<PAGE>
As filed wiith the Securities & Exchange Commission on September 25, 1997.
File No. 333-13735
811-7387
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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 complete address of agent for service:
Marianne O'Doherty, Esq.
ITT Hartford Life Insurance Companies
P.O. Box 2999
Hartford, 06104-2999
E. Title and amount of securities being registered:
Group flexible premium variable life insurance policy: Pursuant to Rule
24f-2 under the Investment Company Act of 1940, the Registrant is
registering an indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered:
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, an
indefinite amount of securities is being registered by this Registration
Statement.
G. Amount of filing fee: Not Applicable
H. Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration
Statement.
The Registrant hereby amends this Registration Statement on such dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the
<PAGE>
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
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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
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.
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
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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 Investment 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
31. Not applicable
32. Not applicable
33. Not applicable
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Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
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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 Provision -
Allocation of Premium Payments
45. Not applicable
46. Detailed Description of Certificate Benefits and Provision -
Values under the Certificate
47. The Funds
48. Cover page; The Company
49. Not applicable
50. The Separate Account
51. Summary; The Company; Detailed Description of Certificate
Benefits and Provisions.
52. The Funds - General
53. Federal Tax Considerations
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Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
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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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OF AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
FUTUREVANTAGE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
GROUP POLICIES
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999
[LOGO] TELEPHONE (800) 243-5433
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This Prospectus describes a group flexible premium variable life insurance
policy ("Group Policy") and certificates of insurance ("Certificates") offered
by ITT Hartford Life and Annuity Insurance Company ("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.
A Group Policy may be issued to a Participating Employer or to a trust that is
adopted by a Participating Employer. Eligible employees of a Participating
Employer 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.
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.
The current Investment Divisions and underlying Funds are:
<TABLE>
<CAPTION>
INVESTMENT DIVISION UNDERLYING FUND SHARES PURCHASED
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<S> <C>
Hartford Bond Investment Division Hartford Bond Fund, Inc. ("Hartford Bond Fund")
Hartford Capital Appreciation Hartford Capital Appreciation Fund, Inc. ("Hartford Capital Appreciation Fund")
Investment Division
N&B Balanced Investment Division N&B Balanced Portfolio of the Neuberger & Berman Advisers Managers Trust ("N&B
Balanced Portfolio")
N&B Partners Investment Division N&B Partners Portfolio of the Neuberger & Berman Advisers Managers Trust ("N&B
Partners Portfolio")
Alger American Small Capitalization Alger American Small Capitalization Portfolio of the Alger American Fund ("Alger
Portfolio Investment Division American Small Cap Portfolio")
Alger American Growth Investment Division Alger American Growth Portfolio of the Alger American Fund
("Alger American Growth Portfolio")
ML Domestic Money Market Investment Division Merrill Lynch Domestic Money Market Fund ofthe Merrill Lynch Variable
Series Funds, Inc. ("ML Domestic Money Market Fund")
ML Index 500 Investment Division Merrill Lynch Index 500 Fund of the Merrill Lynch Variable Series Funds, Inc. ("ML
Index 500 Fund")
ML Prime Bond Investment Division Merrill Lynch Prime Bond Fund of the Merrill Lynch Variable Series Funds, Inc. ("ML
Prime Bond Fund")
ML High Current Income Investment Division Merrill Lynch High Current Income Fund of the Merrill Lynch Variable
Series Funds, Inc. ("ML High Current Income Fund")
ML Quality Equity Investment Division Merrill Lynch Quality Equity Fund of the Merrill Lynch Variable Series Funds, Inc.
("ML Quality Equity Fund")
ML Special Value Focus Investment Division Merrill Lynch Special Value Focus Fund of the Merrill Lynch Variable Series Funds,
Inc. ("ML Special Value Focus Fund")
ML Natural Resources Focus Investment Merrill Lynch Natural Resources Focus Fund of the Merrill Lynch Variable
Division Series Funds, Inc. ("ML Natural Resources Focus Fund")
ML American Balanced Investment Division Merrill Lynch American Balanced Fund of the Merrill Lynch Variable
Series Funds, Inc. ("ML American Balanced Fund")
ML Global Strategy Focus Investment Division Merrill Lynch Global Strategy Focus Fund of the Merrill Lynch Variable Series Funds,
Inc. ("ML Global Strategy Focus Fund")
ML Basic Value Focus Investment Division Merrill Lynch Basic Value Focus Fund of the Merrill Lynch Variable Series Funds, Inc.
("ML Basic Value Focus Fund")
ML Global Bond Focus Investment Division Merrill Lynch Global Bond Focus Fund of the Merrill Lynch Variable Series Funds, Inc.
("ML Global Bond Focus Fund")
ML Global Utility Focus Investment Division Merrill Lynch Global Utility Focus Fund of the Merrill Lynch Variable Series Funds,
Inc. ("ML Global Utility Focus Fund")
ML International Equity Focus Merrill Lynch International Equity Focus Fund of the Merrill Lynch
Investment Division Variable Series Funds, Inc. ("ML International Equity Focus Fund")
ML Developing Capital Markets Focus Merrill Lynch Developing Capital Markets Focus Fund of the Merrill Lynch Variable
Investment Division Series Funds, Inc. ("ML Developing Capital Markets Focus Fund")
ML Government Bond Investment Division Merrill Lynch Government Bond Fund of the Merrill Lynch
Variable Series Funds, Inc. ("ML Government Bond Fund")
</TABLE>
<PAGE>
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.
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THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE UNDERLYING FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS MM DD, 1997.
<PAGE>
2 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 6
THE COMPANY........................................................... 8
THE SEPARATE ACCOUNT.................................................. 9
THE FUNDS............................................................. 9
DETAILED DESCRIPTION OF CERTIFICATE BENEFITS AND PROVISIONS........... 11
General............................................................. 11
Issuance of a Certificate........................................... 11
Premiums............................................................ 11
Premium Payment Flexibility....................................... 11
Allocation of Premium Payments.................................... 11
Accumulation Units................................................ 12
Accumulation Unit Values.......................................... 12
Premium Limitation................................................ 12
Values under the Certificate........................................ 13
Surrender of the Certificate........................................ 13
Partial Withdrawals............................................... 13
Transfers Between the Investment Divisions.......................... 13
Amount and Frequency of Transfers................................. 13
Transfers to or from Investment Divisions......................... 13
Procedures for Telephone Transfer................................. 14
Valuation of Payments and Transfers................................. 14
Loans............................................................... 14
Loan Interest..................................................... 14
Credited Interest................................................. 14
Loan Repayments................................................... 14
Termination Due to Excessive Debt................................. 14
Effect of Loans on Investment Value............................... 14
Death Benefit....................................................... 15
Death Benefit Options............................................. 15
Option Change..................................................... 15
Payment Options................................................... 15
Legal Developments Regarding Income Payments...................... 16
Beneficiary....................................................... 16
Increases and Decreases in Face Amount............................ 16
Benefits at Maturity................................................ 16
Termination of Participation in the Group Policy.................... 16
Lapse and Reinstatement When the Group Policy is in Effect.......... 16
Lapse and Grace Period............................................ 16
Reinstatement..................................................... 16
Enrollment for a Certificate........................................ 17
The Right to Examine the Certificate................................ 17
Deductions from the Premium......................................... 17
Front-End Sales Load.............................................. 17
Premium Related Tax Charge........................................ 17
DAC Tax Charge.................................................... 17
Deductions and Charges from the Investment Value.................... 17
Monthly Deduction Amounts......................................... 17
Mortality and Expense Risk Charge................................. 18
Taxes............................................................. 19
</TABLE>
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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<TABLE>
<CAPTION>
PAGE
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OTHER MATTERS......................................................... 19
<S> <C>
Additions, Deletions or Substitutions of Investments................ 19
Voting Rights....................................................... 19
Our Rights.......................................................... 19
Statements to Owners................................................ 20
Limit on Right to Contest........................................... 20
Misstatement as to Age or sex....................................... 20
Assignment.......................................................... 20
Dividends........................................................... 20
Experience Credits.................................................. 20
SUPPLEMENTAL BENEFITS................................................. 20
Maturity Date Extension Rider....................................... 20
EXECUTIVE OFFICERS AND DIRECTORS...................................... 21
DISTRIBUTION OF THE GROUP POLICIES.................................... 23
SAFEKEEPING OF THE SEPARATE ACCOUNT ASSETS............................ 23
FEDERAL TAX CONSIDERATIONS............................................ 24
General............................................................. 24
Taxation of the Company and the Separate Account.................... 24
Income Taxation of Certificate Benefits............................. 24
Modified Endowment Contracts........................................ 24
Diversification Requirements........................................ 25
Federal Income Tax Withholding...................................... 25
Other Tax Considerations............................................ 25
LEGAL PROCEEDINGS AND EXPERTS......................................... 25
REGISTRATION STATEMENT................................................ 26
APPENDIX A -- ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES.................................................... 27
FINANCIAL STATEMENTS.................................................. 40
</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.
<PAGE>
4 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 Hartford. The method of calculation of the
Adjustable Loan Interest Rate is described in the Section entitled, "Loans --
Loan Interest" 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 Hartford.
DEATH BENEFIT: The Death Benefit option in effect determines how the Death
Benefit is calculated. The 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.
GENERAL ACCOUNT: The assets of Hartford other than those allocated to the
Separate Account. Premium Payments allocated to the General Account become a
part of the general assets of Hartford. Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
Insurance Company General Accounts.
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
Hartford and described in this Prospectus.
HARTFORD (ALSO REFERRED TO AS "WE," "US," "OUR," THE "COMPANY"): ITT Hartford
Life and Annuity Insurance Company. Effective January 1, 1998, the name of ITT
Hartford Life and Annuity Insurance Company will change to 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 Fund.
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 Loan 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%.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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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
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 Hartford issues the Group Policy described in
this Prospectus.
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 Hartford to separate the assets funding the Group Policies from
other assets of Hartford.
VALUATION DAY: Each business day that 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 as of 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.
<PAGE>
6 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 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 Investment Divisions
dedicated to the Group Policies, each of which invests exclusively in one of the
underlying 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 ML Domestic 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 procedures designated by Hartford if You would like to change
how subsequent Net Premiums are allocated. See "Detailed Description of
Certificate Benefits and Provisions -- Allocation of Premium Payments," page 11.
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 Fund. Subject to certain restrictions, an
Owner may transfer amounts among the available Investment Divisions. See
"Detailed Description of Certificate Benefits and Provisions -- Transfers
Between the Investment Divisions," page 13.
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 15.
DEATH BENEFIT
The Certificates currently 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 15.
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 Hartford. Hartford invests the assets of the General
Account in accordance with applicable law governing the investments of insurance
company general accounts.
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 front-end sales load is 6.75% of any premium paid for Coverage Years 1
through 7 and 4.75% of any premium paid in Coverage Years 8 and later. The
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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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expenses. For more information concerning the front-end sales load, see
"Detailed Description of Certificate Benefits and Provisions -- Deductions From
the Premium," page 17.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against
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 a percentage 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 reserve the right to adjust the
charge based on changes in the applicable tax law.
DEDUCTIONS AND CHARGES FROM THE
INVESTMENT VALUE
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 Funds. See "Detailed Description of the
Certificate Benefits and Provisions -- Deductions and Charges From the
Investment Value," page 17.
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.
Hartford may also set up a provision for income taxes imposed on the assets
of the Separate Account. See "Detailed Description of Certificate Benefits and
Provisions -- Deductions and Charges From the Investment Value," page 17 and
"Federal Tax Considerations," page 23.
A charge is made for mortality and expense risks assumed by Hartford.
Hartford deducts a daily charge at a maximum effective annual rate of .65% of
the value of each Investment Division's assets. The current charges for Coverage
Years 1 through 10 is .65%, and for Coverage Years 11 and later is .50%. For
more information about the Monthly Deduction Amount, see "Detailed Description
of Certificate Benefits and Provisions -- Deductions and Charges From the
Investment Value," page 17.
CHARGES AGAINST THE FUNDS
The Separate Account purchases Fund shares at net asset value. The net asset
value of the shares reflect 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.
The following table shows total fund operating expenses in 1996 for the
Funds:
ANNUAL FUND OPERATING EXPENSES
AFTER EXPENSE REIMBURSEMENTS
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FUND NAME FEES EXPENSES EXPENSES
- ------------------------------------------------------------------------------ ------------- ------------ ------------
Hartford Bond Fund............................................................ 0.49% 0.03% 0.52%
<S> <C> <C> <C>
Hartford Capital Appreciation Fund............................................ 0.63% 0.02% 0.65%
N&B Partners Portfolio (1).................................................... 0.84% 0.11% 0.95%
N&B Balanced Portfolio (1).................................................... 0.85% 0.24% 1.09%
Alger American Small Cap Portfolio............................................ 0.85% 0.03% 0.88%
Alger American Growth Portfolio............................................... 0.75% 0.04% 0.79%
ML Domestic Money Market Fund................................................. 0.50% 0.04% 0.54%
ML Index 500 Fund (2) (3)..................................................... 0.00% 0.08% 0.08%
ML Prime Bond Fund............................................................ 0.44% 0.05% 0.49%
</TABLE>
<PAGE>
8 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FUND NAME FEES EXPENSES EXPENSES
- ------------------------------------------------------------------------------ ------------- ------------ ------------
ML High Current Income Fund................................................... 0.49% 0.05% 0.54%
<S> <C> <C> <C>
ML Quality Equity Fund........................................................ 0.44% 0.05% 0.49%
ML Special Value Focus Fund................................................... 0.75% 0.06% 0.81%
ML Natural Resources Focus Fund............................................... 0.65% 0.13% 0.78%
ML American Balanced Fund..................................................... 0.55% 0.05% 0.60%
ML Global Strategy Focus Fund................................................. 0.65% 0.06% 0.71%
ML Basic Value Focus Fund..................................................... 0.60% 0.06% 0.66%
ML Global Bond Focus Fund..................................................... 0.60% 0.09% 0.69%
ML Global Utility Focus Fund.................................................. 0.60% 0.06% 0.66%
ML International Equity Focus Fund............................................ 0.75% 0.14% 0.89%
ML Developing Capital Markets Focus Fund (3).................................. 0.94% 0.31% 1.25%
ML Government Bond Fund (3)................................................... 0.06% 0.09% 0.15%
</TABLE>
- ------------------------
(1) Neuberger and Berman Advisers Management Trust is divided into Portfolios,
each of which invests all of its net investable assets in a corresponding
series of Advisers Managers Trust. The figures reported under Management
Fees include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding series of Advisers
Managers Trust. Similarly, Other Expenses includes all other expenses of the
Portfolio and its corresponding series of Advisers Managers Trust.
(2) Computed for the period January 1, 1997, to March 31, 1997, annualized.
(3) Pursuant to a voluntary agreement, Management Fees were waived for ML Index
500 Fund and ML Government Bond Fund, and fees and expenses were reimbursed
to the extent expenses exceeded 1.25% for ML Developing Capital Markets
Focus Fund. Without such reimbursements, total expenses would have been
0.39%, 1.31% and 0.59% for ML Index 500 Fund, ML Developing Capital Markets
Focus Fund and ML Government Bond Fund, respectively.
LOANS
An Owner may obtain a cash Loan from 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
14.
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 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 "Detailed Description of
Certificate Benefits and Provisions -- The Right to Examine the Certificate,"
page 17.
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 23.
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. 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 23.
THE COMPANY
ITT Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States and the
District of Columbia, except New York. On January 1, 1998, Hartford's name will
change to Hartford Life and Annuity Insurance Company. Hartford was originally
incorporated under the laws of Wisconsin on January 9, 1956, and was
subsequently redomiciled to Connecticut. Its offices are located in Simsbury,
Connecticut; however, its mailing address is P.O. Box 2999, Hartford, CT
06104-2999. Hartford is a subsidiary of Hartford Fire Insurance Company, one of
the largest multiple lines insurance carriers in the United States. Hartford is
ultimately owned by The Hartford Financial Services Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps, on the basis of its claims paying
ability. These ratings do not apply to the
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
investment performance of the Investment Divisions of the Separate Account. The
ratings apply to Hartford's ability to meet its insurance obligations, including
those described in this Prospectus.
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, Hartford is subject to the insurance laws and regulations of
any jurisdiction in which it sells its insurance policies. 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 Hartford on October 9, 1995 under the insurance laws of the State
of Connecticut, pursuant to a resolution of 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 Hartford and the obligations under the Group Policies and the
Certificates are obligations of Hartford. These assets are held separately from
the other assets of Hartford 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
Hartford (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 Hartford.
The Separate Account has certain Investment Divisions dedicated to the Group
Policies, each of which invests solely in a corresponding Fund. Additional
Investment Divisions may be established or current Investment Divisions may
deleted at the discretion of Hartford. The Separate Account may in the future
include other divisions which will not be available under the Group Policies.
THE FUNDS
GENERAL
Shares of the Funds are sold to the Separate Account and may be sold to
other separate accounts of 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 Funds and the Fund prospectuses in
connection with that allocation.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the relevant Funds. Such shares are offered to
separate accounts, including the Separate Account, established by Hartford or
one of its affiliated companies specifically to fund the Group Policies and
other policies issued by 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 Fund are reinvested in shares of that Fund at net
asset value. 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 Fund 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 Funds are as set forth below.
HARTFORD FUNDS
The Separate Account currently invests in the Hartford Bond Fund and
Hartford Capital Appreciation Fund, diversified open-end management investment
companies sponsored by Hartford and incorporated under the laws of the State of
Maryland and registered as investment companies under the 1940 Act. HL
Investment Advisors, Inc. ("HL Advisors") serves as the investment adviser to
each of the Hartford Funds.
Wellington Management Company, L.L.P. serves as sub-investment adviser for
Hartford Capital Appreciation Fund. In addition, HL Advisors has entered into an
investment services agreement with The Hartford Investment Management Company,
Inc. ("HIMCO"), pursuant to which HIMCO will provide certain investment services
to Hartford Bond Fund.
<PAGE>
10 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
NEUBERGER & BERMAN ADVISERS MANAGERS TRUST
The Separate Account currently invests in Neuberger & Berman Advisers
Managers Trust, a diversified open-end management investment company organized
as a Delaware business trust. Each portfolio of Neuberger & Berman Advisers
Managers Trust invests its assets in a corresponding series of 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 and N&B Balanced Portfolios will directly
correspond with the investment performance of the corresponding series of
Advisers Managers 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 Partners and Balanced Portfolios are advised by Neuberger & Berman
Management Incorporated.
ALGER AMERICAN FUND, INC.
The Separate Account currently invests in shares of Alger American Fund, a
diversified open-end management investment company registered under the 1940 Act
and organized as a Massachusetts business trust.
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.
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
The Separate Account currently invests in shares of Merrill Lynch Variable
Series Funds, Inc., an open-end management investment company which has a wide
range of investment objectives among its sixteen separate funds.
Merrill Lynch Variable Series Funds, Inc., is advised by Merrill Lynch Asset
Management, L.P., an indirect wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. The general partner of Merrill Lynch Asset Management, L.P. is Princeton
Services, Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc.
The investment objectives and certain policies of the Funds are as follows:
HARTFORD BOND FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in fixed-income securities. Up to
20% of the total assets of this Fund may be invested in debt securities rated in
the highest category below investment grade ("Ba" by Moody's Investor Services,
Inc. or "BB" by Standard & Poor's) or, if unrated, are determined to be of
comparable quality by the Fund's investment adviser. Securities rated below
investment grade are commonly referred to as "high yield-high risk securities"
or "junk bonds." For more information concerning the risks associated with
investing in such securities, please refer to the section in the accompanying
prospectus for the Hartford Funds entitled "Hartford Bond Fund, Inc. --
Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND -- Seeks growth of capital by investing
in securities selected solely on the basis of potential for capital
appreciation; income, if any, is an incidental consideration.
N&B PARTNERS PORTFOLIO -- Seeks to achieve capital growth by investing
primarily in common stocks of established companies, using a value-oriented
investment approach designed to increase capital with reasonable risk.
N&B BALANCED PORTFOLIO -- Seeks to achieve long-term capital growth and
reasonable current income without undue risk to principal by investing, under
normal circumstances, 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.
ALGER AMERICAN SMALL CAP 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 -- 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.
ML DOMESTIC MONEY MARKET FUND -- Seeks preservation of capital, liquidity
and the highest possible current income consistent with the foregoing objectives
by investing in short-term domestic money market securities.
ML INDEX 500 FUND -- Seeks to provide investment results that, before
expenses, correspond to the aggregate price and yield performance of the
Standard & Poor's Composite Stock Price Index.
ML PRIME BOND FUND -- Seeks as high a level of current income as is
consistent with prudent investment management, and, as a secondary objective,
capital appreciation to the extent consistent with the foregoing objective, by
investing primarily in long-term corporate bonds rated A or better by either
Moody's Investors Service, Inc. or Standard & Poor's Ratings Group.
ML HIGH CURRENT INCOME FUND -- Seeks as high a level of current income as is
consistent with its investment policies and prudent investment management, and
as a secondary objective, capital appreciation when consistent with the
foregoing objective. The Fund invests principally in fixed-income securities
that are rated in the lower rating categories of the established rating services
or in unrated securities of comparable quality.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
ML QUALITY EQUITY FUND -- Seeks the highest total investment return
consistent with prudent risk. The Fund uses a fully managed investment policy
utilizing equity securities, primarily common stocks of large-capitalization
companies, as well as investment grade debt and convertible securities.
ML SPECIAL VALUE FOCUS FUND -- Seeks long-term capital growth by investing
in a diversified portfolio of securities, primarily common stocks, of relatively
small companies and of emerging growth companies regardless of size.
ML NATURAL RESOURCES FOCUS FUND -- Seeks long-term growth of capital and
protection of the purchasing power of shareholders' capital by investing
primarily in equity securities of domestic and foreign companies with
substantial natural resource assets.
ML AMERICAN BALANCED FUND -- Seeks a level of current income and a degree of
stability of principal not normally available from an investment solely in
equity securities and the opportunity for capital appreciation greater than is
normally available from an investment solely in debt securities by investing in
a balanced portfolio of fixed income and equity securities.
ML GLOBAL STRATEGY FOCUS FUND -- Seeks a high total investment return by
investing primarily in a portfolio of equity and fixed income securities,
including convertible securities, of U.S. and foreign issuers.
ML BASIC VALUE FOCUS FUND -- Seeks capital appreciation and, secondarily,
income by investing in securities, primarily equities, that management of the
Fund believes are undervalued and therefore represent basic investment value.
ML GLOBAL BOND FOCUS FUND -- Seeks a high total investment return by
investing in a global portfolio of fixed income securities denominated in
various currencies, including multinational currency units.
ML GLOBAL UTILITY FOCUS FUND -- Seeks capital appreciation and current
income through investment of at least 65% of its total assets in equity and debt
securities issued by domestic and foreign companies which are, in the opinion of
the Investment Adviser, primarily engaged in the ownership or operation of
facilities used to generate, transmit or distribute electricity,
telecommunications, gas or water.
ML INTERNATIONAL EQUITY FOCUS FUND -- Seeks capital appreciation and,
secondarily, income through investing in a diversified portfolio of equity
securities of issuers in countries other than the United States.
ML DEVELOPING CAPITAL MARKETS FOCUS FUND -- Seeks long-term capital
appreciation by investing in securities, principally equities, of issuers in
countries having smaller capital markets.
ML GOVERNMENT BOND FUND -- Seeks the highest possible current income
consistent with the protection of capital afforded by investing in debt
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities.
There is no assurance that any Fund 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 Hartford's underwriting rules then in effect. Hartford
reserves the right to reject an enrollment form for any reason permitted by law.
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 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
<PAGE>
12 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 12. 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 ML Domestic 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 ML Domestic 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 Fund. An Owner may transfer funds
among the Investment Divisions subject to certain restrictions. See "Detailed
Description of Certificate Benefits and Provisions -- Transfers Between the
Investment Divisions," page 13. Any additional Net Premiums received by Us prior
to such date will be allocated to the ML Domestic 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. Subsequent Net
Premiums will be allocated among Investment Divisions according to Your most
recent instructions.
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 ML Domestic 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 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 Fund, 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 Fund at the end of the Valuation Period
(plus the per share amount of any dividend or capital gain distributions paid by
that Fund in the Valuation Period then ended) divided by the net asset value per
share of the corresponding Fund at the beginning of the Valuation Period, less
the daily deduction for the mortality and expense risks assumed by 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 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
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 Funds 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 12.
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 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 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. 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 24.
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 as set forth in the Certificate. Transfer
requests must be in writing on a form approved by 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. 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,
<PAGE>
14 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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.
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.
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 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. 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.
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 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 Certificate Anniversary.
Interest payments are due as shown in the Certificate Specifications. If
interest is not paid within 5 days of its due date, it will be added to the
amount of the Loan as of its due date.
The maximum Adjustable Loan Interest Rate We may charge for Loans is 5%.
CREDITED INTEREST
Amounts in the Loan Account for Coverage Years one through ten will be
credited with interest at a rate equal to the Adjustable Loan Interest Rate then
in effect, minus 1%. Amounts in the Loan Account for Coverage Years eleven and
later will be credited with interest at a rate equal to the Adjustable Loan
Interest Rate then in effect, minus .20%.
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 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
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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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 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 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.
PAYMENT OPTIONS
Death Proceeds under the Certificate may be paid in a lump sum or may be
applied to one of Hartford's payment options. The minimum amount that may be
placed under a payment option is $5,000 unless 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, Hartford may make payments less often. The first, second and third
payment options are based on a net investment rate of 3% per annum. 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.
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16 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 U.S. Supreme Court decision in Arizona
Governing Committee v. Norris, income payment options involving life income are
based on unisex actuarial tables. In addition, legislation previously was
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 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, an Owner may request a change in the Face Amount by
making a request In Writing to Hartford and directing such request to the
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 Hartford and subject to Our rules then in effect. Any 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 Hartford, 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 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 Hartford or the
Participating Employer. The party initiating the termination must provide notice
of such termination to each Owner of record, at the Owner's 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 Hartford,
whichever is applicable, nor will any new Certificates be issued. If premium
payments are discontinued, 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 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 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
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.
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
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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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 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 Hartford's underwriting
rules and 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 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 Hartford or to the agent who sold the Certificate, to be canceled within 10
days after delivery of the Certificate to the Owner, 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 ML Domestic 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
When We receive a Premium Payment, We deduct a front-end sales load. The
current front-end sales load is 6.75% of any premium paid for Coverage Years 1
through 7 and 4.75% of any premium paid in Coverage Years 8 and later. The
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 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
contacts 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.
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.
PREMIUM RELATED TAX CHARGE
We deduct a percentage of each premium to cover taxes assessed against
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 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.
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18 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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DEDUCTIONS AND CHARGES FROM
THE INVESTMENT VALUE
MONTHLY DEDUCTION AMOUNTS
On the Coverage Date and on each subsequent Processing Date, 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) 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 Hartford's anticipated mortality
costs. 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
structure) under the Group Policy that are agreed to by Hartford and the
Participating Employer. The actual monthly cost of insurance rates will be
based on Hartford's expectations as to future experience. 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. 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 Hartford for
anticipated cost of providing these benefits and are specified on the
applicable rider.
The Riders available are described on page 20 under "Supplemental
Benefits" section.
(c)
MONTHLY ADMINISTRATIVE FEE AND OTHER EXPENSE CHARGES
Hartford will assess a monthly administrative charge to compensate
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 Hartford.
Hartford currently deducts a daily charge for Coverage Years one through ten at
an effective
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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annual rate of .65% of the value of each Investment Division's assets and for
Coverage Years eleven and later at an effective annual rate of .50% of each
Investment Division's assets. In no event will the charge exceed .65% of an
Investment Division's assets on an annual basis. See also, "Premiums --
Accumulation Unit Values," page 12.
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 Hartford. Conversely, if the charge proves more than
sufficient, any excess will be added to 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 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
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 Policies. If shares of
any of the Funds should no longer be available for investment, or if, in the
judgment of Hartford's management, further investment in shares of any Fund
should become inappropriate in view of the purposes of the Group Policies,
Hartford may substitute shares of another Fund 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, 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 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 Directors for the
Merrill Lynch Variable Series Funds, Inc. (each a "Board") 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 any Board
were to conclude that separate funds should be established for variable annuity
and variable life insurance separate accounts, Hartford will bear the attendant
expenses.
VOTING RIGHTS
In accordance with its view of presently applicable law, 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. Hartford will vote shares for which no instructions have been given and
shares which are not attributable to Owners (i.e., shares owned by 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 Hartford's present interpretation should change and, as a result, 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 14) 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.
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
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20 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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, 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 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 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; 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.
Hartford also reserves the right to change the name of the Separate Account.
We have reserved all rights to the name of Hartford 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
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. 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.
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 23.
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Wendell J. Bossen, 63 Vice President, 1995** Vice President (1992-Present), Hartford Life and Accident
Insurance Company; Vice President (1992-Present),
Hartford Life Insurance Company; President
(1992-Present), International Corporate Marketing Group,
Inc.; Executive Vice President (1984-1992), Mutual
Benefit.
Gregory A. Boyko, 45 Senior Vice President, Vice President & Controller (1995-1997), Hartford; Senior
Chief Financial Officer & Vice President, Chief Financial Officer & Treasurer
Treasurer, 1997 (1997-Present); Vice President & Controller (1995-1997),
Director, 1997* Hartford Life and Accident Insurance Company; Director
(1997-Present); Senior Vice President, Chief Financial
Officer & Treasurer (1997-Present); Vice President and
Controller (1995-1997), Hartford Life Insurance Company;
Senior Vice President, Chief Financial Officer &
Treasurer (1997-Present), Hartford Life, Inc.; Chief
Financial Officer (1994-1995), IMG American Life; Senior
Vice President (1992-1994), Connecticut Mutual Life
Insurance Company.
Peter W. Cummins, 60 Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President (1989-1997),
Hartford Life and Accident Insurance Company; Senior
Vice President (1997-Present); Vice President
(1989-1997); Director of Broker Dealer Sales--ILAD
(1989-1992), Hartford Life Insurance Company.
Ann M. de Raismes, 46 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice
Director of Human Resources, President (1997-Present); Vice President (1994-1997);
1994 Assistant Vice President (1992-1994), Hartford Life and
Accident Insurance Company; Senior Vice President
(1997-Present); Vice President (1994-1997); Assistant
Vice President (1992-1994), Hartford Life Insurance
Company; Vice President, Human Resources (1997-Present),
Hartford Life, Inc.
James R. Dooley, 60 Vice President, 1993 Director, Information Services (1973-1997), Hartford Life
Insurance Company.
Timothy M. Fitch, 44 Vice President, 1995 Vice President(1995-Present); Actuary (1994-Present);
Actuary, 1997 Assistant Vice President (1992-1995), Hartford Life and
Accident Insurance Company; Vice President
(1995-Present); Actuary (1994-Present); Assistant Vice
President (1992-1995), Hartford Life Insurance Company.
J. Richard Garrett, 52 Vice President, 1994 Treasurer (1994-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer (1997-Present);
Treasurer (1984-1997), Hartford Life and Accident
Insurance Company; Vice President, (1993-Present);
Assistant Treasurer (1997-Present); Treasurer
(1986-1997), Hartford Life Insurance Company; Vice
President (1997-Present), Hartford Life, Inc.
Donald J. Gillette, 51 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1995-1997), Hartford Life and Accident
Insurance Company; Assistant Vice President
(1995-Present), Hartford Life Insurance Company.
</TABLE>
<PAGE>
22 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Lynda Godkin, 43 Senior Vice President, 1997 Assistant General Counsel and Secretary (1994-1995),
General Counsel, 1996 Hartford; Director (1997-Present); Senior Vice President
Corporate Secretary, 1996 (1997-Present); General Counsel (1996-Present);
Director, 1997* Corporate Secretary (1995-Present); Associate General
Counsel (1995-1996); Assistant General Counsel and
Secretary (1994-1995); Counsel (1990-1994), Hartford
Life and Accident Company; Senior Vice President
(1997-Present); General Counsel (1996-Present);
Corporate Secretary (1995-Present); Director
(1997-Present); Associate General Counsel (1995-1996);
Assistant General Counsel and Secretary (1994-1995);
Counsel (1990-1994), Hartford Life Insurance Company;
Vice President and General Counsel (1997-Present),
Hartford Life, Inc.
Lois W. Grady, 52 Vice President, 1994 Vice President (1993-1997); Assistant Vice President
(1987-1993), Hartford Life and Accident Insurance
Company; Vice President (1993-Present); Assistant Vice
President (1987-1993), Hartford Life Insurance Company.
Christopher Graham, 46 Vice President, 1997 Vice President (1997-Present), Hartford Life Insurance
Company.
David A. Hall, 43 Vice President, 1997 Senior Vice President (1993-1997); Chief Investment
Actuary, 1993 Officer (1993), Hartford; Vice President (1997-Present);
Actuary (1992-Present); Senior Vice President
(1992-1997), Chief Investment Officer (1993); Vice
President (1987-1992), Hartford Life and Accident
Insurance Company; Vice President (1997-Present);
Actuary (1983-Present); Senior Vice President
(1992-1997); Chief Investment Officer (1993); Vice
President (1989-1992), Hartford Life Insurance Company.
Stephen T. Joyce, 38 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1994-1997), Hartford Life and Accident
Insurance Company; Vice President (1997-Present);
Assistant Vice President (1994-1997), Hartford Life
Insurance Company.
Robert A. Kerzner, 45 Vice President, 1997 Vice President (1994-1997), Hartford Life and Accident
Insurance Company; Vice President (1994-Present);
Regional Vice President (1991-1994), Hartford Life
Insurance Company.
William B. Malchodi, Jr., 47 Vice President, 1994 Vice President (1994-Present); Director of Taxes
Director of Taxes, 1992 (1992-Present), Hartford Life and Accident Insurance
Company; Vice President (1994-Present); Director of
Taxes (1991-Present), Hartford Life Insurance Company.
Thomas M. Marra, 39 Executive Vice President Director, Senior Vice President (1993-1996); Director of Individual
Individual Life and Annuity Annuities (1991-1993), Hartford; Director
Division, 1993 (1994-Present); Executive Vice President (1995-Present);
Director, 1994* Director, Individual Life and Annuity Division
(1994-Present); Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1997), Hartford
Life Insurance Company; Executive Vice President,
Individual Life and Annuities (1997-Present), Hartford
Life, Inc.
Steven L. Mattieson, 52 Vice President, 1984 Director of New Business (1984-1997), Hartford.
C. Michael O'Halloran, 50 Vice President, 1997 Vice President (1997-Present), Hartford Life Insurance
Company; Corporate Secretary (1997-Present), Hartford
Life, Inc.; Senior Associate General Counsel
(1988-Present), Director of Corporate Law
(1994-Present), The Hartford Financial Services Group.
</TABLE>
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Craig R. Raymond, 36 Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice President
Chief Actuary, 1994 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
President (1997-Present); Chief Actuary (1994-Present);
Vice President (1993-1997); Assistant Vice President
(1992-1993); Actuary (1989-1994), Hartford Life
Insurance Company; Vice President and Chief Actuary
(1997-Present), Hartford Life, Inc.
David T. Schrandt, 49 Vice President, 1987 Treasurer (1987-1997); Controller (1987-[1997]), Hartford.
Lowndes A. Smith, 58 President, 1989 Chief Operating Officer (1989-1997), Hartford; President
Chief Executive Officer, 1997 (1989-Present), Chief Executive Officer (1997-Present);
Director, 1985* Director (1981-Present); Chief Operating Officer
(1989-1997), Hartford Life Insurance Company; Chief
Executive Officer and President and Director
(1997-Present), Hartford Life, Inc.
Walter C. Welsh, 50 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice President
(1995-1997); Assistant Vice President (1993-1995),
Hartford Life Insurance Company; Vice President,
Government Affairs (1997-Present), Hartford Life, Inc.
David M. Znamierowski, 37 Senior Vice President, 1997 Senior Vice President (1997-Present); Director, Risk
Management Strategy (1996-Present); Vice President
(1997), Hartford Life Insurance Company; Vice President,
Investment Strategy (1997-Present), Hartford Life, Inc.;
Vice President, Investment Strategy & Policy, Aetna Life
and Casualty.
</TABLE>
- ------------------------
* Denotes year of election to Board of Directors
** Hartford Affiliated Company
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
DISTRIBUTION OF THE
GROUP POLICIES
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 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 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 Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the General Account of Hartford. 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 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 Hartford.
<PAGE>
24 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of these Policies 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 Hartford 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 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 13). As a result, such investment income
and realized capital gains are automatically applied to increase reserves under
the Certificate.
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 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.
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. 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.
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 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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
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.
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 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
AND EXPERTS
There are no pending material legal proceedings affecting the separate
Account.
Counsel with respect to federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
General Counsel, Hartford Life Insurance Companies, P. O. Box 2999, Hartford,
Connecticut 06104-2999.
The audited financial statements included in this Prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report. Reference is made to said report on the
statutory-basis financial statements of ITT Hartford Life and Annuity Insurance
Company which states the statutory-basis financial statements are presented in
accordance with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners and the State of Connecticut
Insurance Department, not presented in accordance with generally accepted
accounting principles. Reference is made to said report on the statutory-basis
financial statements of ITT Hartford Life and Annuity Insurance Company (the
Depositor), which includes an explanatory paragraph with respect to the change
in valuation method in determining aggregate reserves for future benefits in
1994, as discussed in Note 1 to Notes to Statutory
<PAGE>
26 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Financial Statements. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, CT 06103.
The hypothetical illustrations included in this Prospectus and Registration
Statement have been approved by Pauline Gyllenhammer, ASA, MAAA, Actuarial
Associate, are included in reliance upon her 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, Hartford, the Group Policies and the
Certificates.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
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 Fund 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 29 to 40 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 0.68%. The 0.68% figure is based on an average of the
current management fees and expenses of the available 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
0.68%, 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 the 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, Hartford will furnish a comparable illustration based on a
proposed Certificate's specific circumstances.
<PAGE>
28 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% (-0.68% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,259 12,259 250,000 11,016 11,016 250,000
2 30,355 24,275 24,275 250,000 21,853 21,853 250,000
3 46,680 36,054 36,054 250,000 32,512 32,512 250,000
4 63,821 47,631 47,631 250,000 43,001 43,001 250,000
5 81,819 59,025 59,025 250,000 53,318 53,318 250,000
6 100,717 70,350 70,350 250,000 63,470 63,470 250,000
7 120,560 81,516 81,516 250,000 73,453 73,453 250,000
8 126,588 79,974 79,974 250,000 70,957 70,957 250,000
9 132,917 78,406 78,406 250,000 68,340 68,340 250,000
10 139,563 76,803 76,803 250,000 65,579 65,579 250,000
11 146,541 75,249 75,249 250,000 62,658 62,658 250,000
12 153,868 73,608 73,608 250,000 59,558 59,558 250,000
13 161,561 71,855 71,855 250,000 56,264 56,264 250,000
14 169,639 69,978 69,978 250,000 52,756 52,756 250,000
15 178,121 67,966 67,966 250,000 49,009 49,009 250,000
16 187,027 65,731 65,731 250,000 44,988 44,988 250,000
17 196,378 63,354 63,354 250,000 40,648 40,648 250,000
18 206,197 60,818 60,818 250,000 35,934 35,934 250,000
19 216,507 58,105 58,105 250,000 30,778 30,778 250,000
20 227,332 55,194 55,194 250,000 25,110 25,110 250,000
25 290,140 36,578 36,578 250,000 -- -- --
30 370,300 6,888 6,888 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
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% (5.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,008 13,008 250,000 11,717 11,717 250,000
2 30,355 26,536 26,536 250,000 23,947 23,947 250,000
3 46,680 40,616 40,616 250,000 36,720 36,720 250,000
4 63,821 55,308 55,308 250,000 50,070 50,070 250,000
5 81,819 70,661 70,661 250,000 64,030 64,030 250,000
6 100,717 86,815 86,815 250,000 78,639 78,639 250,000
7 120,560 103,725 103,725 250,000 93,933 93,933 250,000
8 126,588 108,118 108,118 250,000 96,905 96,905 250,000
9 132,917 112,691 112,691 250,000 99,922 99,922 250,000
10 139,563 117,446 117,446 251,533 102,977 102,977 250,000
11 146,541 122,547 122,547 255,298 106,067 106,067 250,000
12 153,868 127,819 127,819 259,172 109,188 109,188 250,000
13 161,561 133,256 133,256 263,091 112,342 112,342 250,000
14 169,639 138,860 138,860 267,054 115,529 115,529 250,000
15 178,121 144,635 144,635 271,063 118,746 118,746 250,000
16 187,027 150,535 150,535 275,041 121,986 121,986 250,000
17 196,378 156,630 156,630 279,108 125,238 125,238 250,000
18 206,197 162,923 162,923 283,292 128,488 128,488 250,000
19 216,507 169,421 169,421 287,615 131,720 131,720 250,000
20 227,332 176,128 176,128 292,090 134,919 134,919 250,000
25 290,140 212,904 212,904 316,757 150,080 150,080 250,000
30 370,300 255,447 255,447 345,882 162,014 162,014 250,000
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
30 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% (11.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,756 13,756 250,000 12,418 12,418 250,000
2 30,355 28,887 28,887 250,000 26,127 26,127 250,000
3 46,680 45,547 45,547 250,000 41,275 41,275 250,000
4 63,821 63,939 63,939 250,000 58,031 58,031 250,000
5 81,819 84,272 84,272 250,000 76,582 76,582 250,000
6 100,717 106,859 106,859 255,453 97,144 97,144 250,000
7 120,560 131,760 131,760 305,905 119,796 119,796 278,287
8 126,588 145,205 145,205 327,529 131,002 131,002 295,665
9 132,917 160,006 160,006 350,789 143,208 143,208 314,154
10 139,563 176,289 176,289 375,816 156,493 156,493 333,825
11 146,541 194,458 194,458 403,243 170,944 170,944 354,753
12 153,868 214,419 214,419 432,763 186,656 186,656 377,017
13 161,561 236,320 236,320 464,424 203,740 203,740 400,702
14 169,639 260,339 260,339 498,376 222,311 222,311 425,899
15 178,121 286,674 286,674 534,785 242,492 242,492 452,702
16 187,027 315,431 315,431 573,665 264,407 264,407 481,214
17 196,378 346,972 346,972 615,443 288,186 288,186 511,544
18 206,197 381,555 381,555 660,394 313,961 313,961 543,807
19 216,507 419,465 419,465 708,817 341,864 341,864 578,126
20 227,332 461,011 461,011 761,017 372,041 372,041 614,633
25 290,140 735,916 735,916 1,089,846 563,467 563,467 835,186
30 370,300 1,165,940 1,165,940 1,571,440 841,748 841,748 1,135,656
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
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% (-0.68% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,248 12,248 262,280 10,964 10,964 261,071
2 30,355 24,233 24,233 274,287 21,691 21,691 271,817
3 46,680 35,950 35,950 286,026 32,176 32,176 282,323
4 63,821 47,431 47,431 297,526 42,419 42,419 292,586
5 81,819 58,690 58,690 308,804 52,410 52,410 302,597
6 100,717 69,876 69,876 319,996 62,144 62,144 312,353
7 120,560 80,869 80,869 331,004 71,603 71,603 321,834
8 126,588 79,141 79,141 329,279 68,561 68,561 318,803
9 132,917 77,376 77,376 327,517 65,373 65,373 315,627
10 139,563 75,558 75,558 325,704 62,015 62,015 312,283
11 146,541 73,759 73,759 323,903 58,475 58,475 308,758
12 153,868 71,841 71,841 321,995 54,734 54,734 305,033
13 161,561 69,768 69,768 319,934 50,784 50,784 301,101
14 169,639 67,530 67,530 317,710 46,612 46,612 296,948
15 178,121 65,116 65,116 315,311 42,199 42,199 292,555
16 187,027 62,412 62,412 312,631 37,516 37,516 287,894
17 196,378 59,536 59,536 309,769 32,528 32,528 282,931
18 206,197 56,472 56,472 306,721 27,190 27,190 277,622
19 216,507 53,206 53,206 303,472 21,452 21,452 271,917
20 227,332 49,717 49,717 300,001 15,264 15,264 265,766
25 290,140 28,031 28,031 278,440 -- -- --
30 370,300 -- -- -- -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
32 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% (5.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,996 12,996 262,965 11,661 11,661 261,712
2 30,355 26,490 26,490 276,417 23,768 23,768 273,781
3 46,680 40,497 40,497 290,380 36,335 36,335 286,308
4 63,821 55,070 55,070 304,905 49,376 49,376 299,309
5 81,819 70,247 70,247 320,031 62,902 62,902 312,794
6 100,717 86,207 86,207 335,924 76,927 76,927 326,777
7 120,560 102,859 102,859 352,517 91,452 91,452 341,259
8 126,588 106,951 106,951 356,598 93,532 93,532 343,345
9 132,917 111,170 111,170 360,806 95,516 95,516 345,338
10 139,563 115,507 115,507 365,133 97,374 97,374 347,206
11 146,541 120,106 120,106 369,709 99,083 99,083 348,928
12 153,868 124,779 124,779 374,376 100,617 100,617 350,476
13 161,561 129,495 129,495 379,088 101,956 101,956 351,832
14 169,639 134,241 134,241 383,832 103,074 103,074 352,969
15 178,121 139,007 139,007 388,596 103,938 103,938 353,854
16 187,027 143,672 143,672 393,270 104,504 104,504 354,445
17 196,378 148,352 148,352 397,948 104,717 104,717 354,689
18 206,197 153,027 153,027 402,624 104,513 104,513 354,520
19 216,507 157,681 157,681 407,280 103,813 103,813 353,862
20 227,332 162,289 162,289 411,892 102,539 102,539 352,637
25 290,140 183,486 183,486 433,152 84,839 84,839 335,282
30 370,300 197,273 197,273 447,114 37,237 37,237 288,338
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
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% (11.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,744 13,744 263,647 12,359 12,359 262,351
2 30,355 28,836 28,836 278,622 25,931 25,931 275,816
3 46,680 45,413 45,413 295,069 40,835 40,835 290,604
4 63,821 63,659 63,659 313,170 57,208 57,208 306,850
5 81,819 83,766 83,766 333,114 75,193 75,193 324,694
6 100,717 106,085 106,085 355,240 94,952 94,952 344,298
7 120,560 130,720 130,720 379,674 116,650 116,650 365,827
8 126,588 143,877 143,877 392,724 126,787 126,787 375,893
9 132,917 158,363 158,363 407,094 137,800 137,800 386,829
10 139,563 174,304 174,304 422,909 149,755 149,755 398,702
11 146,541 192,100 192,100 440,541 162,737 162,737 411,594
12 153,868 211,662 211,662 459,949 176,832 176,832 425,593
13 161,561 233,142 233,142 481,262 192,149 192,149 440,802
14 169,639 256,734 256,734 504,670 208,797 208,797 457,334
15 178,121 282,651 282,651 530,384 226,896 226,896 475,307
16 187,027 311,001 311,001 565,607 246,566 246,566 494,840
17 196,378 342,097 342,097 606,797 267,933 267,933 516,059
18 206,197 376,193 376,193 651,115 291,126 291,126 539,093
19 216,507 413,571 413,571 698,856 316,279 316,279 564,075
20 227,332 454,531 454,531 750,321 343,543 343,543 591,155
25 290,140 725,567 725,567 1,074,520 518,335 518,335 768,291
30 370,300 1,149,539 1,149,539 1,549,335 774,268 774,268 1,044,614
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
34 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% (-0.68% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,058 5,058 250,000 3,969 3,969 250,000
2 12,915 9,955 9,955 250,000 7,814 7,814 250,000
3 19,861 14,691 14,691 250,000 11,532 11,532 250,000
4 27,154 19,298 19,298 250,000 15,123 15,123 250,000
5 34,812 23,790 23,790 250,000 18,578 18,578 250,000
6 42,853 28,300 28,300 250,000 21,896 21,896 250,000
7 51,296 32,720 32,720 250,000 25,060 25,060 250,000
8 60,161 37,167 37,167 250,000 28,178 28,178 250,000
9 69,469 41,514 41,514 250,000 31,117 31,117 250,000
10 79,242 45,755 45,755 250,000 33,858 33,858 250,000
11 89,504 49,933 49,933 250,000 36,396 36,396 250,000
12 100,279 53,967 53,967 250,000 38,718 38,718 250,000
13 111,593 57,833 57,833 250,000 40,821 40,821 250,000
14 123,473 61,530 61,530 250,000 42,694 42,694 250,000
15 135,947 65,054 65,054 250,000 44,326 44,326 250,000
16 149,044 68,328 68,328 250,000 45,691 45,691 250,000
17 162,796 71,444 71,444 250,000 46,763 46,763 250,000
18 177,236 74,394 74,394 250,000 47,504 47,504 250,000
19 192,398 77,172 77,172 250,000 47,869 47,869 250,000
20 208,318 79,768 79,768 250,000 47,813 47,813 250,000
25 300,684 89,559 89,559 250,000 39,595 39,595 250,000
30 418,569 92,205 92,205 250,000 9,395 9,395 250,000
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
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% (5.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,371 5,371 250,000 4,244 4,244 250,000
2 12,915 10,895 10,895 250,000 8,613 8,613 250,000
3 19,861 16,578 16,578 250,000 13,110 13,110 250,000
4 27,154 22,458 22,458 250,000 17,740 17,740 250,000
5 34,812 28,559 28,559 250,000 22,503 22,503 250,000
6 42,853 35,026 35,026 250,000 27,403 27,403 250,000
7 51,296 41,767 41,767 250,000 32,433 32,433 250,000
8 60,161 48,920 48,920 250,000 37,716 37,716 250,000
9 69,469 56,374 56,374 250,000 43,129 43,129 250,000
10 79,242 64,136 64,136 250,000 48,665 48,665 250,000
11 89,504 72,305 72,305 250,000 54,329 54,329 250,000
12 100,279 80,795 80,795 250,000 60,123 60,123 250,000
13 111,593 89,609 89,609 250,000 66,058 66,058 250,000
14 123,473 98,770 98,770 250,000 72,144 72,144 250,000
15 135,947 108,302 108,302 250,000 78,388 78,388 250,000
16 149,044 118,178 118,178 250,000 84,792 84,792 250,000
17 162,796 128,502 128,502 250,000 91,360 91,360 250,000
18 177,236 139,308 139,308 250,000 98,090 98,090 250,000
19 192,398 150,598 150,598 255,659 104,984 104,984 250,000
20 208,318 162,293 162,293 269,146 112,049 112,049 250,000
25 300,684 227,135 227,135 337,929 150,808 150,808 250,000
30 418,569 303,379 303,379 410,783 198,016 198,016 268,393
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
36 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% (11.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,684 5,684 250,000 4,519 4,519 250,000
2 12,915 11,873 11,873 250,000 9,446 9,446 250,000
3 19,861 18,619 18,619 250,000 14,822 14,822 250,000
4 27,154 26,015 26,015 250,000 20,697 20,697 250,000
5 34,812 34,146 34,146 250,000 27,120 27,120 250,000
6 42,853 43,229 43,229 250,000 34,154 34,154 250,000
7 51,296 53,255 53,255 250,000 41,854 41,854 250,000
8 60,161 64,462 64,462 250,000 50,426 50,426 250,000
9 69,469 76,839 76,839 250,000 59,827 59,827 250,000
10 79,242 90,513 90,513 250,000 70,152 70,152 250,000
11 89,504 105,766 105,766 250,000 81,513 81,513 250,000
12 100,279 122,638 122,638 250,000 94,043 94,043 250,000
13 111,593 141,223 141,223 277,536 107,899 107,899 250,000
14 123,473 161,633 161,633 309,420 123,262 123,262 250,000
15 135,947 184,040 184,040 343,322 140,267 140,267 261,861
16 149,044 208,553 208,553 379,290 158,765 158,765 288,949
17 162,796 235,459 235,459 417,646 178,865 178,865 317,494
18 177,236 264,978 264,978 458,623 200,683 200,683 347,601
19 192,398 297,356 297,356 502,475 224,340 224,340 379,381
20 208,318 332,856 332,856 549,464 249,962 249,962 412,951
25 300,684 568,086 568,086 841,300 413,103 413,103 612,313
30 418,569 936,626 936,626 1,262,373 651,376 651,376 878,813
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
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% (-0.68% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,053 5,053 255,077 3,948 3,948 254,047
2 12,915 9,938 9,938 259,975 7,752 7,752 257,863
3 19,861 14,649 14,649 264,701 11,407 11,407 261,530
4 27,154 19,216 19,216 269,280 14,909 14,909 265,045
5 34,812 23,653 23,653 273,728 18,247 18,247 268,397
6 42,853 28,107 28,107 278,181 21,417 21,417 271,581
7 51,296 32,457 32,457 282,539 24,398 24,398 274,578
8 60,161 36,817 36,817 286,908 27,294 27,294 277,491
9 69,469 41,058 41,058 291,159 29,965 29,965 280,180
10 79,242 45,168 45,168 295,280 32,389 32,389 282,624
11 89,504 49,181 49,181 299,301 34,553 34,553 284,810
12 100,279 53,006 53,006 303,142 36,442 36,442 286,721
13 111,593 56,609 56,609 306,763 38,048 38,048 288,351
14 123,473 59,981 59,981 310,154 39,357 39,357 289,685
15 135,947 63,111 63,111 313,304 40,354 40,354 290,708
16 149,044 65,886 65,886 316,108 41,009 41,009 291,391
17 162,796 68,425 68,425 318,667 41,289 41,289 291,702
18 177,236 70,712 70,712 320,975 41,150 41,150 291,598
19 192,398 72,734 72,734 323,019 40,542 40,542 291,028
20 208,318 74,471 74,471 324,780 39,417 39,417 289,946
25 300,684 78,016 78,016 328,475 24,684 24,684 275,475
30 418,569 70,048 70,048 320,727 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
38 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% (5.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,366 5,366 255,364 4,222 4,222 254,301
2 12,915 10,876 10,876 260,862 8,545 8,545 258,615
3 19,861 16,529 16,529 266,503 12,965 12,965 263,027
4 27,154 22,360 22,360 272,319 17,483 17,483 267,537
5 34,812 28,390 28,390 278,331 22,090 22,090 272,136
6 42,853 34,778 34,778 284,689 26,782 26,782 276,821
7 51,296 41,415 41,415 291,305 31,541 31,541 281,574
8 60,161 48,433 48,433 298,300 36,476 36,476 286,504
9 69,469 55,714 55,714 305,559 41,447 41,447 291,472
10 79,242 63,254 63,254 313,077 46,430 46,430 296,454
11 89,504 71,131 71,131 320,926 51,410 51,410 301,434
12 100,279 79,241 79,241 329,015 56,366 56,366 306,392
13 111,593 87,557 87,557 337,314 61,286 61,286 311,315
14 123,473 96,076 96,076 345,816 66,150 66,150 316,184
15 135,947 104,796 104,796 354,518 70,935 70,935 320,976
16 149,044 113,605 113,605 363,320 75,603 75,603 325,654
17 162,796 122,627 122,627 372,324 80,110 80,110 330,175
18 177,236 131,853 131,853 381,532 84,398 84,398 334,481
19 192,398 141,276 141,276 390,939 88,399 88,399 338,506
20 208,318 150,882 150,882 400,529 92,044 92,044 342,182
25 300,684 200,903 200,903 450,501 102,588 102,588 352,964
30 418,569 251,137 251,137 500,767 90,447 90,447 341,347
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
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% (11.32% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
AT 5% CASH CASH
END OF INTEREST PER CASH SURRENDER DEATH CASH SURRENDER DEATH
POLICY YEAR YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
- ----------- ------------- --------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,679 5,679 255,650 4,496 4,496 254,553
2 12,915 11,852 11,852 261,780 9,371 9,371 259,395
3 19,861 18,564 18,564 268,444 14,656 14,656 264,645
4 27,154 25,900 25,900 275,726 20,391 20,391 270,340
5 34,812 33,939 33,939 283,704 26,610 26,610 276,517
6 42,853 42,912 42,912 292,595 33,355 33,355 283,216
7 51,296 52,786 52,786 302,391 40,659 40,659 290,472
8 60,161 63,787 63,787 313,304 48,696 48,696 298,455
9 69,469 75,889 75,889 325,309 57,385 57,385 307,087
10 79,242 89,193 89,193 338,509 66,771 66,771 316,412
11 89,504 103,940 103,940 353,129 76,910 76,910 326,485
12 100,279 120,124 120,124 369,188 87,861 87,861 337,365
13 111,593 137,863 137,863 386,791 99,699 99,699 349,126
14 123,473 157,311 157,311 406,090 112,500 112,500 361,843
15 135,947 178,637 178,637 427,253 126,344 126,344 375,596
16 149,044 201,922 201,922 450,366 141,306 141,306 390,461
17 162,796 227,498 227,498 475,742 157,466 157,466 406,516
18 177,236 255,593 255,593 503,617 174,899 174,899 423,838
19 192,398 286,459 286,459 534,242 193,681 193,681 442,502
20 208,318 320,373 320,373 567,890 213,897 213,897 462,593
25 300,684 546,986 546,986 810,052 340,535 340,535 588,448
30 418,569 903,186 903,186 1,217,303 521,247 521,247 768,123
</TABLE>
<TABLE>
<C> <S>
* 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.
THE DEATH BENEFIT MAY, AND THE CASH VALUE AND CASH SURRENDER VALUE WILL
DIFFER IF PREMIUMS ARE PAID IN DIFFERENT AMOUNTS OR FREQUENCIES.
</TABLE>
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, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE, AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. 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.
<PAGE>
40 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments which are of normal recurring nature necessary to
present fairly the financial position, the results of operations and the cash
flows for the periods presented. Certain reclassifications of prior year results
were made to conform to current presentation. Interim results are not indicative
of the results which may be expected for any other interim period or the full
year. Statements contained in this discussion, other than statements of
historical fact, are forward-looking statements. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements are made based upon
management's expectations and beliefs concerning future developments and their
potential effect on Hartford Life Insurance Company ("the Company"). There can
be no assurance that future developments will be in accordance with management's
expectations or that the effect of these future developments on the Company will
be those anticipated by management. Actual results could differ materially from
those expected by the Company, depending on the outcome of certain factors,
including those described with the forward-looking statements. For a description
of accounting policies, see Note 1 to Consolidated Financial Statements in the
1996 Form 10-K. The Company is an indirect subsidiary of Hartford Life, Inc.
("HLI"). Accordingly, the financial statements presented below are a partial
disclosure of HLI's financials. For a full disclosure of HLI's operations, refer
to the HLI 10Q, as filed with the Securities and Exchange Commission as of June
30, 1997.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES 41
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
QUARTER SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
----------- ---------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ---- ------ ------
(UNAUDITED) (UNAUDITED)
Revenues
Premiums and other considerations............... $323 $299 $ 633 $ 943
Net investment income........................... 322 318 659 651
Net realized capital gains (losses)............. 0 (1) 4 (1)
---- ---- ------ ------
Total Revenues................................ 645 616 1,296 1,593
---- ---- ------ ------
Benefits, Claims and Expenses
Benefits, claims and claim adjustment
expenses....................................... 310 392 652 788
Amortization of deferred policy acquisition
costs.......................................... 91 63 172 129
Dividends to policyholders...................... 18 61 72 347
Other insurance expenses........................ 117 34 190 198
---- ---- ------ ------
Total Benefits, Claims and Expenses........... 536 550 1,086 1,462
---- ---- ------ ------
Income before income tax expense................ 109 66 210 131
Income tax expense.............................. 35 23 73 45
---- ---- ------ ------
Net income........................................ $ 74 $ 43 $ 137 $ 86
---- ---- ------ ------
---- ---- ------ ------
</TABLE>
<PAGE>
42 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
(UNAUDITED)
Assets
Investments:
Fixed maturities, available for sale, at fair
value (amortized cost $13,797 and $13,579)..... $13,844 $13,624
Equity securities, available for sale, at fair
value.......................................... 137 119
Mortgage loans, at outstanding balance.......... -- 2
Policy loans, at outstanding balance............ 3,754 3,836
Other investments, at cost...................... 50 54
----------- ------------
Total investments............................. 17,785 17,635
Cash............................................ 77 43
Premiums and amounts receivable................. 58 137
Reinsurance recoverable......................... 6,362 6,259
Accrued investment income....................... 35 407
Deferred policy acquisition costs............... 2,989 2,760
Deferred income tax............................. 466 474
Other assets.................................... 308 357
Separate account assets......................... 58,970 49,690
----------- ------------
Total assets.................................. $87,374 $77,762
----------- ------------
----------- ------------
Liabilities and Stockholders' Equity
Future policy benefits.......................... $ 2,889 $ 2,474
Other policyholder funds........................ 21,279 22,134
Other liabilities............................... 2,204 1,572
Separate account liabilities.................... 58,970 49,690
----------- ------------
Total liabilities............................. 85,342 75,870
----------- ------------
Common stock -- authorized 1,000 shares, $5,690
par value, issued and outstanding 1,000
shares......................................... 6 6
Additional paid-in capital...................... 1,045 1,045
Unrealized gain on investments, net of tax...... 33 30
Retained earnings............................... 948 811
----------- ------------
Total stockholders' equity.................... 2,032 1,892
----------- ------------
Total liabilities and stockholders' equity...... $87,374 $77,762
----------- ------------
----------- ------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES 43
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------------
<S> <C> <C>
1997 1996
-------- --------
(UNAUDITED)
Operating Activities:
Net income............................ $ 137 $ 86
Adjustments to net income:
Net realized capital (gains) losses on
sale of investments.................. (4) 1
Net increase in deferred policy
acquisition costs.................... (229) (300)
Net amortization of premium on fixed
maturities........................... 0 7
Decrease (increase) in deferred income
tax benefit.......................... 9 (88)
Decrease in premiums and amounts
receivable........................... 92 20
Decrease in other assets.............. 50 26
Increase in reinsurance recoverable... (251) (264)
Increase in liability for future
policy benefits...................... 415 304
Increase in other liabilities......... 146 150
Decrease (increase) in accrued
investment income.................... 48 (5)
-------- --------
Cash provided by (used for)
operating activities............... 413 (63)
-------- --------
Investing Activities:
Purchases of fixed maturities
investments.......................... (3,801) (2,717)
Sales of fixed maturities
investments.......................... 2,274 1,348
Maturities and principal paydowns of
fixed maturities investments......... 1,343 1,469
Net sales (purchases) of other
investments.......................... 110 (120)
Net sales of short-term investments... 138 232
-------- --------
Cash provided by investing
activities......................... 64 212
-------- --------
Financing Activities:
Net disbursements for investment and
universal life-type contracts charged
from policyholder accounts........... (443) (187)
Capital contribution.................. -- 38
-------- --------
Cash used for financing
activities......................... (443) (149)
-------- --------
Net increase in cash.................. 34 0
Cash at beginning of period........... 43 46
-------- --------
Cash at end of period................... $ 77 $ 46
-------- --------
-------- --------
</TABLE>
<PAGE>
44 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS
OF RESULTS OF OPERATIONS
(IN MILLIONS)
QUARTER AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
SEGMENT RESULTS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
----- --------- --------- ---------
Annuity........................... $ 49 $ 37 $ 92 $ 70
Individual Life Insurance......... 12 10 23 19
Employee Benefits................. 9 6 15 14
Guaranteed Investment Contracts... -- (15) -- (30)
Corporate Operation............... 4 5 7 13
--- --------- --------- ---------
Net Income........................ $ 74 $ 43 $ 137 $ 86
--- --------- --------- ---------
--- --------- --------- ---------
</TABLE>
Net income increased $31, or 72%, and $51, or 59%, for the second quarter
and six months ended June 30, 1997, respectively, over prior year. This increase
is reflective of continued, solid growth in both the Annuity and Individual Life
Insurance segments. Net income in the Annuity segment increased due to higher
fee income on growing account values as well as strong new business sales. Net
income in the Individual Life Insurance segment increased due to cost of
insurance charges and other fee income on a growing block of life insurance
in-force, as well as favorable mortality results. Guaranteed Investment
Contracts reported no net income in the second quarter of 1997 consistent with
management's expectations that net income subsequent to 1996 will be immaterial.
ANNUITY
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues........................ $ 308 $ 232 $ 588 $ 466
Expenses........................ 259 195 496 396
--------- --------- --------- ---------
Net Income...................... $ 49 $ 37 $ 92 $ 70
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues, which are primarily comprised of investment income and management
and maintenance fees, grew $76, or 33%, to $308 in the second quarter of 1997
and $122, or 26%, to $588 for the six months ended June 30, 1997. This growth
resulted from an increase in the average account value, primarily driven by
individual variable annuities, of $14.2 billion, or 35%, to $55.2 billion as of
June 30, 1997 from $41.0 billion as of June 30, 1996. This is a result of
approximately $10 billion in new sales of individual annuities over the last
twelve months and market appreciation. Additionally, new individual annuity
sales were approximately $2.5 billion and $5.1 billion for the second quarter
and six months ended June 30, 1997, respectively, similar to sales of $2.7
billion and $4.9 billion, respectively, for the same periods of 1996. Growth in
the assets under management by this segment also resulted in increased expenses
related to other insurance expenses, amortization of deferred policy acquisition
costs and taxes. Expenses increased $64, or 33%, to $259 in the second quarter
of 1997 and $100, or 25%, to $496 for the six months ended June 30, 1997. Net
income increased $12, or 32%, to $49 in the second quarter of 1997 and $22, or
31%, to $92 for the six months ended June 30, 1997.
INDIVIDUAL LIFE INSURANCE
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues........................ $ 125 $ 101 $ 236 $ 216
Expenses........................ 113 91 213 197
--------- --------- --------- ---------
Net Income...................... $ 12 $ 10 $ 23 $ 19
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues increased $24, or 24%, to $125 in the second quarter of 1997 and
$20, or 9%, to $236 for the six months ended June 30, 1997. In the first quarter
of 1996, a block of business was assumed from Investors Equity which increased
revenues by $9. Excluding this transaction, year to date revenues increased $29,
or 14% over prior year. This growth was driven by increased cost of insurance
charges and other fee income earned on this growing block of business. Life
insurance in-force grew approximately $3.3 billion, or 6%, as of June 30, 1997
over the prior period, primarily due to sales of variable life products.
Expenses in this segment increased $22, or 24%, to $113 and $16, or 8%, in the
second quarter of 1997 and for the six months ended June 30, 1997, respectively,
over the same period last year, consistent with a growing block of business. As
a result, net income increased $2, or 20%, to $12 in the second quarter of 1997
and $4, or 21%, to $23 for the six months ended June 30, 1997.
EMPLOYEE BENEFITS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues........................ $ 142 $ 210 $ 321 $ 753
Expenses........................ 133 204 306 739
--------- --------- --------- ---------
Net Income...................... $ 9 $ 6 $ 15 $ 14
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES 45
- --------------------------------------------------------------------------------
Revenues declined $68, or 32%, to $142 in the second quarter of 1997 and
$432, or 57%, for the six months ended June 30, 1997 over the same period last
year. This decline is mainly related to the passage of the Health Insurance
Portability and Accountability Act of 1996, which effectively eliminated all
future sales of leveraged COLI. Expenses declined $71, or 35%, in the second
quarter of 1997 and $433, or 59%, for the six months ended June 30, 1997, over
the same period last year. Significant declines in benefits, claims and claim
adjustment expenses and policyholder dividends are the result of the decline of
the block of COLI business. As a result, net income increased $3, or 50%, in the
second quarter of 1997 and $1, or 7%, for the six months ended June 30, 1997.
GUARANTEED INVESTMENT CONTRACTS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues........................ $ 62 $ 67 $ 134 $ 140
Expenses........................ 62 82 134 170
--------- --------- --------- ---------
Net Income...................... $ -- $ (15) $ -- $ (30)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
This segment had no net income for the three and six months ended June 30,
1997, as compared to losses of $15 and $30 for the same periods last year. These
results are consistent with management's expectations that net income (loss)
from Closed Book GRC in the years subsequent to 1996 will be immaterial based on
the Company's current projections for the performance of the assets and
liabilities associated with Closed Book GRC due to actions taken in the third
quarter of 1996.
<PAGE>
46 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
HARTFORD LIFE INC. INITIAL PUBLIC OFFERING
On February 10, 1997, HLI, an indirect parent of the Company, filed a
registration statement with the Securities and Exchange Commission, as amended,
relating to an Initial Public Offering ("IPO") of up to 20% of HLI's Class A
common stock. Pursuant to the IPO on May 22, 1997, HLI sold to the public 26
million shares at $28.25 per share and received net proceeds of $687. Of the
proceeds, $527 was used to retire debt related to HLI's promissory notes
outstanding and the line of credit discussed in the note below with the
remaining $160 contributed to HLI's insurance subsidiaries to be used for
working capital and other general corporate purposes.
The 26 million shares sold from the IPO represent approximately 18.6% of the
equity ownership in HLI and approximately 4.4% of the combined voting power of
HLI's Class A and Class B Common Stock. The Hartford Financial Services Group,
Inc. ("The Hartford"), an indirect parent of HLI, owns all of the 114 million
outstanding shares of Class B Common Stock of HLI, representing 81.4% of the
equity ownership in HLI and approximately 95.6% of the combined voting power of
HLI's Class A and Class B Common Stock. Holders of Class A Common Stock
generally have identical rights to the holders of Class B Common Stock except
that the holders of Class A Common Stock are entitled to one vote per share
while holders of Class B Common Stock are entitled to five votes per share on
all matters submitted to a vote of the HLI stockholders.
HARTFORD LIFE INC. DEBT OFFERING
On February 7, 1997, HLI declared a dividend of $1,184 payable to its direct
parent, Hartford Accident and Indemnity Company ("HA&I"). As a result, HLI
borrowed $1,084 on February 18, 1997, pursuant to a $1,300 line of credit, with
interest payable at the two-month Eurodollar rate plus 15 basis points, which,
together with a promissory note in the amount of $100, was paid as a dividend to
HA&I on February 20, 1997. Of the $1,184 dividend, $893 constituted a repayment
of the portion of HLI's third party indebtedness internally allocated, for
financial reporting purposes, to HLI's insurance subsidiaries (the "Allocated
Advances"). In addition, on April 4, 1997, HLI declared and paid a dividend of
$25 to its parent in the form of a promissory note. Subsequently, $12 of this
note was forgiven in the form of a capital contribution from HA&I.
On February 14, 1997, HLI filed a shelf registration statement for the
issuance and sale of up to $1.0 billion in the aggregate of senior debt
securities, subordinated debt securities and preferred stock. On June 17, 1997,
HLI issued $650 of unsecured redeemable long-term debt in the form of notes and
debentures. Of this amount, $200 was in the form of 6.90% notes due June 15,
2004, $200 of 7.10% notes due June 15, 2007, and $250 of 7.65% debentures due
June 15, 2027. Interest on each of the notes and debentures is payable
semi-annually on June 15 and December 15, of each year, commencing December 15,
1997. HLI also issued $50 of short-term debt in the form of commercial paper. Of
the proceeds from this issuance, $670 was used to retire the remaining balance
on the $1,300 line of credit with the remainder being used for working capital
and other general corporate purposes. Subsequently, HLI reduced the capacity of
the line of credit from $1,300 to $250, which will be primarily used to support
the commercial paper program.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 47
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory-basis balance sheets of ITT Hartford
Life and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1996 and 1995, and the related statutory-basis statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1996. 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-basis
financial statements. When statutory-basis 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-basis 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996.
However, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1996
in conformity with statutory accounting practices as described in Note 1.
As discussed in Note 1 of notes to statutory financial statements, during 1994,
the Company changed its valuation method in determining aggregate reserves for
future benefits.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 10, 1997
<PAGE>
48 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ----------
($000)
Revenues
Premiums and Annuity Considerations...................................................... $ 250,244 $ 165,792 $ 442,173
Annuity and Other Fund Deposits.......................................................... 1,897,347 1,087,661 608,685
Net Investment Income.................................................................... 98,441 78,787 29,012
Commissions and Expense Allowances on Reinsurance Ceded.................................. 370,637 183,380 154,527
Reserve Adjustment on Reinsurance Ceded.................................................. 3,864,395 1,879,785 1,266,926
Other Revenues........................................................................... 161,906 140,796 41,857
---------- ---------- ----------
Total Revenues......................................................................... 6,642,970 3,536,201 2,543,180
---------- ---------- ----------
Benefits and Expenses
Death and Annuity Benefits............................................................... 60,111 53,029 7,948
Surrenders and Other Benefit Payments.................................................... 276,720 221,392 181,749
Commissions and Other Expenses........................................................... 491,720 236,202 186,303
Increase in Reserves for Future Benefits................................................. 27,351 94,253 416,748
Increase in Liability for Prremium and Other Deposit Funds............................... 207,156 460,124 182,934
Net Transfers to Separate Accounts....................................................... 5,492,964 2,414,669 1,541,419
---------- ---------- ----------
Total Benefits and Expenses............................................................ 6,556,022 3,479,669 2,517,101
---------- ---------- ----------
Net Gain from Operations Before Federal Income Tax Expense................................. 86,948 56,532 26,079
Federal Income Tax Expense............................................................... 19,360 14,048 24,038
---------- ---------- ----------
Net Gain from Operations................................................................... 67,588 42,484 2,041
Net Realized Capital Gains (Losses)...................................................... 407 374 (2)
---------- ---------- ----------
Net Income................................................................................. $ 67,995 $ 42,858 $ 2,039
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 49
- --------------------------------------------------------------------------------
STATUTORY BASIS BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
<S> <C> <C>
1996 1995
----------- ----------
($000)
Assets
Bonds........................................... $ 1,268,480 $1,226,489
Common Stocks................................... 44,996 39,776
Policy Loans.................................... 28,853 22,521
Cash and Short-Term Investments................. 176,830 173,304
Other Invested Assets........................... 2,858 13,432
----------- ----------
Total Cash and Invested Assets................ 1,522,017 1,475,522
----------- ----------
Investment Income Due and Accrued............... 14,555 18,021
Premium Balances Receivable..................... 373 402
Receivables from Affiliates..................... 257 8,182
Other Assets.................................... 19,099 25,907
Separate Account Assets......................... 14,619,324 7,324,910
----------- ----------
Total Assets.................................. $16,175,625 $8,852,944
----------- ----------
----------- ----------
Liabilities
Aggregate Reserves for Future Benefits.......... $ 571,970 $ 542,082
Policy and Contract Claims...................... 6,806 8,223
Liability for Premium and Other Deposit Funds... 1,155,143 948,361
Asset Valuation Reserve......................... 7,442 8,010
Payable to Affiliates........................... 10,022 3,682
Other Liabilities............................... (498,195) (220,658)
Separate Account Liabilities.................... 14,619,324 7,324,910
----------- ----------
Total Liabilities............................. 15,872,512 8,614,610
----------- ----------
Capital and Surplus
Common Stock.................................... 2,500 2,500
Gross Paid-In and Contributed Surplus........... 226,043 226,043
Unassigned Funds................................ 74,570 9,791
----------- ----------
Total Capital and Surplus..................... 303,113 238,334
----------- ----------
Total Liabilities and Capital and Surplus....... $16,175,625 $8,852,944
----------- ----------
----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
50 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-----------------------------
<S> <C> <C> <C>
1996 1995 1994
-------- -------- -------
($000)
Capital and Surplus -- Beginning of Year........................................................... $238,334 $ 91,285 $88,693
-------- -------- -------
Net Income....................................................................................... 67,995 42,858 2,039
Change in Net Unrealized Capital (Losses) Gains on Common Stocks................................. (5,171) 1,709 (133)
Change in Asset Valuation Reserve................................................................ 568 (5,588) (1,356)
Change in Non-Admitted Assets.................................................................... 1,387 (1,944) (8,599)
Change in Reserve (Valuation Basis).............................................................. -- -- 10,659
Aggregate Write-Ins for Surplus.................................................................. -- 8,080 (18)
Dividends to Shareholder......................................................................... -- (10,000) --
Paid-In Surplus.................................................................................. -- 111,934 --
-------- -------- -------
Change in Capital and Surplus.................................................................. 64,779 147,049 2,592
-------- -------- -------
Capital and Surplus -- End of Year................................................................. $303,113 $238,334 $91,285
-------- -------- -------
-------- -------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 51
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ----------
($000)
Operations
Premiums, Annuity Considerations and Other Fund Deposits................................. $2,147,627 $1,253,511 $1,050,493
Net Investment Income.................................................................... 106,178 78,328 24,519
Other Revenues........................................................................... 4,396,892 2,253,466 1,515,700
---------- ---------- ----------
Total Revenues......................................................................... 6,650,697 3,585,305 2,590,712
---------- ---------- ----------
Benefits Paid............................................................................ 338,998 277,965 181,205
Federal Income Taxes Paid on Operations.................................................. 28,857 208,423 20,634
Other Expenses........................................................................... 6,254,139 2,664,385 1,832,905
---------- ---------- ----------
Total Benefits and Expenses............................................................ 6,621,994 3,150,773 2,034,744
---------- ---------- ----------
Net Cash from Operations............................................................... 28,703 434,532 555,968
---------- ---------- ----------
Proceeds from Investments
Bonds.................................................................................... 871,019 287,941 87,747
Common Stocks............................................................................ 72,100 52 --
Other.................................................................................... 10 28 40
---------- ---------- ----------
Total Investment Proceeds.............................................................. 943,129 288,021 87,787
---------- ---------- ----------
Taxes (Paid) Received on Capital (Gains) Losses............................................ (936) (226) 96
Paid-In Surplus.......................................................................... -- 111,934 --
Other Cash Provided...................................................................... 41,998 28,199 30,554
---------- ---------- ----------
Total Proceeds......................................................................... 1,012,894 862,460 674,405
Cost of Investments Acquired Bonds......................................................... 914,523 720,521 595,181
Common Stocks............................................................................ 82,495 35,794 808
Miscellaneous Applications............................................................... 130 2,146 2,523
---------- ---------- ----------
Total Investments Acquired............................................................. 997,148 758,461 598,512
---------- ---------- ----------
Other Cash Applied
Dividends Paid to Shareholders........................................................... -- 10,000 --
Other.................................................................................... 12,220 5,007 24,813
---------- ---------- ----------
Total Other Cash Applied............................................................... 12,220 15,007 24,813
---------- ---------- ----------
Total Applications..................................................................... 1,009,368 773,468 623,325
---------- ---------- ----------
Net Change in Cash and Short-Term investments............................................ 3,526 88,992 51,080
Cash and Short-Term Investments, Beginning of Year....................................... 173,304 84,312 33,232
---------- ---------- ----------
Cash and Short-Term Investments, End of Year............................................... $ 176,830 $ 173,304 $ 84,312
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
52 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(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
Hartford Life, Inc. ("Hartford Life"), which is ultimately owned by ITT Hartford
Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, The Hartford announced its plans to
sell up to 20% of Hartford Life to the public. On December 19, 1995, ITT
Corporation distributed all the outstanding shares of The Hartford to ITT
shareholders of record in an action known herein as the "Distribution". As a
result of the Distribution, The Hartford became an independent, publicly traded
company. During 1996, ILA re-domesticated from the State of Wisconsin to the
State of Connecticut.
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 State of
Connecticut Department of Insurance.
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 liabilities 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 agents' 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 option basis, using a twenty year phase-in approach,
whereas GAAP liabilities are required to be recorded;
(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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 53
- --------------------------------------------------------------------------------
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, whereas 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,
those investments were reflected at fair value with the corresponding
impact included as a component of Stockholder's Equity designated as
"Net unrealized capital (loss)/ gain on investments, net of tax". For
statutory reporting purposes, Net Unrealized Capital Losses (Gains) on
Common Stocks represent unrealized losses (gains) on common stock
reported at fair value; and
(10) separate account liabilities 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 and for the years ended December 31, 1996, 1995 and 1994, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GAAP net income........... $ 41,202 $ 38,821 $ 23,295
Amortization and deferral
of policy acquisition
costs.................... (341,572) (174,341) (117,863)
Change in unearned revenue
reserve.................. 55,504 32,300 24,494
Deferred taxes............ 2,090 2,801 (9,267)
Separate accounts......... 306,978 146,635 75,941
Other, net................ 3,793 (3,358) 5,439
----------- ----------- -----------
Statutory net income...... $ 67,995 $ 42,858 $ 2,039
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GAAP capital and
surplus.................. $ 503,887 $ 455,541 $ 199,785
Deferred policy
acquisition costs........ (938,114) (596,542) (422,201)
Unearned revenue
reserve.................. 130,148 74,644 42,344
Deferred taxes............ 12,823 1,493 13,257
Separate accounts......... 640,101 333,123 186,488
Asset valuation reserve... (7,442) (8,010) (2,422)
Unrealized gain (loss) on
bonds.................... 5,112 (1,696) 21,918
Adjustment relating to
Lyndon contribution (see
Note 3).................. (41,277) (41,277) --
Other, net................ (2,125) 21,058 52,116
----------- ----------- -----------
Statutory capital and
surplus.................. $ 303,113 $ 238,334 $ 91,285
----------- ----------- -----------
----------- ----------- -----------
</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 actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 5%. 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
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
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 Basis 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 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.
<PAGE>
54 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Changes in net unrealized capital (losses)/gains on common stocks are
reported as (reductions)/additions of surplus. The Asset Valuation Reserve
("AVR") is designed to provide a standardized reserving process for realized and
unrealized losses due to default and equity risks associated with invested
assets. The reserve decreased by $568 in 1996 and increased by $5,588 and $1,356
in 1995 and 1994, 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 Basis 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 $1,413 and $39 in 1996 and 1995,
respectively, and the amount of net capital losses was $67 in 1994. The amount
of income amortized was $392, $256 and $114 in 1996, 1995 and 1994,
respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $640 million and $333 million as of December 31, 1996 and
1995, respectively. The balances are classified in accordance with NAIC
accounting practices.
2. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income from
bonds..................... $ 89,940 $ 76,100 $ 28,335
Interest income from policy
loans..................... 1,846 1,504 454
Interest and dividends from
other investments......... 7,864 2,288 1,069
--------- --------- ---------
Gross investment income.... 99,650 79,892 29,858
Less: investment
expenses.................. 1,209 1,105 846
--------- --------- ---------
Net investment income...... $ 98,441 $ 78,787 $ 29,012
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON STOCKS
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains
at end of year............... $ 713 $ 1,724 $ 75
Gross unrealized capital
losses at end of year........ (4,160) -- (60)
--------- --------- ---------
Net unrealized capital
(losses) gains............... (3,447) 1,724 15
Balance at beginning of
year......................... 1,724 15 148
--------- --------- ---------
Change in net unrealized
capital (losses) gains on
common stocks................ $ (5,171) $ 1,709 $ (133)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Gross unrealized capital
gains at end of year... $ 11,821 $ 22,251 $ 986
Gross unrealized capital
losses at end of
year................... (3,842) (1,374) (34,718)
---------- ---------- ----------
Net unrealized capital
gains (losses) after
tax.................... 7,979 20,877 (33,732)
Balance at beginning of
year................... 20,877 (33,732) 5,232
---------- ---------- ----------
Change in net unrealized
capital (losses) gains
on bonds and short-term
investments............ $ (12,898) $ 54,609 $ (38,964)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term
investments..................... $ 2,756 $ 156 $ (101)
Common stocks.................... 0 52 0
Real estate and other............ 0 0 34
--------- --------- ---------
Realized capital gains (losses).. 2,756 208 (67)
Capital gains taxes (benefit).... 936 (205) 2
--------- --------- ---------
Net realized capital gains
(losses) after tax.............. 1,820 413 (69)
Less: IMR capital gains
(losses)........................ 1,413 39 (67)
--------- --------- ---------
Net realized capital gains
(losses)........................ $ 407 $ 374 $ (2)
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 55
- --------------------------------------------------------------------------------
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1996 and 1995.
(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.
(G) BONDS, SHORT-TERM AND COMMON STOCK INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
----------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
------------ --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 58,761 $ 6 $ (195)
(Guaranteed and sponsored) -- asset-backed....................................... 78,237 1,477 (609)
States, municipalities and political subdivisions.................................. 25,958 163 (2)
International governments.......................................................... 7,447 205 --
Public utilities................................................................... 70,116 396 (424)
All other corporate................................................................ 410,530 6,357 (1,355)
All other corporate -- asset-backed................................................ 485,953 2,654 (1,081)
Short-term investments............................................................. 148,094 -- (66)
Certificates of deposit............................................................ 83,378 563 (110)
Parents, subsidiaries and affiliates............................................... 48,100 -- --
------------ --------- ---------
Total bonds and short-term investments......................................... $ 1,416,574 $ 11,821 $ (3,842)
------------ --------- ---------
------------ --------- ---------
Common stock -- unaffiliated....................................................... $ 13,064 $ 713 $ 0
Common stock -- affiliated......................................................... 35,379 0 4,160
------------ --------- ---------
Total common stocks............................................................ $ 48,443 $ 713 $ 4,160
------------ --------- ---------
------------ --------- ---------
<CAPTION>
AS OF DECEMBER 31, 1995
----------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
------------ --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 44,268 $ 14 $ (248)
(Guaranteed and sponsored) -- asset-backed....................................... 176,160 4,644 (682)
States, municipalities and political subdivisions.................................. 16,948 38 (6)
International governments.......................................................... 5,402 441 --
Public utilities................................................................... 108,083 1,652 (90)
All other corporate................................................................ 374,058 8,145 (248)
All other corporate -- asset-backed................................................ 410,197 5,841 (89)
Short-term investments............................................................. 139,011 18 --
Certificates of deposit............................................................ 91,373 1,458 (11)
------------ --------- ---------
Total bonds and short-term investments......................................... $ 1,365,500 $ 22,251 $ (1,374)
------------ --------- ---------
------------ --------- ---------
Common stock -- unaffiliated....................................................... $ 2,668 $ 555 $ --
Common stock -- affiliated......................................................... 35,384 1,169 --
------------ --------- ---------
Total common stocks............................................................ $ 38,052 $ 1,724 $ --
------------ --------- ---------
------------ --------- ---------
<CAPTION>
FAIR
VALUE
------------
<S> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 58,572
(Guaranteed and sponsored) -- asset-backed....................................... 79,105
States, municipalities and political subdivisions.................................. 26,119
International governments.......................................................... 7,652
Public utilities................................................................... 70,088
All other corporate................................................................ 415,532
All other corporate -- asset-backed................................................ 487,526
Short-term investments............................................................. 148,028
Certificates of deposit............................................................ 83,831
Parents, subsidiaries and affiliates............................................... 48,100
------------
Total bonds and short-term investments......................................... $ 1,424,553
------------
------------
Common stock -- unaffiliated....................................................... $ 13,777
Common stock -- affiliated......................................................... 31,219
------------
Total common stocks............................................................ $ 44,996
------------
------------
FAIR
VALUE
------------
<S> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 44,034
(Guaranteed and sponsored) -- asset-backed....................................... 180,122
States, municipalities and political subdivisions.................................. 16,980
International governments.......................................................... 5,843
Public utilities................................................................... 109,645
All other corporate................................................................ 381,955
All other corporate -- asset-backed................................................ 415,949
Short-term investments............................................................. 139,029
Certificates of deposit............................................................ 92,820
------------
Total bonds and short-term investments......................................... $ 1,386,377
------------
------------
Common stock -- unaffiliated....................................................... $ 3,223
Common stock -- affiliated......................................................... 36,553
------------
Total common stocks............................................................ $ 39,776
------------
------------
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1996 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate
<PAGE>
56 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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>
ESTIMATED
MATURITY AMORTIZED COST FAIR VALUE
- ---------------------------------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
Due in one year or less....................................................................... $ 478,095 $ 478,852
Due after one year through five years......................................................... 622,805 623,105
Due after five years through ten years........................................................ 259,479 265,681
Due after ten years........................................................................... 56,195 56,915
-------------- ------------
Total..................................................................................... $ 1,416,574 $ 1,424,553
-------------- ------------
-------------- ------------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1996, 1995 and 1994 were $668,078, $313,961 and $117,912, respectively,
resulting in gross realized gains of $3,675, $1,419 and $518, respectively, and
gross realized losses of $919, $1,263 and $619, 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>
1996 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Assets
Bonds and short-term investments............................................. $ 1,417 $ 1,425 $ 1,366 $ 1,386
Common stocks................................................................ 45 45 40 40
Policy loans................................................................. 29 29 23 23
Other invested assets........................................................ 3 3 13 13
Liabilities
Liabilities on investment contracts.......................................... $ 1,245 $ 1,191 $ 1,031 $ 981
</TABLE>
The carrying amounts for policy loans approximates fair value. The
liabilities are determined by forecasting future cash flows and discounting the
forecasted cash flows at current market rates.
3. RELATED PARTY TRANSACTIONS
Transactions between the Company and its affiliates within The 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 bonds and
short-term investments, common stocks 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 million were recorded
as an increase to paid-in surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were to file separate federal, state and local
income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
Federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a single consolidated Federal income tax
return. The Company will continue to remit (receive from) The Hartford a current
income tax provision (benefit) computed in accordance with such tax sharing
agreement. Federal income taxes paid by the Company were $29,792, $215,921 and
$20,538 in 1996, 1995 and 1994, respectively. The effective tax rate was 22%,
25% and 92% in 1996, 1995 and 1994,
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 57
- --------------------------------------------------------------------------------
respectively. The following schedule provides a reconciliation of the tax
provision at the U.S. Federal Statutory rate to Federal income tax expense (in
millions).
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate..................................... $ 30 $ 20 $ 9
Tax deferred acquisition costs............ 27 8 8
Statutory to tax reserve differences...... -- 3 5
Unrealized (gain)/loss on separate
accounts................................. (21) (13) 2
Investments and other..................... (17) (4) --
--------- --------- ---
Federal income tax expense................ $ 19 $ 14 $ 24
--------- --------- ---
--------- --------- ---
</TABLE>
5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut 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. No dividends were paid in 1996 or
1994. ILA paid dividends of $10 million to its parent, HLIC, in 1995. 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 surplus.
6. PENSION PLANS AND OTHER POST-RETIREMENT
AND POST-EMPLOYMENT BENEFITS
The Company's employees are included in The 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
$358, $1,034, and $1,211 in 1996, 1995 and 1994, respectively. Liabilities for
the plan are held by The Hartford.
The Company also participates in The 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 The Hartford. The cost to ILA was not
material in 1996, 1995 and 1994.
The Company's employees are included in The Hartford'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
The Hartford 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 9.3% for 1996, 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
1996, 1995 and 1994.
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 1996, 1995 and 1994.
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.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Direct premiums............ $ 226,612 $ 159,918 $ 133,180
Premiums assumed........... 33,817 13,299 960
Premiums ceded............. (10,185) (7,425) 308,033
---------- ---------- ----------
Premiums and annuity
considerations............ $ 250,244 $ 165,792 $ 442,173
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
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, in
December 1994, 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 1994.
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
<PAGE>
58 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
the cession was an increase of approximately $765 to net income and surplus in
1994.
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 1994.
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 liabilities totaling $14.6
billion and $7.3 billion at December 31, 1996 and 1995, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with 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 $144 million, $72
million and $42 million in 1996, 1995 and 1994, respectively, and are recorded
as a component of other revenues on the Statutory Basis Statements of Income.
9. COMMITMENTS AND CONTINGENCIES
As of December 31, 1996 and 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 normal course 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 $1,262, $1,684 and $583 in 1996, 1995 and 1994,
respectively. ILA incurred guaranteed fund expense of $548, $0 and $0 in 1996,
1995 and 1994, respectively.
<PAGE>
Part II
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 establishing the
Separate Account. (1)
(A2) Not applicable.
(A3a) Principal Underwriting Agreement. (1)
(A3b) Form of Selling Agreements. (2)
(A3c) Not Applicable.
(A4) Not Applicable.
(A5) Form of Certificate for Group Flexible Premium Variable Life Insurance
Policy. (1)
(A6a) Charter of ITT Hartford Life and Annuity Insurance Company. (3)
(A6b) Bylaws of ITT Hartford Life and Annuity Insurance Company. (1)
(A7) Not Applicable.
- --------------------------------
(1) Incorporated herein by reference to the initial Form S-6 registration
statement for the Registrant (File No. 33-63731) filed with the Commission
on October 30, 1995.
(2) Incorporated herein by reference to the initial Form S-6 registration
statement for the Registrant (File No. 333-13735) filed with the Commission
on October 8, 1996.
(3) Incorporated by reference to the Post-Effective Amendment No. 1 to the
Registration Statement File No. 33-63731, filed on April 16, 1997.
<PAGE>
(A8) Not Applicable.
(A9) Not Applicable.
(A10) Form of Enrollment Form for Certificate Issued Under Group
Flexible Premium Variable Life Insurance Policies. (1)
(A11) Memorandum describing transfer and redemption procedures. (1)
(2) Opinion and consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
(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 Pauline Gyllenhammer, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Power of Attorney. (3)
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
ITT Hartford Life and Annuity Insurance Company ("Hartford") hereby
represents that the aggregate fees and charges under the Policy are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Hartford.
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. Hartford undertakes to keep and make available to the Commission upon
request any documents used to support the any representation in as to the
reasonableness of fees.
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 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
<PAGE>
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 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 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 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 day of
, 1997.
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY ICMG REGISTERED VARIABLE LIFE
SEPARATE ACCOUNT ONE
(Registrant)
By: /s/ Gregory A. Boyko
---------------------
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer and Treasurer
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
(Depositor)
By: /s/ Gregory A. Boyko
--------------------
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer and Treasurer
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.
Gregory A. Boyko, Senior Vice
President, Chief Financial Officer and
Treasurer, Director *
Lynda Godkin, Senior Vice President
General Counsel and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President and Director, Individual ----------------
Life and Annuity Division, Director * Lynda Godkin
Lowndes A. Smith, President and Attorney-In-Fact
Chief Executive Officer,
Director * Dated: _________________
(ICMG FutureVantage VUL)
<PAGE>
EXHIBIT INDEX
(2) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(5) Opinion and Consent of Pauline Gyllenhammer, ASA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
<PAGE>
THE [LOGO]
HARTFORD
September 11, 1997 LYNDA GODKIN, Senior Vice
President, General Counsel &
Corporate Secretary
Law Department
Board of Directors
ITT Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
FILE NO. 33-63731
Dear Sir/Madam:
I have acted as General Counsel to ITT Hartford Life and Annuity Insurance
Company (the "Company"), a Connecticut insurance company, and ITT Hartford Life
and Annuity Insurance Company Separate Account VL I (the "Account") in
connection with the registration of an indefinite amount of securities in the
form of a flexible premium variable life insurance policy (the "Policy") with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended. I have examined such documents (including the Form S-6 Registration
Statement) and reviewed such questions of law as I considered necessary and
appropriate, and on the basis of such examination and review, it is my opinion
that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Policy.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Policy, that portion of the assets of
the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
Hartford Life Insurance Companies
200 Hopmeadow Street
Simsbury, CT 06089
860 843 3153
860 843 8665 Fax
Mailing Address: P.O. Box 2999
Hartford, CT 06104-2999
<PAGE>
Board of Directors
ITT Hartford Life and Annuity Insurance Company
September 11, 1997
Page 2
4. The Policy, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Policy and the Account.
Sincerely,
Lynda Godkin
<PAGE>
THE [LOGO]
HARTFORD
September 11, 1997 PAULINE GYLLENHAMMER, ASA, MAAA
Actuarial Associate
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration Statement
under the Securities Act of 1933, as amended ("Securities Act"), of a certain
group flexible premium variable life insurance policy (the "Policy") that will
be offered and sold by ITT Hartford Life and Annuity Insurance Company and
certain units of interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6 Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as part of such Form S-6 Registration
Statement.
Very truly yours,
Pauline Gyllenhammer
Hartford Life Insurance Companies
200 Hopmeadow Street
Enclosures Simsbury, CT 06089
860 843 3153
860 843 8665 Fax
Mailing Address: P.O. Box 2999
Hartford, CT 06104-2999
<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. 333-13735 for ITT Hartford Life and Annuity
Insurance Company ICMG Registered Variable Life Separate Account One on
Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
September 25, 1997
