ITT Hartford will continue insurance Coverage under
the Certificate as long as the Cash Surrender Value is sufficient to cover the
charges due. This Continuation of Insurance will not continue the Coverage under
the Certificate beyond Attained Age 100, nor will it continue any optional
benefit rider beyond the Certificate's date of termination. If the Group Policy
is discontinued or amended to discontinue the eligible class to which an Insured
belongs (and if the Coverage on the Insured is not transferred to another
insurance carrier), any Certificate then in effect will remain in force under
the discontinued Group Policy, provided it is not canceled or surrendered by the
Owner, subject to ITT Hartford's qualifications then in effect.
LAPSE AND REINSTATEMENT WHILE THE GROUP POLICY
IS IN EFFECT
LAPSE AND GRACE PERIOD
A Grace Period of 61 days will be allowed following the date We mail to the
Owner notice that the Cash Surrender Value is insufficient to pay the charges
due under the Certificate. Unless the Owner has given ITT Hartford written
notice of termination in advance of the date of termination of the Certificate,
insurance will continue in force during the Grace Period. The Owner will be
liable to ITT Hartford for all charges due under the Certificate then unpaid for
the period the Certificate remains in force.
In the event that total Debt outstanding equals or exceeds the Cash
Surrender Value, the Certificate will terminate 31 days after We have mailed
notice to Your last known address and that of any assignees of record. If
sufficient Loan repayment is not made by the end of this 31 day period, the
Certificate will end without value.
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<PAGE>
REINSTATEMENT
Prior to the death of the Insured, and unless (1) the Group Policy is
terminated (See "Termination of Participation in the Group Policy") or (2) the
Certificate has been surrendered for cash, the Certificate may be reinstated
prior to the Maturity Date, provided:
(a) you make Your request within three (3) years of the date of lapse; and
(b) satisfactory evidence of insurability is submitted.
To reinstate Your Certificate, you must remit a premium payment large enough
to keep the coverage under the Certificate in force for at least 3 months
following the date of reinstatement. The Face Amount of the reinstated
Certificate cannot exceed the Face Amount at the time of lapse. The Investment
Value on the reinstatement date will reflect:
(a) The Investment Value at the time of termination; plus
(b) Net Premiums attributable to premiums paid at the time of reinstatement.
Upon reinstatement, any Debt at the time of termination must be repaid or
carried over to the reinstated Certificate.
ENROLLMENT FOR A CERTIFICATE
Individuals wishing to purchase a Certificate must submit an enrollment form
to ITT Hartford. Within limits, an applicant may choose the Initial Premium and
the initial Face Amount. A Certificate generally will be issued only on the
lives of Insureds Attained Age 79 and under who supply evidence of insurability
satisfactory to the Company. Acceptance is subject to ITT Hartford's
underwriting rules and ITT Hartford reserves the right to reject an enrollment
form for any reason. No change in the terms or conditions of a Certificate will
be made without the consent of the Owner.
The Certificate will be effective on the Coverage Date only after ITT
Hartford has received all outstanding delivery requirements and received the
Initial Premium. The Coverage Date is the date used to determine all future
cyclical transactions on the Certificate, e.g., Processing Date, Coverage months
and Coverage Years.
THE RIGHT TO EXAMINE THE CERTIFICATE
An Owner has a limited right to return a Certificate. Subject to applicable
state regulation, if the Certificate is returned, by mail or personal delivery
to ITT Hartford or to the agent who sold the Certificate, to be canceled within
10 days after delivery of the Certificate to the Owner, ITT Hartford will return
either (1) the total amount of premiums or (2) the Cash Value plus charges
deducted under the Certificate to the Owner within 7 days. If the state where
Your Certificate is issued requires that We return Your Initial Premium, We will
allocate Your initial Net Premium to the HVA Money Market Investment Division.
If the state of issue of Your Certificate provides for Our return of the
Certificate's Cash Value to the Owner, We will allocate the initial Net Premium
immediately among Your chosen Investment Divisions.
DEDUCTIONS FROM THE PREMIUM
Before allocating the Net Premium to the Investment Divisions, a deduction
as a percentage of premium is made for the front-end sales load, premium taxes
and the DAC tax charge. The amount of each premium allocated to the Investment
Divisions is Your Net Premium.
FRONT-END SALES LOAD
The current and maximum front-end sales load included in the
premium deduction is 9% of any premium paid for Coverage Years 1 through 7
and 7% of any premium paid in Coverage Years 8 and later.
Front-end sales loads cover expenses related to the sale and distribution
of the Certificates. The front-end sales load may be reduced for certain sales
of the Certificates under circumstances which result in a saving of such sales
and distribution expenses. To qualify for such a reduction, a plan must
satisfy certain criteria as to, for example, the expected number of Owners
and the anticipated Face Amount of All Certificates under the plan.
Generally, the sales contracts and effort and administrative costs per
Certificate vary based on such factors as the size of the plan, the purpose
for which Certificates are purchased and certain characteristics of the
plan's members. The amount of reduction and the criteria for qualification
are related to the reduced sales effort and administrative costs resulting
from sales to qualifying plans. ITT Hartford may modify from time to time on
a uniform basis both the amounts of reductions and the criteria for
qualification. Reductions in these charges will not be unfairly
discriminatory against any person, including the affected Owners funded by
the Separate Account.
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PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against ITT
Hartford that are attributable to premiums. This percentage will vary by locale
depending on the tax rates in effect there. The range of premium taxes actually
deducted by ITT Hartford currently ranges from 0% to 4%.
DAC TAX CHARGE
The Company deducts 1.25% of each premium to cover a federal premium tax
assessed against the Company. This charge is reasonable in relation to the
Company's federal income tax burden, under Section 848 of the Code, resulting
from the receipt of premiums. We will adjust this charge based on changes in the
applicable tax law.
DEDUCTIONS AND CHARGES FROM THE INVESTMENT VALUE
MONTHLY DEDUCTION AMOUNTS
On the Coverage Date and on each subsequent Processing Date, ITT Hartford
will deduct an amount (the "Monthly Deduction Amount") from the Investment Value
to cover certain charges and expenses incurred in connection with a Certificate.
The Monthly Deduction Amount will vary from month to month. These will be taken
from the Charge Deduction Division, if designated in the enrollment form for the
Certificate or later elected.
If a Charge Deduction Division has been designated but the Investment Value
in the Charge Deduction Division is less than that required to cover all charges
due on such date:
(1) ITT Hartford will apply the Investment Value of the Charge Deduction
Division to the charges due and set the Investment Value in the Charge
Deduction Division to zero; and
(2) any additional amount due will be allocated among the remaining
Investment Divisions on a Pro Rata Basis.
If no Charge Deduction Division has been designated or elected, any amounts
due will be allocated among the Owner's chosen Investment Divisions on a Pro
Rata Basis.
The Monthly Deduction Amount equals:
(a) the administrative expense charge; plus
(b) the charges for cost of insurance, plus any charges for additional
benefits provided by rider.
(a) COST OF INSURANCE CHARGE
The charge for the cost of insurance is equal to:
(i) the cost of insurance rate per $1,000; multiplied by
(ii) the Net Amount at Risk; divided by
(iii) $1,000
The Net Amount at Risk equals the Death Benefit less the Cash Value on
that date.
The cost of insurance charge is to cover ITT Hartford's anticipated
mortality costs. ITT Hartford uses various underwriting procedures,
including medical underwriting procedures, depending on the characteristics
of the group to which the Group Policies are issued. The current cost of
insurance rates for standard risks may be equal to or less than the 1980
Commissioners Standard Ordinary Mortality Table. Substandard risks will be
charged a higher cost of insurance rate that will not exceed rates based on
a multiple of the 1980 Commissioners Standard Ordinary Mortality Table. The
multiple will be based on the Insured's risk class. The use of simplified
underwriting and guaranteed issue procedures may result in the cost of
insurance charges being higher for some individuals than if medical
underwriting procedures were used.
Cost of insurance rates are based on the age, sex (except where unisex
rates apply), and rate class of the Insured and group mortality
characteristics and the particular characteristics (such as the rate class
21
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structure) under the Group Policy that are agreed to by ITT Hartford and the
Participating Employer. The actual monthly cost of insurance rates will be
based on ITT Hartford's expectations as to future experience. ITT Hartford
will determine the cost of insurance rate at the start of each Coverage
Year. Any changes in the cost of insurance rate will be made uniformly for
all Insureds in the same risk class.
The rate class of an Insured affects the cost of insurance rate. ITT
Hartford and the Participating Employer will agree to the number of classes
and characteristics of each class. The classes may vary by smokers and
nonsmokers, active and retired status, and/or any other nondiscriminatory
classes agreed to by the Participating Employer. Where smoker and non-smoker
divisions are provided, an Insured who is in the nonsmoker division of a
rate class will have a lower cost of insurance than an Insured in the smoker
division of the same rate class, even if each Insured has an identical
Certificate.
Because the Cash Value and the Death Benefit Amount under a Certificate
may vary from month to month, the cost of insurance charge may also vary on
each Processing Date.
(b) RIDER CHARGE
If the policy includes riders, a charge is deducted from the Investment
Value on each Processing Date.
The charge applicable to these riders is to compensate ITT Hartford for
anticipated cost of providing these benefits and are specified on the
applicable rider.
The Riders available are described on page under "Supplemental
Benefits" section.
(c) MONTHLY ADMINISTRATIVE FEE AND OTHER EXPENSE CHARGES
ITT Hartford will assess a monthly administrative charge to compensate
ITT Hartford for administrative costs in connection with the Certificates.
This charge will be $5 per Coverage month initially and is guaranteed never
to exceed $10.00 per Coverage month. This charge covers the average expected
cost for these expenses.
MORTALITY AND EXPENSE RISK CHARGE
A charge is made for mortality and expense risks assumed by ITT Hartford.
ITT Hartford deducts a daily charge at a maximum effective annual rate of .65%
of the value of each Investment Division's assets. See also, "Premiums --
Accumulation Unit Values," page .
The Mortality and Expense Risk Charge is equal to:
(i) the Mortality and Expense Risk Rate; multiplied by
(ii) the portion of the Cash Value allocated to the Investment Divisions and
the Loan Account.
The mortality risk assumed is that the actual cost of insurance charges
specified in the Certificate will be insufficient to meet actual claims. The
expense risk assumed is that expenses incurred in issuing and administering the
Certificates will exceed the administrative charges set forth therein.
If these charges are insufficient to cover actual costs and assumed risks,
the loss will fall on ITT Hartford. Conversely, if the charge proves more than
sufficient, any excess will be added to ITT Hartford's surplus.
TAXES
Currently, no charge is made to the Separate Account for federal, state, and
local taxes that may be attributable to the Separate Account. A change in the
applicable federal, state or local tax laws which impose tax on ITT Hartford
and/or the Separate Account may result in a charge against the Certificates in
the future. Charges for other taxes, if any, attributable to the Separate
Account may also be made.
OTHER MATTERS
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
ITT Hartford reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, or substitutions for the
Separate Account and the Investment Divisions which fund the Group
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Policies. If shares of any of the Portfolios should no longer be available for
investment, or if, in the judgment of ITT Hartford's management, further
investment in shares of any Portfolio should become inappropriate in view of the
purposes of the Group Policies, ITT Hartford may substitute shares of another
Portfolio for shares already purchased, or to be purchased in the future, under
the Group Policies. No substitution of securities will take place without notice
to and consent of Owners and without prior approval of the SEC to the extent
required by the 1940 Act. Subject to Owner approval, if required, ITT Hartford
also reserves the right to end the registration under the 1940 Act of the
Separate Account or any other separate accounts of which it is the depositor
which may fund the Group Policies.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Funds simultaneously. Although neither ITT Hartford nor the Funds
currently foresee any such disadvantages either to variable life insurance
Owners or to variable annuity contract owners, the Board of Directors of The
Hartford Funds, the Board of Trustees for the Neuberger & Berman Trust, the
Board of Trustees for The Alger American Fund and the Board of Trustees for each
of the VIP Fund and the VIP Fund II (collectively the "Boards") intend to
monitor events in order to identify any material conflicts between such Owners
and to determine what action, if any, should be taken in response thereto. If
the Boards were to conclude that separate funds should be established for
variable annuity and variable life insurance separate accounts, ITT Hartford
will bear the attendant expenses.
VOTING RIGHTS
In accordance with its view of presently applicable law, ITT Hartford will
vote the shares of the Funds at regular and special meetings of the shareholders
of the Funds in accordance with instructions from Owners (or the assignee of the
Certificates, as the case may be) having a voting interest in the Separate
Account. The number of shares held in the Separate Account which are
attributable to each Owner is determined by dividing the Owner's interest in
each Investment Division by the net asset value of the applicable shares of the
Funds. ITT Hartford will vote shares for which no instructions have been given
and shares which are not attributable to Owners (i.e., shares owned by ITT
Hartford) in the same proportion as it votes shares for which it has received
instructions. If the 1940 Act or any rule promulgated thereunder should be
amended, however, or if ITT Hartford's present interpretation should change and,
as a result, ITT Hartford determines it is permitted to vote the shares of the
Funds in its own right, it may elect to do so.
The voting interests of the Owners (or the assignees) in the Funds will be
determined as follows: Owners may cast one vote for each full or fractional
Accumulation Unit owned under their respective Certificates and allocated to an
Investment Division the assets of which are invested in the particular Fund on
the record date for the shareholder meeting for that Fund. If, however, an Owner
has taken a Loan secured by the Certificate, amounts transferred from the
Investment Division(s) to the Loan Account(s) in connection with the Loan (see
"Certificate Benefits and Rights -- Loans," page ) will not be considered in
determining the voting interests of the Owner. Owners should review the
prospectuses for the Funds which accompany this Prospectus to determine matters
on which shareholders may vote.
ITT Hartford may, when required by state insurance regulatory authorities,
disregard voting instructions if the instructions require that the shares be
voted so as to cause a change in the sub-classification or investment objective
of one or more of the Funds or to approve or disapprove an investment advisory
policy for the Funds. In addition, ITT Hartford itself may disregard voting
instructions in favor of changes initiated by an Owner in the investment policy
or the investment adviser of the Funds if ITT Hartford reasonably disapproves of
such changes. A change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities. In the
event ITT Hartford does disregard voting instructions, a summary of that action
and the reasons for such action will be included in the next periodic report to
Owners.
OUR RIGHTS
We reserve the right to take certain actions in connection with Our
operations and the operations of the Separate Account. These actions will be
taken in accordance with applicable laws (including obtaining any required
approval of the SEC). If necessary, We will seek approval by Owners.
Specifically, We reserve the right to:
- Add or remove any Investment Division;
- Create new separate accounts;
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<PAGE>
- Combine the Separate Account with one or more other separate
accounts;
- Operate the Separate Account as a management investment company
under the 1940 Act or in any other form permitted by law;
- Deregister the Separate Account under the 1940 Act;
- Manage the Separate Account under the direction of a committee
or discharge such committee at any time;
- Transfer the assets of the Separate Account to one or more
other separate accounts; and
- Restrict or eliminate any of the voting rights of Owners or
other persons who have voting rights as to the Separate
Account.
ITT Hartford also reserves the right to change the name of the Separate
Account.
We have reserved all rights to the name of ITT Hartford Life and Annuity
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use Our name or part of it, but We may also withdraw this right.
STATEMENTS TO OWNERS
We will send You a statement at least once each Coverage Year, showing:
(a) the current Cash Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, Monthly Deduction Amounts and Loans since the last
report;
(c) the amount of any outstanding Debt;
(d) notifications required by the provisions of the Certificate; and
(e) any other information required by the Insurance Department of the State
where the Certificate was delivered.
LIMIT ON RIGHT TO CONTEST
ITT Hartford may not contest the validity of the Certificate after it has
been in effect during the Insured's lifetime for two years from the Issue Date.
If the Certificate is reinstated, the two-year period is measured from the date
of reinstatement. Any increase in the Face Amount as a result of a premium
payment is contestable for two years from its effective date. In addition, if
the Insured commits suicide in the two-year period, or such period as specified
in state law, the Death Benefit payable will be limited to the premiums paid
less any outstanding Debt and partial withdrawals.
MISSTATEMENT AS TO AGE OR SEX
If the age or sex of the Insured is incorrectly stated, the amount of all
benefits payable will be appropriately adjusted, as specified in the
Certificate.
ASSIGNMENT
The Certificate may be assigned as collateral for a loan or other
obligation. ITT Hartford is not responsible for any payment made or action taken
before receipt of written notice of such assignment. Proof of interest must be
filed with any claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Certificates.
EXPERIENCE CREDITS
The Certificates issued under a Group Policy may be eligible for experience
credits due to administrative savings. The amount of any experience credit may
be paid in cash or applied to and used to increase the Investment Value.
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SUPPLEMENTAL BENEFITS
The following supplemental benefit, which is subject to the restrictions and
limitations set forth therein, may be included in a Certificate.
MATURITY DATE EXTENSION RIDER
We will extend the Maturity Date (the date on which the Certificate will
mature), to the date of death of the Insured. Certain Death Benefit and premium
restrictions apply. See "Federal Tax Considerations -- Income Taxation of
Certificate Benefits," page .
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
OTHER BUSINESS
PROFESSION, VOCATION
POSITION WITH ITT OR EMPLOYMENT FOR
HARTFORD, YEAR PAST 5 YEARS; OTHER
NAME, AGE OF ELECTION DIRECTORSHIPS
- ------------------- ------------------------- ------------------------------
<S> <C> <C>
Andrew, Joan M. Vice President, 1992 Vice President and Director,
38 National Service Center Operations
(1992-Present), ITT Hartford.
Bossen, Wendell J. Vice President, 1995** Vice President (1992), Hartford
62 Life Insurance Company; Executive Vice
President (1984), Mutual Benefit.
Boyko, Gregory A. Vice President, 1995 Vice President and Controller
44 (1995-Present), Hartford Life Insurance
Company; Chief Financial Officer (1994-
1995), IMG American Life; Senior Vice
President (1992-1994), Connecticut Mutual.
Cummins, Peter W. Vice President, 1993 Vice President, Individual Annuity
59 Operations (1989-Present), Hartford Life
Insurance Company.
deRaismes, Ann M. Vice President, 1994 Vice President (1994-Present),
45 Assistant Vice President (1992),
Director of Human Resources (1991-Present),
Hartford Life Insurance Company.
Dooley, James R. Vice President, 1977 Vice President, Director
59 Information Services (1973-Present),
ITT Hartford.
Fitch, Timothy M. Vice President, 1995 Vice President (1995-Present);
43 Assistant Vice President (1993);
Director (1991), Hartford Life.
Frahm, Donald R. Director, 1995* Chairman and Chief Executive
64 Officer (1988-Present), ITT
Hartford Insurance Group, Inc.
Gardner, Bruce D. Director, 1991* Vice President (1996-Present) General
45 Counsel and Corporate Secretary
(1991), Hartford Life Insurance Company
Gareau, Joseph H. Executive Vice President, Executive Vice President and
49 1993 Chief Investment Officer (1993-
Chief Investment Officer, Present), Hartford Life Insurance
1993 Company
Director, 1993*
Gillette, Donald J. Vice President, 1993 Vice President, Director of
50 Marketing (1991-Present), ITT
Hartford; MSI Insurance (1986)
Godkin, Lynda General Counsel, 1996 General Counsel (1996-Present,
42 Corporate Secretary, 1995 Associate General Counsel and
Corporate Secretary (1995), Assistant
General Counsel and Secretary (1994),
Counsel (1990), Hartford Life
Insurance Company
Grady, Lois W. Vice President, 1993 Vice President (1993-Present),
51 Assistant Vice President (1988),
Hartford Life Insurance Company
25
<PAGE>
<CAPTION>
OTHER BUSINESS
PROFESSION, VOCATION
POSITION WITH ITT OR EMPLOYMENT FOR
HARTFORD, YEAR PAST 5 YEARS; OTHER
NAME, AGE OF ELECTION DIRECTORSHIPS
- ------------------- ------------------------- ------------------------------
<S> <C> <C>
Hall, David A. Senior Vice President, Senior Vice President and Actuary
42 1993 Actuary, 1993 (1993-Present), Hartford Life
Insurance Company
Kanarek, Joseph Vice President, 1994 Vice President (1991-Present),
48 Director, 1994* Director (1992-Present), Hartford Life
Insurance Company
Kerzner, Robert A. Vice President, 1994 Vice President (1994-Present),
44 Regional Vice President (1991), Life
Sales Manager (1990), Hartford Life
Insurance Company
Kohlhof, LaVern L. Vice President, 1980 Vice President and Secretary
66 Secretary, 1980 (1980-Present), ITT Hartford
Malchodi, Jr., Vice President, 1994 Vice President (1994-Present),
William B. Director of Taxes, 1992 Director of Taxes (1992-Present),
45 Assistant General Counsel and
Assistant Director of Taxes (1986),
Hartford Insurance Group
Marra, Thomas M. Executive Vice President, Senior Vice President (1994),
37 1995 Director of Individual Annuities
Director, 1994* (1991), Vice President (1989),
Hartford Life Insurance Company
Matthiesen, Steven L. Vice President, 1984 Vice President, Director of New
51 Business (1984-Present), ITT
Hartford
Noto, Joseph J. Vice President, 1989 Vice President (1989-Present),
44 Hartford Life Insurance Company.
Raymond, Craig D. Vice President, 1993 Vice President and Chief Actuary
32 Chief Actuary, 1994 (1994-Present), Vice President (1993),
Assistant Vice President (1992),
Actuary (1989-1994), Hartford Life
Insurance Company
Schrandt, David T. Vice President, 1987 Vice President, Treasurer and
48 Treasurer, 1987 Controller (1987-Present), ITT
Hartford
Smith, Lowndes A. President, 1993 President and Chief Executive
55 Chief Executive Officer, Officer (1993-Present), ITT
1989 Hartford; President and Chief
Director, 1985* Operating Officer (1989-Present),
Hartford Life Insurance Company
Zlatkus, Lizabeth H. Vice President, 1994 Vice President, Director Business
36 Director, 1994* Operations (1994), Assistant Vice
President, Director Executive
Operations (1992), Executive Staff
Assistant to President (1990), Hartford
Life Insurance Company
</TABLE>
- -----------------------------
* Denotes year of election to Board of Directors
** ITT Hartford Affiliated Company
26
<PAGE>
DISTRIBUTION OF THE GROUP POLICIES
ITT Hartford intends to sell the Group Policies in all jurisdictions where
it is licensed to do business. The Group Policies will be sold by life insurance
sales representatives who represent ITT Hartford and who are registered
representatives of Hartford Equity Sales Company, Inc. ("HESCO"), or certain
other registered Broker-Dealers. Any sales representative or employee will have
been qualified to sell variable life insurance policies under applicable Federal
and State laws. Each Broker-Dealer is registered with the SEC under the
Securities Exchange Act of 1934 and all are members of the National Association
of Securities Dealers, Inc. HESCO is the principal underwriter for the Group
Policies. The maximum sales commission payable to ITT Hartford agents,
independent registered insurance brokers, and other registered Broker-Dealers is
6% of the premiums paid. In addition, expense allowances may be paid. The sales
representative may be required to return all or a portion of the commissions
paid if a Certificate terminates prior to the second Certificate Anniversary.
SAFEKEEPING OF THE SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by ITT Hartford. The assets of
the Separate Account are kept physically segregated and held separate and apart
from the General Account of ITT Hartford. ITT Hartford maintains records of all
purchases and redemptions of shares of the Fund. Additional protection for the
assets of the Separate Account is afforded by ITT Hartford's blanket fidelity
bond issued by Aetna Casualty and Surety Company, in the aggregate amount of $50
million, covering all of the officers and employees of ITT Hartford.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE OWNER INVOLVED AND THE TYPE OF PLAN UNDER WHICH THE
CERTIFICATE IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CERTIFICATE DESCRIBED
HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of these Certificates cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. This discussion
of Federal tax considerations is based upon ITT Hartford's understanding of
current Federal income tax laws as they are currently interpreted.
TAXATION OF THE COMPANY AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of ITT Hartford which is taxed as a
life insurance company under Part 1 of Subchapter L of Chapter 1 of the Internal
Revenue Code ("Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Investment Divisions) are reinvested and are taken into account in determining
the value of the Accumulation Units (see "Certificate Benefits and Provisions --
Values under the Certificate", on page ). As a result, such investment income
and realized capital gains are automatically applied to increase reserves under
the Certificate.
ITT Hartford does not expect to incur any Federal income tax on the earnings
or realized capital gains attributable to the Separate Account. Based upon these
expectations, no charge is currently being made to the Separate Account for
Federal income taxes. If ITT Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for taxes against the Separate Account.
27
<PAGE>
INCOME TAXATION OF CERTIFICATE BENEFITS
For Federal income tax purposes, the Certificates should be treated as life
insurance policies under Section 7702 of the Code. The death benefit under a
life insurance policy is excluded from the gross income of the Beneficiary.
Also, a life insurance policy owner is not taxed on increments in the policy
value until the policy is partially or completely surrendered. Section 7702
limits the amount of premiums that may be invested in a policy that is treated
as life insurance. ITT Hartford intends to monitor premium levels to assure
compliance with the Section 7702 standards.
During the first fifteen policy years, an "income first" rule generally
applies to any distribution of cash that is required under Code Section 7702
because of a reduction in benefits under the Certificate.
ITT Hartford also believes that any Loan received under a Certificate will
be treated as Debt of the Owner, and that no part of any Loan under a
Certificate will constitute income to the Owner. A surrender or assignment of
the Certificate may have tax consequences depending upon the circumstances.
Owners should consult qualified tax advisers concerning the effect of such
changes.
Federal, state, and local estate tax, inheritance, and other tax
consequences of ownership or receipt of Certificate proceeds depend on the
circumstances of each Owner or Beneficiary.
The Maturity Date Extension Rider allows an Owner to extend the Maturity
Date to the date of the death of the Insured. Although ITT Hartford believes
that the Certificate will continue to be treated as a life insurance contract
for federal income tax purposes after the scheduled Maturity Date, due to the
lack of specific guidance on this issue, this result is not certain. If the
Certificate is not treated as a life insurance contract for federal income tax
purposes after the Maturity Date, among other things, the Death Proceeds may be
taxable to the recipient. The Owner should consult a competent tax adviser
regarding the possible adverse tax consequences resulting from an extension of
the scheduled Maturity Date.
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance contracts. A modified endowment contract is a life insurance policy
which satisfies the Section 7702 definition of life insurance but fails the
seven-pay test of Section 7702A. A policy fails the seven-pay test if the
accumulated amount paid into the Certificate at any time during the first seven
Coverage Years exceeds the sum of the net level premiums that would have been
paid up to that point if the Certificate provided for paid-up future benefits
after the payment of seven level annual premiums. Computational rules for the
seven-pay test are described in Section 7702A(c).
A policy that is classified as a modified endowment contract is eligible for
certain aspects of the beneficial tax treatment accorded to life insurance. That
is, the death benefit is excluded from income and increments in value are not
subject to current taxation. However, withdrawals and loans from a modified
endowment policy are treated first as income, then as a recovery of basis.
Taxable withdrawals are subject to a 10% additional tax, with certain
exceptions. Generally, only distributions and loans made in the first year in
which a policy becomes a modified endowment policy, and in subsequent years, are
taxable. However, distributions and loans made in the two years prior to a
policy's failing the seven-pay test are deemed to be in anticipation of failure
and are subject to tax.
If the Certificate satisfies the seven-pay test for seven years,
distributions and loans made thereafter will not be subject to the modified
endowment policy rules, unless the Certificate is changed materially. The
seven-pay test will be applied anew at any time the Certificate undergoes a
material change, which includes an increase in the Face Amount.
All modified endowment policies that are issued within any calendar year to
the same policy owner by one company or its affiliates shall be treated as one
modified endowment policy for the purpose of determining the taxable portion of
any loan or distribution.
ITT Hartford has instituted procedures to monitor whether a Certificate may
become a modified endowment contract after issue.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance policy
(other than a pension plan policy) will not be treated as a life insurance
policy for any period during which the investments made by the separate
28
<PAGE>
account underlying the policy are not adequately diversified in accordance with
regulations prescribed by the Treasury. If a policy is not treated as a life
insurance policy, the policy owner will be subject to income tax on the annual
increases in cash value. The Treasury has issued diversification regulations
which, among other things, generally require that no more than 55% of the value
of the total assets of the segregated asset account (such as the Funds)
underlying a variable contract is represented by any one investment, no more
than 70% is represented by any two investments, no more than 80% is represented
by any three investments, and no more than 90% is represented by any four
investments. In determining whether the diversification standards are met, all
securities of the same issuer, all interests in the same real property project,
and all interests in the same commodity are each treated as a single investment.
In addition, in the case of government securities, each government agency or
instrumentality shall be treated as a separate issuer. If the diversification
standards are not met, non-pension policy owners will be subject to current tax
on the increase in cash value in the policy.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to need the diversification
standards, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
Policy Owner must agree to pay the tax due for the period during which the
diversification standards were not met. The amount required to be paid shall be
an amount based upon the tax that would have been owed by the policy owner if
they were treated as receiving the income on the policy for such period or
periods.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Owner, such
amounts will be subject to Federal income tax withholding and reporting,
pursuant to Section 3405 of the Internal Revenue Code.
OTHER TAX CONSIDERATIONS
Qualified tax advisers should be consulted concerning the estate and gift
tax consequences of Certificate ownership and distributions under federal, state
and local law.
LEGAL PROCEEDINGS
There are no pending material legal proceedings affecting the Group
Policies, the Certificates, the Separate Account or any of the Funds.
EXPERTS
The financial statements for ITT Hartford included in this Prospectus and
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report herein, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said report. Reference is made to said report of ITT
Hartford Life and Annuity Insurance Company (the depositor), which includes
an explanatory paragraph with respect to changing the valuation method
in determining aggregate reserves for future benefits. The principal business
address of Arther Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
The hypothetical illustrations included in this Prospectus and Registration
Statement have been approved by Peter J. Vogt, FSA, MAAA, Assistant Actuary, are
included in reliance upon his opinion as to their reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning the Separate Account, ITT Hartford, the Group Policies and the
Certificates.
29
<PAGE>
APPENDIX A
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT
VALUES AND CASH SURRENDER VALUES
The following tables illustrate how the Death Benefits, Cash Values and Cash
Surrender Values of a Policy may change with the investment experience of the
Separate Account. The tables show how the Death Benefits, Cash Values and Cash
Surrender Values of a Certificate issued to an Insured of a given age would vary
over time if the investment return on the assets held in each Portfolio were a
uniform, gross annual rate of 0%, 6% and 12%. The Death Benefits, Cash Values
and Cash Surrender Values would be different from those shown if the gross
annual investment returns averaged 0%, 6% and 12% over a period of years, but
fluctuated above and below those averages for individual Coverage Years. The
tables assume that no Loans are made and that no partial withdrawals have been
made. The tables are also based on the assumption that the Owner has not
requested an increase or decrease in the Face Amount and that no transfers have
been made in any Coverage Years.
The tables on pages to illustrate a Certificate issued to a Male
Insured, Age 45 in the Medical Non-Smoker Class with an Initial Face Amount of
$250,000. The Death Benefits, Cash Values and Cash Surrender Values would be
lower if the Insured was a smoker or in a special class since the cost of
insurance charges would increase.
The tables reflect the fact that the net return on the assets held in the
Investment Divisions is lower than the gross after-tax return of the Funds. This
is because these tables assume an investment management fee and other estimated
Fund expenses totaling 0.70%. The 0.70% figure is based on an average of the
current management fees and expenses of the available twelve Funds, taking into
account any applicable expense caps or reimbursement arrangements. Actual fees
and expenses of the Funds associated with a Certificate may be more or less than
0.70%, will vary from year to year, and will depend on how the Cash Value is
allocated.
As their headings indicate, the tables reflect the deductions of current
contractual charges and guaranteed contractual charges for a single gross
interest rate. These charges include the daily charge to the Separate Account
for assuming mortality and expense risks and the monthly administrative expense
and cost of insurance charges. All tables assume a charge of 2.00% for taxes
attributable to premiums, a 1.25% charge for Federal DAC tax and reflect the
fact that no charges against the Separate Account are currently made for
federal, state or local taxes attributable to the Policy or Certificate.
Each table also shows the amount to which the premiums would accumulate if
an amount equal to those premiums were invested to earn interest, after taxes,
at 5% compounded annually.
Upon request, ITT Hartford will furnish a comparable illustration based on a
proposed Certificate's specific circumstances.
30
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 11,943 11,943 250,000 11,013 11,013 250,000
2 30,355 23,644 23,644 250,000 21,844 21,844 250,000
3 46,680 35,107 35,107 250,000 32,494 32,494 250,000
4 63,821 46,369 46,369 250,000 42,971 42,971 250,000
5 81,819 57,449 57,449 250,000 53,275 53,275 250,000
6 100,717 68,460 68,460 250,000 63,410 63,410 250,000
7 120,560 79,312 79,312 250,000 73,372 73,372 250,000
8 126,588 77,772 77,772 250,000 70,858 70,858 250,000
9 132,917 76,207 76,207 250,000 68,223 68,223 250,000
10 139,563 74,608 74,608 250,000 65,444 65,444 250,000
11 146,541 72,941 72,941 250,000 62,507 62,507 250,000
12 153,868 71,192 71,192 250,000 59,390 59,390 250,000
13 161,561 69,331 69,331 250,000 56,081 56,081 250,000
14 169,639 67,350 67,350 250,000 52,558 52,558 250,000
15 178,121 65,235 65,235 250,000 48,798 48,798 250,000
16 187,027 62,899 62,899 250,000 44,763 44,763 250,000
17 196,378 60,424 60,424 250,000 40,411 40,411 250,000
18 206,197 57,790 57,790 250,000 35,685 35,685 250,000
19 216,507 54,983 54,983 250,000 30,519 30,519 250,000
20 227,332 51,979 51,979 250,000 24,841 24,841 250,000
25 290,140 32,923 32,923 250,000 0 0 0
30 370,300 2,817 2,817 250,000 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 0%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
31
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,674 12,674 250,000 11,715 11,715 250,000
2 30,355 25,850 25,850 250,000 23,941 23,941 250,000
3 46,680 39,558 39,558 250,000 36,707 36,707 250,000
4 63,821 53,858 53,858 250,000 50,048 50,048 250,000
5 81,819 68,796 68,796 250,000 63,995 63,995 250,000
6 100,717 84,514 84,514 250,000 78,589 78,589 250,000
7 120,560 100,962 100,962 250,000 93,864 93,864 250,000
8 126,588 105,202 105,202 250,000 96,816 96,816 250,000
9 132,917 109,613 109,613 250,000 99,812 99,812 250,000
10 139,563 114,198 114,198 250,000 102,842 102,842 250,000
11 146,541 118,943 118,943 250,000 105,906 105,906 250,000
12 153,868 123,850 123,850 251,157 108,999 108,999 250,000
13 161,561 128,899 128,899 254,526 112,123 112,123 250,000
14 169,639 134,094 134,094 257,924 115,277 115,277 250,000
15 178,121 139,436 139,436 261,355 118,458 118,458 250,000
16 187,027 144,879 144,879 264,744 121,658 121,658 250,000
17 196,378 150,492 150,492 268,208 124,867 124,867 250,000
18 206,197 156,274 156,274 271,769 128,071 128,071 250,000
19 216,507 162,234 162,234 275,451 131,251 131,251 250,000
20 227,332 168,372 168,372 279,267 134,393 134,393 250,000
25 290,140 201,822 201,822 300,311 149,164 149,164 250,000
30 370,300 240,120 240,120 325,173 160,373 160,373 250,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATE OF INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
32
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,403 13,403 250,000 12,416 12,416 250,000
2 30,355 28,141 28,141 250,000 26,120 26,120 250,000
3 46,680 44,362 44,362 250,000 41,260 41,260 250,000
4 63,821 62,264 62,264 250,000 58,004 58,004 250,000
5 81,819 82,050 82,050 250,000 76,539 76,539 250,000
6 100,717 104,029 104,029 250,000 97,079 97,079 250,000
7 120,560 128,268 128,268 297,803 119,704 119,704 278,078
8 126,588 141,331 141,331 318,794 130,879 130,879 295,392
9 132,917 155,708 155,708 341,372 143,050 143,050 313,810
10 139,563 171,523 171,523 365,662 156,292 156,292 333,403
11 146,541 188,883 188,883 391,737 170,696 170,696 354,243
12 153,868 207,924 207,924 419,710 186,353 186,353 376,410
13 161,561 228,775 228,775 449,660 203,374 203,374 399,988
14 169,639 251,604 251,604 481,721 221,873 221,873 425,066
15 178,121 276,591 276,591 516,046 241,972 241,972 451,739
16 187,027 303,826 303,826 552,635 263,795 263,795 480,107
17 196,378 333,647 333,647 591,889 287,470 287,470 510,279
18 206,197 366,285 366,285 634,054 313,126 313,126 542,369
19 216,507 402,004 402,004 679,405 340,896 340,896 576,498
20 227,332 441,080 441,080 728,217 370,924 370,924 612,796
25 290,140 698,226 698,226 1,034,173 561,291 561,291 831,973
30 370,300 1,097,000 1,097,000 1,478,729 837,775 837,775 1,130,313
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN. DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATE OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 12%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
33
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 11,933 11,933 261,964 10,961 10,961 261,068
2 30,355 23,603 23,603 273,656 21,682 21,682 271,808
3 46,680 35,007 35,007 285,082 32,159 32,159 282,306
4 63,821 46,175 46,175 296,270 42,390 42,390 292,558
5 81,819 57,123 57,123 307,236 52,367 52,367 302,555
6 100,717 68,000 68,000 318,119 62,084 62,084 312,294
7 120,560 78,683 78,682 328,818 71,525 71,525 321,758
8 126,588 76,962 76,962 327,100 68,465 68,465 318,709
9 132,917 75,206 75,206 325,346 65,261 65,261 315,516
10 139,563 73,398 73,398 323,543 61,887 61,887 312,157
11 146,541 71,497 71,497 321,649 58,333 58,333 308,617
12 153,868 69,482 69,482 319,644 54,578 54,578 304,879
13 161,561 67,315 67,315 317,490 50,617 50,617 300,935
14 169,639 64,989 64,989 315,177 46,434 46,434 296,771
15 178,121 62,493 62,493 312,695 42,012 42,012 292,368
16 187,027 59,712 59,712 309,938 37,320 37,320 287,699
17 196,378 56,767 56,767 307,006 32,325 32,325 282,729
18 206,197 53,638 53,638 303,892 26,983 26,983 277,415
19 216,507 50,314 50,314 300,584 21,241 21,241 271,706
20 227,332 46,774 46,774 297,062 15,051 15,051 265,553
25 290,140 24,947 24,947 275,357 0 0 0
30 370,300 0 0 0 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 0%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
34
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,663 12,663 262,633 11,659 11,659 261,710
2 30,355 25,805 25,805 275,735 23,762 23,762 273,775
3 46,680 39,443 39,443 289,331 36,322 36,322 286,296
4 63,821 53,626 53,626 303,468 49,354 49,354 299,288
5 81,819 68,393 68,393 318,185 62,868 62,868 312,762
6 100,717 83,922 83,922 333,649 76,879 76,879 326,730
7 120,560 100,120 100,120 349,789 91,386 91,386 341,194
8 126,588 104,066 104,066 353,725 93,447 93,447 343,261
9 132,917 108,133 108,133 357,782 95,411 95,411 345,234
10 139,563 112,312 112,312 361,951 97,247 97,247 347,080
11 146,541 116,560 116,560 366,194 98,933 98,933 348,780
12 153,868 120,862 120,862 370,491 100,442 100,442 350,304
13 161,561 125,179 125,179 374,806 101,756 101,756 351,634
14 169,639 129,500 129,500 379,127 102,847 102,847 352,744
15 178,121 133,813 133,813 383,441 103,683 103,683 353,601
16 187,027 137,997 137,997 387,636 104,218 104,218 354,163
17 196,378 142,167 142,167 391,807 104,400 104,400 354,375
18 206,197 146,298 146,298 395,942 104,163 104,163 354,173
19 216,507 150,376 150,376 400,024 103,429 103,429 353,481
20 227,332 154,374 154,374 404,029 102,199 102,199 352,221
25 290,140 171,947 171,947 421,683 84,222 84,222 334,669
30 370,300 181,020 181,020 430,948 36,402 36,402 287,507
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 6%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
35
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$14,102 PREMIUM PAID FOR 7 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,391 13,391 263,298 12,357 12,357 262,348
2 30,355 28,092 28,092 277,884 25,923 25,923 275,809
3 46,680 44,231 44,231 293,898 40,820 40,820 290,590
4 63,821 61,992 61,992 311,517 57,182 57,182 306,824
5 81,819 81,557 81,557 330,925 75,151 75,151 324,653
6 100,717 103,275 103,275 352,455 94,889 94,889 344,236
7 120,560 127,240 127,240 376,224 116,560 116,560 365,739
8 126,588 140,002 140,002 388,884 126,665 126,665 375,773
9 132,917 154,051 154,051 402,820 137,641 137,641 386,674
10 139,563 169,508 169,508 418,154 149,554 149,554 398,505
11 146,541 186,473 186,473 434,988 162,486 162,486 411,348
12 153,868 205,087 20,087 453,458 176,524 176,524 425,290
13 161,561 225,480 225,480 473,696 191,775 191,775 440,435
14 169,639 247,830 247,830 495,876 208,347 208,347 456,892
15 178,121 272,332 272,332 520,190 226,360 226,360 474,779
16 187,027 299,090 299,090 546,751 245,931 245,931 494,214
17 196,378 328,442 328,442 582,656 267,184 267,184 515,320
18 206,197 360,570 360,570 624,161 290,247 290,247 538,225
19 216,507 395,730 395,730 668,803 315,252 315,252 563,061
20 227,332 434,196 434,196 716,852 342,348 342,348 589,975
25 290,140 687,323 687,323 1,018,024 515,918 515,918 764,719
30 370,300 1,079,864 1,079,864 1,455,630 769,993 769,993 1,038,862
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 12%,
BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
36
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 4,924 4,924 250,000 3,968 3,968 250,000
2 12,915 9,687 9,687 250,000 7,811 7,811 250,000
3 19,861 14,290 14,290 250,000 11,526 11,526 250,000
4 27,154 18,763 18,763 250,000 15,112 15,112 250,000
5 34,812 23,122 23,122 250,000 18,563 18,563 250,000
6 42,853 27,500 27,500 250,000 21,874 21,874 250,000
7 51,296 31,787 31,787 250,000 25,031 25,031 250,000
8 60,161 36,099 36,099 250,000 28,142 28,142 250,000
9 69,469 40,314 40,314 250,000 31,072 31,072 250,000
10 79,242 44,422 44,422 250,000 33,804 33,804 250,000
11 89,504 48,391 48,391 250,000 36,332 36,332 250,000
12 100,279 52,210 52,210 250,000 38,644 38,644 250,000
13 111,593 55,854 55,854 250,000 40,735 40,735 250,000
14 123,473 59,323 59,323 250,000 42,597 42,597 250,000
15 135,947 62,612 62,612 250,000 44,215 44,215 250,000
16 149,044 65,645 65,645 250,000 45,568 45,568 250,000
17 162,796 68,513 68,513 250,000 46,626 46,626 250,000
18 177,236 71,206 71,206 250,000 47,353 47,353 250,000
19 192,398 73,722 73,722 250,000 47,703 47,703 250,000
20 208,318 76,049 76,049 250,000 47,632 47,632 250,000
25 300,684 84,346 84,346 250,000 39,331 39,331 250,000
30 418,569 85,135 85,135 250,000 9,035 9,035 250,000
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 0%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
37
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,229 5,229 250,000 4,243 4,243 250,000
2 12,915 10,604 10,604 250,000 8,610 8,610 250,000
3 19,861 16,130 16,130 250,000 13,105 13,105 250,000
4 27,154 21,843 21,843 250,000 17,732 17,732 250,000
5 34,812 27,769 27,769 250,000 22,490 22,490 250,000
6 42,853 34,052 34,052 250,000 27,385 27,385 250,000
7 51,296 40,597 40,597 250,000 32,408 32,408 250,000
8 60,161 47,542 47,542 250,000 37,684 37,684 250,000
9 69,469 54,777 54,777 250,000 43,087 43,087 250,000
10 79,242 62,309 62,309 250,000 48,612 48,612 250,000
11 89,504 70,123 70,123 250,000 54,264 54,264 250,000
12 100,279 78,226 78,226 250,000 60,043 60,043 250,000
13 111,593 86,616 86,616 250,000 65,963 65,963 250,000
14 123,473 95,313 95,313 250,000 72,030 72,030 250,000
15 135,947 104,339 104,339 250,000 78,253 78,253 250,000
16 149,044 113,659 113,659 250,000 84,635 84,635 250,000
17 162,796 123,376 123,376 250,000 91,176 91,176 250,000
18 177,236 133,518 133,518 250,000 97,878 97,878 250,000
19 192,398 144,121 144,121 250,000 104,739 104,739 250,000
20 208,318 155,158 155,158 257,350 111,766 111,766 250,000
25 300,684 216,025 216,025 321,445 150,258 150,258 250,000
30 418,569 286,969 286,969 388,618 197,093 197,093 267,146
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 6%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
38
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
LEVEL DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,535 5,535 250,000 4,518 4,518 250,000
2 12,915 11,557 11,557 250,000 9,443 9,443 250,000
3 19,861 18,117 18,117 250,000 14,816 14,816 250,000
4 27,154 25,305 25,305 250,000 20,687 20,687 250,000
5 34,812 33,204 33,204 250,000 27,105 27,105 250,000
6 42,853 42,029 42,029 250,000 34,131 34,131 250,000
7 51,296 51,767 51,767 250,000 41,821 41,821 250,000
8 60,161 62,651 62,651 250,000 50,379 50,379 250,000
9 69,469 74,669 74,669 250,000 59,765 59,765 250,000
10 79,242 87,941 87,941 250,000 70,070 70,070 250,000
11 89,504 102,584 102,584 250,000 81,408 81,408 250,000
12 100,279 118,751 118,751 250,000 93,909 93,909 250,000
13 111,593 136,560 136,560 268,409 107,730 107,730 250,000
14 123,473 156,085 156,085 298,841 123,051 123,051 250,000
15 135,947 177,483 177,483 331,137 140,011 140,011 261,387
16 149,044 200,853 200,853 365,336 158,459 158,459 288,395
17 162,796 226,460 226,460 401,741 178,501 178,501 316,851
18 177,236 254,506 254,506 440,560 200,252 200,252 346,858
19 192,398 285,216 285,216 482,028 223,831 223,831 378,526
20 208,318 318,831 318,831 526,386 249,366 249,366 411,972
25 300,684 540,360 540,360 800,351 411,856 411,856 610,473
30 418,569 884,473 884,473 1,192,249 648,965 648,965 875,573
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 12%,
BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
39
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.70% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 4,919 4,919 254,943 3,947 3,947 254,046
2 12,915 9,671 9,671 259,708 7,749 7,749 257,860
3 19,861 14,249 14,249 264,301 11,400 11,400 261,524
4 27,154 18,683 18,683 268,747 14,898 14,898 265,034
5 34,812 22,989 22,989 273,063 18,231 18,231 268,381
6 42,853 27,313 27,313 277,386 21,396 21,396 271,560
7 51,296 31,531 31,531 281,613 24,370 24,370 274,550
8 60,161 35,759 35,759 285,850 27,259 27,259 277,456
9 69,469 39,871 39,871 289,971 29,922 29,922 280,137
10 79,242 43,853 43,853 293,964 32,337 32,337 282,573
11 89,504 47,662 47,662 297,787 34,493 34,493 284,750
12 100,279 51,281 51,281 301,422 36,372 36,372 286,652
13 111,593 54,672 54,672 304,832 37,968 37,968 288,272
14 123,473 57,828 57,828 308,008 39,268 39,268 289,596
15 135,947 60,741 60,741 310,941 40,255 40,255 290,609
16 149,044 63,297 63,297 313,526 40,899 40,899 291,282
17 162,796 65,616 65,616 315,865 41,169 41,169 291,583
18 177,236 67,680 67,680 317,950 41,020 41,020 291,468
19 192,398 69,479 69,479 319,771 40,402 40,402 290,889
20 208,318 70,994 70,994 321,310 39,267 39,267 289,797
25 300,684 73,439 73,439 323,904 24,498 24,498 275,290
30 418,569 64,458 64,458 315,141 0 0 0
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 0%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
40
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,225 5,225 255,223 4,221 4,221 254,300
2 12,915 10,586 10,586 260,573 8,542 8,542 258,612
3 19,861 16,082 16,082 266,058 12,960 12,960 263,022
4 27,154 21,748 21,748 271,709 17,475 17,475 267,529
5 34,812 27,604 27,604 277,549 22,078 22,078 272,124
6 42,853 33,810 33,810 283,725 26,764 26,764 276,804
7 51,296 40,254 40,254 290,149 31,516 31,516 281,550
8 60,161 47,068 47,068 296,941 36,444 36,444 286,473
9 69,469 54,135 54,135 303,987 41,406 41,406 291,432
10 79,242 61,452 61,452 311,283 46,379 46,379 296,404
11 89,504 68,984 68,984 318,797 51,348 51,348 301,374
12 100,279 76,721 76,721 326,516 56,291 56,291 306,319
13 111,593 84,631 84,631 334,412 61,197 61,197 311,228
14 123,473 92,712 92,712 342,478 66,046 66,046 316,082
15 135,947 100,959 100,959 350,711 70,814 70,814 320,856
16 149,044 109,259 109,259 359,006 75,463 75,463 325,516
17 162,796 117,734 117,734 367,466 79,949 79,949 330,016
18 177,236 126,369 126,369 376,088 84,215 84,215 334,300
19 192,398 135,160 135,160 384,865 88,192 88,192 338,302
20 208,318 144,089 144,089 393,782 91,811 91,811 341,952
25 300,684 189,952 189,952 439,620 102,201 102,201 352,580
30 418,569 234,498 234,498 484,226 89,866 89,866 340,768
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 6%, BUT
VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
41
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
INCREASING DEATH BENEFIT OPTION
ISSUE AGE 45 MALE MEDICAL NON-SMOKER
$6,000 PREMIUM PAID FOR 30 YEARS
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.30% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES * GUARANTEED CHARGES **
PREMIUMS ------------------------------------ ------------------------------------
END OF ACCUMULATED CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ---------------- ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,530 5,530 255,502 4,495 4,495 254,552
2 12,915 11,536 11,536 261,467 9,368 9,368 259,392
3 19,861 18,063 18,063 267,948 14,651 14,651 264,639
4 27,154 25,192 25,192 275,025 20,381 20,381 270,311
5 34,812 33,003 33,003 282,776 26,594 26,594 276,501
6 42,853 41,721 41,721 291,415 33,332 33,332 283,193
7 51,296 51,311 51,311 300,929 40,626 40,626 290,439
8 60,161 61,994 61,994 311,527 48,651 48,651 298,411
9 69,469 73,744 73,744 323,814 57,326 57,326 307,029
10 79,242 86,658 86,658 335,997 66,693 66,693 316,336
11 89,504 100,812 100,812 350,043 76,811 76,811 326,388
12 100,279 116,316 116,316 365,429 87,736 87,736 337,242
13 111,593 133,271 133,271 382,257 99,543 99,543 348,973
14 123,473 151,819 151,819 400,666 112,308 112,308 361,654
15 135,947 172,116 172,116 420,810 126,110 126,100 375,365
16 149,044 194,222 194,222 442,758 141,023 141,023 390,182
17 162,796 218,454 218,454 466,805 157,125 157,125 406,180
18 177,236 245,012 245,012 493,160 174,492 174,492 423,437
19 192,398 274,129 274,129 522,054 193,196 193,196 442,024
20 208,318 306,052 306,052 553,732 213,324 213,324 462,028
25 300,684 518,130 518,130 767,425 339,286 339,286 587,214
30 418,569 849,534 849,534 1,145,152 518,712 518,712 765,616
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
</TABLE>
THE DEATH BENEFIT MAY, AND THE CASH VALUES AND CASH SURRENDER VALUES WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A
CERTIFICATE WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CERTIFICATE AVERAGED 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL COVERAGE YEARS. THE DEATH
BENEFIT, CASH VALUE AND CASH SURRENDER VALUE FOR A CERTIFICATE WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
INVESTMENT DIVISIONS AND THE RATES OF RETURN OF THE INVESTMENT DIVISIONS IF THE
ACTUAL RATES OF INVESTMENT RETURN APPLICABLE TO THE CERTIFICATE AVERAGED 12%,
BUT VARIED ABOVE OR BELOW THAT AVERAGE FOR THE INVESTMENT DIVISIONS. NO
REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
42
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, the results of operations
and the cash flows for the periods presented. Interim results are not
indicative of the results which may be expected for any other interim period
or the full year. Certain reclassifications of prior year results were made
to conform to current presentation. For a description of accounting policies,
see Notes to Consolidated Financial Statements in the 1995 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in Millions)
Three Months Ended
March 31,
---------
1996 1995
-------- --------
(unaudited)
REVENUES:
Premiums and other considerations $ 644 $ 450
Net investment income 333 339
Net realized gains on investments - 1
------ ------
977 790
------ ------
BENEFITS, CLAIMS AND EXPENSES:
Benefits, claims and claim adjustment expenses 396 366
Amortization of deferred policy acquisition costs 66 42
Dividends to policyholders 286 228
Other insurance expenses 164 108
------ ------
912 744
------ ------
INCOME BEFORE INCOME TAX 65 46
Income tax expense 22 15
------ ------
NET INCOME $ 43 $ 31
------ ------
------ ------
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
March 31, December 31,
1996 1995
--------- -------------
(unaudited)
ASSETS
Investments:
Fixed maturities, available for sale, at fair
value $ 14,279 $ 14,400
Equity securities, at fair value 64 63
Mortgage loans, at outstanding principal balance 82 265
Policy loans, at outstanding balance 3,868 3,381
Other investments 104 156
------- -------
18,397 18,265
Cash 52 46
Premiums and amounts receivable 104 165
Reinsurance recoverable 6,219 6,221
Accrued investment income 334 394
Deferred policy acquisition costs 2,283 2,188
Deferred income tax 531 420
Other assets 246 234
Separate account assets 38,951 36,264
------- -------
$ 67,117 $ 64,197
------- -------
------- -------
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $ 2,284 $ 2,373
Other policyholder funds 22,637 22,598
Other liabilities 1,603 1,233
Separate account liabilities 38,951 36,264
------- -------
65,475 62,468
Common stock -- authorized 1,000 shares, $5,690 par value,
issued and outstanding 1,000 shares 6 6
Capital surplus 1,007 1,007
Unrealized loss on investments, net of tax (187) (57)
Retained earnings 816 773
------- -------
1,642 1,729
------- -------
$ 67,117 $ 64,197
------- -------
------- -------
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 43 $ 31
Adjustments to net income:
Net realized investment gains before tax -- (1)
Net policyholder investment gains before tax (3) --
Net deferred policy acquisition costs (95) (108)
Net amortization of premium on fixed maturities 7 1
Deferred income tax expense (40) (75)
Decrease in premiums and amounts receivable 43 14
Increase in other assets (12) (131)
Increase in reinsurance recoverable (12) (36)
(Decrease) increase in liability for future policy benefits (89) 99
Increase in other liabilities 262 141
Decrease in accrued investment income 60 26
------ ------
CASH PROVIDED (USED FOR) BY OPERATING ACTIVITIES 164 (39)
------ ------
INVESTING ACTIVITIES:
Purchases of fixed maturity investments (1,382) (1,080)
Proceeds from sales of fixed maturity investments 701 751
Maturities and principal paydowns of long-term investments 640 290
Net purchases of other investments (235) (927)
Net (purchases) sales of short-term investments (70) 98
------ ------
CASH USED FOR INVESTING ACTIVITIES (346) (868)
------ ------
FINANCING ACTIVITIES:
Net receipts from investment and UL-type contracts credited to
policyholder account balances 188 932
------ ------
CASH PROVIDED BY FINANCING ACTIVITIES 188 932
------ ------
NET INCREASE IN CASH 6 25
Cash at beginning of period 46 20
------ ------
CASH AT END OF PERIOD $ 52 $ 45
------ ------
------ ------
</TABLE>
F-3
<PAGE>
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---- --- --------- ------ -----
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $273 $190 $99 $105 $543 $394 $62 $101 $977 $790
BENEFITS, CLAIMS, EXPENSES AND TAXES 226 155 96 101 535 389 77 114 934 759
------- ----- ----- ----- ----- ----- ------ ----- ----- -----
$47 $35 $3 $4 $8 $5 ($15) ($13) $43 $31
------- ----- ----- ----- ----- ----- ------ ----- ----- -----
------- ----- ----- ----- ----- ----- ------ ----- ----- -----
</TABLE>
INDIVIDUAL LIFE AND ANNUITY DIVISION (ILAD)
Net income, up 35% from the same period last year, continues to grow as
earnings are generated from an increasing asset base. The premiums,
investment income, management and maintenance fees and cost of insurance
associated with this growing asset base continue to be the source of ILAD's
increased revenues. New deposits of fixed and variable annuities in the first
quarter of 1996 were approximately $2.3 billion, a slight increase over the
same period last year, indicative of strong, stable growth in assets.
ASSET MANAGEMENT SERVICES (AMS)
This segment continues to be an industry leader in deferred compensation
products where it is among the top providers in the country. Revenues and
expenses decreased as a result of lower investment and lower credited rates.
Asset Management Services is currently engaged in a restructuring process
that is anticipated to result in new product development as well as expense
reductions.
SPECIALTY
Increased net income in the Specialty segment is attributable to net
investment income and other revenues on the existing block of corporate owned
life insurance (COLI) business. There were no new deposits of leveraged COLI
in the first quarter of 1996 in anticipation of unfavorable tax legislation.
New products, including variable COLI and other non-qualified deferred
compensation vehicles, as well as new international ventures are being
developed. These should mitigate the earnings lost due to leveraged COLI.
RUNOFF
The Runoff segment consists of a closed block of guaranteed rate contracts
(GRC) formerly part of the AMS segment of business. GRC results have been
negatively affected by lower investment earnings on mortgaged-backed
securities due to prepayments experienced in excess of assumed levels.
F-4
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
ITT Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford
Life and Annuity Insurance Company (a Wisconsin corporation and wholly-owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December
31, 1995 and 1994, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory-basis financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes
other than for filing with a regulatory agency, generally accepted auditing
standards require that an auditors' report on them state whether they are
presented in conformity with generally accepted accounting principles. The
accounting practices used by the Company vary from generally accepted
accounting principles as explained and quantified in Note 1. In our opinion,
because the differences in accounting practices as described in Note 1 are
material, the statutory financial statements referred to above do not present
fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995.
<PAGE>
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 1995 and 1994, and the results of operations and
its cash flows for each of the three years in the period ended December 31,
1995 in conformity with statutory accounting practices as described in Note 1.
As discussed in Note 1 of notes to statutory financial statements, the
Company changed its valuation method in determining aggregate reserves for
future benefits.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 24, 1996
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Revenues
Premiums and Annuity Considerations..................................... $ 165,792 $ 442,173 $ 14,281
Annuity and Other Fund Deposits......................................... 1,087,661 608,685 1,986,140
Net Investment Income................................................... 78,787 29,012 7,970
Commissions and Expense Allowances on Reinsurance
Ceded.................................................................. 183,380 154,527 60,700
Reserve Adjustment on Reinsurance Ceded................................. 1,879,785 1,266,926 0
Other Revenues.......................................................... 140,796 41,857 369,598
------------- ------------- -------------
Total Revenues........................................................ 3,536,201 2,543,180 2,438,689
------------- ------------- -------------
Benefits and Expenses
Death and Annuity Benefits.............................................. 53,029 7,948 3,192
Surrenders and Other Benefit Payments................................... 221,392 181,749 4,955
Commissions and Other Expenses.......................................... 236,202 186,303 132,169
Increase in Reserves for Future Benefits................................ 94,253 416,748 5,120
Increase in Liability for Premium and Other Deposit Funds............... 460,124 182,934 281,024
Net Transfers to Separate Accounts...................................... 2,414,669 1,541,419 2,013,183
------------- ------------- -------------
Total Benefits and Expenses........................................... 3,479,669 2,517,101 2,439,643
------------- ------------- -------------
Net Gain (Loss) from Operations before Federal Income Tax Expense......... 56,532 26,079 (954)
Federal Income Tax Expense.............................................. 14,048 24,038 11,270
------------- ------------- -------------
Net Gain (Loss) from Operations........................................... 42,484 2,041 (12,224)
Net Realized Capital Gains (Losses)..................................... 374 (2) 877
------------- ------------- -------------
Net Income (Loss)......................................................... $ 42,858 $ 2,039 $ (11,347)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Assets
Bonds................................................................................... $ 1,226,489 $ 798,501
Common Stocks........................................................................... 39,776 2,275
Policy Loans............................................................................ 22,521 20,145
Cash and Short-Term Investments......................................................... 173,304 84,312
Other Invested Assets................................................................... 13,432 2,519
------------- -------------
Total Cash and Invested Assets........................................................ 1,475,522 907,752
------------- -------------
Investment Income Due and Accrued....................................................... 18,021 12,757
Premium Balances Receivable............................................................. 402 467
Receivables from Affiliates............................................................. 8,182 2,861
Other Assets............................................................................ 25,907 13,749
Separate Account Assets................................................................. 7,324,910 3,588,077
------------- -------------
Total Assets.......................................................................... $ 8,852,944 $ 4,525,663
------------- -------------
------------- -------------
Liabilities
Aggregate Reserves for Future Benefits.................................................. $ 542,082 $ 447,284
Policy and Contract Claims.............................................................. 8,223 9,902
Liability for Premium and Other Deposit Funds........................................... 948,361 479,202
Asset Valuation Reserve................................................................. 8,010 2,422
Payable to Affiliates................................................................... 3,682 7,840
Other Liabilities....................................................................... (220,658) (100,349)
Separate Account Liabilities............................................................ 7,324,910 3,588,077
------------- -------------
Total Liabilities..................................................................... 8,614,610 4,434,378
------------- -------------
Capital and Surplus
Common Stock............................................................................ 2,500 2,500
Gross Paid-In and Contributed Surplus................................................... 226,043 114,109
Unassigned Funds........................................................................ 9,791 (25,324)
------------- -------------
Total Capital and Surplus............................................................. 238,334 91,285
------------- -------------
Total Liabilities and Capital and Surplus................................................. $ 8,852,944 $ 4,525,663
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
----------- --------- ----------
<S> <C> <C> <C>
Capital and Surplus -- Beginning of Year........................................... $ 91,285 $ 88,693 $ 30,027
----------- --------- ----------
Net Income (Loss)................................................................ 42,858 2,039 (11,347)
Net Unrealized Gains (Losses).................................................... 1,709 (133) (1,198)
Change in Asset Valuation Reserve................................................ (5,588) (1,356) 135
Change in Non-Admitted Assets.................................................... (1,944) (8,599) 1,076
Change in Reserve (calculation basis-see Note 1)................................. 0 10,659 0
Aggregate Write-ins for Surplus (see Note 3)..................................... 8,080 (18) 0
Dividends to Shareholder......................................................... (10,000) 0 0
Paid-in Surplus.................................................................. 111,934 0 70,000
----------- --------- ----------
Change in Capital and Surplus.................................................. 147,049 2,592 58,666
----------- --------- ----------
Capital and Surplus -- End of Year................................................. $ 238,334 $ 91,285 $ 88,693
----------- --------- ----------
----------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOW
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Operations
Premiums, Annuity Considerations and Fund Deposits...................... $ 1,253,511 $ 1,050,493 $ 2,000,492
Investment Income....................................................... 78,328 24,519 5,594
Other Income............................................................ 2,253,466 1,515,700 434,851
------------- ------------- -------------
Total Income.......................................................... 3,585,305 2,590,712 2,440,937
------------- ------------- -------------
Benefits Paid........................................................... 277,965 181,205 8,215
Federal Income Taxes Paid on Operations................................. 208,423 20,634 9,666
Other Expenses.......................................................... 2,664,385 1,832,905 2,231,477
------------- ------------- -------------
Total Benefits and Expenses........................................... 3,150,773 2,034,744 2,249,358
------------- ------------- -------------
Net Cash From Operations.............................................. 434,532 555,968 191,579
------------- ------------- -------------
Proceeds from Investments
Bonds................................................................... 287,941 87,747 88,334
Common Stocks........................................................... 52 0 0
Other................................................................... 28 40 23,638
------------- ------------- -------------
Net Investment Proceeds............................................... 288,021 87,787 111,972
------------- ------------- -------------
Tax on Capital Gains.................................................... 226 (96) 376
Paid-in-Surplus......................................................... 111,934 0 70,000
Other Cash Provided..................................................... 28,199 30,554 0
------------- ------------- -------------
Total Proceeds........................................................ 862,460 674,405 373,175
------------- ------------- -------------
Cost of Investments Acquired
Bonds................................................................... 720,521 595,181 314,933
Common Stocks........................................................... 35,794 808 567
Miscellaneous Applications.............................................. 2,146 2,523 0
------------- ------------- -------------
Total Investments Acquired............................................ 758,461 598,512 315,500
------------- ------------- -------------
Other Cash Applied
Dividends Paid to Stockholder........................................... 10,000 0 0
Other................................................................... 5,007 24,813 24,626
------------- ------------- -------------
Total Other Cash Applied.............................................. 15,007 24,813 24,626
------------- ------------- -------------
Total Applications.................................................. 773,468 623,325 340,126
------------- ------------- -------------
Net Change in Cash and Short-Term Investments............................. 88,992 51,080 33,049
Cash and Short-Term Investments, Beginning of Year........................ 84,312 33,232 183
------------- ------------- -------------
Cash and Short-Term Investments, End of Year.............................. $ 173,304 $ 84,312 $ 33,232
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company (ILA or the Company),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company (HLIC), which is an indirect subsidiary of
ITT Hartford Group, Inc. (ITT Hartford), formerly a wholly owned subsidiary of
ITT Corporation (ITT). On December 19, 1995, ITT Corporation distributed all the
outstanding shares of ITT Hartford Group to ITT shareholders of record in an
action known herein as the "Distribution". As a result of the Distribution, ITT
Hartford became an independent, publicly traded company.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners (NAIC) and the Insurance
Department of the State of Wisconsin.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilties and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
Statutory accounting practices and generally accepted accounting principles
(GAAP) differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying period of
the contract and which for GAAP purposes, generally, for universal life policies
and investment products, are only recorded for policy charges for the cost of
insurance, policy administration and surrender charges assessed to policy
account balances. Also, for GAAP purposes, premiums for traditional life
insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment margins
are the primary source of profit;
(3) development of liabilities for future policy benefits, which for
statutory purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and mortality
assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for financial
reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
past due agent's balances and furniture and equipment) from the balance sheet
for statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits on an optional basis, immediate recognition or a twenty year
phase-in approach, whereas GAAP liabilities were established at date of
adoption;
6
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset Valuation
Reserve); as well as the deferral and amortization of realized gains and losses,
motivated by changes in interest rates during the period the asset is held, into
income over the remaining life to maturity of the asset sold (Interest
Maintenance Reserve); whereas on a GAAP basis, no such formula reserve is
required and realized gains and losses are recognized in the period the asset is
sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, where GAAP requires
that fixed maturities be classified as "held-to-maturity", "available-for-sale"
or "trading", based on the Company's intentions with respect to the ultimate
disposition of the security and its ability to affect those intentions. The
Company's fixed maturities were classified on a GAAP basis as
"available-for-sale" and accordingly, these investments were reflected at fair
value with the corresponding impact included as a component of Stockholder's
Equity designated as "Unrealized Gain/Loss on Investments, Net of Tax". For
statutory reporting purposes, Net Unrealized Loss on Investments represents
unrealized gains or losses on common stock and other bonds reported at fair
value; and
(10) separate account liabilties are valued on the Commissioner's Annuity
Reserve Valuation Method (CARVM), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance sheet of
the general account), whereas GAAP liabilities are valued at account value.
As of December 31, 1995, 1994 and 1993, the significant differences between
statutory and GAAP basis net income and capital and surplus for the Company are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
GAAP Net Income:.............................................................. $ 38,821 $ 23,295 $ 6,071
Amortization and deferral of policy acquisition costs....................... (174,341) (117,863) (147,700)
Benefit reserve adjustment.................................................. 31,392 30,912 14,059
Deferred taxes.............................................................. 2,801 (9,267) (7,123)
Separate accounts........................................................... 146,635 75,941 110,547
Coinsurance................................................................. 0 3,472 11,578
Other, net.................................................................. (2,450) (4,451) 1,221
Statutory Net Income (Loss)................................................. $ 42,858 $ 2,039 $ (11,347)
GAAP Capital and Surplus...................................................... $ 455,541 $ 199,785 $ 198,408
Deferred policy acquisition costs........................................... (596,542) (422,201) (304,338)
Benefit reserve adjustment.................................................. 74,782 85,191 43,621
Deferred taxes.............................................................. 1,493 13,257 13,706
Separate accounts........................................................... 333,123 186,488 110,547
Asset valuation reserve..................................................... (8,010) (2,422) (1,066)
Coinsurance................................................................. 0 0 22,642
Unrealized gain (loss) on bonds............................................. (1,696) 21,918 0
Adjustment relating to Lyndon contribution.................................. (41,277) 0 0
Other, net.................................................................. 20,920 9,269 5,173
Statutory Capital and Surplus............................................... $ 238,334 $ 91,285 $ 88,693
</TABLE>
AGGREGATE RESERVES AND LIABILITIES FOR PREMIUM AND OTHER DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with presently accepted actuarial standards.
Reserves for life insurance policies are generally based on the 1958 and 1980
Commissioner's Standard Ordinary Mortality Tables at various rates ranging from
2.5% to 6.0%. Accumulation and on-benefit annuity reserves are based principally
on Individual Annuity tables at various rates ranging from 2.5% to 8.75% and
using the Commissioner's Annuity Reserve Valuation Method (CARVM). Accident and
health reserves are established using a two year preliminary term method and
morbidity tables based on Company experience.
7
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Statements of
Income.
During 1994, the Company changed the valuation method on aggregate reserves
for future benefits resulting in a $10.7 million increase in surplus. The new
valuation method is in accordance with presently accepted actuarial standards.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the National Association of Insurance
Commissioners (NAIC) Securities Valuation Office (SVO) are carried at the
appropriate SVO published value. When a permanent reduction in the value of
publicly traded securities occurs, the decrease is reported as a realized loss
and the carrying value is adjusted accordingly. Common stocks are carried at
market value with the difference from cost reflected in surplus. Other invested
assets are generally recorded at fair value.
Changes in unrealized capital gains and losses on common stock are reported
as additions to or reductions of surplus. The Asset Valuation Reserve is
designed to provide a standardized reserve process for realized and unrealized
losses due to the default and equity risks associated with invested assets. The
reserve increased by $5,588, $1,356 and $135 in 1995, 1994 and 1993,
respectively. Additionally, the Interest Maintenance Reserve (IMR) captures net
realized capital gains and losses, net of applicable income taxes, resulting
from changes in interest rates and amortizes these gains or losses into income
over the remaining life of the mortgage loan or bond sold. Realized capital
gains and losses, net of taxes, not included in IMR are reported in the
Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital gains
reclassified from the IMR was $39 in 1995 and the amount of net capital losses
was $67 and $264 in 1994 and 1993, respectively. The amount of income amortized
was $256, $114 and $178 in 1995, 1994 and 1993, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $333.1, $186.5 million in 1995 and 1994, respectively. The
balances are classified in accordance with NAIC accounting practices.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed maturity securities.............................. $ 76,100 $ 28,335 $ 7,541
Interest income from policy loans........................................... 1,504 454 124
Interest and dividends from other investments............................... 2,288 1,069 481
--------- --------- ---------
Gross investment income..................................................... 79,892 29,858 8,146
Less: investment expenses................................................... 1,105 846 176
Net investment income....................................................... $ 78,787 $ 29,012 $ 7,970
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) UNREALIZED GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized gains at end of year............................................. $ 1,724 $ 75 $ 148
Gross unrealized losses at end of year............................................ 0 (60) 0
--------- --------- ---------
Net unrealized gains.............................................................. 1,724 15 148
Balance at beginning of year...................................................... 15 148 93
--------- --------- ---------
Change in net unrealized gains on common stocks................................... $ 1,709 $ (133) $ 55
--------- --------- ---------
--------- --------- ---------
</TABLE>
8
<PAGE>
2. INVESTMENTS: (CONTINUED)
(C) UNREALIZED GAINS (LOSSES) ON BONDS AND SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Gross unrealized gains at end of year..................................... $ 22,251 $ 986 $ 5,916
Gross unrealized losses at end of year.................................... (1,374) (34,718) (684)
---------- ---------- ---------
Net unrealized gains (losses) after tax................................... 20,877 (33,732) 5,232
Balance at beginning of year.............................................. (33,732) 5,232 2,287
---------- ---------- ---------
Change in net unrealized gains (losses) on bonds and short-term
investments.............................................................. $ 54,609 $ (38,964) $ 2,945
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short term investments................................................. $ 156 $ (101) $ (316)
Common stocks.................................................................... 52 0 0
Real estate and other............................................................ 0 34 1,316
--------- --------- ---------
Realized gains (losses).......................................................... 208 (67) 1,000
Capital gains (benefit) taxes.................................................... (205) 2 386
--------- --------- ---------
Net realized capital gains (losses) after tax.................................... 413 (69) 614
Less: IMR capital gains (losses)................................................. 39 (67) (263)
--------- --------- ---------
Net realized capital gains (losses).............................................. $ 374 $ (2) $ 877
--------- --------- ---------
--------- --------- ---------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1995 and 1994.
(F) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
9
<PAGE>
2. INVESTMENTS: (CONTINUED)
(G) BONDS, SHORT-TERM AND COMMON STOCK INVESTMENTS
<TABLE>
<CAPTION>
1995
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
-- guaranteed and sponsored......................... $ 44,268 $ 14 $ (248) $ 44,034
-- guaranteed and sponsored -- asset backed......... 176,160 4,644 (682) 180,122
States, municipalities and political subdivisions..... 16,948 38 (6) 16,980
International governments............................. 5,402 441 0 5,843
Public utilities...................................... 108,083 1,652 (90) 109,645
All other corporate................................... 374,058 8,145 (248) 381,955
All other corporate -- asset backed................... 410,197 5,841 (89) 415,949
Short-term investments................................ 139,011 18 0 139,029
Certificates of deposit............................... 91,373 1,458 (11) 92,820
------------- ----------- ----------- -------------
Total............................................. $ 1,365,500 $ 22,251 $ (1,374) $ 1,386,377
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
1995
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Common Stock -- Unaffiliated................................ $ 2,668 $ 555 $ 0 $ 3,223
Common Stock -- Affiliated.................................. 35,384 1,169 0 36,553
----------- ----------- ----------- ---------
Total Common Stock...................................... $ 38,052 $ 1,724 $0 $ 39,776
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
1994
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- guaranteed and sponsored............................. $ 175,925 $ 0 $ (12,059) $ 163,866
-- guaranteed and sponsored -- asset backed............. 142,318 382 (4,911) 137,789
States, municipalities and political subdivisions......... 10,409 0 (603) 9,806
International governments................................. 2,248 0 (69) 2,179
Public utilities.......................................... 29,509 31 (1,271) 28,269
All other corporate....................................... 257,301 246 (9,452) 248,095
All other corporate -- asset backed....................... 112,390 327 (4,066) 108,651
Short-term investments.................................... 56,365 0 0 56,365
Certificates of deposit................................... 68,401 0 (2,287) 66,114
----------- ----- ----------- -----------
Total................................................. $ 854,866 $ 986 $ (34,718) $ 821,134
----------- ----- ----------- -----------
----------- ----- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1994
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- --------------- ------------- ---------
<S> <C> <C> <C> <C>
Common Stock -- Unaffiliated................................. $ 2,260 $ 75 $ (60) $ 2,275
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1995 by management's anticipated maturity are shown
below. Asset backed securities are distributed to
10
<PAGE>
2. INVESTMENTS: (CONTINUED)
maturity year based on ILA's estimate of the rate of future prepayments of
principal over the remaining life of the securities. Expected maturities differ
from contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ------------------------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
Due in one year or less................................................................... $ 439,793 $ 442,327
Due after one year through five years..................................................... 840,088 855,741
Due after five years through ten years.................................................... 80,820 83,432
Due after ten years....................................................................... 4,799 4,877
------------- -------------
Total..................................................................................... $ 1,365,500 $ 1,386,377
------------- -------------
------------- -------------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1995, 1994 and 1993 were $313,961, $117,912 and $333,023, respectively,
resulting in gross realized gains of $1,419, $518 and $937, respectively, and
gross realized losses of $1,263, $624 and $1,255, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS:
(IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturites.............................................................. $ 1,366 $ 1,386 $ 855 $ 821
Common stocks................................................................ 40 40 2 2
Policy loans................................................................. 23 23 20 20
Miscellaneous................................................................ 13 13 2 2
LIABILITIES
Liabilities on investment contracts.......................................... $ 1,031 $ 981 $ 534 $ 526
</TABLE>
The carrying amounts for policy loans approximates fair value. The
liabilities are determined by forecasting future cash flows discounted at
current market rates.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within ITT Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in fixed maturities,
equity securities and cash, $28 million in policy reserves, $187 million of
current tax liability, $26 million in IMR, $8 million in AVR (offset by an
aggregate write-in to surplus), and $4 million of other liabilities. The assets
in excess of liabilities of $112 were recorded as an increase to paid-in
surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES:
The Company is included in the consolidated Federal income tax return of ITT
Hartford and its includable subsidiaries. Allocation of taxes is based primarily
upon separate company tax return calculations with current credit for net losses
used in consolidation except that increases resulting from consolidation are
allocated in proportion to separate return amounts. Intercompany Federal income
tax balances are generally settled quarterly with Hartford Fire Insurance
Company (Hartford Fire), a subsidiary of ITT Hartford. Federal income
11
<PAGE>
4. FEDERAL INCOME TAXES: (CONTINUED)
taxes paid by the Company were $215,921, $20,538, and $10,042 in 1995, 1994 and
1993, respectively. The effective tax rate was 25%, 92%, and 1,181% in 1995,
1994, and 1993 respectively. The following schedule provides a reconciliation of
the effective tax rate (in millions).
<TABLE>
<CAPTION>
1995 1994
--------- -----
<S> <C> <C>
Tax provision (benefit) at US statutory rate..................................................... 20 9
Tax acquisiton deferred costs.................................................................... 8 8
Statutory to tax reserves........................................................................ 3 5
Investments and other............................................................................ (17) 2
Federal income tax expense....................................................................... 14 24
<CAPTION>
1993
-----
<S> <C>
Tax provision (benefit) at US statutory rate..................................................... (1)
Tax acquisiton deferred costs.................................................................... 10
Statutory to tax reserves........................................................................ 0
Investments and other............................................................................ 2
Federal income tax expense....................................................................... 11
</TABLE>
5. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Wisconsin insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. ILA paid dividends of $10 million
to its parent, HLIC, in 1995. No dividends were paid in 1994 and 1993. As a
result of the distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
exceeded liabilities at the contribution date ($112 million) was included in
paid-in capital.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in ITT Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$1,034, $1,211, and $765 in 1995, 1994 and 1993, respectively. Liabilities for
the plan are held by Hartford Fire.
The Company also participates in ITT Hartford 's Investment and Savings
Plan, which includes a deferred compensation option under IRC section 401(k) and
an ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of Hartford Fire. The cost to ILA was not
material in 1995, 1994 and 1993.
The Company's employees are included in Hartford Fire's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
Hartford Fire for post-retirement health care and life insurance benefits
expense (not including provisions for accrual of post-retirement benefit
obligations) are immaterial.
The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 10.1% for 1995, decreasing ratably to 6% in the
year 2001. Increasing the health care trend rates by one percent per year would
have an immaterial impact on the accumulated post-retirement benefit obligation
and the annual expense. The cost to ILA was not material in 1995, 1994 and 1993.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long term disability. Post-employment
benefit expense was not material in 1995, 1994 and 1993.
7. REINSURANCE:
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
12
<PAGE>
7. REINSURANCE: (CONTINUED)
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
----------- ------------ -----------
<S> <C> <C> <C>
Direct premiums................................................................. $ 159,918 $ 133,180 $ 131,586
Premiums assumed................................................................ 13,299 960 841
Premiums ceded.................................................................. 7,425 (308,033) 118,146
Premiums and annuity considerations............................................. 165,792 442,173 14,281
</TABLE>
In December 1994 the Company ceded to a third party, on a modified
coinsurance basis, 80% of the variable annuity business written in 1994. The
ceded business includes both general and separate account liabilities. As a
result of the agreement ILA transferred approximately $1,352 million in assets
and liabilities. The financial impact of the cession was an increase of
approximately $15 million to net income and surplus.
In November 1994, the Company ceded, on a modified coinsurance basis, 30% of
the separate account variable annuity business distributed by Paine Webber to
Paine Webber Life Insurance Company (PWLIC). As a result of the agreement, ILA
transferred approximately $24 million in assets and liabilities to PWLIC. The
financial impact of the cession was an increase of approximately $765 to net
income and surplus.
In October 1994, the agreement, effective December 1990, which required ILA
to coinsure 90% of all existing and new business, excluding variable annuity
business, written by the Company to HLIC, was terminated. As a result of the
termination, ILA received approximately $430 million in assets and liabilities
from HLIC. The impact of the transaction was a decrease of approximately $15
million to net income and surplus.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of Hartford Life and Accident, an affiliate. As a result of this
transaction, the assets and liabilities of the Company increased approximately
$1 billion, substantially all of which was transferred to the separate accounts
of the Company. The remaining assets and liabilities (approximately $41 million)
were transferred in October 1995. The impact of these transactions on net income
and surplus was not significant.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilties totaling $7.3
billion and $3.6 billion at December 31, 1995 and 1994, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with the Commissioners Annuity Reserve Valuation Method
(CARVM), which approximates the market value less applicable surrender charges.
Separate account assets are segregated from other investments, the policyholder
assumes the investment risk, and the investment income and gains and losses
accrue directly to the policyholder. Separate account management fees, net of
minimum guarantees, were $72 million, $42 million, and $6 million in 1995, 1994,
and 1993, respectively.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1995, the Company had no material contingent liabilities,
nor had the Company committed any surplus funds for any contingent liabilities
or arrangements. The Company is involved in various legal actions which have
arisen in the course normal of its business. In the opinion of management, the
ultimate liability with respect to such lawsuits as well as other contingencies
is not considered to be material in relation to the results of operations and
financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the company in certain states. ILA paid guaranty
fund assessments of $1,684, $583, and $495 in 1995, 1994, and 1993,
respectively.
13
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing Sheet.
The prospectus consisting of ___pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of the Company is incorporated by
reference to the initial filing, of the Registration Statement File
No. 33-63731, dated October 30, 1995.
(A2) Not Applicable.
(A3a) Principal Underwriting Agreement is incorporated by reference as
stated above.
(A3b) Form of Selling Agreements is incorporated herein.
(A3c) Not Applicable
(A4) Not Applicable.
(A5) Form of Certificate for Group Flexible Premium Variable Life
Insurance Policy is incorporated by reference as stated above.
(A6a) Charter of ITT Hartford Life and Annuity Insurance Company is
incorporated herein.
(A6b) Bylaws of ITT Hartford Life and Annuity Insurance Company is
incorporated herein.
(A7) Not Applicable.
(A8) Not Applicable.
(A9) Not Applicable.
<PAGE>
(A10) Form of Enrollment Form for Certificate Issued Under Group Flexible
Premium Variable Life Insurance Policies is incorporated by
reference as stated above.
(A11) Memorandum describing transfer and redemption procedures is
incorporated by reference as stated above.
(2) Opinion and counsel of Lynda Godkin, General Counsel is incorporated
herein.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1(b) or (c) of Part I.
(4) Not Applicable.
(5) Opinion and consent of Peter J. Vogt, FSA, MAAA, is incorporated by
reference as stated above.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants is
incorporated herein.
(7) Opinion and consent of Counsel is incorporated by reference as Exhibit 2.
(8) Opinion and consent of Actuary is incorporated by reference as Exhibit 5.
(9) Power of Attorney is incorporated herein.
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. ICMG Registered Variable Life Separate Account One meets the definition of
"Separate Account" under Rule 6e-3(T).
2. The Registrant represents that:
(a) it relies on Rule 6e-3(T)(b)(iii)(F) to offer the Policies;
(b) the level of mortality and expense risk charge is within the
range of industry practice for comparable flexible contracts.
(c) the Company has conducted a survey of similar policies and
insurers and determined that the charge is within the range of
industry practice;
(d) the Company undertakes to keep and make available to the
Commission upon request the documents we used to support the
representation in (b); and
(e) the Company further represents that the account will invest only
in management investment companies which have undertaken to have
a Board of Directors, a majority of whom are not interested
persons of the Company, formulate and approve a plan under Rule
12b-1 to finance distribution expenses.
(f) The life insurer has concluded that there is a reasonable
likelihood that the distribution financing arrangement of the
separate account benefits the separate account and contract-
holders and will keep and make available to the Commission on
request a memorandum setting for the basis for this
representation.
UNDERTAKING ON INDEMNIFICATION
Article VIII of the Bylaws of ITT Hartford Life and Annuity Insurance Company, a
Connecticut corporation, provides for indemnification of its officers, directors
and employees as follows:
SECTION 1. No person shall be liable to the Company for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him as
director or officer of the Company, or of any other company, partnership, joint
venture, trust or other enterprise for which he serves as a director, officer or
employee at the request of the Company, in good faith, if such person (a)
exercised and used the same degree of care and skill as a prudent man would have
exercised or used under the circumstances in the conduct of his own affairs, or
(b) took or omitted to take such action in reliance upon advice of counsel for
the Company or upon statements made or information furnished by officers or
employees of the Company which he had reasonable grounds to believe to be true.
The foregoing shall not be exclusive of other rights and defenses to which he
may be entitled as a matter of law.
SECTION 2. The Company shall indemnify any person who was or is a party or
threatened to be
<PAGE>
made a party to any threatened, pending or completed action, suit or
proceeding, (other than one by or in the right of the Company) by reason of
the fact that he is or was a director, officer or employee of the company, or
is or was serving at the request of the Company as a director, officer or
employee of the Company, or was serving at the request of the Company as a
director, officer or employee another company, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonable believed to be in or not
opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall no, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding had reasonable cause to believe that his
conduct was unlawful.
SECTION 3. The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, by or in the right of the Company to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer or employee of the Company, or is or was serving at the request of
the Company as a director, officer or employee of another company,
partnership, joint venture, trust or other enterprise against expenses,
including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company, except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Company unless and only to the extent that the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability and in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
SECTION 4. Expenses, including attorney's fees, incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Company in advance
of the final disposition of such action, suit or proceeding, upon receipt of
any undertaking by or on behalf of the director or employee to repay such
amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Company as authorized hereby.
SECTION 5. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any statute, bylaw, agreement, vote of shareholders or of disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the registrant, pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
<PAGE>
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be herewith affixed and attested, all in the city of Simsbury, and the
State of Connecticut on the 17 day of May, 1996.
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY ICMG REGISTERED VARIABLE LIFE
SEPARATE ACCOUNT ONE
(Registrant)
By: /s/ Gregory A. Boyko
---------------------------------------
Gregory A. Boyko, Vice President and Controller
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
By: /s/ Gregory A. Boyko
---------------------------------------
Gregory A. Boyko, Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Donald R. Frahm, Chairman and
Chief Executive Officer, Director*
Bruce D. Gardner, General Counsel
Corporate Secretary, Director*
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director*
John P. Ginnetti, Senior Vice
President, Director*
Thomas M. Marra, Senior Vice *By: /s/ Lynda Godkin
President, Director* -----------------------------
Leonard E. Odell, Jr., Senior Lynda Godkin
Vice President, Director* Attorney-In-Fact
Lowndes A. Smith, President,
Chief Operating Officer, Dated: May 17, 1996
Director* ----------------------
Raymond P. Welnicki, Senior Vice
President, Director*
Lizabeth H. Zlatkus, Vice President
Director*
(ICMG VUL)
<PAGE>
BROKER-DEALER SALES AND
SUPERVISION AGREEMENT
This Broker-Dealer Sales and Supervision Agreement ("Agreement")
dated ____________________ is made by and between Hartford Life Insurance
Company and ITT Hartford Life and Annuity Insurance Company (referred to
collectively as "Companies"), Hartford Securities Distribution Company, Inc.
("Distributor"), a broker-dealer registered with the Securities and Exchange
Commission ("SEC") under the Securities and Exchange Act of 1934 ("1934 Act")
and a member of the National Association of Securities Dealers, Inc. ("NASD")
and __________________________________, who is also a broker-dealer registered
with the SEC under the 1934 Act and a member of the NASD ("Broker-Dealer"), and
any and all undersigned insurance agency affiliates ("Affiliates") of Broker-
Dealer.
WHEREAS, Companies offer certain variable life insurance policies and variable
and modified guaranteed annuity contracts which are deemed to be securities
under the Securities Act of 1933 (the "Registered Products"); and
WHEREAS, Companies wish to appoint the Broker-Dealer and Affiliates as agents of
the Companies for the solicitation and procurement of applications for
Registered Products; and
WHEREAS, Distributor is the principal underwriter of the Registered Products;
and
WHEREAS, Distributor anticipates having registered representatives who are
associated with Broker-Dealer ("Registered Representatives"), who are NASD
registered and are duly licensed under applicable state insurance law and
appointed as life insurance agents of Companies solicit and sell the Registered
Products; and
WHEREAS, Distributor acknowledges that the Broker-Dealer will provide certain
supervisory and administrative services to Registered Representatives who are
associated with the Broker-Dealer in connection with the solicitation, service
and sale of the Registered Products; and
WHEREAS, Broker-Dealer agrees to provide the aforementioned supervisory services
to its Registered Representatives who have been appointed by the Companies to
sell the Registered Products.
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree to the following:
I. APPOINTMENT OF THE BROKER-DEALER
The Companies hereby appoint Broker-Dealer as an agent of the Companies for
the solicitation and procurement of applications for the Registered
Products offered by the Companies, as outlined in Exhibit A attached
herein, in all states in which the Companies are authorized to do business
and in which Broker-Dealer or any Affiliates are properly licensed.
Distributor hereby authorizes Broker-Dealer under the securities laws to
supervise Registered Representatives in connection with the solicitation,
service and sale of the Registered Products.
II. AUTHORITY OF THE BROKER-DEALER
<PAGE>
Broker-Dealer has the authority to represent Distributor and Companies only
to the extent expressly granted in this Agreement. Broker-Dealer and any
Registered Representatives shall not hold themselves out to be employees of
Companies or Distributor in any dealings with the public. Broker-Dealer
and any Registered Representatives shall be independent contractors as to
Distributor or Companies. Nothing contained herein is intended to create a
relationship of employer and employee between Broker-Dealer and Distributor
or Companies or between Registered Representatives and Distributor or
Companies.
III. BROKER-DEALER REPRESENTATION
Broker-Dealer represents that it is a registered broker-dealer under the
1934 Act, a member in good standing of the NASD, and is registered as a
broker-dealer under state law to the extent necessary to perform the duties
described in this Agreement. Broker-Dealer represents that its Registered
Representatives, who will be soliciting applications for the Registered
Products, will be duly registered representatives associated with Broker-
Dealer and that they will be representatives in good standing with
accreditation as required by the NASD to sell the Registered Products.
Broker-Dealer agrees to abide by all rules and regulations of the NASD,
including its Rules of Fair Practice, and to comply with all applicable
state and federal laws and the rules and regulations of authorized
regulatory agencies affecting the sale of the Registered Products.
IV. BROKER-DEALER OBLIGATIONS
(a) TRAINING AND SUPERVISION
Broker-Dealer has full responsibility for the training and
supervision of all Registered Representatives associated with
Broker-Dealer and any other persons who are engaged directly or
indirectly in the offer or sale of the Registered Products. Broker-
Dealer shall, during the term of this Agreement, establish and
implement reasonable procedures for periodic inspection and
supervision of sales practices of its Registered Representatives.
If a Registered Representative ceases to be a Registered
Representative of Broker-Dealer, is disqualified for continued
registration or has their registration suspended by the NASD or
otherwise fails to meet the rules and standards imposed by Broker-
Dealer, Broker-Dealer shall immediately notify such Registered
Representative that he or she is no longer authorized to solicit
applications, on behalf of the Companies, for the sale of Registered
Products. Broker-Dealer shall immediately notify Distributor of
such termination or suspension.
(b) SOLICITATION
Broker-Dealer agrees to supervise its Registered Representatives so
that they will only solicit applications in states where the
Registered Products are approved for sale in accordance with
applicable state and federal laws. Broker-Dealer shall be notified
by Companies or Distributor of the availability of the Registered
Products in each state.
(c) NO CHURNING
Broker-Dealer and any Registered Representatives shall not make any
misrepresentation or incomplete comparison of products for the
purpose of inducing a policyholder to lapse, forfeit or surrender
its insurance in favor of purchasing a Registered Product.
(d) PROSPECTUS DELIVERY AND SUITABILITY REQUIREMENTS
Broker-Dealer shall ensure that its Registered Representatives
comply with the prospectus delivery requirements under the
Securities Act of 1933. In addition, Broker-Dealer shall ensure
that its Registered Representatives shall not make recommendations
to an applicant to purchase a Registered Product in the absence of
reasonable grounds to believe that the
2
<PAGE>
purchase is suitable for such applicant, as outlined in the
suitability requirements of the 1934 Act and the NASD Rules of Fair
Practice. Broker-Dealer shall ensure that each application
obtained by its Registered Representatives shall bear evidence of
approval by one of its principals indicating that the application
has been reviewed for suitability.
(e) PROMOTIONAL MATERIAL
Broker-Dealer and its Registered Representatives are not authorized
to provide any information or make any representation in connection
with this Agreement or the solicitation of the Registered Products
other than those contained in the prospectus or other promotional
material produced or authorized by Companies or Distributor.
Broker-Dealer agrees that if it develops any promotional material
for sales, training, explanatory or other purposes in connection
with the solicitation of applications for Registered Products,
including generic advertising and/or training materials which may be
used in connection with the sale of Registered Products, it will
obtain the prior written consent of Distributor, and where
appropriate, approval of Companies, such approval not to be
unreasonably withheld.
(f) RECORD KEEPING
Broker-Dealer is responsible for maintaining the records of its
Registered Representatives. Broker-Dealer shall maintain such other
records as are required of it by applicable laws and regulations.
The books, accounts and records maintained by Broker-Dealer that
relate to the sale of the Registered Products, or dealings with the
Companies, Distributor and/or Broker-Dealer shall be maintained so
as to clearly and accurately disclose the nature and details of each
transaction.
Broker-Dealer acknowledges that all the records maintained by
Broker-Dealer relating to the solicitation, service or sale of the
Registered Products subject to this Agreement, including but not
limited to applications, authorization cards, complaint files and
suitability reviews, shall be available to Companies and Distributor
upon request during normal business hours. Companies and
Distributor may retain copies of any such records which Companies
and Distributor, in their discretion, deems necessary or desirable
to keep.
(g) REFUND OF COMPENSATION
Broker-Dealer agrees to repay Companies the total amount of any
compensation which may have been paid to it within thirty (30)
business days of notice of the request for such refund should
Companies for any reason return any premium on a Registered Product
which was solicited by a Registered Representative of Broker-Dealer.
(h) PREMIUM COLLECTION
Broker-Dealer only has the authority to collect initial premiums
unless specifically set forth in the applicable commission schedule.
Unless previously authorized by Distributor, neither Broker-Dealer
nor any of its Registered Representatives shall have any right to
withhold or deduct any part of any premium it shall receive for
purposes of payment of commission or otherwise.
V. COMPANIES AND/OR DISTRIBUTOR OBLIGATIONS
(a) PROSPECTUS/PROMOTIONAL MATERIAL
Companies and/or Distributor will provide Broker-Dealer with
reasonable quantities of the currently effective prospectus for the
Registered Products and appropriate sales promotional
3
<PAGE>
material which has been filed with the NASD, and applicable state
insurance departments.
(b) COMPENSATION
Distributor will pay Broker-Dealer as full compensation for all
services rendered by Broker-Dealer under this Agreement, commissions
and/or service fees in the amounts, in the manner and for the period
of time as set forth in the Commission Schedules attached to this
Agreement or subsequently made a part hereof, and which are in
effect at the time such Registered Products are sold. The manner of
commission payments (I.E. fronted or trail) is not subject to change
after the effective date of a contract for which the compensation is
payable.
Distributor or Companies may change the Commission Schedules
attached to this Agreement at any time. Such change shall become
effective only when Distributor or Companies provide the Broker-
Dealer with written notice of the change. No such change shall
affect any contracts issued upon applications received by Companies
at Companies' Home Office prior to the effective date of such
change.
Distributor agrees to identify to Broker-Dealer for each such
payment, the name of the Registered Representative of Broker-Dealer
who solicited each contract covered by the payment. Distributor
will not compensate Broker-Dealer for any Registered Product which
is tendered for redemption after acceptance of the application. Any
chargebacks will be assessed against the Broker-Dealer of record at
the time of the redemption.
Distributor will only compensate Broker-Dealer or Affiliates, as
outlined below, for those applications accepted by Companies, and
only after receipt by Companies at Companies' Home Office or at such
other location as Companies may designate from time to time for its
various lines of business, of the required premium and compliance by
Broker-Dealer with any outstanding contract and prospectus delivery
requirements.
In the event that this Agreement terminates for fraudulent
activities or due to a material breach by the Broker-Dealer,
Distributor will only pay to Broker-Dealer or Affiliate commissions
or other compensation earned prior to discovery of events requiring
termination. No further commissions or other compensation shall
thereafter be payable.
(c) COMPENSATION PAYABLE TO AFFILIATES
If Broker-Dealer is unable to comply with state licensing
requirements because of a legal impediment which prohibits a non-
domiciliary corporation from becoming a licensed insurance agency or
prohibits non-resident ownership of a licensed insurance agency,
Distributor agrees to pay compensation to Broker-Dealer's
contractually affiliated insurance agency, a wholly-owned life
agency affiliate of Broker-Dealer, or a Registered Representative or
principal of Broker-Dealer who is properly state licensed. As
appropriate, any reference in this Agreement to Broker-Dealer shall
apply equally to such Affiliate. Distributor agrees to pay
compensation to an Affiliate subject to Affiliates agreement to
comply with the requirements of Exhibit B, attached hereto.
VI. TERMINATION
(a) This Agreement may be terminated by any party by giving thirty (30)
days' notice in writing to the other party.
(b) Such notice of termination shall be mailed to the last known address
of Broker-Dealer appearing on Companies' records, or in the event of
termination by Broker-Dealer, to the Home Office of Companies at
P.O. Box 2999, Hartford, Connecticut 06104-2999.
4
<PAGE>
(c) Such notice shall be an effective notice of termination of this
Agreement as of the time the notice is deposited in the United
States mail or the time of actual receipt of such notice if
delivered by means other than mail.
(d) This Agreement shall automatically terminate without notice upon the
occurrence of any of the events set forth below:
(1) Upon the bankruptcy or dissolution of Broker-Dealer.
(2) When and if Broker-Dealer commits fraud or gross negligence in the
performance of any duties imposed upon Broker-Dealer by this
Agreement or wrongfully withholds or misappropriates, for Broker-
Dealer's own use, funds of Companies, its policyholders or
applicants.
(3) When and if Broker-Dealer materially breaches this Agreement or
materially violates state insurance or Federal securities laws and
administrative regulations of a state in which Broker-Dealer
transacts business.
(4) When and if Broker-Dealer fails to obtain renewal of a necessary
license in any jurisdiction, but only as to that jurisdiction.
(e) The parties agree that on termination of this Agreement, any
outstanding indebtedness to Companies shall become immediately due
and payable.
VII. GENERAL PROVISIONS
(a) COMPLAINTS AND INVESTIGATIONS
Broker-Dealer shall cooperate with Distributor and Companies in the
investigation and settlement of all complaints or claims against
Broker-Dealer and/or Distributor or Companies relating to the
solicitation or sale of the Registered Products under this
Agreement. Broker-Dealer, Distributor and Companies each shall
promptly forward to the other any complaint, notice of claim or
other relevant information which may come into either one's
possession. Broker-Dealer, Distributor and Companies agree to
cooperate fully in any investigation or proceeding in order to
ascertain whether Broker-Dealer's, Distributor's or Companies'
procedures with respect to solicitation or servicing is consistent
with any applicable law or regulation.
In the event any legal process or notice is served on Broker-Dealer
in a suit or proceeding against Distributor or Companies, Broker-
Dealer shall forward forthwith such process or notice to Companies
at its Home Office in Hartford, Connecticut, by certified mail.
(b) WAIVER
The failure of Distributor or Companies to enforce any provisions of
this Agreement shall not constitute a waiver of any such provision.
The past waiver of a provision by Distributor or Companies shall not
constitute a course of conduct or a waiver in the future of that
same provision.
(c) INDEMNIFICATION
Broker-Dealer shall indemnify and hold Distributor and Companies
harmless from any liability, loss or expense sustained by Companies
or the Distributor (including reasonable attorney fees) on account
of any acts or omissions by Broker-Dealer or persons employed or
appointed by Broker-Dealer, except to the extent Companies' or
Distributor's acts or omissions caused such
5
<PAGE>
liability Indemnification by Broker-Dealer is subject to the
conditions that Distributor or Companies promptly notify Broker-
Dealer of any claim or suit made against Distributor or Companies,
and that Distributor or Companies allow Broker-Dealer to make such
investigation, settlement, or defense thereof as Broker-Dealer deems
prudent. Broker-Dealer expressly authorizes Companies to charge
against all compensation due or to become due to Broker-Dealer under
this Agreement any monies paid or liabilities incurred by Companies
under this Indemnification provision.
Distributor and Companies shall indemnify and hold Broker-Dealer
harmless from any liability, loss or expense sustained by the
Broker-Dealer (including reasonable attorney fees) on account of any
acts or omissions by Distributor or Companies, except to the extent
Broker-Dealer's acts or omissions caused such liability.
Indemnification by Distributor or Companies is subject to the
condition that Broker-Dealer promptly notify Distributor or
Companies of any claim or suit made against Broker-Dealer, and that
Broker-Dealer allow Distributor or Companies to make such
investigation, settlement, or defense thereof as Distributor or
Companies deems prudent.
(d) ASSIGNMENT
No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by Distributor. Every
assignment shall be subject to any indebtedness and obligation of
Broker-Dealer that may be due or become due to Companies and any
applicable state insurance regulations pertaining to such
assignments.
(e) OFFSET
Companies may at any time deduct, from any monies due under this
Agreement, every indebtedness or obligation of Broker-Dealer to
Companies or to any of its affiliates.
(f) CONFIDENTIALITY
Companies, Distributor and Broker-Dealer agree that all facts or
information received by any party related to a contract owner shall
remain confidential, unless such facts or information is required to
be disclosed by any regulatory authority or court of competent
jurisdiction.
(g) PRIOR AGREEMENTS
This Agreement terminates all previous agreements, if any, between
Companies, Distributor and Broker-Dealer. However, the execution of
this Agreement shall not affect any obligations which have already
accrued under any prior agreement.
(h) CHOICE OF LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.
By executing this Broker-Dealer Sales and Supervision Agreement Specifications
Page, Broker-Dealer acknowledges that it has read this Agreement in its entirety
and is in agreement with the terms and conditions outlining the rights of
Distributor, Companies and Broker-Dealer and Affiliates under this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to be
effective as set forth above, upon the later of the execution date below or
approval of Distributor's registration by all appropriate state securities
commissions.
6
<PAGE>
BROKER-DEALER HARTFORD SECURITIES DISTRIBUTION
COMPANY INC.
By: By:
Title: Title:
Date: Date:
AFFILIATE (IF APPLICABLE) HARTFORD LIFE INSURANCE COMPANY
By: By:
Title: Title:
Date: Date:
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
By:
Title:
Date:
7
<PAGE>
EXHIBIT B
In accordance with Section V.(c) of the Broker-Dealer-Dealer Sales and
Supervision Agreement, no compensation is payable unless Broker-Dealer and
Registered Representative have first complied with all applicable state
insurance laws, rules and regulations. Distributor must ensure that any Broker-
Dealer with whom Distributor intends to enter into an Agreement and any
Registered Representatives meet the licensing and registration requirements of
the state(s) Broker-Dealer operates in and the NASD.
Companies are required by the Insurance Department in all 50 states to pay
compensation only to individuals and entities that are properly insurance
licensed and appointed. For registered products, Distributor must also comply
with NASD regulations that require Distributor to pay compensation to an NASD
registered Broker-Dealer. Distributor must comply with both state and NASD
requirements.
Distributor requires confirmation that Broker-Dealer holds current state
insurance licenses or markets insurance products through a contractual affiliate
or wholly owned life agency, which is properly insurance licensed. If Broker-
Dealer is properly state licensed then compensation may be paid to Broker-Dealer
in compliance with both state and NASD requirements.
If Broker-Dealer is not state insurance licensed and relies on the licensing of
a contractual affiliate or wholly owned life agency, the SEC has issued a number
of letters indicating that, under specific limited circumstances, it will take
"no action" against insurers (Distributor) paying compensation on registered
products to Broker-Dealer's contractual affiliate or wholly owned life agency.
At the request of Broker-Dealer, Distributor will provide copies of several of
these letters as well as a summary of their requirements.
If Broker-Dealer intends to rely on one of these "no-action" letters, legal
counsel for Broker-Dealer must confirm to Distributor in writing that all of the
circumstances of any one of the SEC no-action letters are applicable. Broker-
Dealer's counsel must summarize each point upon which the no-action relief was
granted and represent that Broker-Dealer's method of operation is identical or
meets the same criteria. Broker-Dealer's counsel must also confirm that, to the
best of counsel's knowledge, the SEC has not rescinded or modified its no-action
position since the letter was released.
The Broker-Dealer Sales and Supervision Agreement will not be finalized and no
new applications for registered products will be accepted or no new compensation
will be payable unless the appropriate proof of state licensing or no-action
relief is confirmed. In addition to a letter from Broker-Dealer's counsel,
copies of the following documentation is required:
-- life insurance licenses for all states in which Broker-Dealer holds
these licenses and intends to operate and/or;
-- life insurance licenses for any contractual affiliate or wholly owned
life agency; and
-- the SEC No-Action Letter that will be relied upon.
If you have any questions regarding these matters, please contact your Life
Licensing and Contracting representative.
8
<PAGE>
CERTIFICATE AMENDING AND RESTATING
THE CERTIFICATE OF INCORPORATION BY
ACTION OF THE BOARD OF DIRECTORS AND SHAREHOLDERS
1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY.
2. The Certificate of Incorporation is amended and restated by the following
resolution of the Board of Directors and Shareholder of the Corporation.
RESOLVED, that the Certificate of Incorporation of the Corporation, as
supplemented and amended to date, is further amended and restated to read
as follows:
Section 1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY.
Section 2. The address of the Registered Office of the Corporation is
Hartford Plaza, Hartford, Connecticut 06104-2999.
Section 3. The Corporation is a body politic and corporate and shall
have all the powers granted by the general statutes, as now
enacted or hereinafter amended, to corporations formed under
the Stock Corporation Act.
Section 4. The Corporation shall have the purposes and powers to write
any and all forms of insurance which any other corporation
now or hereafter chartered in Connecticut and empowered to
do an insurance business may now or hereafter lawfully do;
to accept and to cede reinsurance; to issue policies and
contracts for any kind or combination of kinds of insurance;
to issue policies or contracts either with or without
participation in profits; to acquire and hold any or all of
the shares or other securities of any insurance corporation
or any other kind of corporation; and to engage in any
lawful act or activity for which corporations may be formed
under the Stock Corporation Act. The corporation is
authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in
any foreign country.
Section 5. The Corporation shall obtain a license from the insurance
commissioner prior to the commencement of business and shall
be subject to all general statutes applicable to insurance
companies.
Section 6. The aggregate number of shares which the corporation shall
have authority to issue is 3,000 shares consisting of one
class only, designated as Common Shares, of the par value of
$1,250.
Section 7. No shareholder shall, because of his ownership of shares,
have a preemptive or
<PAGE>
-2-
other right to purchase, subscribe for, or take any part of
any shares or any part of the notes, debentures, bonds, or
other securities convertible into or carrying options or
warrants to purchase shares of this corporation issued,
optioned, or sold by it after its incorporation.
Section 8. The minimum amount of stated capital with which the
corporation shall commence business is One Thousand Dollars
($1,000.00).
Section 9. So much of the charter of said corporation is amended, as is
inconsistent herewith is repealed, provided such repeal
shall not invalidate or otherwise affect any action taken
pursuant to the charter of the corporation, in accordance
with its terms, prior to the effective date of such repeal.
3. The above resolution was passed by the Board of Directors and the
Shareholder of the Corporation. The number of shares entitled to vote
thereon was 3,000 and the vote required for adoption was 2,000 shares. The
vote favoring adoption was 3,000 which was the greatest vote needed to pass
the resolution.
4. The term of existence of the corporation shall be perpetual.
Dated at Simsbury, Connecticut this 30 day of April, 1996.
--
We hereby declare, under the penalties of false statement, that the statements
made in the foregoing Certificate are true.
ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
/s/ Lowndes A. Smith
-----------------------------
Lowndes A. Smith, President
/s/ Lynda Godkin
- ----------------------------------------
Lynda Godkin, Associate General Counsel
and Corporate Secretary
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
EFFECTIVE MAY 1, 1996
<PAGE>
-2-
ARTICLE I
Name - Home Office
SECTION 1. This company shall be named ITT Hartford and Annuity Life Insurance
Company.
SECTION 2. The Company may have such principal and other business offices,
either within or without the State of Connecticut, as the Board of Directors may
designate or as the business of the Company may require.
SECTION 3. The registered office of the Company is Hartford Plaza, Hartford,
Connecticut 06104-2999.
ARTICLE II
Stockholders' Meetings - Notice-Quorum-Right to Vote
SECTION 1. All meetings of the stockholders shall be held at the principal
business office of the Company unless the Board of Directors shall otherwise
provide and direct.
SECTION 2. The annual meeting of the stockholders shall be held on such day and
at such hour as the Board of Directors may decide. For cause the Board of
Directors may postpone or adjourn such annual meeting to any other time during
the year.
SECTION 3. Special meetings of the stockholders may be called by the Board of
Directors, the Executive Committee, the Chairman or Vice Chairman of the Board,
the President or any Vice President.
SECTION 4. Notice of stockholders' meetings shall be delivered to each
stockholder, either personally or by mail at his address as it appears on the
records of the Company, at least seven days prior to the meeting. The notice
shall state the place, date and time of the meeting and shall specify all
matters proposed to be acted upon at the meeting.
SECTION 5. At each annual meeting, the stockholders shall choose Directors as
hereinafter provided.
SECTION 6. Each stockholder shall be entitled to one vote at all meetings of
the Company for each share of stock held by such stockholder. Proxies may be
authorized by written power of attorney.
<PAGE>
-3-
SECTION 7. A majority of the total number of shares entitled to vote,
represented in person or by proxy, shall constitute a quorum.
SECTION 8. Each stockholder shall be entitled to a certificate of stock which
shall be signed by the President or a Vice President, and either the Treasurer
or an Assistant Treasurer of the Company, and shall bear the seal of the
Company, but such signatures and seal may be facsimile.
ARTICLE III
Directors-Meetings-Quorum
SECTION 1. The property, business and affairs of the Company shall be managed
by a board of not less than three nor more than twenty Directors, who shall be
chosen by the stockholders at each annual meeting. Vacancies occurring between
annual meetings may be filled by the affirmative vote of a majority of the
Directors then in office. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is chosen and qualified.
SECTION 2. Meetings of the Board of Directors may be called by the direction of
the Chairman of the Board, the President, or any three Directors.
SECTION 3. Three days' notice of meetings of the Board of Directors shall be
given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time, in
writing, and attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting except where a Director attends a meeting and objects
thereat to the transaction of any business on grounds that the meeting was not
lawfully called or convened.
SECTION 4. A majority of the number of existing directorships, but not less than
two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officer - Duties of Board of
Directors and Executive Committee
SECTION 1. The Board of Directors shall annually elect a President, a Secretary
and a Treasurer. It may elect a Chairman of the Board, a Vice Chairman of the
Board and such Vice Presidents, other Secretaries, Assistant Secretaries,
Assistant Treasurers and other officers as it may determine. All officer of the
Company shall hold office during the pleasure of the Board of Directors.
<PAGE>
-4-
SECTION 2. The Directors may fill any vacancy among the officers by election
for the unexpired term.
SECTION 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee may
exercise all powers vested in and conferred upon the Board of Directors at any
time when the Board is not in session. A majority of the members of said
Committee shall constitute a quorum. Meetings of the Committee shall be called
whenever the Chairman of the Board, the President or a majority of its members
shall request.
SECTION 4. The Board of Directors may annually appoint from its own number a
Finance Committee of not less than three Directors, whose duties shall be as
hereinafter provided.
SECTION 5. The Board of Directors may, at any time, appoint such other
committees, not necessarily from its own number, as it may deem necessary for
the proper conduct of the business of the Company, which committees shall have
only such powers and duties as are specifically assigned to them by the Board of
Directors or the Executive Committee.
For all meetings, forty-eight hours' notice shall be given but notice may be
waived, at any time, in writing, and attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends a
meeting and objects thereat to the transaction of any business on grounds that
the meeting was not lawfully called or convened.
SECTION 6. The Board of Directors may authorize corporate contributions, in such
amounts as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
and
Vice Chairman of the Board
SECTION 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the absence of the
Chairman of the Finance Committee, at the meetings of the Finance Committee.
In the absence or inability of the Chairman of the Board to so preside, the Vice
Chairman shall preside in his place if there be one, otherwise the President
shall preside.
<PAGE>
-5-
SECTION 2. The Vice Chairman of the Board shall, in the absence of the Chairman
of the Board, exercise the powers and perform the duties of the Chairman of the
Board. He shall perform such other duties and have such other powers as may be
assigned to him by the Board of Directors.
President
SECTION 3. The President, unless the Board of Directors shall otherwise order
pursuant to Section 7 below, shall be the chief executive officer of the Company
and, subject to the control of the Board of Directors, shall in general
supervise and control all the business and affairs of the Company. Unless the
Board of Directors shall provide otherwise, he shall, when present, preside at
all meetings of the shareholders and shall preside at all meetings of the Board
of Directors unless the Board shall have elected a Chairman of the Board of
Directors. He shall have authority, subject to such rules as may be prescribed
by the Board of Directors, to appoint such agents and employees of the Company
as he shall deem necessary, to prescribe their powers, duties and compensation,
and to delegate authority to them. Such agents and employees shall hold office
at the discretion of the President. Except as otherwise provided in these
Bylaws or by resolution of the Board of Directors, the President shall have
authority to sign, execute and acknowledge, on behalf of the Company all
contracts, reports and other documents or instruments necessary or proper to be
executed in the course of the Company's regular business, or which shall be
authorized by resolution of the Board of Directors; and except as otherwise
provided by law or the Board of Directors, he may authorize any Vice President
or other officer or agent of the Company to sign, execute and acknowledge such
documents or instruments in his place and stead. In general, he shall perform
all duties incident to the office of the chief executive officer and such other
duties as may be prescribed by the Board of Directors from time to time.
If the President is not the chief executive officer, he shall have such duties
and authority as prescribed by the Board of Directors or the chief executive
officer.
SECTION 4. In the absence or inability of the President to perform his duties,
the Board or the Chairman thereof may designate a Vice President to exercise the
powers and perform the duties of the President during such absence or inability.
Secretary
SECTION 5. The Secretary shall keep a record of all the meetings of the
Company, of the Board of Directors and of the Executive Committee, and he shall
discharge all other duties specifically required of the Secretary by law.
<PAGE>
-6-
The other Secretaries and the Assistant Secretaries shall perform such duties as
may be assigned to them by the Board of Directors or by their senior officers
and any Secretary or Assistant Secretary may affix the seal of the Company and
attest it and the signature of any officer to any and all instruments.
Treasurer
SECTION 6. The Treasurer shall keep, or cause to be kept, full and accurate
accounts of the Company. He shall see that the funds of the Company are
disbursed as may be ordered by the Board of Directors, the Finance Committee or
a duly authorized individual. He shall have charge of all moneys paid to the
Company and shall deposit such to the credit of the Company or in any other
properly authorized name, in such banks or depositories as may be designated in
a manner provided by these Bylaws. He shall also discharge all other duties
that may be required of him by law.
Other Officers
SECTION 7. The other officers shall perform such duties as may be assigned to
them by the President or the Board of Directors. The Board of Directors may
designate the Chairman of the Board or the Vice Chairman as the chief executive
officer of the Company. In such event that person shall assume all authority,
power, duties and responsibilities otherwise appointed to the President pursuant
to Section 3 above, and all references to the President in these Bylaws shall be
regarded as references to the Chairman of the Board or Vice Chairman, as the
case may be, as such chief executive officer, except where a contrary meaning is
clearly required, and provided that in no case shall that person be empowered in
place of the President to sign the certificates for shares of stock of the
Company.
ARTICLE VI
Finance Committee
SECTION 1. If a Finance Committee is established, it shall be the duty of that
committee to supervise the investment of the funds of the Company in securities
in which insurance companies are permitted by law to invest, and all other
matters connected with the management of investments. If no Finance Committee
is established, this duty shall be performed by the Board of Directors.
SECTION 2. All loans or purchases for the investment and reinvestment of the
funds of the Company shall be submitted for approval to the Finance Committee,
if not specifically approved by the Board of Directors.
<PAGE>
-7-
SECTION 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
SECTION 4. Transfers of stock and registered bonds, deeds, leases, releases,
sales, mortgages chattel or real, assignments or partial releases of mortgages
chattel or real, and in general all instruments of defeasance of property and
all agreements or contracts affecting the same, except discharges of mortgages
and entries to foreclose the same as hereinafter provided, shall be authorized
by the Finance Committee or the Board of Directors, and be executed jointly for
the Company by two persons, to wit: the Chairman of the Board, the Vice
Chairman, the President or a Vice President, and a Secretary, the Treasurer or
an Assistant Treasurer, but may be acknowledged and delivered by either one of
those executing the instrument; provided, however, that either a Secretary, the
Treasurer, or an Assistant Treasurer alone, when authorized as aforesaid, or any
person specially authorized by the Finance Committee as attorney for the
Company, may make entry to foreclose any mortgage, and a Secretary, the
Treasurer or an Assistant Treasurer alone is authorized, without the necessity
of further authority, to discharge by deed or otherwise any mortgage on payment
to the Company of the principal, interest and all charges due.
SECTION 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the Finance
Committee at any meeting shall be valid notwithstanding any defect in the notice
of such meeting.
SECTION 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the President, a
Vice President or the Treasurer shall have the power to vote or execute proxies
for voting any shares held by the Company.
ARTICLE VII
Funds
SECTION 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are designated
by the Board of Directors shall direct, in such bank or banks as may be
designated from time to time by the Finance Committee, the Chairman of the
Finance Committee or by such executive officers as are designated by the Board
of Directors. Such monies shall be drawn only on checks or drafts signed by any
two executive officers of the Company, provided that the Board of Directors may
authorize the withdrawal of such monies by check or draft signed with the
facsimile signature of any one or more executive officers, and provided further,
that the Finance Committee may authorize such alternative methods of withdrawal
as it deems proper.
<PAGE>
-8-
The Board of Directors, the President, the Chairman of the Finance Committee, a
Vice President, or such executive officers as are designated by the Board of
Directors may authorize withdrawal of funds by checks or drafts drawn at offices
of the Company to be signed by Managers, General Agents, or employees of the
Company, provided that all such checks or drafts shall be signed by two such
authorized persons, except checks or drafts used for the payment of claims or
losses which need to be signed by only one such authorized person, and provided
further that the Board of Directors of the Company or executive officers
designated by the Board of Directors may impose such limitations or restrictions
upon the withdrawal of such funds as it deems proper.
ARTICLE VIII
Liability and Indemnity
SECTION 1. No person shall be liable to the Company for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him as
director or officer of the Company, or of any other company, partnership, joint
venture, trust or other enterprise for which he serves as a director, officer
or employee at the request of the Company, in good faith, if such person (a)
exercised and used the same degree of care and skill as a prudent man would have
exercised or used under the circumstances in the conduct of his own affairs, or
(b) took or omitted to take such action in reliance upon advice of counsel for
the Company or upon statements made or information furnished by officers or
employees of the Company which he had reasonable grounds to believe to be true.
The foregoing shall not be exclusive of other rights and defenses to which he
may be entitled as a matter of law.
SECTION 2. The Company shall indemnify any person who was or is a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, (other than one by or in the right of the Company) by reason
of the fact that he is or was a director, officer or employee of the Company, or
is or was serving at the request of the Company as a director, officer or
employee of another company, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding had reasonable
cause to believe that his conduct was unlawful.
SECTION 3. The Company shall indemnify any person who was or is a party or is
threatened to
<PAGE>
-9-
be made a party to any threatened, pending or completed action, suit or
proceeding, by or in the right of the Company to procure a judgment in its
favor by reason of the fact that he is or was a director, officer or
employee of the Company, or is or was serving at the request of the Company as a
director, officer or employee of another company, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees, actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability and in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
SECTION 4. Expenses, including attorneys' fees, incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Company in advance of
the final disposition of such action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or employee to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Company as authorized hereby.
SECTION 5. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any statute, bylaw, agreement, vote of shareholders or of disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of the heirs, executors and administrators of such a person.
ARTICLE IX
Amendment of Bylaws
SECTION 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
SECTION 2. The stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains a
statement of the proposed alteration, amendment, repeal or adoption of the
substance thereof. Bylaws amended or adopted by the stockholders may be amended
or repealed by the Directors.
<PAGE>
-10-
ARTICLE X
Term of Existence
SECTION 1. The term of existence of the corporation shall be perpetual.
This is to certify that the foregoing is a true copy of the Bylaws of ITT
Hartford Life and Annuity Insurance Company in full force and effect on this
first day of May, 1996.
Attest:
- ---------------------------------
Gregory A. Boyko
Vice President
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement File No 33-63731 for ITT Hartford Life and Annuity
Insurance Company on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
May 21, 1996
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Bruce D. Gardner
Joseph H. Gareau
Joseph Kanarek
Thomas M. Marra
Lowndes A. Smith
Lizabeth H. Zlatkus
do hereby jointly and severally authorize Lynda Godkin and/or Scott K.
Richardson to sign as their agent, any Registration Statement, pre-effective
amendment, post-effective amendment and any application for exemptive relief of
the ITT Hartford Life and Annuity Insurance Company under the Securities Act of
1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Bruce D. Gardner Dated: 10/19/95
- ------------------------------ --------------------------
Bruce D. Gardner
/s/ Joseph H. Gareau Dated: 10/19/95
- ------------------------------ --------------------------
Joseph H. Gareau
/s/ Joseph Kanarek Dated: 10/19/95
- ------------------------------ --------------------------
Joseph Kanarek
/s/ Thomas M. Marra Dated: 10/19/95
- ------------------------------ --------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated: 10/19/95
- ------------------------------ --------------------------
Lowndes A. Smith
/s/ Lizabeth H. Zlatkus Dated: 10/19/95
- ------------------------------ --------------------------
Lizabeth H. Zlatkus
