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As Filed with the Securities and Exchange Commission on April 15, 1998.
File No. 33-63731
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 5
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: ICMG Registered Variable Life Separate Account One
B. Name of depositor: 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:
Leslie T. Soler, Esq.
Hartford Life
P.O. Box 2999
Hartford, 06104-2999
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_x_ on May 1, 1998, pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1998, pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following:
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
E. Title and amount of securities being registered: Group Flexible Premium
Variable Life Insurance Policies. Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant has registered an indefinite
amount of these group flexible premium variable life insurance policies.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: N/A
G. Amount of filing fee: N/A
H. Approximate date of proposed public offering: As soon as practicable
after the effective date of this registration statement.
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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. Hartford; Distribution of the Group Policy
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 Investment Value;
Distribution of the Group Policy; 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
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ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
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17. Summary; Detailed Description of Certificate
Benefits and Provisions - Values Under the
Certificate, Surrender of the Certificate, The Right
to Examine the Certificate
18. The Funds; Detailed Description of Certificate
Benefits and Provisions - Deductions and Charges
From 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 Assets
24. Other Matters - Assignment
25. Hartford
26. Not applicable
27. Hartford
28. Hartford; Executive Officers and Directors
29. Hartford
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 Group Policy
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Group Policy
39. Hartford; Distribution of the Group Policy
40. Not applicable
41. Hartford; Distribution of the Group Policy
42. Not applicable
43. Not applicable
44. Detailed Description of Certificate Benefits and
Provisions - Allocation of Premium Payments
45. Not applicable
46. Detailed Description of Certificate Benefits and
Provisions - Values Under the Certificate
47. The Funds
48. Cover page; Hartford
49. Not applicable
50. The Separate Account
51. Summary; Hartford; Detailed Description of
Certificate Benefits and Provisions
52. The Funds - General
53. Federal Tax Considerations
<PAGE>
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>
OMNISOURCE -SM-
GROUP FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] TELEPHONE: 1-800-861-1408
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This Prospectus describes a group flexible premium variable life insurance
policy (the "Group Policies," and each individually a "Group Policy") and
certificates of insurance (the "Certificates," and each individually a
"Certificate") offered by 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 the Death Benefit, together with an
opportunity to participate in the investment experience of ICMG Registered
Variable Life Separate Account One. For a given amount of Death Benefit chosen,
the Owner has considerable flexibility in selecting the timing and amount of
premium payments. In addition to the Initial Premium payment, additional premium
payments are also allowed.
Group Policies may be issued to a Participating Employer or to a trust that
is adopted by a Participating Employer. Eligible employees of Participating
Employers may own Certificates issued under their respective Participating
Employer's Group Policy. 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.
Sales agents can provide prospective purchasers with individualized sales
illustrations which reflect all the fees and charges associated with the
Certificate options selected.
The Certificates provide for a Death Benefit, pursuant to which Death
Proceeds are payable at the Insured's death. You may select one of two Death
Benefit options. Death Benefit Option A is an amount equal to the larger of (1)
the Face Amount and (2) the Variable Insurance Amount. Death Benefit Option B is
an amount equal to the larger of (1) the Face Amount plus the Cash Value and (2)
the Variable Insurance Amount. The Death Proceeds payable to the Beneficiary
equal the Death Benefit less any Debt outstanding under the Certificate plus any
rider benefits payable.
The Investment Value of a Certificate will also vary up or down to reflect
the investment experience of the Investment Divisions to which Net Premiums have
been allocated. The Owner bears the investment risk for all amounts so
allocated.
The Portfolios underlying the Investment Divisions presently are: shares of
Class IA of the Hartford Capital Appreciation Fund, Inc. ("Hartford Capital
Appreciation Fund"), shares of Class IA of the Hartford Bond Fund, Inc.
("Hartford Bond Fund") and shares of Class IA of the Hartford Money Market Fund,
Inc. ("Hartford Money Market Fund"), the Limited Maturity Bond Portfolio, the
Balanced Portfolio and the Partners Portfolio of Neuberger & Berman Advisers
Management Trust; the VIP High Income Portfolio, the VIP Equity-Income Portfolio
and the VIP Overseas Portfolio of Variable Insurance Products Fund; the VIP II
Asset Manager Portfolio of Variable Insurance Products Fund II; the Alger
American Small Capitalization Portfolio and the Alger American Growth Portfolio
of The Alger American Fund; the J.P. Morgan Bond Portfolio, the J.P. Morgan
Equity Portfolio, the J.P. Morgan Small Company Portfolio and the J.P. Morgan
International Equity Portfolio of J.P. Morgan Series Trust II; the Fixed Income
Portfolio, the High Yield Portfolio, the Equity Growth Portfolio, the Value
Portfolio, the Global Equity Portfolio and the Emerging Markets Equity Portfolio
of Morgan Stanley Universal Funds, Inc.; and the EAFE-Registered Trademark-
Equity Index Fund, Equity 500 Index Fund and the Small Cap Index Fund of the BT
Insurance Funds Trust.
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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
AVAILABLE 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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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VARIABLE LIFE INSURANCE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED
OR GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
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THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
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2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
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SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 6
HARTFORD.............................................................. 9
THE SEPARATE ACCOUNT.................................................. 9
THE FUNDS............................................................. 9
General............................................................. 9
Hartford Funds.................................................... 10
Neuberger & Berman Advisers Management Trust...................... 10
Variable Insurance Products Fund and Variable Insurance Products
Fund II.......................................................... 10
The Alger American Fund........................................... 10
J.P. Morgan Series Trust II....................................... 11
Morgan Stanley Universal Funds, Inc............................... 11
BT Insurance Funds Trust.......................................... 11
The Portfolios...................................................... 11
DETAILED DESCRIPTION OF CERTIFICATE BENEFITS AND PROVISIONS........... 13
General............................................................. 13
Issuance of a Certificate........................................... 13
Premiums............................................................ 14
Premium Payment Flexibility....................................... 14
Allocation of Premium Payments.................................... 14
Accumulation Units................................................ 15
Accumulation Unit Values.......................................... 15
Premium Limitation................................................ 15
Values Under the Certificate........................................ 15
Surrender of the Certificate........................................ 15
Partial Withdrawals............................................... 16
Transfers Among Investment Divisions................................ 16
Amount and Frequency of Transfers................................. 16
Transfers To or from Investment Divisions......................... 16
Asset Rebalancing................................................. 16
Procedures for Telephone Transfers................................ 16
Valuation of Payments and Transfers................................. 17
Processing of Transactions........................................ 17
Loans............................................................... 17
Loan Interest..................................................... 17
Credited Interest................................................. 17
Loan Repayments................................................... 17
Termination Due to Excessive Debt................................. 17
Effect of Loans on Investment Value............................... 17
Death Benefit....................................................... 18
Minimum Death Benefit Testing Procedures.......................... 18
Death Benefit Options............................................. 18
Option Change..................................................... 18
Payment Options................................................... 18
Legal Developments Regarding Income Payments...................... 19
Beneficiary....................................................... 19
Increases and Decreases in Face Amount............................ 19
Benefits at Maturity................................................ 19
Termination of Participation in the Group Policy.................... 19
Lapse and Reinstatement While the Group Policy Is In Effect......... 20
Lapse and Grace Period............................................ 20
Reinstatement..................................................... 20
Enrollment for a Certificate........................................ 20
</TABLE>
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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<TABLE>
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The Right to Examine the Certificate................................ 20
Deductions from Premium............................................. 20
Front-End Sales Load.............................................. 20
Premium Related Tax Charge........................................ 21
DAC Tax Charge.................................................... 21
Deductions and Charges from Investment Value........................ 21
Monthly Deduction Amount.......................................... 21
Mortality and Expense Risk Charge................................... 22
Taxes............................................................... 22
OTHER MATTERS......................................................... 22
Additions, Deletions or Substitutions of Investments................ 22
Voting Rights....................................................... 22
Our Rights.......................................................... 23
Statements to Owners................................................ 23
Limit on Right to Contest........................................... 23
Misstatement as to Age or Sex....................................... 23
Assignment.......................................................... 23
Dividends........................................................... 23
Experience Credits.................................................. 24
SUPPLEMENTAL BENEFITS................................................. 24
Maturity Date Extension Rider....................................... 24
EXECUTIVE OFFICERS AND DIRECTORS...................................... 24
DISTRIBUTION OF THE GROUP POLICY...................................... 28
SAFEKEEPING OF THE SEPARATE ACCOUNT ASSETS............................ 28
FEDERAL TAX CONSIDERATIONS............................................ 28
General............................................................. 28
Taxation of Hartford and the Separate Account....................... 29
Income Taxation of Certificate Benefits............................. 29
Modified Endowment Contracts........................................ 29
Diversification Requirements........................................ 30
Federal Income Tax Withholding...................................... 30
Other Tax Considerations............................................ 30
LEGAL PROCEEDINGS..................................................... 30
EXPERTS............................................................... 30
REGISTRATION STATEMENT................................................ 30
APPENDIX A -- ILLUSTRATIONS OF DEATH BENEFIT, CASH VALUE AND CASH
SURRENDER VALUE..................................................... 31
FINANCIAL STATEMENTS..................................................
</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 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 later in this Prospectus.
ATTAINED AGE: The Issue Age plus the period since the Coverage Date.
BENEFICIARY: The person so designated by the Owner in the Certificate.
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 and from which Coverage Months and Coverage Years are determined.
COVERAGE MONTH(S): The 1-month period following the Coverage Date and each
anniversary thereof.
COVERAGE YEAR(S): The 12 month period following the Coverage Date and each
anniversary thereof.
CUSTOMER SERVICE CENTER: The service area of Hartford Life and Annuity Insurance
Company.
DEATH BENEFIT: The Death Benefit option in effect determines how the Death
Benefit is calculated. The two Death Benefit options are described under
"Detailed Description of Certificate Benefits and Provisions -- Death Benefit."
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.
ENROLLMENT FORM: The form required to be filled out prior to issuance of a
Certificate. The specific form used will depend on the underwriting
classification and plan design.
FACE AMOUNT: The minimum Death Benefit as long as the Certificate is in force.
It is specified at issue and may be changed after issue on request, or due to a
change in Death Benefit option or a partial withdrawal.
FUNDS: The registered open-end management investment companies in which assets
of the Investment Divisions of the Separate Account may be invested. Currently,
the Funds include: (i) Hartford Capital Appreciation Fund; (ii) Hartford Bond
Fund; (iii) Hartford Money Market Fund ((i)-(iii) are each a "Hartford Fund" and
collectively the "Hartford Funds" and are managed by HL Investment Advisors,
Inc. ("HL Advisors")); (iv) Neuberger & Berman Advisers Management Trust
("Neuberger & Berman AMT"), managed by Neuberger & Berman Management
Incorporated ("N&B Management"); (v) Variable Insurance Products Fund ("VIP"),
managed by Fidelity Management & Research Company ("FMR"); (vi) Variable
Insurance Products Fund II ("VIP II"), managed by FMR; (vii) The Alger American
Fund ("Alger American Fund"), managed by Fred Alger Management, Inc. ("Alger
Management"); (viii) J.P. Morgan Series Trust II ("J.P. Morgan Series Trust"),
managed by J.P. Morgan Investment Management Inc. ("J.P. Morgan"); (ix) Morgan
Stanley Universal Funds, Inc. ("MSUF"), managed by either Morgan Stanley Asset
Management Inc. ("MSAM") or Miller Anderson & Sherrerd, LLP ("MAS"); and (x) BT
Insurance Funds Trust, managed by Bankers Trust Global Investment Management, a
unit of Bankers Trust Company ("Bankers Trust").
GENERAL ACCOUNT: The assets of Hartford other than those allocated to the
Separate Account.
GRACE PERIOD: The 61-day period, measured in calendar days, 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 group flexible premium variable life insurance policy issued
by Hartford and described in this Prospectus.
HARTFORD (ALSO REFERRED TO AS "WE," "US," "OUR"): Hartford Life and Annuity
Insurance Company.
IN WRITING: In a written form satisfactory to Us.
INITIAL PREMIUM: The amount of premium initially payable shown in Your
Certificate.
INSURED: The person on whose life the Certificate is issued. The Insured is
identified in the Certificate.
INVESTMENT DIVISION: A separate division of the Separate Account which invests
exclusively in the shares of a specified Portfolio of a Fund. The Separate
Account currently offers 25 Investment Divisions: (i) the Hartford Capital
Appreciation Investment Division, (ii) the Hartford Bond Investment Division,
(iii) the Hartford Money Market Investment Division, (iv) the N&B AMT Limited
Maturity Bond Investment Division, (v) the N&B AMT Balanced Investment Division,
(vi) the N&B AMT Partners Investment Division, (vii) the Fidelity VIP High
Income Investment Division, (viii) the
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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Fidelity VIP Equity-Income Investment Division, (ix) the Fidelity VIP Overseas
Investment Division, (x) the Fidelity VIP II Asset Manager Investment Division,
(xi) the Alger American Small Capitalization Investment Division, (xii) the
Alger American Growth Investment Division, (xiii) the J.P. Morgan Bond
Investment Division, (xiv) the J.P. Morgan Equity Investment Division, (xv) the
J.P. Morgan Small Company Investment Division, (xvi) the J.P. Morgan
International Opportunities Investment Division, (xvii) the MS Fixed Income
Investment Division, (xviii) the MS High Yield Investment Division, (xix) the MS
Equity Growth Investment Division, (xx) the MS Value Investment Division, (xxi)
the MS Global Equity Investment Division, (xxii) the MS Emerging Markets Equity
Investment Division, (xxiii) the BT EAFE-Equity Index Investment Division,
(xxiv) BT Equity 500 Index Investment Division, and (xxv) the BT Small Cap Index
Investment Division.
INVESTMENT VALUE: The sum of the values of assets in the Investment Divisions
under the Certificate.
ISSUE AGE: The Insured's age on the birthday nearest to the Coverage Date.
LOAN: Any amount borrowed against the Investment Value under a Certificate.
LOAN ACCOUNT: That portion of Hartford's General Account to which amounts are
transferred as a result of a Loan. The Loan Account is credited with interest
and does not participate in the investment experience of the Separate Account.
LOAN ACCOUNT VALUE: The amounts of the Investment Value transferred to (or from)
the General Account to secure Loans, plus interest accrued at the daily
equivalent of an annual rate equal to the Adjustable Loan Interest Rate actually
charged, reduced by not more than 1%.
MATURITY DATE: The date on which an Insured's coverage matures as shown in the
Certificate. 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 AMOUNT AT RISK: The Death Benefit less the Cash Value.
NET PREMIUM: The amount of premium actually credited to the Investment
Divisions.
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 Certificate.
PARTICIPATING EMPLOYER: A participating employer, or a trust sponsored by a
participating employer, to which Hartford issues the Group Policy described in
this Prospectus.
PORTFOLIO: A Hartford Fund or a separate mutual fund, series or portfolio of the
remaining Funds. There are currently 25 Portfolios available under the Group
Policy: the Hartford Capital Appreciation Fund, Inc., Hartford Bond Fund, Inc.
and Hartford Money Market Fund, Inc.; the Limited Maturity Bond Portfolio ("N&B
AMT Limited Maturity Bond Portfolio"), Balanced Portfolio ("N&B AMT Balanced
Portfolio") and Partners Portfolio ("N&B AMT Partners Portfolio") of Neuberger &
Berman AMT; the VIP High Income Portfolio, VIP Equity-Income Portfolio and VIP
Overseas Portfolio of VIP, the VIP II Asset Manager Portfolio of VIP II; the
Alger American Small Capitalization Portfolio and Alger American Growth
Portfolio of Alger American Fund; the J.P. Morgan Bond Portfolio, J.P. Morgan
Equity Portfolio, J.P. Morgan Small Company Portfolio and J.P. Morgan
International Opportunities Portfolio of J.P. Morgan Series Trust; the Fixed
Income Portfolio ("MS Fixed Income Portfolio"), High Yield Portfolio ("MS High
Yield Portfolio"), Equity Growth Portfolio ("MS Equity Growth Portfolio"), Value
Portfolio ("MS Value Portfolio"), Global Equity Portfolio ("MS Global Equity
Portfolio"), and Emerging Markets Equity Portfolio ("MS Emerging Markets Equity
Portfolio") of MSUF; the EAFE-Registered Trademark- Equity Index Fund ("BT EAFE"
Equity Index Fund"), Equity 500 Index Fund ("BT Equity 500 Index Fund") and
Small Cap Index Fund ("BT Small Cap Index Fund") of BT Insurance Funds Trust.
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: U.S. 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 indicates otherwise. A
business day is any day the NYSE is open for trading or any day the SEC requires
mutual funds, unit investment trusts or other investment portfolios to be
valued. The value of the Separate Account is determined at the close of the NYSE
(generally 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.
VIP: Variable Insurance Products Fund.
VIP II: Variable Insurance Products Fund II.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SUMMARY
THE GROUP POLICY
The Group Policies, and the Certificates, offered by this Prospectus are
funded by 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 has 25 Investment Divisions dedicated to the Group Policies,
each of which invests solely in a corresponding Portfolio of the Funds.
Depending upon the state of issuance of Your Certificate and the applicable
provisions of Your Certificate, Your initial Net Premium will, when Your
Certificate is issued, either be (1) invested in the Hartford Money Market
Investment Division during the right to examine period or (2) invested
immediately in Your chosen Investment Divisions, upon Our receipt thereof. IF
YOUR INITIAL NET PREMIUM IS INVESTED IMMEDIATELY IN YOUR CHOSEN INVESTMENT
DIVISIONS, YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE
INVESTMENT DIVISIONS DURING THE RIGHT TO EXAMINE PERIOD. Please note that this
automatic immediate investment feature only applies if Your Certificate so
specifies. Please check with Your agent to determine the status of Your
Certificate. You must fill out and send Us the appropriate form In Writing or
comply with other designated Hartford procedures if You would like to change how
subsequent Net Premiums are allocated. See "Allocation of Premium Payments,"
page 14.
Pursuant to the Certificates, each selected Investment Division is credited
with Accumulation Units and each selected Investment Division's assets are
invested in the applicable underlying Portfolio. Subject to certain
restrictions, an Owner may transfer amounts among the available Investment
Divisions. See "Detailed Description of Certificate Benefits and Provisions --
Transfers Among Investment Divisions," page 16.
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 "flexible premium" because, once the
desired level and pattern of the Death Benefit 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 18.
DEATH BENEFIT
The Certificates provide for two Death Benefit options. Under Death Benefit
Option A, the Death Benefit is an amount equal to the larger of (1) the Face
Amount and (2) the Variable Insurance Amount. Under Death Benefit Option B, the
Death Benefit is an amount equal to the larger of (1) the Face Amount plus the
Cash Value and (2) the Variable Insurance Amount. At the death of the Insured,
We will pay the Death Proceeds to the Beneficiary. The Death Proceeds equal the
Death Benefit less outstanding Debt plus any rider benefits payable under the
Certificate. See "Detailed Description of Certificate Benefits and Provisions --
Death Benefit," page 18.
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 fail to
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. See "Detailed Description of Certificate Benefits and
Provisions -- Loans," page 17.
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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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The front-end sales load covers expenses relating to the sale and
distribution of the Certificates and may be reduced for certain sales of the
Certificates under circumstances which result in savings of such sales and
distribution expenses. For more information concerning the front-end sales load,
see "Detailed Description of Certificate Benefits and Provisions -- Deductions
from Premium," page 20.
LIMITS ON FRONT-END SALES LOAD
Certain insurance laws and regulations limit the front-end sales load which
can be assessed against the Certificates. The front-end sales load assessed in
the Certificates complies with these limitations.
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
Hartford deducts 1.25% of each premium to cover a federal premium tax
assessed against Hartford. This charge is reasonable in relation to Hartford's
federal income tax burden, under Code Section 848, resulting from the receipt of
premiums. We will adjust the charge based on changes in the applicable tax law.
DEDUCTIONS AND CHARGES
FROM INVESTMENT VALUE
As with many other types of insurance policies, each Certificate will have
an Investment Value. The Investment Value of the Certificate will increase or
decrease to reflect the investment experience of the chosen Investment
Divisions, deductions for the Monthly Deduction Amount and any amounts
transferred from the Investment Divisions into the Loan Account. There is no
minimum guaranteed Investment Value and the Owner bears the risk of the
investment in the underlying Portfolios. See "Detailed Description of
Certificate Benefits and Provisions -- Deductions and Charges from Investment
Value," page 21.
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. If there is insufficient Investment
Value in the Charge Deduction Division:
(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 is selected, any amounts due will be taken
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; plus
(c) the charges for 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 "Deductions and Charges From Investment Value,"
page 21, and "Federal Tax Considerations," page 28.
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 1 through 10 at an
effective annual rate of .65% of the value of each Investment Division's assets
and for Coverage Years 11 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.
CHARGES AGAINST THE FUNDS
The Separate Account purchases Fund shares at net asset value. The net asset
value of those shares reflects investment advisory fees and administrative and
other expenses deducted from the assets of the Portfolios. 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
Portfolios.
The following table shows annual operating expenses after waivers or
reimbursements for 1997:
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL
OPERATING
MANAGEMENT OTHER EXPENSES (AFTER
FEE EXPENSES (AFTER WAIVERS AND/OR
PORTFOLIO NAME (AFTER WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
- ------------------- ----------------- ------------------- -------------------
<S> <C> <C> <C>
Hartford Capital
Appreciation
Fund.............. 0.620% 0.020% 0.640%
Hartford Bond
Fund.............. 0.490% 0.020% 0.510%
Hartford Money
Market Fund....... 0.425% 0.015% 0.440%
</TABLE>
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
OPERATING
MANAGEMENT OTHER EXPENSES (AFTER
FEE EXPENSES (AFTER WAIVERS AND/OR
PORTFOLIO NAME (AFTER WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
- ------------------- ----------------- ------------------- -------------------
<S> <C> <C> <C>
N&B AMT Limited
Maturity Bond
Portfolio (2)..... 0.650% 0.120% 0.770%
N&B AMT Balanced
Portfolio (2)..... 0.850% 0.190% 1.040%
N&B AMT Partners
Portfolio (2)..... 0.800% 0.060% 0.860%
VIP High Income
Portfolio (3)..... 0.590% 0.120% 0.710%
VIP Equity-Income
Portfolio (3)..... 0.500% 0.080% 0.580%
VIP Overseas
Portfolio (3)..... 0.750% 0.170% 0.920%
VIP II Asset
Manager Portfolio
(3)............... 0.550% 0.100% 0.650%
Alger American
Small
Capitalization
Portfolio......... 0.850% 0.040% 0.890%
Alger American
Growth
Portfolio......... 0.750% 0.040% 0.790%
J.P. Morgan Bond
Portfolio (4)..... 0.300% 0.450% 0.750%
J.P. Morgan Equity
Portfolio (4)..... 0.400% 0.500% 0.900%
J.P. Morgan Small
Company Portfolio
(4)............... 0.600% 0.550% 1.150%
J.P. Morgan
International
Opportunities
Portfolio (4)..... 0.600% 0.600% 1.200%
MS Fixed Income
Portfolio (5)..... 0.000% 0.700% 0.700%
MS High Yield
Portfolio (5)..... 0.000% 0.800% 0.800%
MS Equity Growth
Portfolio (5)..... 0.000% 0.850% 0.850%
MS Value Portfolio
(5)............... 0.000% 0.850% 0.850%
MS Global Equity
Portfolio (5)..... 0.000% 1.150% 1.150%
MS Emerging Markets
Equity Portfolio
(5)............... 0.000% 1.750% 1.750%
BT
EAFE-Registered Trademark-
Equity Index Fund
(6)............... 0.020% 0.630% 0.650%
BT Equity 500 Index
Fund (6).......... 0.000% 0.300% 0.300%
BT Small Cap Index
Fund (6).......... 0.000% 0.450% 0.450%
</TABLE>
- ------------
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliate for investment and administrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from
the fund including legal, accounting and custodian fees. For complete
description of the nature of the services provided in consideration of the
operating expenses deducted, please see the Fund prospectuses.
(2) Neuberger & Berman AMT 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 Fee" include the aggregate of
the administration fees paid by the Portfolio and the management fee 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.
(3) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby credits
realized, as a result of uninvested cash balances were used to reduce
custodian expenses. Including these reductions, the total operating expenses
presented in the table would have been 0.710% for VIP High Income Portfolio,
0.570% for VIP Equity-Income Portfolio, 0.900% for VIP Overseas Portfolio,
and 0.640% for VIP II Asset Manager Portfolio.
(4) Pursuant to a voluntary agreement, fees and expenses were reimbursed to the
extnet expenses exceeded .75%, .90%, 1.15% and 1.20% of the average daily
net assets of J.P. Morgan Bond Portfolio, J.P. Morgan Equity Portfolio, J.P.
Morgan Small Company Portfolio and J.P. Morgan International Opportunities
Portfolio, respectively. Without such reimbrusement, total expenses would
have been 1.910%, 2.310%, 3.810% and 4.250% for J.P. Morgan Bond Portfolio,
J.P. Morgan Equity Portfolio, J.P. Morgan Small Company Portfolio and J.P.
Morgan International Opportunities Portfolio, respectively.
(5) With respect to the Fixed Income, High Yield, Equity Growth, Value, Global
Equity and Emerging Markets Equity Portfolios, the investment adviser has
voluntarily agreed to waive its investment advisory fees and to reimburse
the Portfolios if such fees would cause their respective "Total Fund
Operating Expenses" to exceed those set forth in the table above. Absent
such reductions, it is estimated that "Management Fees," "Other Expenses"
and "Total Fund Operating Expenses" for the Portfolios would have been as
follows:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
PORTFOLIO FEE EXPENSES EXPENSES
- -------------------------------- --------------- ------------ -------------
<S> <C> <C> <C>
Fixed Income.................... 0.400% 1.310% 1.710%
High Yield...................... 0.500% 1.180% 1.680%
Equity Growth................... 0.550% 1.550% 2.050%
Value........................... 0.550% 1.320% 1.870%
Global Equity................... 0.800% 1.630% 2.430%
Emerging Markets Equity......... 1.250% 2.870% 4.120%
</TABLE>
(6) Without expense waivers and reimbursements, the total operating expenses for
BT EAFE-Registered Trademark- Equity Index Fund, BT Equity 500 Index Fund
and BT Small Cap Index Fund would have been 2.750%, 2.780% and 3.270%,
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
17.
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 calendar 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
plus charges deducted. See "The Right to Examine the Certificate," page 20.
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 28.
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 29.
HARTFORD
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. Effective on January 1, 1998, Hartford's
name changed from ITT Hartford Life and Annuity Insurance Company 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 controlled by
The Hartford Financial Services Group, Inc., a Delaware corporation.
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 rating do not apply to the investment performance of the
Sub-Accounts. The rating apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
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 25 Investment Divisions dedicated to the Group
Policies, each of which invests solely in a corresponding Portfolio of the
Funds. Additional Investment Divisions may be established at the discretion of
Hartford. The Separate Account may include other divisions which will not be
available under the Group Policies.
THE FUNDS
GENERAL
The shares of the Portfolios are sold by the Funds to the Separate Account.
The assets of the Separate Account attributable to the Group Policies are
invested exclusively in the Investment Divisions. An Owner may allocate Net
Premium payments among the Investment Divisions. Owners should review the brief
descriptions of the investment objectives of each of the Portfolios in
connection with that allocation. See "The Funds -- The Portfolios," page 11.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the relevant Portfolios. In addition to being
offered to the Separate Account, each Fund's shares are or may be offered to
other separate accounts funding variable annuity contracts and variable life
insurance policies issued by Hartford or its affiliates and to separate accounts
of other insurance companies.
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
It is conceivable that in the future it may become disadvantageous for both
variable annuity and variable life insurance separate accounts or for separate
accounts of other life insurance companies to invest in shares of the Funds
simultaneously. Although neither Hartford nor any of the Funds currently foresee
any such disadvantage, each Fund's Board of Directors or Board of Trustees, as
applicable (collectively, the "Boards"), will monitor events in order to
identify any material conflict between different variable annuity and variable
life owners and to determine what action, if any, should be taken in response
thereto, including the possible withdrawal of the Separate Account's
participation in any of the Funds. Material conflicts could result from such
things as (1) changes in state insurance law, (2) changes in federal income tax
law, (3) changes in the investment management of any Portfolio, or (4)
differences between voting instructions given by variable annuity and variable
life owners. If the Boards were to conclude that separate underlying funds
should be established for variable annuity and variable life insurance separate
accounts, Hartford will bear the attendant expenses.
All investment income of, and other distributions to, each Investment
Division arising from the applicable Portfolio are reinvested in shares of that
Portfolio at net asset value. Hartford will purchase Portfolio shares in
connection with Net Premium payments allocated to the applicable Investment
Division in accordance with Owners' instructions and will redeem Portfolio
shares to meet obligations under the Group Policies and the Certificates or make
adjustments in reserves, if any. The Funds are required to redeem Portfolio
shares at net asset value and generally to make payment within seven (7)
calendar days.
Applicants should read the Fund prospectuses accompanying this Prospectus in
connection with the purchase of a Certificate.
HARTFORD FUNDS
The Separate Account currently invests in the Hartford Funds, a family of
funds comprised of twelve separate diversified open-end management investment
companies registered under the 1940 Act and organized as Maryland corporations.
Three of the Hartford Funds -- the Hartford Capital Appreciation Fund, the
Hartford Bond Fund and the Hartford Money Market Fund -- are available as part
of OmniSource-SM-.
HL Advisors serves as the investment adviser to each of the Hartford Funds.
In addition, HL Advisors has entered 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 and Hartford
Money Market Fund. Wellington Management Company, L.L.P. ("Wellington
Management") serves as sub-investment adviser for Hartford Capital Appreciation
Fund.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
The Separate Account currently invests in Neuberger & Berman AMT, a
diversified open-end management investment company registered under the 1940 Act
and organized as a Delaware business trust. Neuberger & Berman AMT consists of
several portfolios, including the Limited Maturity Bond Portfolio, Balanced
Portfolio and Partners Portfolio available as part of OmniSource-SM-.
Each portfolio of Neuberger & Berman AMT invests its assets in its
corresponding series of the Advisers Managers Trust, which is also an open-end
management investment company registered under the 1940 Act and is organized as
a New York common law trust. The investment performance of the Limited Maturity
Bond Portfolio, Balanced Portfolio and Partners Portfolio will directly
correspond with the investment performance of the corresponding series of the
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.
Neuberger & Berman Management Inc. serves as the investment manager of each
series of Advisers Managers Trust, as administrator of each portfolio of
Neuberger & Berman AMT, and as distributor of the shares of each portfolio of
Neuberger & Berman AMT. Neuberger & Berman, LLC serves as the sub-adviser for
each series of Advisers Managers Trust.
VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE INSURANCE PRODUCTS FUND II (EACH,
A "FIDELITY FUND" AND COLLECTIVELY,
THE "FIDELITY FUNDS")
The Separate Account currently invests in both Fidelity Funds. The Fidelity
Funds are diversified, open-end management investment companies organized as
Massachusetts business trusts by Fidelity Management & Research Company ("FMR")
and registered under the 1940 Act. The Fidelity Funds consist of several
investment portfolios, including the VIP High Income Portfolio, VIP Equity-
Income Portfolio, VIP Overseas Portfolio and VIP II Asset Manager Portfolio
available as part of OmniSource-SM-.
The Fidelity Funds are each managed by FMR. FMR is one of America's largest
investment management organizations. It is composed of a number of different
companies, which provide a variety of financial services and products. FMR is
the original Fidelity company, founded in 1946. It provides a number of mutual
funds and other clients with investment research and portfolio management
services.
THE ALGER AMERICAN FUND
The Separate Account currently invests in shares of The Alger American Fund,
a diversified open-end management investment company registered under the 1940
Act and organized as a Massachusetts business trust. The Alger American Fund
consists of six series, including the Alger
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
American Small Capitalization and Alger American Growth Portfolios available as
part of OmniSource-SM-.
The Alger American Fund is managed by Alger Management, a subsidiary of Fred
Alger & Company, Incorporated, which is in turn a subsidiary of Alger
Associates, Inc., a financial services holding company. Alger Management has
been in the business of providing investment advisory services since 1964.
J.P. MORGAN SERIES TRUST II
The Separate Account currently invests in shares of J.P. Morgan Series
Trust, a diversified open-end management investment company registered under the
1940 Act and organized as a Delaware business trust. J.P. Morgan Series Trust
consists of five portfolios, including the J.P. Morgan Bond, J.P. Morgan Equity,
J.P. Morgan Small Company and J.P. Morgan International Opportunities Portfolios
available as part of OmniSource-SM-.
Each Portfolio of J.P. Morgan Series Trust is advised by J.P. Morgan
Investment Management Inc., a wholly-owned subsidiary of J.P. Morgan & Co.
Incorporated which is a bank holding company with a long history of service as
adviser, underwriter and lender to an extensive roster of major companies and as
financial adviser to national governments.
MORGAN STANLEY UNIVERSAL FUNDS, INC.
The Separate Account currently invests in shares of MSUF, an open-end
management investment company registered under the 1940 Act and organized as a
corporation under the laws of the State of Maryland. MSUF consists of 17
portfolios, including the Fixed Income, High Yield, Equity Growth, Value, Global
Equity and Emerging Markets Equity Portfolios available as part of
OmniSource-SM-.
The investment adviser for Equity Growth, Global Equity and Emerging Markets
Equity Portfolios is MSAM, a wholly-owned subsidiary of Morgan Stanley Dean
Witter & Co., which is a publicly owned global financial services corporation.
The investment adviser for Fixed Income, High Yield and Value Portfolios is MAS,
which is indirectly wholly-owned by Morgan Stanley Dean Witter & Co.
BT INSURANCE FUNDS TRUST
The Separate Account currently invests in the BT Insurance Funds Trust, a
diversified open-end management investment company registered under the 1940 Act
and organized as a Massachusetts business trust. BT Insurance Funds Trust
consists of six series, including the EAFE0-Equity Index Fund, the Equity 500
Index Fund and the Small Cap Index Fund available as part of OmniSource-SM-.
BT Insurance Funds Trust has retained the services of Bankers Trust Global
Investment Management, a unit of Bankers Trust, as investment manager. Bankers
Trust conducts a variety of general banking and trust activities and is a major
wholesaler supplier of financial services to the international and domestic
institutional markets.
THE PORTFOLIOS
HARTFORD CAPITAL APPRECIATION FUND
Hartford Capital Appreciation Fund seeks to achieve growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation.
HARTFORD BOND FUND
Hartford Bond Fund seeks to achieve maximum current income consistent with
preservation of capital by investing primarily in fixed-income securities. Up to
20% of the total assets of the Portfolio 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 Portfolio'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 "High Yield -- High Risk
Debt Securities."
HARTFORD MONEY MARKET FUND
Hartford Money Market Fund seeks to achieve maximum current income
consistent with liquidity and preservation of capital.
LIMITED MATURITY BOND PORTFOLIO
N&B AMT Limited Maturity Bond Portfolio seeks to achieve the highest current
income consistent with low risk to principal and liquidity; and secondarily,
total return. This Portfolio invests in a diversified portfolio primarily
consisting of short to intermediate term U.S. government and agency securities
and investment grade debt securities issued by financial institutions,
corporations, and others. The Portfolio may invest up to 10% of its net assets,
measured at the time of investment, in fixed-income securities that are below
investment grade.
BALANCED PORTFOLIO
N&B AMT Balanced Portfolio seeks to achieve long-term capital growth and
reasonable current income without undue risk to principal. It is anticipated
that the Portfolio's investment program will normally be managed so that
approximately 60% of its total assets will be invested in common and preferred
stocks and the remaining assets will be invested in debt securities, primarily
investment grade. However, depending on the investment manager's views regarding
current market trends, the common stock portion of its portfolio investments may
be adjusted downward to as low as 50% or upward to as high as 70%. At least 25%
of its assets will be invested in fixed income securities.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
PARTNERS PORTFOLIO
N&B AMT Partners Portfolio seeks to achieve capital growth. This Portfolio's
investment approach is to invest principally in common stocks of medium to large
capitalization established companies, using a value-oriented investment approach
designed to increase capital with reasonable risk. Its investment program seeks
securities believed to be undervalued based on strong fundamentals such as low
price-to-earnings ratios, consistent cash flow and the company's track record
through all parts of the market cycle.
VIP HIGH INCOME PORTFOLIO
VIP High Income Portfolio seeks high current income primarily through
investments in all types of income-producing debt securities, preferred stocks
and convertible securities. Although the Portfolio has no limits on the quality
and maturity of its investments, its strategy typically leads to longer-term,
lower-quality, fixed-income securities. These domestic and foreign investments
may present the risk of default or may be in default.
VIP EQUITY-INCOME PORTFOLIO
VIP Equity-Income Portfolio seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities, the
Portfolio will also consider the potential for capital appreciation. This
Portfolio's goal is to achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500 Stocks
(commonly referred to as "S&P 500"). The Portfolio may invest in high yielding,
lower-rated securities (commonly referred to as "junk bonds") which are subject
to greater risk than investments in higher-rated securities.
VIP OVERSEAS PORTFOLIO
VIP Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities and provides a means for aggressive investors
to diversify their own portfolios by participating in companies and economies
outside of the United States. International investing involves increased or
additional risks compared to investing primarily in domestic equity securities.
VIP II ASSET MANAGER PORTFOLIO
VIP II Asset Manager Portfolio seeks high total return with reduced risk
over the long term by allocating its assets among domestic and foreign stocks,
bonds and short-term instruments.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
Alger American Small Capitalization Portfolio seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of equity
securities, primarily of companies with total market capitalization within the
range of companies included in the Russell 2000 Growth Index or the S&P SmallCap
600 Index, updated quarterly.
ALGER AMERICAN GROWTH PORTFOLIO
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.
J.P. MORGAN BOND PORTFOLIO
J.P. Morgan Bond Portfolio seeks high total return consistent with moderate
risk of capital and maintenance of liquidity. Although the net asset value of
the Portfolio will fluctuate, the Portfolio attempts to preserve the value of
its investments to the extent consistent with its objective. Under normal market
conditions, 65% of the Portfolio's, assets will be invested in bonds, debentures
and other debt instruments. The Portfolio may invest up to 20% of its assets in
securities denominated in foreign currencies and may invest without limitation
in U.S. dollar-denominated securities of foreign issuers.
J.P. MORGAN EQUITY PORTFOLIO
J.P. Morgan Equity Portfolio seeks high total return from a portfolio
comprised of selected equity securities. The Portfolio invests primarily in the
common stock of large and medium capitalization U.S. companies.
J.P. MORGAN SMALL COMPANY PORTFOLIO
J.P. Morgan Small Company Portfolio seeks high total return from a portfolio
of equity securities of small companies. The Portfolio invests at least 65% of
the value of its total assets in the common stock of small U.S. companies
primarily with market capitalizations less than $1 billion.
J.P. MORGAN INTERNATIONAL OPPORTUNITIES PORTFOLIO
J.P. Morgan International Opportunities Portfolio seeks high total return
from a portfolio of equity securities of foreign corporations. Under normal
market conditions, the Portfolio will invest in a minimum of three different
foreign countries.
FIXED INCOME PORTFOLIO
MS Fixed Income Portfolio seeks above average total return over a market
cycle of three to five years by investing in a diversified portfolio of U.S.
government and agency securities, corporate bonds, foreign bonds,
mortgage-backed securities of domestic issuers, and other fixed income
securities and derivatives. Under normal circumstances, the Portfolio will
invest at least 65% of its total assets in fixed income securities, not more
than 20% of which will be below investment grade (commonly referred to as "high
yield securities" or "junk bonds").
HIGH YIELD PORTFOLIO
MS High Yield Portfolio seeks above average total return over a market cycle
of three to five years by investing at least 65% of its total assets in high
yield securities of U.S. and foreign issuers including corporate bonds and other
fixed income securities. The Portfolio expects to achieve its
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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objective through maximizing current income, although it may seek capital growth
opportunities when consistent with its objective.
EQUITY GROWTH PORTFOLIO
MS Equity Growth Portfolio seeks long-term capital appreciation by investing
primarily in growth-oriented common and preferred stocks, convertible
securities, rights and warrants to purchase common stocks, depositary receipts
and other equity securities. Under normal circumstances, the Portfolio will
invest at least 65% of its total assets in equity securities.
VALUE PORTFOLIO
MS Value Portfolio seeks above average total return over a market cycle of
three to five years by investing primarily in common and preferred stocks,
convertible securities, rights and warrants to purchase common stocks, ADRs and
other equity securities of companies with equity capitalizations usually greater
than $300 million. Under normal circumstances, the Portfolio will invest at
least 65% of its total assets in equity securities. The Portfolio may invest up
to 5% of its total assets in foreign equity securities (other than ADRs).
GLOBAL EQUITY PORTFOLIO
MS Global Equity Portfolio seeks long-term capital appreciation by investing
primarily in common and preferred stocks, convertible securities, and rights and
warrants to purchase common stocks, depositary receipts and other equity
securities of issuers throughout the world, including issuers in the United
States and emerging market countries. Under normal circumstances, at least 65%
of the total assets of the Portfolio will be invested in equity securities. At
least 20% of the Portfolio's total assets will be invested in common stocks of
U.S. issuers and the remaining equity position will be invested in at least
three countries other than the United States.
EMERGING MARKET EQUITY PORTFOLIO
MS Emerging Markets Equity Portfolio seeks long-term capital appreciation by
investing primarily in common and preferred stocks, convertible securities,
rights and warrants to purchase common stocks, sponsored or unsponsored ADRs and
other equity securities of emerging market country issuers. Under normal
circumstances, at least 65% of the Portfolio's total assets will be invested in
emerging market country equity securities.
EAFE-REGISTERED TRADEMARK- EQUITY INDEX FUND
BT EAFE-Registered Trademark- Equity Index Fund seeks to replicate as
closely as possible (before deduction for expenses) the total return of the
Europe, Australia, Far East Index (the "EAFE Index"), a capitalization-weighted
index containing approximately 1,100 equity securities of companies located
outside the United States, by investing in a statistically selected sample of
the equity securities included in the EAFE Index. It will invest primarily in
equity securities of business enterprises organized and domiciled outside of the
United States or for which the principal trading market is outside the United
States.
EQUITY 500 INDEX FUND
BT Equity 500 Index Fund seeks to replicate as closely as possible (before
deduction for expenses) the total return of the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500"), an index emphasizing large-capitalization
stocks. It will include the common stock of those companies included in the S&P
500, other than Bankers Trust New York Corporation, selected on the basis of
computer-generated statistical data, that are deemed representative of the
industry diversification of the entire S&P 500.
SMALL CAP INDEX FUND
BT Small Cap Index Fund seeks to replicate as closely as possible (before
deduction for expenses) the total return of the Russell 2000 Small Stock Index
(the "Russell 2000"), an index consisting of 2,000 small-capitalization common
stocks. It will include the common stock of companies included in the Russell
2000, on the basis of computer-generated statistical data, that are deemed
representative of the industry diversification of the entire Russell 2000.
There is no assurance that any Portfolio will achieve its stated objectives.
Owners are also advised to read the prospectuses for each of the Funds
accompanying this Prospectus for more detailed information. Each Fund is subject
to certain investment restrictions which may not be changed without the approval
of a majority of the shareholders of the Fund. See the accompanying prospectuses
for each of the Funds.
DETAILED DESCRIPTION
OF CERTIFICATE BENEFITS
AND PROVISIONS
GENERAL
This Prospectus describes a flexible premium group variable life insurance
policy where the Owner has considerable flexibility in selecting the timing and
amount of premium payments.
ISSUANCE OF A CERTIFICATE
Certificates will only be offered to eligible employees when provided by the
Participating Employer. Individuals wishing to purchase a Certificate must
complete an Enrollment Form In Writing, which must be received by Our Customer
Service Center before a Certificate will be issued. A Certificate will not be
issued with a specified Face Amount of less than the minimum Face Amount.
Acceptance is
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14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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subject to Hartford's underwriting rules then in effect. Hartford reserves the
right to reject an Enrollment Form for any reason permitted by law.
There are two circumstances under which a Certificate may be issued with a
backdated Coverage Date. The first involves Group Policy rollovers from Section
1035 exchanges under the Code. Backdating will occur in order to prevent a gap
in coverage under the Certificate. Charges and deductions (other than those of
the Portfolios) will be made for the period the Coverage Date is backdated;
however, the Owner will not experience investment return during that time.
Backdating will also occur when an application accompanied by the Initial
Premium is received by Us but issuance of a Certificate is subject to Our
insurance underwriting requirements. The initial Net Premium will be allocated
to the Hartford Money Market Investment Division during the underwriting period.
See "Premiums -- Allocation of Premium Payments" below. If the Insured meets Our
underwriting requirements, a Certificate will be issued with a backdated
Coverage Date. Charges and deductions (other than those of the Portfolios) will
be made for the backdated period. If the Insured does not meet Our underwriting
requirements, no Certificate will be issued and no coverage will have been in
effect. A conditional receipt will be given to the applicant reflecting receipt
of the Initial Premium and outlining any interim coverage in effect until the
Certificate is either issued or declined.
Backdating may only be permitted in certain states.
PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant feature of the Certificate is that once the desired level and
pattern of the Death Benefit have been determined, the Owner has considerable
flexibility in the selection of the timing and amount of premiums to be paid and
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, as set forth in the Certificate, is due on the
Coverage Date. Unless determined otherwise by Hartford, the amount of the
minimum Initial Premium is the amount which, after the deductions for sales
load, state premium tax, and DAC tax charge, is sufficient (disregarding
investment performance) to pay twelve (12) times the first Monthly Deduction
Amount. Thereafter, additional premiums may be paid at any time, subject to the
premium limitations set forth by the Code as indicated in the section entitled
"Premium Limitation," page 15. 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 when Your Certificate
is issued to the Hartford 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 Hartford Money Market Investment Division if it is selected as an
initial allocation option). This later date is the later of ten (10) calendar
days after We receive the Initial Premium and the date We receive the final
requirement to put the Certificate in force. The Certificates are credited with
units ("Accumulation Units") in each selected Investment Division, the assets of
which are invested in the corresponding underlying Portfolio. An Owner may
transfer funds among the Investment Divisions subject to certain restrictions.
See "Detailed Description of Certificate Benefits and Provisions -- Transfers
Among Investment Divisions," page 16. Any additional premiums received by Us
prior to such date will be allocated to the Hartford 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 Net Premium allocation. Portions
allocated to the Investment Divisions must be whole percentages of 5% or more.
Subsequent Net Premiums will be allocated among Investment Divisions according
to Your most recent instructions, subject to the following. If We receive a
premium and Your most recent allocation instructions would violate the 5%
requirement, We will allocate the Net Premium among the Investment Divisions
according to Your previous premium allocation. If the asset rebalancing option
is in effect, Net Premiums will be allocated accordingly until that option is
terminated. See "Transfers Among Investment Divisions -- Asset Rebalancing,"
page 16.
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 on the Enrollment Form is shown in the Certificate. In addition, every
transactional confirmation generated after a premium payment is received will
show how that premium has been allocated. A Certificate's annual statement will
also summarize the current premium allocation in effect for that Certificate.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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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 Hartford 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 Portfolio, as well as the
daily deduction for mortality and expense risks, and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Investment Division on the preceding Valuation Day by a net investment factor
for that Investment Division for the Valuation Period then ended. The net
investment factor for each of the Investment Divisions is equal to the net asset
value per share of the corresponding Portfolio at the end of the Valuation
Period (plus the per share amount of any dividend or capital gain distributions
paid by that Portfolio in the Valuation Period then ended) divided by the net
asset value per share of the corresponding Portfolio at the beginning of the
Valuation Period, less the daily deduction for the mortality and expense risks
assumed by Hartford.
All valuations in connection with a Certificate, e.g., with respect to
determining Cash Value and Investment Value, or calculating the Death Benefit,
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 Code, We will
refund the excess premium payments. We will refund such premium payments and
interest thereon within sixty (60) days after the end of a Coverage Year.
A premium payment that results in an increase in the Death Benefit greater
than the amount of the premium will be accepted only after We approve evidence
of insurability.
VALUES UNDER THE CERTIFICATE
As with traditional life insurance, each Certificate will have a Cash
Surrender Value. The Cash Surrender Value is equal to the Cash Value, less Debt,
less any charges accrued but not deducted. There is no minimum guaranteed Cash
Surrender Value. The Cash Value equals the value in the Investment Divisions
plus the Loan Account Value.
Each Certificate will also have an Investment Value. The Investment Value of
a Certificate changes on a daily basis and will be computed on each Valuation
Day. The Investment Value will vary to reflect the investment experience of the
Investment Divisions, Monthly Deduction Amounts and any amounts transferred to
the Loan Account to secure a Loan.
The Investment Value of a particular Certificate is related to the net asset
value of the Portfolios associated with the Investment Divisions to which Net
Premiums on the Certificate have been allocated. The total Investment Value in
the Investment Divisions on any Valuation Day is calculated by multiplying the
number of Accumulation Units in each Investment Division as of the Valuation Day
by the current Accumulation Unit value of that Investment Division and then
summing the result for all the Investment Divisions. The Investment Value equals
the sum of the values of the assets in the Investment Divisions. See "Premiums
- -- Accumulation Unit Values," page 15.
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.
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 charge for processing partial withdrawals which is the
lesser of 2% of the amount withdrawn or $25.00. 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 Benefit 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 29.
TRANSFERS AMONG 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, without charge, up to twelve (12) times
per Coverage Year. Transfers in excess of twelve (12) per Coverage Year will be
subject to a charge of $50 per transfer deducted from the amount of the
transfer. 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 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. Hartford reserves the right in the future to impose additional
restrictions on transfers.
TRANSFERS TO OR FROM INVESTMENT DIVISIONS
In the event of a transfer from an Investment Division, the number of
Accumulation Units credited to the Investment Division from which the transfer
is made will be reduced. The reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit value for that Investment Division on the Valuation
Day We receive Your request for transfer In Writing.
In the event of a transfer to an Investment Division, We will increase the
number of Accumulation Units credited thereto. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit value for that Investment Division determined on the
Valuation Day We receive Your request for transfer In Writing.
ASSET REBALANCING
Subject to Our rules then in effect, an Owner may authorize Hartford to
automatically reallocate Investment Value periodically in order to maintain a
particular percentage allocation among the Investment Divisions as selected by
the Owner ("Asset Rebalancing"). The Investment Value held in each Investment
Division will increase or decrease in value at different rates during the
relevant period. Asset Rebalancing is intended to reallocate Investment Value
from those Investment Divisions that have increased in value to those that have
decreased in value.
To elect Asset Rebalancing, a request In Writing must be received by
Hartford. If Asset Rebalancing is elected, all Investment Value must be included
in the automatic reallocation. The percentages selected under Asset Rebalancing
will override any prior percentage allocations chosen by the Owner and all
future Net Premiums will be allocated accordingly. Once elected, an Owner may
instruct Hartford In Writing at any time to terminate the option. In addition,
any transfer made outside of Asset Rebalancing will terminate the option.
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
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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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 generally pay Death Proceeds, Cash Surrender Values, partial
withdrawals, and Loan amounts attributable to the Investment Divisions within
seven (7) calendar 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.
PROCESSING OF TRANSACTIONS
Generally, transactions initiated by an Owner will be processed only on a
Valuation Day. Requests received by Hartford on a Valuation Day before the close
of trading on the NYSE (generally 4:00 p.m. Eastern Time) will be processed as
of that day, except as otherwise indicated in this Prospectus. Those requests
received after the close of the NYSE will be processed as of the next Valuation
Day.
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 on 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 the
greater of 5% and the Published Monthly Average for the calendar month two
months prior to the date on which the Adjustable Loan Interest Rate is
determined. The Published Monthly Average means the "Moody's Corporate Bond
Yield Average -- Monthly Average Corporate" as published by Moody's Investors
Service, Inc. or any successor to that service. If that monthly average is no
longer published, a substitute average will be used.
CREDITED INTEREST
Amounts in the Loan Account for Coverage Years 1 through 10 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 11 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 thirty-one (31) calendar days after We have mailed
notice to Your last known address and that of any assignees of record. If
sufficient Loan repayment is not made by the end of this 31-day period, the
Certificate will end without value.
EFFECT OF LOANS ON INVESTMENT VALUE
A Loan, whether or not repaid, will have a permanent effect on the
Investment Value because the investment results of each Investment Division will
apply only to the amount remaining in such Investment Divisions. The longer a
Loan is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Investment Divisions earn more than the annual
interest rate for funds held in the Loan Account, an Owner's Investment Value
will not increase as rapidly as it would have had no
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18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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.
MINIMUM DEATH BENEFIT TESTING PROCEDURES
Section 7702 of the Code defines alternative testing procedures, the
guideline premium test ("GPT") and the cash value accumulation test ("CVAT") in
order to meet the definition of life insurance under the Code. See "Federal Tax
Considerations -- Income Taxation of Certificate Benefits," page 29. Each
Certificate must qualify under either the GPT or the CVAT. Prior to issue, the
Owner chooses the procedure under which a Certificate will qualify. Once either
the GPT or the CVAT is chosen to test a Certificate, it cannot be changed while
the Certificate is in force.
Under both testing procedures, there is a minimum Death Benefit required at
all times equal to the Variable Insurance Amount. The factors used to determine
the Variable Insurance Amount depend on the testing procedure chosen and are set
forth in the Certificate.
Under the GPT, there is also a maximum amount of premium which may be paid
with respect to each Certificate.
Use of the CVAT can be advantageous if an Owner intends to maximize the
total amount of premiums paid under a Certificate. An offsetting consideration,
however, is that the factors used to determine the Variable Insurance Amount are
higher under the CVAT, which can result in a higher Death Benefit over time and
thus, a higher total cost of insurance.
DEATH BENEFIT OPTIONS
Regardless of the minimum death benefit testing procedure chosen, there are
two Death Benefit options: Death Benefit Option A and Death Benefit Option B.
1. Under 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
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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.
Hartford will make any other arrangements for income payments as may be
agreed on.
LEGAL DEVELOPMENTS REGARDING INCOME PAYMENTS
In those states affected by the 1983 Supreme Court decision in Arizona
Governing Committee v. Norris, income payment options involving life income are
based on unisex actuarial tables. In addition, legislation has previously been
introduced in Congress which, had it been enacted, would have required the use
of tables that do not vary on the basis of sex for some or all annuities.
Currently, several states have enacted such laws.
BENEFICIARY
The Owner names the Beneficiary in the Enrollment Form for the Certificate.
The Owner may change the Beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to Hartford. If no Beneficiary is living
when the Insured dies, the Death Proceeds will be paid to the Owner if living;
otherwise to the Owner's estate.
INCREASES AND DECREASES IN FACE AMOUNT
The minimum Face Amount of the Certificate is $50,000. At any time after
purchasing a Certificate, the Owner may request a change in the Face Amount by
making a request In Writing to Hartford and directing such request to Hartford's
Customer Service Center.
All requests to increase the Face Amount must be applied for on a new
Enrollment Form. All requests will be subject to evidence of insurability
satisfactory to 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 twelve (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 his or her last known address,
at least fifteen (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.
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
LAPSE AND REINSTATEMENT WHILE
THE GROUP POLICY IS IN EFFECT
LAPSE AND GRACE PERIOD
A Grace Period will follow the date We mail notice to the Owner 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 thirty-one (31) calendar 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 (i) the Group Policy is
terminated (see "Termination of Participation in the Group Policy" above) or
(ii) the Certificate has been surrendered for cash, the Certificate may be
reinstated prior to the Maturity Date, provided:
(a) you make Your request within three (3) years of the date of lapse; and
(b) satisfactory evidence of insurability is submitted.
To reinstate Your Certificate, you must remit a premium payment large enough
to keep the coverage under the Certificate in force for at least three (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 Hartford. 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 ten
(10) calendar days after delivery of the Certificate to the Owner, Hartford will
return either (i) the total amount of premiums or (ii) the Cash Value plus
charges deducted under the Certificate to the Owner within seven (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 Hartford 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 PREMIUM
Before allocating the Net Premium to the Investment Divisions, a deduction
as a percentage of premium is made for the front-end sales load, premium taxes
and the DAC tax charge. The amount of each premium allocated to the Investment
Divisions is Your Net Premium.
FRONT-END SALES LOAD
The current 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 in 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
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
Hartford deducts 1.25% of each premium to cover a federal premium tax
assessed against Hartford. This charge is reasonable in relation to Hartford's
federal income tax burden, under Section 848 of the Code, resulting from the
receipt of premiums. We will adjust this charge based on changes in the
applicable tax law.
DEDUCTIONS AND CHARGES
FROM INVESTMENT VALUE
MONTHLY DEDUCTION AMOUNT
On the Coverage Date and on each subsequent Processing Date, Hartford will
deduct 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. It 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
(c) the charges for additional benefits provided by rider, if any.
(A) 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.
(B) 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
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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.
(C) Rider Charge
If the Certificate includes riders, a charge is deducted from the
Investment Value on each Processing Date. The applicable charge is specified
on the rider and is to compensate Hartford for the anticipated cost of
providing the benefits thereunder.
The riders available under the Certificate are described on page 24 under
"Supplemental Benefits."
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 1 through 10 at an
effective annual rate of .65% of the value of each Investment Division's assets
and for Coverage Years 11 and later at an effective annual rate of .50% of an
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 15.
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 Portfolios should no longer be available for investment, or if, in
the judgment of Hartford's management, further investment in shares of any
Portfolio should become inappropriate in view of the purposes of the Group
Policies, Hartford may substitute shares of another Portfolio for shares already
purchased, or to be purchased in the future, under the Group Policies. No
substitution of securities will take place without notice to and consent of
Owners and without prior approval of the SEC to the extent required by the 1940
Act. Subject to Owner approval, if required, 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 Policy.
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
Loan secured by the Certificate, amounts transferred from the Investment
Division(s) to the Loan Account(s) in connection with the Loan (see "Detailed
Description of Certificate Benefits and Provisions -- Loans," page 17) 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 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 Life and Annuity
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use Our name or part of it, but We may also withdraw this right.
STATEMENTS TO OWNERS
We will send You a statement at least once each Coverage Year, showing:
(a) the current Cash Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, Monthly Deduction Amounts and Loans since the last
report;
(c) the amount of any outstanding Debt;
(d) notifications required by the provisions of the Certificate; and
(e) any other information required by the Insurance Department of the State
where the Certificate was delivered.
LIMIT ON RIGHT TO CONTEST
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.
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 may in the future be included in a
Certificate, subject to the restrictions and limitations set forth therein.
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 29.
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Bossen, Wendell J., 64 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.
Boyko, Gregory A., 46 Senior Vice President, Chief Vice President & Controller (1995-1997), Hartford;
Financial Officer & Director (1997-Present); Senior Vice President, Chief
Treasurer, 1997 Financial Officer & Treasurer (1997-Present); Vice
Director, 1997* President & Controller (1995-1997), 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.
Cummins, Peter W., 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); Senior Vice President (1997-Present); Vice
President (1989-1997), Hartford Life Insurance Company.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
deRaismes, Ann M., 47 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); Director of Human
Resources (1991-Present), Hartford Life and Accident
Insurance Company; Senior Vice President (1997-Present);
Vice President (1994-1997); Assistant Vice President
(1992-1994); Director of Human Resources (1991-Present),
Hartford Life Insurance Company; Vice President, Human
Resources (1997-Present), Hartford Life, Inc.
Dooley, James R., 61 Vice President, 1993 Director, Information Services (1973-1997), Hartford Life
Insurance Company.
Fitch, Timothy M., 45 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.
Foy, David T., 31 Vice President, 1998 Assistant Vice President (1995-1998), Hartford; Vice
President (1998-Present); Assistant Vice President
(1995-1998), Hartford Life Insurance Company.
Garrett, J. Richard, 53 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.
Gillette, Donald J., 52 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.
Godfrey, III, William A., 41 Senior Vice President, 1997 Senior Vice President (1997-Present), Hartford; Senior
Vice President (1997-Present), Hartford Life and
Accident Insurance Company; Vice President Information
Technology (1997-Present), Hartford Life, Inc.
</TABLE>
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Godkin, Lynda, 44 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 Insurance 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.
Grady, Lois W., 53 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1994 (1993-1997); Assistant Vice President (1987-1993),
Hartford Life and Accident Insurance Company; Senior
Vice President (1998-Present); Vice President
(1993-1997); Assistant Vice President (1987-1993),
Hartford Life Insurance Company.
Graham, Christopher, 47 Vice President, 1997
Hunt, Mark E., 37 Vice President, 1998 Assistant Vice President (1997-1998), Hartford; Vice
President (1998-Present), Hartford Life and Accident
Insurance Company.
Joyce, Stephen T., 39 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.
Keeler, Michael D., 37 Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company.
Kerzner, Robert A., 46 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1997 (1994-1998), Hartford; Senior Vice President
(1998-Present); Vice President (1994-1997); Regional
Vice President (1991-1994), Hartford Life Insurance
Company.
Levenson, David N., 31 Vice President, 1998 Assistant Vice President (1997-1998), Hartford.
Malchodi, Jr., William B., 50 Vice President, 1994 [Director of Taxes (1992-1998), Hartford;] Vice President
Director of Taxes, 1992 [delete?] (1994-Present); Director of Taxes (1992-[1998] Present),
Hartford Life and Accident Insurance Company; Vice
President (1994-Present); Director of Taxes
(1991-Present), Hartford Life Insurance Company.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Marra, Thomas M., 38 Executive Vice President, 1996 Senior Vice President (1993-1996); Director of Individual
Director, Individual Life Annuities (1991-1993), Hartford; Director
and Annuity 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 and Accident Insurance Company; Director
(1994-Present); Executive Vice President (1995-Present);
Director, Individual Life and Annuity Division
(1994-Present); Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1995), Hartford
Life Insurance Company; Executive Vice President,
Individual Life and Annuities (1997-Present), Hartford
Life, Inc.
Matthieson, Steven L., 53 Vice President, 1984 Director of New Business (1984-1997), Hartford.
O'Halloran, C. Michael, 51 Vice President, 1997 Vice President (1997-Present), Hartford Life and Accident
Insurance Company; 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.
O'Sullivan, Daniel E., 43 Vice President, 1998 Vice President (1998-Present), Hartford; Vice President
(1988-Present), Hartford Life Insurance Company.
Raymond, Craig R., 37 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 (1995-Present);
Vice President (1993-1997); Actuary (1990-1995),
Hartford Life and Accident Insurance Company; 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.
Schrandt, David T., 50 Vice President, 1987 Treasurer (1987-1997); Controller (1987-1997), Hartford.
Smith, Lowndes A., 58 President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief
Director, 1985* Executive Officer (1997-Present); Chief Operating
Officer (1989-1997), Hartford Life and Accident
Insurance Company; Director (1981-Present); President
(1989-Present), Chief Executive Officer (1997-Present);
Chief Operating Officer (1989-1997), Hartford Life
Insurance Company; Chief Executive Officer and President
and Director (1997-Present), Hartford Life, Inc.
</TABLE>
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Welsh, Walter C., 51 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice President
(1994-1997); Assistant Vice President (1992-1995),
Hartford Life and Accident Insurance Company; Senior
Vice President (1997-Present); Vice President
(1995-1997); Assistant Vice President (1992-1995),
Hartford Life Insurance Company; Vice President,
Government Affairs (1997-Present), Hartford Life, Inc.
Znamierowski, David M., 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, 1998 (1997-Present), Hartford Life and Accident Insurance
Company; Director (1998-Present); 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
Company.
- ---------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
</TABLE>
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 POLICY
Hartford intends to sell the Group Policy in all jurisdictions where it is
licensed to do business. The Group Policy 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 Policy. 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, service fees and asset-based trail commissions 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.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HESCO and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HESCO, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HESCO, its affiliates or Hartford out of their own
assets and will not affect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE OWNER INVOLVED AND THE TYPE OF PLAN UNDER WHICH THE
GROUP POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A GROUP POLICY DESCRIBED
HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of the Group Policy 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's understanding of current
Federal income tax laws as they are currently interpreted.
TAXATION OF HARTFORD 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 "Detailed Description of Certificate
Benefits and Provisions -- Values Under the Certificate," on page 15). 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
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
treatment accorded to life insurance. That is, the death benefit is excluded
from income and increments in value are not subject to current taxation.
However, withdrawals and loans from a modified endowment policy are treated
first as income, then as a recovery of basis. Taxable withdrawals are subject to
a 10% additional tax, with certain exceptions. Generally, only distributions and
loans made in the first year in which a policy becomes a modified endowment
policy, and in subsequent years, are taxable. However, distributions and loans
made in the two years prior to a policy's failing the seven-pay test are deemed
to be in anticipation of failure and are subject to tax.
If the Certificate satisfies the seven-pay test for seven years,
distributions and loans made thereafter will not be subject to the modified
endowment policy rules, unless the Certificate is changed materially. The
seven-pay test will be applied anew at any time the Certificate undergoes a
material change, which includes an increase in the Face Amount.
All modified endowment policies that are issued within any calendar year to
the same policy owner by one company or its affiliates shall be treated as one
modified endowment policy for the purpose of determining the taxable portion of
any loan or distribution.
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 meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
Owner must agree to pay the tax due for the period during which the
diversification standards were not met. The amount required to be paid shall be
an amount based upon the tax that would have been owed by the policy owner if
they were treated as receiving the income on the policy for such period or
periods.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Owner, such
amounts will be subject to Federal income tax withholding and reporting,
pursuant to Section 3405 of the Internal Revenue Code.
OTHER TAX CONSIDERATIONS
Qualified tax advisers should be consulted concerning the estate and gift
tax consequences of Certificate ownership and distributions under federal, state
and local law.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party.
EXPERTS
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 reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Reference is made to the report on the
statutory-basis financial statements of Hartford Life and Annuity Insurance
Company (formerly 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, and are not presented in accordance with generally accepted
accounting principles. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, Connecticut 06103.
The hypothetical illustrations included in this Prospectus and Registration
Statement have been approved by Pauline Gyllenhammer, ASA, MAAA, Senior
Actuarial
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
Associate, are included in reliance upon her opinion as to their reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFIT, CASH VALUE
AND CASH SURRENDER VALUE
The following tables illustrate how the Death Benefit, Cash Value and Cash
Surrender Value of a Group Policy may change with the investment experience of
the Separate Account. The tables show how the Death Benefit, Cash Value and Cash
Surrender Value of a Certificate issued to an Insured of a given age would vary
over time if the investment return on the assets held in each Portfolio were a
uniform, gross annual rate of 0%, 6% and 12%. The Death Benefit, Cash Value and
Cash Surrender Value 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 32 to 43 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 Benefit, Cash Value and Cash Surrender Value 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 Portfolios.
This is because these tables assume an investment management fee and other
estimated Portfolio expenses totaling 0.820%. The 0.820% figure is based on an
average of the current management fees and expenses of the available 25
Portfolios, taking into account any applicable expense caps or reimbursement
arrangements. Actual fees and expenses of the Portfolios associated with a
Certificate may be more or less than 0.820%, 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 front-end sales load, 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
Group 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>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.82% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- -----------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,242 12,242 250,000 11,000 11,000 250,000
2 30,355 24,223 24,223 250,000 21,805 21,805 250,000
3 46,680 35,952 35,952 250,000 32,418 32,418 250,000
4 63,821 47,463 47,463 250,000 42,846 42,846 250,000
5 81,819 58,776 58,776 250,000 53,088 53,088 250,000
6 100,717 70,004 70,004 250,000 63,152 63,152 250,000
7 120,560 81,059 81,059 250,000 73,031 73,031 250,000
8 126,588 79,409 79,409 250,000 70,438 70,438 250,000
9 132,917 77,737 77,737 250,000 67,726 67,726 250,000
10 139,563 76,033 76,033 250,000 64,873 64,873 250,000
11 146,541 74,390 74,390 250,000 61,866 61,866 250,000
12 153,868 72,678 72,678 250,000 58,682 58,682 250,000
13 161,561 70,874 70,874 250,000 55,309 55,309 250,000
14 169,639 68,973 68,973 250,000 51,725 51,725 250,000
15 178,121 66,967 66,967 250,000 47,906 47,906 250,000
16 187,027 64,783 64,783 250,000 43,817 43,817 250,000
17 196,378 62,477 62,477 250,000 39,414 39,414 250,000
18 206,197 60,032 60,032 250,000 34,640 34,640 250,000
19 216,507 57,434 57,434 250,000 29,429 29,429 250,000
20 227,332 54,664 54,664 250,000 23,710 23,710 250,000
25 290,140 37,293 37,293 250,000 -- -- --
30 370,300 10,376 10,376 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- -----------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,990 12,990 250,000 11,701 11,701 250,000
2 30,355 26,482 26,482 250,000 23,897 23,897 250,000
3 46,680 40,505 40,505 250,000 36,618 36,618 250,000
4 63,821 55,118 55,118 250,000 49,895 49,895 250,000
5 81,819 70,368 70,368 250,000 63,760 63,760 250,000
6 100,717 86,393 86,393 250,000 78,249 78,249 250,000
7 120,560 103,144 103,144 250,000 93,397 93,397 250,000
8 126,588 107,366 107,366 250,000 96,210 96,210 250,000
9 132,917 111,753 111,753 250,000 99,055 99,055 250,000
10 139,563 116,307 116,307 250,000 101,924 101,924 250,000
11 146,541 121,204 121,204 252,527 104,812 104,812 250,000
12 153,868 126,269 126,269 256,053 107,714 107,714 250,000
13 161,561 131,496 131,496 259,641 110,631 110,631 250,000
14 169,639 136,892 136,892 263,292 113,561 113,561 250,000
15 178,121 142,464 142,464 267,012 116,499 116,499 250,000
16 187,027 148,173 148,173 270,740 119,434 119,434 250,000
17 196,378 154,070 154,070 274,562 122,354 122,354 250,000
18 206,197 160,160 160,160 278,502 125,242 125,242 250,000
19 216,507 166,448 166,448 282,582 128,076 128,076 250,000
20 227,332 172,939 172,939 286,816 130,838 130,838 250,000
25 290,140 208,558 208,558 310,301 142,988 142,988 250,000
30 370,300 249,843 249,843 338,301 149,364 149,364 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------------- ------------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ------------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,739 13,739 250,000 12,402 12,402 250,000
2 30,355 28,831 28,831 250,000 26,075 26,075 250,000
3 46,680 45,428 45,428 250,000 41,164 41,164 250,000
4 63,821 63,726 63,726 250,000 57,834 57,834 250,000
5 81,819 83,930 83,930 250,000 76,266 76,266 250,000
6 100,717 106,346 106,346 254,254 96,669 96,669 250,000
7 120,560 131,029 131,029 304,242 119,126 119,126 276,760
8 126,588 144,219 144,219 325,337 130,105 130,105 293,671
9 132,917 158,718 158,718 348,002 142,048 142,048 311,641
10 139,563 174,649 174,649 372,360 155,028 155,028 330,737
11 146,541 192,420 192,420 399,056 169,130 169,130 351,026
12 153,868 211,937 211,937 427,791 184,442 184,442 372,584
13 161,561 233,346 233,346 458,620 201,069 201,069 395,490
14 169,639 256,831 256,831 491,698 219,118 219,118 419,827
15 178,121 282,590 282,590 527,201 238,707 238,707 445,683
16 187,027 310,746 310,746 565,175 259,951 259,951 473,153
17 196,378 341,619 341,619 605,979 282,971 282,971 502,339
18 206,197 375,461 375,461 649,878 307,889 307,889 533,345
19 216,507 412,551 412,551 697,165 334,828 334,828 566,287
20 227,332 453,189 453,189 748,137 363,924 363,924 601,285
25 290,140 722,002 722,002 1,069,272 547,697 547,697 811,896
30 370,300 1,142,549 1,142,549 1,539,940 813,034 813,034 1,097,032
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.82% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,231 12,231 262,264 10,947 10,947 261,056
2 30,355 24,182 24,182 274,238 21,643 21,643 271,772
3 46,680 35,848 35,848 285,928 32,083 32,083 282,233
4 63,821 47,263 47,263 297,364 42,267 42,267 292,438
5 81,819 58,442 58,442 308,562 52,184 52,184 302,378
6 100,717 69,533 69,533 319,660 61,833 61,833 312,049
7 120,560 80,416 80,416 330,561 71,194 71,194 321,434
8 126,588 78,583 78,583 328,730 68,061 68,061 318,310
9 132,917 76,716 76,716 326,866 64,786 64,786 315,047
10 139,563 74,801 74,801 324,955 61,348 61,348 311,623
11 146,541 72,923 72,923 323,074 57,733 57,733 308,022
12 153,868 70,948 70,948 321,107 53,924 53,924 304,229
13 161,561 68,849 68,849 319,018 49,913 49,913 300,235
14 169,639 66,621 66,621 316,800 45,685 45,685 296,025
15 178,121 64,258 64,258 314,448 41,224 41,224 291,583
16 187,027 61,664 61,664 311,874 36,499 36,499 286,880
17 196,378 58,922 58,922 309,144 31,477 31,477 281,883
18 206,197 56,016 56,016 306,252 26,113 26,113 276,547
19 216,507 52,934 52,934 303,184 20,357 20,357 270,823
20 227,332 49,658 49,658 299,925 14,159 14,159 264,662
25 290,140 29,569 29,569 279,945 -- -- --
30 370,300 626 626 251,175 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- -----------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,979 12,979 262,949 11,645 11,645 261,697
2 30,355 26,436 26,436 276,366 23,719 23,719 273,734
3 46,680 40,387 40,387 290,275 36,234 36,234 286,212
4 63,821 54,882 54,882 304,723 49,204 49,204 299,144
5 81,819 69,956 69,956 319,748 62,638 62,638 312,538
6 100,717 85,788 85,788 335,516 76,548 76,548 326,407
7 120,560 102,284 102,284 351,956 90,933 90,933 340,752
8 126,588 106,208 106,208 355,869 92,864 92,864 342,690
9 132,917 110,245 110,245 359,897 94,690 94,690 344,524
10 139,563 114,387 114,387 364,030 96,379 96,379 346,225
11 146,541 118,789 118,789 368,409 97,910 97,910 347,770
12 153,868 123,270 123,270 372,884 99,255 99,255 349,131
13 161,561 127,806 127,806 377,415 100,396 100,396 350,289
14 169,639 132,390 132,390 381,995 101,304 101,304 351,216
15 178,121 137,020 137,020 386,621 101,948 101,948 351,883
16 187,027 141,595 141,595 391,201 102,282 102,282 352,244
17 196,378 146,195 146,195 395,799 102,254 102,254 352,246
18 206,197 150,803 150,803 400,406 101,796 101,796 351,825
19 216,507 155,406 155,406 405,009 100,832 100,832 350,904
20 227,332 159,981 159,981 409,586 99,284 99,284 349,406
25 290,140 181,433 181,433 431,089 80,071 80,071 330,541
30 370,300 196,724 196,724 446,526 30,810 30,810 281,938
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------------- -------------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ------------- ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,727 13,727 263,631 12,343 12,343 262,336
2 30,355 28,781 28,781 278,570 25,879 25,879 275,768
3 46,680 45,294 45,294 294,955 40,726 40,726 290,500
4 63,821 63,448 63,448 312,966 57,015 57,015 306,664
5 81,819 83,426 83,426 332,786 74,884 74,884 324,395
6 100,717 105,576 105,576 354,746 94,490 94,490 343,850
7 120,560 129,993 129,993 378,966 115,992 115,992 365,186
8 126,588 142,892 142,892 391,762 125,899 125,899 375,025
9 132,917 157,076 157,076 405,834 136,645 136,645 385,698
10 139,563 172,663 172,663 421,299 148,289 148,289 397,264
11 146,541 190,058 190,058 438,536 160,911 160,911 409,801
12 153,868 209,173 209,173 457,501 174,591 174,591 423,388
13 161,561 230,160 230,160 478,324 189,429 189,429 438,126
14 169,639 253,211 253,211 501,195 205,528 205,528 454,115
15 178,121 278,537 278,537 526,323 222,998 222,998 471,465
16 187,027 306,273 306,273 557,039 241,948 241,948 490,285
17 196,378 336,701 336,701 597,255 262,491 262,491 510,690
18 206,197 370,055 370,055 640,521 284,746 284,746 532,795
19 216,507 406,610 406,610 687,125 308,830 308,830 556,720
20 227,332 446,662 446,662 737,361 334,878 334,878 582,597
25 290,140 711,598 711,598 1,053,863 500,718 500,718 747,343
30 370,300 1,126,078 1,126,078 1,517,740 743,048 743,048 1,002,599
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
38 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.82% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ --------- -------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,050 5,050 250,000 3,962 3,962 250,000
2 12,915 9,934 9,934 250,000 7,796 7,796 250,000
3 19,861 14,649 14,649 250,000 11,497 11,497 250,000
4 27,154 19,229 19,229 250,000 15,066 15,066 250,000
5 34,812 23,687 23,687 250,000 18,494 18,494 250,000
6 42,853 28,159 28,159 250,000 21,781 21,781 250,000
7 51,296 32,534 32,534 250,000 24,909 24,909 250,000
8 60,161 36,930 36,930 250,000 27,987 27,987 250,000
9 69,469 41,222 41,222 250,000 30,881 30,881 250,000
10 79,242 45,400 45,400 250,000 33,575 33,575 250,000
11 89,504 49,524 49,524 250,000 36,061 36,061 250,000
12 100,279 53,511 53,511 250,000 38,328 38,328 250,000
13 111,593 57,347 57,347 250,000 40,372 40,372 250,000
14 123,473 61,030 61,030 250,000 42,183 42,183 250,000
15 135,947 64,562 64,562 250,000 43,749 43,749 250,000
16 149,044 67,879 67,879 250,000 45,047 45,047 250,000
17 162,796 71,044 71,044 250,000 46,048 46,048 250,000
18 177,236 74,051 74,051 250,000 46,715 46,715 250,000
19 192,398 76,895 76,895 250,000 47,004 47,004 250,000
20 208,318 79,570 79,570 250,000 46,869 46,869 250,000
25 300,684 89,984 89,984 250,000 38,221 38,221 250,000
30 418,569 93,946 93,946 250,000 7,529 7,529 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- ---------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- ---------- --------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,364 5,364 250,000 4,237 4,237 250,000
2 12,915 10,873 10,873 250,000 8,594 8,594 250,000
3 19,861 16,532 16,532 250,000 13,071 13,071 250,000
4 27,154 22,380 22,380 250,000 17,675 17,675 250,000
5 34,812 28,439 28,439 250,000 22,404 22,404 250,000
6 42,853 34,854 34,854 250,000 27,261 27,261 250,000
7 51,296 41,530 41,530 250,000 32,239 32,239 250,000
8 60,161 48,607 48,607 250,000 37,461 37,461 250,000
9 69,469 55,970 55,970 250,000 42,801 42,801 250,000
10 79,242 63,627 63,627 250,000 48,252 48,252 250,000
11 89,504 71,685 71,685 250,000 53,819 53,819 250,000
12 100,279 80,060 80,060 250,000 59,503 59,503 250,000
13 111,593 88,758 88,758 250,000 65,312 65,312 250,000
14 123,473 97,802 97,802 250,000 71,255 71,255 250,000
15 135,947 107,217 107,217 250,000 77,339 77,339 250,000
16 149,044 116,981 116,981 250,000 83,563 83,563 250,000
17 162,796 127,175 127,175 250,000 89,928 89,928 250,000
18 177,236 137,829 137,829 250,000 96,431 96,431 250,000
19 192,398 148,970 148,970 252,910 103,070 103,070 250,000
20 208,318 160,511 160,511 266,204 109,848 109,848 250,000
25 300,684 224,484 224,484 333,997 146,534 146,534 250,000
30 418,569 299,755 299,755 405,886 190,827 190,827 258,677
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
40 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------- ---------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- --------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,677 5,677 250,000 4,513 4,513 250,000
2 12,915 11,850 11,850 250,000 9,426 9,426 250,000
3 19,861 18,570 18,570 250,000 14,780 14,780 250,000
4 27,154 25,927 25,927 250,000 20,624 20,624 250,000
5 34,812 34,006 34,006 250,000 27,004 27,004 250,000
6 42,853 43,019 43,019 250,000 33,981 33,981 250,000
7 51,296 52,955 52,955 250,000 41,608 41,608 250,000
8 60,161 64,048 64,048 250,000 50,086 50,086 250,000
9 69,469 76,284 76,284 250,000 59,373 59,373 250,000
10 79,242 89,784 89,784 250,000 69,555 69,555 250,000
11 89,504 104,832 104,832 250,000 80,743 80,743 250,000
12 100,279 121,467 121,467 250,000 93,062 93,062 250,000
13 111,593 139,789 139,789 274,743 106,664 106,664 250,000
14 123,473 159,910 159,910 306,145 121,722 121,722 250,000
15 135,947 182,000 182,000 339,539 138,396 138,396 258,396
16 149,044 206,182 206,182 374,996 156,527 156,527 284,905
17 162,796 232,715 232,715 412,799 176,203 176,203 312,801
18 177,236 261,816 261,816 453,172 197,533 197,533 342,180
19 192,398 293,726 293,726 496,364 220,630 220,630 373,147
20 208,318 328,706 328,706 542,637 245,614 245,614 405,811
25 300,684 560,383 560,383 829,916 404,038 404,038 598,938
30 418,569 923,352 923,352 1,244,505 633,898 633,898 855,322
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.82% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,046 5,046 255,070 3,942 3,942 254,041
2 12,915 9,916 9,916 259,955 7,734 7,734 257,846
3 19,861 14,606 14,606 264,660 11,372 11,372 261,497
4 27,154 19,147 19,147 269,213 14,852 14,852 264,990
5 34,812 23,551 23,551 273,628 18,165 18,165 268,316
6 42,853 27,967 27,967 278,044 21,305 21,305 271,471
7 51,296 32,273 32,273 282,358 24,252 24,252 274,434
8 60,161 36,583 36,583 286,678 27,110 27,110 277,309
9 69,469 40,769 40,769 290,875 29,740 29,740 279,958
10 79,242 44,819 44,819 294,936 32,120 32,120 282,358
11 89,504 48,783 48,783 298,907 34,237 34,237 284,498
12 100,279 52,572 52,572 302,711 36,077 36,077 286,361
13 111,593 56,162 56,162 306,317 37,633 37,633 287,940
14 123,473 59,547 59,547 309,719 38,891 38,891 289,223
15 135,947 62,725 62,725 312,914 39,835 39,835 290,193
16 149,044 65,599 65,599 315,813 40,437 40,437 290,823
17 162,796 68,253 68,253 318,485 40,664 40,664 291,081
18 177,236 70,672 70,672 320,924 40,473 40,473 290,925
19 192,398 72,845 72,845 323,118 39,814 39,814 290,305
20 208,318 74,756 74,756 325,050 38,640 38,640 289,173
25 300,684 79,599 79,599 330,030 23,720 23,720 274,513
30 418,569 74,006 74,006 324,636 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
42 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,359 5,359 255,357 4,215 4,215 254,295
2 12,915 10,854 10,854 260,841 8,526 8,526 258,597
3 19,861 16,484 16,484 266,459 12,927 12,927 262,991
4 27,154 22,283 22,283 272,244 17,419 17,419 267,475
5 34,812 28,271 28,271 278,216 21,993 21,993 272,042
6 42,853 34,607 34,607 284,522 26,644 26,644 276,686
7 51,296 41,180 41,180 291,076 31,353 31,353 281,391
8 60,161 48,123 48,123 297,997 36,230 36,230 286,263
9 69,469 55,315 55,315 305,168 41,134 41,134 291,165
10 79,242 62,754 62,754 312,585 46,039 46,039 296,070
11 89,504 70,528 70,528 320,331 50,932 50,932 300,963
12 100,279 78,540 78,540 328,323 55,789 55,789 305,824
13 111,593 86,769 86,769 336,533 60,600 60,600 310,638
14 123,473 95,219 95,219 344,965 65,343 65,343 315,388
15 135,947 103,895 103,895 353,621 69,995 69,995 320,047
16 149,044 112,704 112,704 362,419 74,518 74,518 324,581
17 162,796 121,735 121,735 371,432 78,866 78,866 328,944
18 177,236 130,981 130,981 380,659 82,983 82,983 333,081
19 192,398 140,437 140,437 390,097 86,799 86,799 336,922
20 208,318 150,092 150,092 399,735 90,246 90,246 340,401
25 300,684 200,723 200,723 450,306 99,598 99,598 349,996
30 418,569 252,661 252,661 502,251 85,961 85,961 336,887
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.18% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ---------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- ---------- --------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,672 5,672 255,643 4,490 4,490 254,547
2 12,915 11,829 11,829 261,758 9,351 9,351 259,376
3 19,861 18,514 18,514 268,397 14,616 14,616 264,606
4 27,154 25,812 25,812 275,642 20,320 20,320 270,271
5 34,812 33,799 33,799 283,569 26,496 26,496 276,407
6 42,853 42,703 42,703 292,393 33,186 33,186 283,052
7 51,296 52,489 52,489 302,102 40,421 40,421 290,239
8 60,161 63,378 63,378 312,905 48,370 48,370 298,136
9 69,469 75,341 75,341 324,774 56,952 56,952 306,663
10 79,242 88,476 88,476 337,807 66,206 66,206 315,859
11 89,504 103,031 103,031 352,238 76,188 76,188 325,777
12 100,279 119,005 119,005 368,088 86,951 86,951 336,472
13 111,593 136,516 136,516 385,464 98,566 98,566 348,013
14 123,473 155,721 155,721 404,522 111,105 111,105 360,471
15 135,947 176,793 176,793 425,431 124,642 124,642 373,921
16 149,044 199,827 199,827 448,294 139,246 139,246 388,432
17 162,796 225,114 225,114 473,385 154,990 154,990 404,077
18 177,236 252,878 252,878 500,932 171,940 171,940 420,922
19 192,398 283,365 283,365 531,182 190,165 190,165 439,036
20 208,318 316,844 316,844 564,400 209,741 209,741 458,494
25 300,684 540,277 540,277 800,140 331,491 331,491 579,515
30 418,569 891,524 891,524 1,201,606 502,933 502,933 750,014
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ITT Hartford Life and Annuity Insurance Company
ICMG Registered Variable Life Separate Account One
and to the Owners of Units of Interest Therein:
We have audited the accompanying statements of assets and liabilities of ITT
Hartford Life and Annuity Insurance Company ICMG Registered Variable Life
Separate Account One (the Account) as of December 31, 1997, the related
statement of operations for the year then ended and the statements of changes in
net assets for the year ended December 31, 1997 and the period from inception,
November 14, 1996, to December 31, 1996. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ITT Hartford Life and Annuity
Insurance Company ICMG Registered Variable Life Separate Account One as of
December 31, 1997, the results of operations for the year then ended and the
changes in its net assets for the year then ended and the period from inception,
November 14, 1996, to December 31, 1996 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1998
<PAGE>
This page intentionally left blank.
<PAGE>
- --------------------------------------------------------------------------------
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
HARTFORD NEUBERGER&BERMAN
CAPITAL HVA MONEY ADVISERS
HARTFORD BOND APPRECIATION MARKET FUND, MANAGEMENT TRUST
FUND, INC. FUND, INC. INC. PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 248,953
Cost $ 259,807
Market Value............................. $ 261,339 -- -- --
Hartford Capital Appreciation Fund, Inc.
Shares 32,526
Cost $ 132,939
Market Value............................. -- $ 143,432 -- --
HVA Money Market Fund, Inc. Portfolio
Shares 1,190,652
Cost $1,190,652
Market Value............................. -- -- $1,190,652 --
Neuberger & Berman Advisers Management
Trust Partners Portfolio
Shares 11,492
Cost $ 226,493
Market Value............................. -- -- -- $ 236,745
Neuberger & Berman Advisers Management
Trust Balanced Portfolio
Shares 1,792
Cost $ 30,252
Market Value............................. -- -- -- --
Neuberger & Berman Advisers Management
Trust Limited Maturity Bond Portfolio
Shares 17,242
Cost $ 241,506
Market Value............................. -- -- -- --
Fidelity VIPF Equity--Income Portfolio
Shares 20,059
Cost $ 454,342
Market Value............................. -- -- -- --
Fidelity VIPF High Income Portfolio
Shares 7,630
Cost $ 95,168
Market Value............................. -- -- -- --
Fidelity VIPF Overseas Portfolio
Shares 16,475
Cost $ 312,436
Market Value............................. -- -- -- --
Fidelity VIPF II Asset Manager Portfolio
Shares 5,092
Cost $ 84,566
Market Value............................. -- -- -- --
Alger American Small Capitalization
Portfolio
Shares 2,101
Cost $ 85,706
Market Value............................. -- -- -- --
Alger American Growth Portfolio
Shares 12,864
Cost $ 515,455
Market Value............................... -- -- -- --
Morgan Stanley Universal Funds, Inc. Fixed
Income Portfolio
Shares 1,459
Cost $ 15,847
Market Value............................. -- -- -- --
Receivable From ITT Hartford Life And
Annuity Insurance Company................. -- -- 28 2,551
--------------- ------------- ------------ --------
Total Assets............................... 261,339 143,432 1,190,680 239,296
--------------- ------------- ------------ --------
LIABILITIES:
Payable to ITT Hartford Life and Annuity
Insurance Company......................... 21 3 -- --
--------------- ------------- ------------ --------
Total Liabilities........................ 21 3 -- --
--------------- ------------- ------------ --------
Net Assets............................... $ 261,318 $ 143,429 $1,190,680 $ 239,296
--------------- ------------- ------------ --------
--------------- ------------- ------------ --------
VARIABLE LIFE INSURANCE POLICIES:
Units Owned by Participants................ 22,649 10,684 112,109 16,776
Unit Price................................. $ 11.0499 $ 12.2754 $ 10.5268 $ 13.4621
Units Owned by ITT Hartford Life and
Annuity Insurance Company................. 1,000 1,000 1,000 1,000
Unit Price $ 11.0499 $ 12.2754 $ 10.5268 $ 13.4621
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEUBERGER&BERMAN NEUBERGER&BERMAN
ADVISERS ADVISERS FIDELITY
MANAGEMENT TRUST MANAGEMENT TRUST FIDELITY VIPF VIPF HIGH FIDELITY VIPF
BALANCED LIMITED MATURITY EQUITY-INCOME INCOME OVERSEAS
PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 248,953
Cost $ 259,807
Market Value............................. -- -- -- -- --
Hartford Capital Appreciation Fund, Inc.
Shares 32,526
Cost $ 132,939
Market Value............................. -- -- -- -- --
HVA Money Market Fund, Inc. Portfolio
Shares 1,190,652
Cost $1,190,652
Market Value............................. -- -- -- -- --
Neuberger & Berman Advisers Management
Trust Partners Portfolio
Shares 11,492
Cost $ 226,493
Market Value............................. -- -- -- -- --
Neuberger & Berman Advisers Management
Trust Balanced Portfolio
Shares 1,792
Cost $ 30,252
Market Value............................. $ 31,867 -- -- -- --
Neuberger & Berman Advisers Management
Trust Limited Maturity Bond Portfolio
Shares 17,242
Cost $ 241,506
Market Value............................. -- $ 243,461 -- -- --
Fidelity VIPF Equity--Income Portfolio
Shares 20,059
Cost $ 454,342
Market Value............................. -- -- $ 487,025 -- --
Fidelity VIPF High Income Portfolio
Shares 7,630
Cost $ 95,168
Market Value............................. -- -- -- $ 103,614 --
Fidelity VIPF Overseas Portfolio
Shares 16,475
Cost $ 312,436
Market Value............................. -- -- -- -- $ 316,322
Fidelity VIPF II Asset Manager Portfolio
Shares 5,092
Cost $ 84,566
Market Value............................. -- -- -- -- --
Alger American Small Capitalization
Portfolio
Shares 2,101
Cost $ 85,706
Market Value............................. -- -- -- -- --
Alger American Growth Portfolio
Shares 12,864
Cost $ 515,455
Market Value............................... -- -- -- -- --
Morgan Stanley Universal Funds, Inc. Fixed
Income Portfolio
Shares 1,459
Cost $ 15,847
Market Value............................. -- -- -- -- --
Receivable From ITT Hartford Life And
Annuity Insurance Company................. 30 2,804 7,987 -- --
-------- -------- ------------- ----------- ---------------
Total Assets............................... 31,897 246,265 495,012 103,614 316,322
-------- -------- ------------- ----------- ---------------
LIABILITIES:
Payable to ITT Hartford Life and Annuity
Insurance Company......................... -- -- -- -- 112
-------- -------- ------------- ----------- ---------------
Total Liabilities........................ -- -- -- -- 112
-------- -------- ------------- ----------- ---------------
Net Assets............................... $ 31,897 $ 246,265 $ 495,012 $ 103,614 $ 316,210
-------- -------- ------------- ----------- ---------------
-------- -------- ------------- ----------- ---------------
VARIABLE LIFE INSURANCE POLICIES:
Units Owned by Participants................ 1,666 22,158 37,665 7,722 26,887
Unit Price................................. $ 11.9633 $ 10.6340 $ 12.8026 $ 11.8799 $ 11.3388
Units Owned by ITT Hartford Life and
Annuity Insurance Company................. 1,000 1,000 1,000 1,000 1,000
Unit Price $ 11.9633 $ 10.6340 $ 12.8026 $ 11.8799 $ 11.3388
<CAPTION>
MORGAN STANLEY
ALGER AMERICAN UNIVERSAL
FIDELITY VIPF II SMALL ALGER AMERICAN FUNDS, INC.
ASSET MANAGER CAPITALIZATION GROWTH FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 248,953
Cost $ 259,807
Market Value............................. -- -- -- --
Hartford Capital Appreciation Fund, Inc.
Shares 32,526
Cost $ 132,939
Market Value............................. -- -- -- --
HVA Money Market Fund, Inc. Portfolio
Shares 1,190,652
Cost $1,190,652
Market Value............................. -- -- -- --
Neuberger & Berman Advisers Management
Trust Partners Portfolio
Shares 11,492
Cost $ 226,493
Market Value............................. -- -- -- --
Neuberger & Berman Advisers Management
Trust Balanced Portfolio
Shares 1,792
Cost $ 30,252
Market Value............................. -- -- -- --
Neuberger & Berman Advisers Management
Trust Limited Maturity Bond Portfolio
Shares 17,242
Cost $ 241,506
Market Value............................. -- -- -- --
Fidelity VIPF Equity--Income Portfolio
Shares 20,059
Cost $ 454,342
Market Value............................. -- -- -- --
Fidelity VIPF High Income Portfolio
Shares 7,630
Cost $ 95,168
Market Value............................. -- -- -- --
Fidelity VIPF Overseas Portfolio
Shares 16,475
Cost $ 312,436
Market Value............................. -- -- -- --
Fidelity VIPF II Asset Manager Portfolio
Shares 5,092
Cost $ 84,566
Market Value............................. $ 91,698 -- -- --
Alger American Small Capitalization
Portfolio
Shares 2,101
Cost $ 85,706
Market Value............................. -- $ 91,928 -- --
Alger American Growth Portfolio
Shares 12,864
Cost $ 515,455
Market Value............................... -- -- $ 550,074 --
Morgan Stanley Universal Funds, Inc. Fixed
Income Portfolio
Shares 1,459
Cost $ 15,847
Market Value............................. -- -- -- $ 15,184
Receivable From ITT Hartford Life And
Annuity Insurance Company................. 1,797 -- -- --
-------- -------------- -------------- --------------
Total Assets............................... 93,495 91,928 550,074 15,184
-------- -------------- -------------- --------------
LIABILITIES:
Payable to ITT Hartford Life and Annuity
Insurance Company......................... -- 1 -- 8
-------- -------------- -------------- --------------
Total Liabilities........................ -- 1 -- 8
-------- -------------- -------------- --------------
Net Assets............................... $ 93,495 $ 91,927 $ 550,074 $ 15,176
-------- -------------- -------------- --------------
-------- -------------- -------------- --------------
VARIABLE LIFE INSURANCE POLICIES:
Units Owned by Participants................ 6,742 7,397 43,772 1,504
Unit Price................................. $ 12.0768 $ 10.9480 $ 12.2861 $ 10.0892
Units Owned by ITT Hartford Life and
Annuity Insurance Company................. 1,000 1,000 1,000 --
Unit Price $ 12.0768 $ 10.9480 $ 12.2861 $ --
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HARTFORD NEUBERGER&BERMAN
CAPITAL HVA MONEY ADVISERS
HARTFORD BOND APPRECIATION MARKET MANAGEMENT TRUST
FUND, INC. FUND, INC. FUND, INC. PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ----------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 8,554 $ 1,297 $ 24,081 $ 514
EXPENSES:
Mortality and expense risk undertakings.... (688) (513) (2,976) (715)
------------- ------------- ----------- -------
Net investment income (loss)............. 7,866 784 21,105 (201)
------------- ------------- ----------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investment
transactions.............................. 1,895 (485) -- 8,982
Net unrealized appreciation (depreciation)
of investments during the year............ 2,399 10,394 -- 9,920
------------- ------------- ----------- -------
Net realized and unrealized gain (loss)
on investments.......................... 4,294 9,909 -- 18,902
------------- ------------- ----------- -------
Net increase in net assets resulting from
operations.............................. $ 12,160 $ 10,693 $ 21,105 $ 18,701
------------- ------------- ----------- -------
------------- ------------- ----------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEUBERGER&BERMAN NEUBERGER&BERMAN
ADVISERS ADVISERS FIDELITY
MANAGEMENT TRUST MANAGEMENT TRUST FIDELITY VIPF VIPF HIGH
BALANCED LIMITED MATURITY EQUITY-INCOME INCOME
PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 678 $ 4,823 $ 13,355 $ 812
EXPENSES:
Mortality and expense risk undertakings.... (137) (627) (1,289) (361)
------ ------ ------- -----------
Net investment income (loss)............. 541 4,196 12,066 451
------ ------ ------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investment
transactions.............................. 2,408 (178) 4,147 186
Net unrealized appreciation (depreciation)
of investments during the year............ 1,526 1,691 32,216 8,275
------ ------ ------- -----------
Net realized and unrealized gain (loss)
on investments.......................... 3,934 1,513 36,363 8,461
------ ------ ------- -----------
Net increase in net assets resulting from
operations.............................. $ 4,475 $ 5,709 $ 48,429 $ 8,912
------ ------ ------- -----------
------ ------ ------- -----------
<CAPTION>
ALGER AMERICAN
FIDELITY VIPF FIDELITY VIPF II SMALL ALGER AMERICAN
OVERSEAS ASSET MANAGER CAPITALIZATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------------- -------------- --------------
<S> <C>
INVESTMENT INCOME:
Dividends.................................. $ 7,213 $ 1,233 $ 1,930 $ 1,798
EXPENSES:
Mortality and expense risk undertakings.... (866) (330) (331) (1,439)
------- ------ ------ -------
Net investment income (loss)............. 6,347 903 1,599 359
------- ------ ------ -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investment
transactions.............................. 4,892 951 1,078 5,144
Net unrealized appreciation (depreciation)
of investments during the year............ 2,400 7,049 6,321 36,145
------- ------ ------ -------
Net realized and unrealized gain (loss)
on investments.......................... 7,292 8,000 7,399 41,289
------- ------ ------ -------
Net increase in net assets resulting from
operations.............................. $ 13,639 $ 8,903 $ 8,998 $ 41,648
------- ------ ------ -------
------- ------ ------ -------
<CAPTION>
MORGAN STANLEY
UNIVERSAL
FUNDS, INC.
FIXED INCOME
PORTFOLIO
--------------
INVESTMENT INCOME:
Dividends.................................. $ 802
EXPENSES:
Mortality and expense risk undertakings.... (8)
------
Net investment income (loss)............. 794
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investment
transactions.............................. --
Net unrealized appreciation (depreciation)
of investments during the year............ (663)
------
Net realized and unrealized gain (loss)
on investments.......................... (663)
------
Net increase in net assets resulting from
operations.............................. $ 131
------
------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HARTFORD NEUBERGER&BERMAN
CAPITAL HVA MONEY ADVISERS
HARTFORD BOND APPRECIATION MARKET MANAGEMENT
FUND, INC. FUND, INC. FUND, INC. TRUST PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss)............... $ 7,866 $ 784 $ 21,105 $ (201)
Net realized gain (loss) on investment
transactions.............................. 1,895 (485) -- 8,982
Net unrealized appreciation (depreciation)
of investments during the year............ 2,399 10,394 -- 9,920
------------- ------------- ----------- --------------
Net increase in net assets resulting from
operations................................ 12,160 10,693 21,105 18,701
------------- ------------- ----------- --------------
UNIT TRANSACTIONS:
Premiums................................... 170,405 128,021 1,163,820 213,551
Administrative fees........................ (123) (306) (244) (443)
Cost of insurance.......................... (2,754) (4,661) (3,726) (6,743)
Other activity............................. 605 (417) (334) 3,907
------------- ------------- ----------- --------------
Net increase in net assets resulting from
unit transactions......................... 168,133 122,637 1,159,516 210,272
------------- ------------- ----------- --------------
Total increase in net assets............... 180,293 133,330 1,180,621 228,973
NET ASSETS:
Beginning of year.......................... 81,025 10,099 10,059 10,323
------------- ------------- ----------- --------------
End of year................................ $ 261,318 $ 143,429 $1,190,680 $ 239,296
------------- ------------- ----------- --------------
------------- ------------- ----------- --------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, NOVEMBER 14, 1996, TO DECEMBER 31, 1996
HARTFORD NEUBERGER&BERMAN
CAPITAL HVA MONEY ADVISERS
HARTFORD BOND APPRECIATION MARKET MANAGEMENT
FUND, INC. FUND, INC. FUND, INC. TRUST PARTNERS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ----------- --------------
OPERATIONS:
Net investment income (Loss)............... $ 793 $ -- $ 59 $ (9)
Net unrealized appreciation (depreciation)
of investments during the period.......... (867) 99 -- 332
------------- ------------- ----------- --------------
Net (decrease) increase in net assets
resulting from operations................. (74) 99 59 323
------------- ------------- ----------- --------------
UNIT TRANSACTIONS:
Premiums................................... 81,371 10,000 10,000 10,000
Administrative fee......................... (9) -- -- --
Cost of insurance.......................... (263) -- -- --
------------- ------------- ----------- --------------
Net increase in net assets resulting from
unit transactions......................... 81,099 10,000 10,000 10,000
------------- ------------- ----------- --------------
Total increase in net assets............... 81,025 10,099 10,059 10,323
NET ASSETS:
Beginning of period........................ -- -- -- --
------------- ------------- ----------- --------------
End of period.............................. $ 81,025 $ 10,099 $ 10,059 $ 10,323
------------- ------------- ----------- --------------
------------- ------------- ----------- --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEUBERGER&BERMAN NEUBERGER&BERMAN
ADVISERS ADVISERS FIDELITY
MANAGEMENT TRUST MANAGEMENT TRUST FIDELITY VIPF VIPF HIGH
BALANCED LIMITED MATURITY EQUITY-INCOME INCOME
PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss)............... $ 541 $ 4,196 $ 12,066 $ 451
Net realized gain (loss) on investment
transactions.............................. 2,408 (178) 4,147 186
Net unrealized appreciation (depreciation)
of investments during the year............ 1,526 1,691 32,216 8,275
------- -------- --------------- -----------
Net increase in net assets resulting from
operations................................ 4,475 5,709 48,429 8,912
------- -------- --------------- -----------
UNIT TRANSACTIONS:
Premiums................................... 19,605 161,723 324,563 88,260
Administrative fees........................ (46) (99) (309) (206)
Cost of insurance.......................... (690) (2,386) (6,332) (3,147)
Other activity............................. (1,528) 17 (207) (368)
------- -------- --------------- -----------
Net increase in net assets resulting from
unit transactions......................... 17,341 159,255 317,715 84,539
------- -------- --------------- -----------
Total increase in net assets............... 21,816 164,964 366,144 93,451
NET ASSETS:
Beginning of year.......................... 10,081 81,301 128,868 10,163
------- -------- --------------- -----------
End of year................................ $ 31,897 $ 246,265 $ 495,012 $ 103,614
------- -------- --------------- -----------
------- -------- --------------- -----------
NEUBERGER&BERMAN NEUBERGER&BERMAN
ADVISERS ADVISERS FIDELITY
MANAGEMENT TRUST MANAGEMENT TRUST FIDELITY VIPF VIPF HIGH
BALANCED LIMITED MATURITY EQUITY-INCOME INCOME
PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ----------------- --------------- -----------
OPERATIONS:
Net investment income (Loss)............... $ (8) $ (62) $ (98) $ (8)
Net unrealized appreciation (depreciation)
of investments during the period.......... 89 264 467 171
------- -------- --------------- -----------
Net (decrease) increase in net assets
resulting from operations................. 81 202 369 163
------- -------- --------------- -----------
UNIT TRANSACTIONS:
Premiums................................... 10,000 81,372 128,952 10,000
Administrative fee......................... -- (9) (15) --
Cost of insurance.......................... -- (264) (438) --
------- -------- --------------- -----------
Net increase in net assets resulting from
unit transactions......................... 10,000 81,099 128,499 10,000
------- -------- --------------- -----------
Total increase in net assets............... 10,081 81,301 128,868 10,163
NET ASSETS:
Beginning of period........................ -- -- -- --
------- -------- --------------- -----------
End of period.............................. $ 10,081 $ 81,301 $ 128,868 $ 10,163
------- -------- --------------- -----------
------- -------- --------------- -----------
<CAPTION>
ALGER AMERICAN
FIDELITY VIPF FIDELITY VIPF II SMALL ALGER AMERICAN
OVERSEAS ASSET MANAGER CAPITALIZATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- -------------- --------------
<S> <C>
OPERATIONS:
Net Investment Income (Loss)............... $ 6,347 $ 903 $ 1,599 $ 359
Net realized gain (loss) on investment
transactions.............................. 4,892 951 1,078 5,144
Net unrealized appreciation (depreciation)
of investments during the year............ 2,400 7,049 6,321 36,145
-------- ------- ------- --------------
Net increase in net assets resulting from
operations................................ 13,639 8,903 8,998 41,648
-------- ------- ------- --------------
UNIT TRANSACTIONS:
Premiums................................... 227,707 78,301 78,303 362,066
Administrative fees........................ (239) (182) (186) (307)
Cost of insurance.......................... (4,596) (2,780) (2,835) (6,634)
Other activity............................. (2,819) (822) (2,246) 2,735
-------- ------- ------- --------------
Net increase in net assets resulting from
unit transactions......................... 220,053 74,517 73,036 357,860
-------- ------- ------- --------------
Total increase in net assets............... 233,692 83,420 82,034 399,508
NET ASSETS:
Beginning of year.......................... 82,518 10,075 9,893 150,566
-------- ------- ------- --------------
End of year................................ $ 316,210 $ 93,495 $ 91,927 $ 550,074
-------- ------- ------- --------------
-------- ------- ------- --------------
ALGER AMERICAN
FIDELITY VIPF FIDELITY VIPF II SMALL ALGER AMERICAN
OVERSEAS ASSET MANAGER CAPITALIZATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- -------------- --------------
OPERATIONS:
Net investment income (Loss)............... $ (62) $ (8) $ (8) $ (116)
Net unrealized appreciation (depreciation)
of investments during the period.......... 1,486 83 (99) (1,526)
-------- ------- ------- --------------
Net (decrease) increase in net assets
resulting from operations................. 1,424 75 (107) (1,642)
-------- ------- ------- --------------
UNIT TRANSACTIONS:
Premiums................................... 81,366 10,000 10,000 152,752
Administrative fee......................... (9) -- -- (18)
Cost of insurance.......................... (263) -- -- (526)
-------- ------- ------- --------------
Net increase in net assets resulting from
unit transactions......................... 81,094 10,000 10,000 152,208
-------- ------- ------- --------------
Total increase in net assets............... 82,518 10,075 9,893 150,566
NET ASSETS:
Beginning of period........................ -- -- -- --
-------- ------- ------- --------------
End of period.............................. $ 82,518 $ 10,075 $ 9,893 $ 150,566
-------- ------- ------- --------------
-------- ------- ------- --------------
<CAPTION>
MORGAN STANLEY
UNIVERSAL
FUNDS, INC.
FIXED INCOME
PORTFOLIO
--------------
OPERATIONS:
Net Investment Income (Loss)............... $ 794
Net realized gain (loss) on investment
transactions.............................. --
Net unrealized appreciation (depreciation)
of investments during the year............ (663)
-------
Net increase in net assets resulting from
operations................................ 131
-------
UNIT TRANSACTIONS:
Premiums................................... 15,042
Administrative fees........................ --
Cost of insurance.......................... --
Other activity............................. 3
-------
Net increase in net assets resulting from
unit transactions......................... 15,045
-------
Total increase in net assets............... 15,176
NET ASSETS:
Beginning of year.......................... --
-------
End of year................................ $ 15,176
-------
-------
OPERATIONS:
Net investment income (Loss)...............
Net unrealized appreciation (depreciation)
of investments during the period..........
Net (decrease) increase in net assets
resulting from operations.................
UNIT TRANSACTIONS:
Premiums...................................
Administrative fee.........................
Cost of insurance..........................
Net increase in net assets resulting from
unit transactions.........................
Total increase in net assets...............
NET ASSETS:
Beginning of period........................
End of period..............................
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION:
ICMG Registered Variable Life Separate Account One (the Account) is a separate
investment account with ITT Hartford Life and Annuity Insurance Company (the
Company) and is registered with the Securities and Exchange Commission (SEC) as
a unit investment trust under the Investment Company Act of 1940, as amended.
The Account consists of thirteen portfolios. Both the Company and the Account
are subject to supervision and regulation by the Department of Insurance of the
State of Connecticut and the SEC. The Account invests deposits by variable life
contractholders of the Company in various mutual funds (the Funds) as directed
by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Investment gains and losses
are determined on the basis of identified cost. Dividend income is accrued as of
the ex-dividend date.
b) SECURITY VALUATION -- The investment in shares of the funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1997.
c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
d) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable
life insurance contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives an annual fee of 0.65% of the Account's
average daily net assets.
b) DEDUCTION OF OTHER FEES -- In accordance with the terms of the contracts,
the Company makes deductions for the cost of insurance, administrative fees,
state premium taxes and other insurance charges. These charges are deducted
through termination of units of interest from applicable contractholders'
accounts.
The accompanying notes are an integral part of these financial statements.
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford Life
and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory financial statements referred to above do not
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)
<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. 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 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. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
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, for universal life policies and
investment products, generally, 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 recorded upon adoption of the applicable standard;
<PAGE>
- --------------------------------------------------------------------------------
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, 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 bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) 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, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY 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 6%. 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 Statements of
Income.
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 fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.
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 increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
- --------------------------------------------------------------------------------
("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1997 and 1996.
(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.
<PAGE>
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 58,761 $ 6 $ (195) $ 58,572
Guaranteed and sponsored -- asset-backed... 78,237 1,477 (609) 79,105
States, municipalities and political
subdivisions................................ 25,958 163 (2) 26,119
International governments.................... 7,447 205 0 7,652
Public utilities............................. 70,116 396 (424) 70,088
All other corporate.......................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed.......... 485,953 2,654 (1,081) 487,526
Short-term investments....................... 148,094 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated................... 35,379 0 (4,160) 31,219
----------- ---------- ---------- -----------
Total common stocks.......................... $ 48,443 $ 713 $(4,160) $ 44,996
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, 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>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>
The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts 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. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
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 HLI, 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 (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</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 1997 or
1996. 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
<PAGE>
- --------------------------------------------------------------------------------
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
$265, $358, and $1,034 in 1997, 1996 and 1995, 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 1997, 1996 and 1995.
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 8.5% for 1997, 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
1997, 1996 and 1995.
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 1997, 1996 and 1995.
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>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>
The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, 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 $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1997 and 1996, 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 $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
<PAGE>
PEGASUS PROVIDER
GROUP FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999
[LOGO] TELEPHONE (800) 861-1408
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus describes a group flexible premium variable life insurance
policy (the "Group Policies," and each individually a "Group Policy") and
certificates of insurance (the "Certificates," and each individually a
"Certificate") offered by 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 the Death Benefit, together with an
opportunity to participate in the investment experience of ICMG Registered
Variable Life Separate Account One. For a given amount of Death Benefit chosen,
the Owner has considerable flexibility in selecting the timing and amount of
premium payments. In addition to the Initial Premium payment, additional premium
payments are also allowed.
Group Policies may be issued to a Participating Employer or to a trust that is
adopted by a Participating Employer. Eligible employees of Participating
Employers may own Certificates issued under their respective Participating
Employer's Group Policy. 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.
Sales agents can provide prospective purchasers with individualized sales
illustrations which reflect all the fees and charges associated with the
Certificate options selected.
The Certificates provide for a Death Benefit, pursuant to which Death Proceeds
are payable at the Insured's death. You may select one of two Death Benefit
options. Death Benefit Option A is an amount equal to the larger of (1) the Face
Amount and (2) the Variable Insurance Amount. Death Benefit Option B is an
amount equal to the larger of (1) the Face Amount plus the Cash Value and (2)
the Variable Insurance Amount. The Death Proceeds payable to the Beneficiary
equal the Death Benefit less any Debt outstanding under the Certificate plus any
rider benefits payable.
The Investment Value of a Certificate will also vary up or down to reflect the
investment experience of the Investment Divisions to which Net Premiums have
been allocated. The Owner bears the investment risk for all amounts so
allocated.
The Portfolios underlying the Investment Divisions presently are: the VIP High
Income Portfolio, the VIP Equity-Income Portfolio, and the VIP Money Market
Portfolio of Variable Insurance Products Fund; the VIP II Asset Manager
Portfolio of Variable Insurance Products Fund II; the VIP III Growth
Opportunities Portfolio of Variable Insurance Products Fund III; the Pegasus
Bond Fund, the Pegasus Growth and Value Fund, the Pegasus Mid-Cap Opportunity
Fund, the Pegasus Growth Fund, and the Pegasus Intrinsic Value Fund of Pegasus
Variable Funds; and the Putnam VT International Growth Fund, the Putnam VT Vista
Fund, and the Putnam VT Voyager Fund of Putnam Variable Trust.
- --------------------------------------------------------------------------------
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
AS A REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY.
- --------------------------------------------------------------------------------
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
AVAILABLE UNDERLYING FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED
OR GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C>
SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 6
HARTFORD.............................................................. 8
THE SEPARATE ACCOUNT.................................................. 9
THE FUNDS............................................................. 9
General............................................................. 9
Variable Insurance Products Fund, Variable Insurance Products Fund
II, and
Variable Insurance Products Fund III............................. 9
Pegasus Variable Funds............................................ 10
Putnam Variable Trust............................................. 10
The Portfolios...................................................... 10
DETAILED DESCRIPTION OF CERTIFICATE BENEFITS AND PROVISIONS........... 11
General............................................................. 11
Issuance of a Certificate........................................... 11
Premiums............................................................ 12
Premium Payment Flexibility....................................... 12
Allocation of Premium Payments.................................... 12
Accumulation Units................................................ 12
Accumulation Unit Values.......................................... 12
Premium Limitation................................................ 13
Values Under the Certificate........................................ 13
Surrender of the Certificate........................................ 13
Partial Withdrawals............................................... 13
Transfers Among Investment Divisions................................ 14
Amount and Frequency of Transfers................................. 14
Transfers To or from Investment Divisions......................... 14
Asset Rebalancing................................................. 14
Procedures for Telephone Transfers................................ 14
Valuation of Payments and Transfers................................. 14
Processing of Transactions........................................ 15
Loans............................................................... 15
Loan Interest..................................................... 15
Credited Interest................................................. 15
Loan Repayments................................................... 15
Termination Due to Excessive Debt................................. 15
Effect of Loans on Investment Value............................... 15
Death Benefit....................................................... 15
Minimum Death Benefit Testing Procedures.......................... 15
Death Benefit Options............................................. 16
Option Change..................................................... 16
Payment Options................................................... 16
Legal Developments Regarding Income Payments...................... 16
Beneficiary....................................................... 17
Increases and Decreases in Face Amount............................ 17
Benefits at Maturity................................................ 17
Termination of Participation in the Group Policy.................... 17
Lapse and Reinstatement While the Group Policy Is In Effect......... 17
Lapse and Grace Period............................................ 17
Reinstatement..................................................... 17
Enrollment for a Certificate........................................ 18
The Right to Examine the Certificate................................ 18
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Deductions from Premium............................................. 18
Front-End Sales Load.............................................. 18
Premium Related Tax Charge........................................ 18
DAC Tax Charge.................................................... 18
Deductions and Charges from Investment Value........................ 18
Monthly Deduction Amount.......................................... 18
Mortality and Expense Risk Charge................................... 19
Taxes............................................................... 20
OTHER MATTERS......................................................... 20
Additions, Deletions or Substitutions of Investments................ 20
Voting Rights....................................................... 20
Our Rights.......................................................... 20
Statements to Owners................................................ 21
Limit on Right to Contest........................................... 21
Misstatement as to Age or Sex....................................... 21
Assignment.......................................................... 21
Dividends........................................................... 21
Experience Credits.................................................. 21
SUPPLEMENTAL BENEFITS................................................. 21
Maturity Date Extension Rider....................................... 21
EXECUTIVE OFFICERS AND DIRECTORS...................................... 22
DISTRIBUTION OF THE GROUP POLICY...................................... 25
SAFEKEEPING OF THE SEPARATE ACCOUNT ASSETS............................ 25
FEDERAL TAX CONSIDERATIONS............................................ 26
General............................................................. 26
Taxation of Hartford and the Separate Account....................... 26
Income Taxation of Certificate Benefits............................. 26
Modified Endowment Contracts........................................ 26
Diversification Requirements........................................ 27
Federal Income Tax Withholding...................................... 27
Other Tax Considerations............................................ 27
LEGAL PROCEEDINGS..................................................... 27
EXPERTS............................................................... 27
REGISTRATION STATEMENT................................................ 28
APPENDIX A -- ILLUSTRATIONS OF DEATH BENEFIT, CASH VALUE AND CASH
SURRENDER VALUE..................................................... 29
FINANCIAL STATEMENTS..................................................
</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 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 later in this Prospectus.
ATTAINED AGE: The Issue Age plus the period since the Coverage Date.
BENEFICIARY: The person so designated by the Owner in the Certificate.
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 and from which Coverage Months and Coverage Years are determined.
COVERAGE MONTH(S): The 1-month period following the Coverage Date and each
anniversary thereof.
COVERAGE YEAR(S): The 12 month period following the Coverage Date and each
anniversary thereof.
CUSTOMER SERVICE CENTER: The service area of Hartford Life and Annuity Insurance
Company.
DEATH BENEFIT: The Death Benefit option in effect determines how the Death
Benefit is calculated. The two Death Benefit options are described under
"Detailed Description of Certificate Benefits and Provisions -- Death Benefit,"
page 15.
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.
ENROLLMENT FORM: The form required to be filled out prior to issuance of a
Certificate. The specific form used will depend on the underwriting
classification and plan design.
FACE AMOUNT: The minimum Death Benefit as long as the Certificate is in force.
It is specified at issue and may be changed after issue on request, or due to a
change in Death Benefit option or a partial withdrawal.
FUNDS: The registered open-end management investment companies in which assets
of the Investment Divisions of the Separate Account may be invested. Currently,
the Funds include: (i) Variable Insurance Products Fund ("VIP"), managed by
Fidelity Management & Research Company ("FMR"); (ii) Variable Insurance Products
Fund II ("VIP II"), managed by FMR; (iii) Variable Insurance Products Fund III
("VIP III"), managed by FMR; (iv) Pegasus Variable Funds, managed by First
Chicago NBD Investment Management Company ("FCNIMCO"); and (v) Putnam Variable
Trust, managed by Putnam Investment Management, Inc.("Putnam Management").
GENERAL ACCOUNT: The assets of Hartford other than those allocated to the
Separate Account.
GRACE PERIOD: The 61-day period, measured in calendar days, 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 group flexible premium variable life insurance policy issued
by Hartford and described in this Prospectus.
HARTFORD (ALSO REFERRED TO AS "WE," "US," "OUR"): Hartford Life and Annuity
Insurance Company.
IN WRITING: In a written form satisfactory to Us.
INITIAL PREMIUM: The amount of premium initially payable shown in Your
Certificate.
INSURED: The person on whose life the Certificate is issued. The Insured is
identified in the Certificate.
INVESTMENT DIVISION: A separate division of the Separate Account which invests
exclusively in the shares of a specified Portfolio of a Fund. The Separate
Account currently offers 13 Investment Divisions: (i) the Fidelity VIP High
Income Investment Division, (ii) the Fidelity VIP Equity-Income Investment
Division, (iii) the Fidelity VIP Money Market Investment Division, (iv) the
Fidelity VIP II Asset Manager Investment Division, (v) the Fidelity VIP III
Growth Opportunities Investment Division, (vi) the Pegasus Bond Investment
Division, (vii) the Pegasus Growth and Value Investment Division, (viii) the
Pegasus Mid-Cap Opportunity Investment Division, (ix) the Pegasus Growth
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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Investment Division, (x) the Pegasus Intrinsic Value Investment Division, (xi)
the Putnam VT International Growth Investment Division, (xii) the Putnam VT
Vista Investment Division, and (xiii) the Putnam VT Voyager Investment Division.
INVESTMENT VALUE: The sum of the values of assets in the Investment Divisions
under the Certificate.
ISSUE AGE: The Insured's age on the birthday nearest to the Coverage Date.
LOAN: Any amount borrowed against the Investment Value under a Certificate.
LOAN ACCOUNT: That portion of Hartford's General Account to which amounts are
transferred as a result of a Loan. The Loan Account is credited with interest
and does not participate in the investment experience of the Separate Account.
LOAN ACCOUNT VALUE: The amounts of the Investment Value transferred to (or from)
the General Account to secure Loans, plus interest accrued at the daily
equivalent of an annual rate equal to the Adjustable Loan Interest Rate actually
charged, reduced by not more than 1%.
MATURITY DATE: The date on which an Insured's coverage matures as shown in the
Certificate. 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 AMOUNT AT RISK: The Death Benefit less the Cash Value.
NET PREMIUM: The amount of premium actually credited to the Investment
Divisions.
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 Certificate.
PARTICIPATING EMPLOYER: A participating employer, or a trust sponsored by a
participating employer, to which Hartford issues the Group Policy described in
this Prospectus.
PORTFOLIO: A separate mutual fund, series or portfolio of the Funds. There are
currently 13 Portfolios available under the Policies: the VIP High Income
Portfolio, the VIP Equity-Income Portfolio, and the VIP Money Market Portfolio
of VIP Fund; the VIP II Asset Manager Portfolio of VIP Fund II; the VIP III
Growth Opportunities Portfolio of VIP Fund III; the Pegasus Bond Fund, the
Pegasus Growth and Value Fund, the Pegasus Mid-Cap Opportunity Fund, the Pegasus
Growth Fund, and the Pegasus Intrinsic Value Fund of Pegasus Variable Funds; and
the Putnam VT International Growth Fund, the Putnam VT Vista Fund, and the
Putnam VT Voyager Fund of Putnam Variable Trust.
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: U.S. 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 indicates otherwise. A
business day is any day the NYSE is open for trading or any day the SEC requires
mutual funds, unit investment trusts or other investment portfolios to be
valued. The value of the Separate Account is determined at the close of the NYSE
(generally 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.
VIP: Variable Insurance Products Fund.
VIP II: Variable Insurance Products Fund II.
VIP III: Variable Insurance Products Fund III.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SUMMARY
THE GROUP POLICY
The Group Policies, and the Certificates, offered by this Prospectus are
funded by 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 has 13 Investment Divisions dedicated to the Group Policies,
each of which invests solely in a corresponding Portfolio of the Funds.
Depending upon the state of issuance of Your Certificate and the applicable
provisions of Your Certificate, Your initial Net Premium will, when Your
Certificate is issued, either be (1) invested in the Fidelity VIP Money Market
Investment Division during the right to examine period or (2) invested
immediately in Your chosen Investment Divisions, upon Our receipt thereof. IF
YOUR INITIAL NET PREMIUM IS INVESTED IMMEDIATELY IN YOUR CHOSEN INVESTMENT
DIVISIONS, YOU WILL BEAR FULL INVESTMENT RISK FOR ANY AMOUNTS ALLOCATED TO THE
INVESTMENT DIVISIONS DURING THE RIGHT TO EXAMINE PERIOD. Please note that this
automatic immediate investment feature only applies if Your Certificate so
specifies. Please check with Your agent to determine the status of Your
Certificate. You must fill out and send Us the appropriate form In Writing or
comply with other designated Hartford procedures if You would like to change how
subsequent Net Premiums are allocated. See "Allocation of Premium Payments,"
page 12.
Pursuant to the Certificates, each selected Investment Division is credited
with Accumulation Units and each selected Investment Division's assets are
invested in the applicable underlying Portfolio. Subject to certain
restrictions, an Owner may transfer amounts among the available Investment
Divisions. See "Detailed Description of Certificate Benefits and Provisions --
Transfers Among Investment Divisions," page 14.
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 "flexible premium" because, once the
desired level and pattern of the Death Benefit 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 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 fail to
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. See "Detailed Description of Certificate Benefits and
Provisions -- Loans," page 15.
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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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The front-end sales load covers expenses relating to the sale and
distribution of the Certificates and may be reduced for certain sales of the
Certificates under circumstances which result in savings of such sales and
distribution expenses. For more information concerning the front-end sales load,
see "Detailed Description of Certificate Benefits and Provisions -- Deductions
from Premium," page 18.
LIMITS ON FRONT-END SALES LOAD
Certain insurance laws and regulations limit the front-end sales load which
can be assessed against the Certificates. The front-end sales load assessed in
the Certificates complies with these limitations.
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
Hartford deducts 1.25% of each premium to cover a federal premium tax
assessed against Hartford. This charge is reasonable in relation to Hartford's
federal income tax burden, under Code Section 848, resulting from the receipt of
premiums. We will adjust the charge based on changes in the applicable tax law.
DEDUCTIONS AND CHARGES
FROM INVESTMENT VALUE
As with many other types of insurance policies, each Certificate will have
an Investment Value. The Investment Value of the Certificate will increase or
decrease to reflect the investment experience of the chosen Investment
Divisions, deductions for the Monthly Deduction Amount and any amounts
transferred from the Investment Divisions into the Loan Account. There is no
minimum guaranteed Investment Value and the Owner bears the risk of the
investment in the underlying Portfolios. See "Detailed Description of
Certificate Benefits and Provisions -- Deductions and Charges from Investment
Value," page 18.
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. If there is insufficient Investment
Value in the Charge Deduction Division:
(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 is selected, any amounts due will be taken
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; plus
(c) the charges for 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 "Deductions and Charges from Investment Value,"
page 18, and "Federal Tax Considerations," page 26.
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 1 through 10 at an
effective annual rate of .65% of the value of each Investment Division's assets
and for Coverage Years 11 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.
CHARGES AGAINST THE FUNDS
The Separate Account purchases Fund shares at net asset value. The net asset
value of those shares reflects investment advisory fees and administrative and
other expenses deducted from the assets of the Portfolios. 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
Portfolios.
The following table shows annual operating expenses after waivers or
reimbursements for 1997:
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL
OPERATING
MANAGEMENT OTHER EXPENSES (AFTER
FEE EXPENSES (AFTER WAIVERS AND/OR
PORTFOLIO NAME (AFTER WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)(1)
- ----------------- ----------------- ------------------- ---------------------
<S> <C> <C> <C>
VIP High Income
Portfolio (2)... .590% .120% .710%
VIP Equity-Income
Portfolio(2).... 0.500% 0.080% 0.580%
VIP Money Market
Portfolio(2).... .210% .100% .310%
</TABLE>
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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<TABLE>
<CAPTION>
TOTAL
OPERATING
MANAGEMENT OTHER EXPENSES (AFTER
FEE EXPENSES (AFTER WAIVERS AND/OR
PORTFOLIO NAME (AFTER WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)(1)
- ----------------- ----------------- ------------------- ---------------------
<S> <C> <C> <C>
VIP II Asset
Manager
Portfolio (2)... 0.550% 0.100% 0.650%
VIP III Growth
Opportunities
Portfolio(2).... 0.600% 0.140% 0.740%
Pegasus Bond Fund
(3)............. 0.400% 0.350% 0.750%
Pegasus Growth
and Value Fund
(3)............. 0.600% 0.350% 0.950%
Pegasus Mid-Cap
Opportunity Fund
(3)............. 0.600% 0.350% 0.950%
Pegasus Growth
Fund (3)........ 0.600% 0.350% 0.950%
Pegasus Intrinsic
Value Fund (3).. 0.600% 0.350% 0.950%
Putnam VT
International
Growth Fund
(4)............. 0.730% 0.470% 1.350%
Putnam VT Vista
Fund (4)........ 0.650% 0.220% 1.020%
Putnam VT Voyager
Fund (4)........ 0.540% 0.050% 0.740%
</TABLE>
- ------------
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliate for investment and administrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from
the fund including legal, accounting and custodian fees. For complete
description of the nature of the services provided in consideration of the
operating expenses deducted, please see the Fund prospectuses.
(2) A portion of the brokerage commissions that certain Portfolios pay was used
to reduce expenses. In addition, certain Portfolios have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, the Total Operating Expenses presented
in the table would have been 0.710% for VIP High Income Portfolio, 0.570%
for VIP Equity-Income Portfolio, 0.640% for VIP II Asset Manager Portfolio
and 0.730% for VIP III Growth Opportunities Portfolio.
(3) Operating expenses of these Portfolios of the Pegasus Variable Funds reflect
the management fee schedule that will be in effect for future periods
combined with the historic or anticipated expense levels for the Portfolios.
FCNIMCO has agreed to waive portions of the management fee through December
31, 1998, in order to keep total portfolio operating expenses at the levels
shown in the table. Absent such waivers, the Total Operating Expenses
presented were 0.750%, 0.950%, 0.950%, 0.950%, 0.950% for Pegasus Bond Fund,
Pegasus Growth and Value Fund, Pegasus Mid-Cap Opportunity Fund, Pegasus
Growth Fund and Pegasus Intrinsic Value Fund, respectively.
(4) The Management Fees and Other Expenses shown in the table above do not
reflect an expense limitation. After an expense limitation, Total Fund
Operating Expenses for the Putnam VT International Growth Fund was 1.350%.
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
15.
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 calendar 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 "The Right to
Examine the Certificate," page 18.
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 26.
There are circumstances when the Certificate may become a Modified Endowment
Contract underFederal 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 26.
HARTFORD
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. Effective on January 1, 1998, Hartford's
name changed from ITT Hartford Life and Annuity Insurance Company 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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Company, one of the largest multiple lines insurance carriers in the United
States. Hartford is ultimately controlled by The Hartford Financial Services
Group, Inc., a Delaware corporation.
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 investment performance of the
Sub-Accounts. The ratings apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
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 13 Investment Divisions dedicated to the Group
Policies, each of which invests solely in a corresponding Portfolio of the
Funds. Additional Investment Divisions may be established at the discretion of
Hartford. The Separate Account may include other divisions which will not be
available under the Group Policies.
THE FUNDS
GENERAL
The shares of the Portfolios are sold by the Funds to the Separate Account.
The assets of the Separate Account attributable to the Group Policies are
invested exclusively in the Investment Divisions. An Owner may allocate Net
Premium payments among the Investment Divisions. Owners should review the brief
descriptions of the investment objectives of each of the Portfolios in
connection with that allocation. See "The Funds -- The Portfolios," page 10.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the relevant Portfolios. In addition to being
offered to the Separate Account, each Fund's shares are or may be offered to
other separate accounts funding variable annuity contracts and variable life
insurance policies issued by Hartford or its affiliates and to separate accounts
of other insurance companies. It is conceivable that in the future it may become
disadvantageous for both variable annuity and variable life insurance separate
accounts or for separate accounts of other life insurance companies to invest in
shares of the Funds simultaneously. Although neither Hartford nor any of the
Funds currently foresee any such disadvantage, each Fund's Board of Trustees
will monitor events in order to identify any material conflict between different
variable annuity and variable life owners and to determine what action, if any,
should be taken in response thereto, including the possible withdrawal of the
Separate Account's participation in any of the Funds. Material conflicts could
result from such things as (1) changes in state insurance law, (2) changes in
federal income tax law, (3) changes in the investment management of any
Portfolio of the Funds, or (4) differences between voting instructions given by
variable annuity and variable life owners. If the Boards of Trustees were to
conclude that separate underlying funds should be established for variable
annuity and variable life insurance separate accounts, Hartford will bear the
attendant expenses.
All investment income of, and other distributions to, each Investment
Division arising from the applicable Portfolio are reinvested in shares of that
Portfolio at net asset value. Hartford will purchase Portfolio shares in
connection with Net Premium payments allocated to the applicable Investment
Division in accordance with Owners' instructions and will redeem Portfolio
shares to meet obligations under the Group Policies and the Certificates or make
adjustments in reserves, if any. The Funds are required to redeem Portfolio
shares at net asset value and generally to make payment within seven (7)
calendar days.
Applicants should read each of the Fund prospectuses accompanying this
Prospectus in connection with the purchase of a Certificate.
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10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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VARIABLE INSURANCE PRODUCTS FUND ("VIP"),
VARIABLE INSURANCE PRODUCTS FUND II ("VIP II")
AND VARIABLE INSURANCE PRODUCTS FUND III ("VIP III") (EACH,
A "FIDELITY FUND" AND COLLECTIVELY, THE "FIDELITY FUNDS").
The Separate Account currently invests in the Fidelity Funds. The Fidelity
Funds are diversified, open-end management investment companies organized as
Massachusetts business trusts by Fidelity Management & Research Company ("FMR")
and registered under the 1940 Act. The Fidelity Funds consist of several
investment portfolios, including VIP Equity-Income Portfolio, VIP High Income
Portfolio, VIP Money Market Portfolio, VIP II Asset Manager Portfolio, and VIP
III Growth Opportunities Portfolio, which are available as part of Pegasus
Provider.
Each Fidelity Fund is composed of multiple classes of shares with a common
investment objective and investment portfolio. The original class ("Original
Class") of shares is offered at net asset value and is not subject to a 12b-1
fee. The service class ("Service Class") shares are offered at net asset value
and are subject to a 12b-1 fee. Each class of shares is offered through its own
prospectus. Service Class shares of VIP Equity-Income Portfolio, VIP High Income
Portfolio, VIP II Asset Manager Portfolio, and VIP III Growth Opportunities
Portfolio and Original Class shares of VIP Money Market Portfolio are available
under the Group Policy.
The Fidelity Funds are each managed by FMR. FMR is one of America's largest
investment management organizations. It is composed of a number of different
companies, which provide a variety of financial services and products. FMR is
the original Fidelity company, founded in 1946. It provides a number of mutual
funds and other clients with investment research and portfolio management
services.
PEGASUS VARIABLE FUNDS
The Separate Account currently invests in shares of the Pegasus Variable
Funds, a diversified open-end management investment company registered under the
1940 Act and organized as a Delaware business trust. The Pegasus Variable Funds
consists of seven series, including Pegasus Bond Fund, Pegasus Growth and Value
Fund, Pegasus Mid-Cap Opportunity Fund, Pegasus Growth Fund and Pegasus
Intrinsic Value Fund, which are available as part of Pegasus Provider.
First Chicago NBD Investment Management Company ("FCNIMCO") is the
investment adviser to Pegasus Variable Funds. FCNIMCO is a wholly-owned
subsidiary of The First National Bank of Chicago, which, in turn, is a
wholly-owned subsidiary of First Chicago NBD Corporation, a registered bank
holding company. Included among FCNIMCO's accounts are pension and
profit-sharing funds for major corporations and state and local governments,
commingled trust funds and a variety of institutional and personal advisory
accounts, estates and trusts, either directly or through investment services
provided through its bank affiliates. FCNIMCO also acts as investment adviser
for other registered investment companies and investment company portfolios.
PUTNAM VARIABLE TRUST
The Separate Account currently invests in shares of Putnam Variable Trust, a
diversified open-end management investment company registered under the 1940 Act
and organized as a Massachusetts business trust. Putnam Variable Trust consists
of sixteen funds, including Putnam VT International Growth Fund, Putnam VT Vista
Fund and Putnam VT Voyager Fund, which are available as part of Pegasus
Provider.
Putnam Investment Management, Inc. ("Putnam Management") serves as the
investment manager of Putnam Variable Trust. An affiliate, The Putnam Advisory
Company, Inc., manages domestic and foreign institutional accounts and mutual
funds. Another affiliate, Putnam Fiduciary Trust Company, provides investment
advice to institutional clients under its banking and fiduciary policies. Putnam
Management and its affiliates are wholly-owned subsidiaries of Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal businesses are
international insurance brokerage and employee benefit consulting.
THE PORTFOLIOS
VIP HIGH INCOME PORTFOLIO
VIP High Income Portfolio seeks high current income primarily through
investments in all types of income-producing debt securities, preferred stocks
and convertible securities. Although the Portfolio has no limits on the quality
and maturity of its investments, its strategy typically leads to longer-term,
lower-quality, fixed-income securities. These domestic and foreign investments
may present the risk of default or may be in default.
VIP EQUITY-INCOME PORTFOLIO
VIP Equity-Income Portfolio seeks reasonable income by investing primarily
in income-producing equity securities. In choosing these securities, the
Portfolio will also consider the potential for capital appreciation. This
Portfolio's goal is to achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500 Stocks
(commonly referred to as "S&P 500"). The Portfolio may invest in high yielding,
lower-rated securities (commonly referred to as "junk bonds") which are subject
to greater risk than investments in higher-rated securities.
VIP MONEY MARKET PORTFOLIO
VIP Money Market Portfolio seeks as high a level of current income as is
consistent with preserving capital and providing liquidity. The Portfolio will
invest only in high-quality U.S. dollar denominated money market instruments
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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of domestic and foreign issuers. An investment in the Portfolio is not insured
or guaranteed by the U.S. Government, and there can be no assurance that the
Portfolio will maintain a stable asset value per share of $1.00.
VIP II ASSET MANAGER PORTFOLIO
VIP II Asset Manager Portfolio seeks high total return with reduced risk
over the long-term by allocating its assets among domestic and foreign stocks,
bonds and short-term instruments.
VIP III GROWTH OPPORTUNITIES PORTFOLIO
VIP III Growth Opportunities Portfolio seeks to provide capital growth by
investing primarily in common stocks and securities convertible into common
stocks. The Portfolio also has the ability to purchase other securities, such as
preferred stock and bonds, that may produce capital growth, and may invest in
foreign securities without limitation.
PEGASUS BOND FUND
Pegasus Bond Fund seeks to maximize total rate of return by investing
predominantly in intermediate and long-term debt securities.
PEGASUS GROWTH AND VALUE FUND
Pegasus Growth and Value Fund seeks long-term capital growth, with income as
a secondary consideration. In seeking to achieve its objective, this Fund will
invest primarily in equity securities of larger companies that are attractively
priced relative to their growth potential.
PEGASUS MID-CAP OPPORTUNITY FUND
Pegasus Mid-Cap Opportunity Fund seeks long-term capital appreciation. In
seeking to achieve its objective, this Fund will invest primarily in equity
securities of companies with intermediate market capitalizations.
PEGASUS GROWTH FUND
Pegasus Growth Fund seeks long-term capital appreciation. In seeking to
achieve its objective, this Fund will invest primarily in equity securities of
domestic issuers believed by FCNIMCO to have above-average growth
characteristics.
PEGASUS INTRINSIC VALUE FUND
Pegasus Intrinsic Value Fund seeks long-term capital appreciation. In
seeking to achieve its objective, this Fund will invest primarily in equity
securities believed by FCNIMCO to represent a value or potential worth which is
not fully recognized by prevailing market prices.
PUTNAM VT INTERNATIONAL GROWTH FUND
Putnam VT International Growth Fund seeks capital appreciation by investing
primarily in equity securities of companies located in countries other than the
United States.
PUTNAM VT VISTA FUND
Putnam VT Vista Fund seeks capital appreciation by investing in a
diversified portfolio of common stocks which Putnam Management believes have the
potential for above-average capital appreciation.
PUTNAM VT VOYAGER FUND
Putnam VT Voyager Fund seeks capital appreciation by investing primarily in
common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.
There is no assurance that any Portfolio will achieve its stated objectives.
Owners are also advised to read the prospectuses for each of the Funds
accompanying this Prospectus for more detailed information. Each Fund is subject
to certain investment restrictions which may not be changed without the approval
of a majority of the shareholders of the Fund. See the accompanying prospectuses
for each of the Funds.
DETAILED DESCRIPTION
OF CERTIFICATE BENEFITS
AND PROVISIONS
GENERAL
This Prospectus describes a flexible premium group variable life insurance
policy where the Owner has considerable flexibility in selecting the timing and
amount of premium payments.
ISSUANCE OF A CERTIFICATE
Certificates will only be offered to eligible employees when provided by the
Participating Employer. Individuals wishing to purchase a Certificate must
complete an Enrollment Form In Writing, which must be received by Our Customer
Service Center before a Certificate will be issued. A Certificate will not be
issued with a specified Face Amount of less than the minimum Face Amount.
Acceptance is subject to Hartford's underwriting rules then in effect. Hartford
reserves the right to reject an Enrollment Form for any reason permitted by law.
There are two circumstances under which a Certificate may be issued with a
backdated Coverage Date. The first involves Group Policy rollovers from Section
1035 exchanges under the Code. Backdating will occur in order to prevent a gap
in coverage under the Certificate. Charges and deductions (other than those of
the Portfolios) will be made for the period the Coverage Date is backdated;
however, the Owner will not experience investment return during that time.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Backdating will also occur when an application accompanied by the Initial
Premium is received by Us but issuance of a Certificate is subject to Our
insurance underwriting requirements. The initial Net Premium will be allocated
to the Fidelity VIP Money Market Investment Division during the underwriting
period. See "Premiums -- Allocation of Premium Payments" below. If the Insured
meets Our underwriting requirements, a Certificate will be issued with a
backdated Coverage Date. Charges and deductions (other than those of the
Portfolios) will be made for the backdated period. If the Insured does not meet
Our underwriting requirements, no Certificate will be issued and no coverage
will have been in effect. A conditional receipt will be given to the applicant
reflecting receipt of the Initial Premium and outlining any interim coverage in
effect until the Certificate is either issued or declined.
Backdating may only be permitted in certain states.
PREMIUMS
PREMIUM PAYMENT FLEXIBILITY
A significant feature of the Certificate is that once the desired level and
pattern of the Death Benefit have been determined, the Owner has considerable
flexibility in the selection of the timing and amount of premiums to be paid and
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, as set forth in the Certificate, is due on the
Coverage Date. Unless determined otherwise by Hartford, the amount of the
minimum Initial Premium is the amount which, after the deductions for sales
load, state premium tax, and DAC tax charge, is sufficient (disregarding
investment performance) to pay twelve (12) times the first Monthly Deduction
Amount. Thereafter, additional premiums may be paid at any time, subject to the
premium limitations set forth by the Code as indicated in the section entitled
"Premium Limitation," page 13. 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 when Your Certificate
is issued to the Fidelity VIP 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 Fidelity VIP Money Market Investment Division if it
is selected as an initial allocation option). This later date is the later of
ten (10) calendar days after We receive the Initial Premium and the date We
receive the final requirement to put the Certificate in force. The Certificates
are credited with units ("Accumulation Units") in each selected Investment
Division, the assets of which are invested in the corresponding underlying
Portfolio. An Owner may transfer funds among the Investment Divisions subject to
certain restrictions. See "Detailed Description of Certificate Benefits and
Provisions -- Transfers Among Investment Divisions," page 14. Any additional
premiums received by Us prior to such date will be allocated to the Fidelity VIP
Money Market Investment Division.
Alternatively, if the state of issue of Your Certificate provides for Our
return of the Certificate's Cash Value to the Owner, We will allocate the
initial Net Premium immediately among Your chosen Investment Divisions. In that
case You will bear full investment risk for any amounts allocated to the
Investment Divisions during the right to examine period. (Please note that this
automatic immediate investment feature only applies if Your Certificate so
specifies. Please check with Your agent to determine the status of Your
Certificate.)
Upon written request, You may change the premium allocation. Portions
allocated to the Investment Divisions must be whole percentages of 5% or more.
Subsequent Net Premiums will be allocated among Investment Divisions according
to Your most recent instructions, subject to the following. If We receive a
premium and Your most recent allocation instructions would violate the 5%
requirement, We will allocate the Net Premium among the Investment Divisions
according to Your previous premium allocation. If the asset rebalancing option
is in effect, Net Premiums will be allocated accordingly until that option is
terminated. See "Transfers Among Investment Divisions -- Asset Rebalancing,"
page 14.
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 on the Enrollment Form is shown in the Certificate. In addition, every
transactional confirmation generated after a premium payment is received will
show how that premium has been allocated. A Certificate's annual statement will
also summarize 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 Fidelity VIP
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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particular Investment Division next computed following receipt of the payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit value for each Investment Division will vary daily to
reflect the investment experience of the applicable Portfolio, as well as the
daily deduction for mortality and expense risks, and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Investment Division on the preceding Valuation Day by a net investment factor
for that Investment Division for the Valuation Period then ended. The net
investment factor for each of the Investment Divisions is equal to the net asset
value per share of the corresponding Portfolio at the end of the Valuation
Period (plus the per share amount of any dividend or capital gain distributions
paid by that Portfolio in the Valuation Period then ended) divided by the net
asset value per share of the corresponding Portfolio at the beginning of the
Valuation Period, less the daily deduction for the mortality and expense risks
assumed by Hartford.
All valuations in connection with a Certificate, e.g., with respect to
determining Cash Value and Investment Value, or calculating the Death Benefit,
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 Code, We will
refund the excess premium payments. We will refund such premium payments and
interest thereon within sixty (60) days after the end of a Coverage Year.
A premium payment that results in an increase in the Death Benefit greater
than the amount of the premium will be accepted only after We approve evidence
of insurability.
VALUES UNDER THE CERTIFICATE
As with traditional life insurance, each Certificate will have a Cash
Surrender Value. The Cash Surrender Value is equal to the Cash Value, less Debt,
less any charges accrued but not deducted. There is no minimum guaranteed Cash
Surrender Value. The Cash Value equals the value in the Investment Divisions
plus the Loan Account Value.
Each Certificate will also have an Investment Value. The Investment Value of
a Certificate changes on a daily basis and will be computed on each Valuation
Day. The Investment Value will vary to reflect the investment experience of the
Investment Divisions, Monthly Deduction Amounts and any amounts transferred to
the Loan Account to secure a Loan.
The Investment Value of a particular Certificate is related to the net asset
value of the Portfolios associated with the Investment Divisions to which Net
Premiums on the Certificate have been allocated. The total Investment Value in
the Investment Divisions on any Valuation Day is calculated by multiplying the
number of Accumulation Units in each Investment Division as of the Valuation Day
by the current Accumulation Unit value of that Investment Division and then
summing the result for all the Investment Divisions. The Investment Value equals
the sum of the values of the assets in the Investment Divisions. See "Premiums
- -- Accumulation Unit Values," page 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 charge for processing partial withdrawals which is the
lesser of 2% of the amount withdrawn or $25.00. 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 Benefit payable. If Death Benefit Option A is in
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14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 26.
TRANSFERS AMONG 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, without charge, up to twelve (12) times
per Coverage Year. Transfers in excess of twelve (12) per Coverage Year will be
subject to a charge of $50 per transfer deducted from the amount of the
transfer. 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 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. Hartford reserves the right in the future to impose additional
restrictions on transfers.
TRANSFERS TO OR FROM INVESTMENT DIVISIONS
In the event of a transfer from an Investment Division, the number of
Accumulation Units credited to the Investment Division from which the transfer
is made will be reduced. The reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit value for that Investment Division on the Valuation
Day We receive Your request for transfer In Writing.
In the event of a transfer to an Investment Division, We will increase the
number of Accumulation Units credited thereto. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit value for that Investment Division determined on the
Valuation Day We receive Your request for transfer In Writing.
ASSET REBALANCING
Subject to Our rules then in effect, an Owner may authorize Hartford to
automatically reallocate Investment Value periodically in order to maintain a
particular percentage allocation among the Investment Divisions as selected by
the Owner ("Asset Rebalancing"). The Investment Value held in each Investment
Division will increase or decrease in value at different rates during the
relevant period. Asset Rebalancing is intended to reallocate Investment Value
from those Investment Divisions that have increased in value to those that have
decreased in value.
To elect Asset Rebalancing, a request In Writing must be received by
Hartford. If Asset Rebalancing is elected, all Investment Value must be included
in the automatic reallocation. The percentages selected under Asset Rebalancing
will override any prior percentage allocations chosen by the Owner and all
future Net Premiums will be allocated accordingly. Once elected, an Owner may
instruct Hartford In Writing at any time to terminate the option. In addition,
any transfer made outside of Asset Rebalancing will terminate the option.
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 generally pay Death Proceeds, Cash Surrender Values, partial
withdrawals, and Loan amounts attributable to the Investment Divisions within
seven (7) calendar days
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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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.
PROCESSING OF TRANSACTIONS
Generally, transactions initiated by an Owner will be processed only on a
Valuation Day. Requests received by Hartford on a Valuation Day before the close
of trading on the NYSE (generally 4:00 p.m. Eastern Time) will be processed as
of that day, except as otherwise provided in this Prospectus. Those requests
received after the close of the NYSE will be processed as of the next Valuation
Day.
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 on 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 the
greater of 5% and the Published Monthly Average for the calendar month two
months prior to the date on which the Adjustable Loan Interest Rate is
determined. The Published Monthly Average means the "Moody's Corporate Bond
Yield Average -- Monthly Average Corporate" as published by Moody's Investors
Service, Inc. or any successor to that service. If that monthly average is no
longer published, a substitute average will be used.
CREDITED INTEREST
Amounts in the Loan Account for Coverage Years 1 through 10 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 11 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 thirty-one (31) calendar days after We have mailed
notice to Your last known address and that of any assignees of record. If
sufficient Loan repayment is not made by the end of this 31-day period, the
Certificate will end without value.
EFFECT OF LOANS ON INVESTMENT VALUE
A Loan, whether or not repaid, will have a permanent effect on the
Investment Value because the investment results of each Investment Division will
apply only to the amount remaining in such Investment Divisions. The longer a
Loan is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If the Investment Divisions earn more than the annual
interest rate for funds held in the Loan Account, an Owner's Investment Value
will not increase as rapidly as it would have had no Loan been made. If the
Investment Divisions earn less than the Loan Account, the Owner's Investment
Value will be greater than it would have been had no Loan been made. Also, if
not repaid, the aggregate amount of outstanding Debt will reduce the Death
Proceeds and Cash Surrender Value otherwise payable.
DEATH BENEFIT
As long as the Certificate remains in force, the Certificate provides for
the payment of the Death Proceeds to the named Beneficiary when the Insured
under the Certificate dies. The Death Proceeds payable to the Beneficiary equal
the Death Benefit less any Debt outstanding under the Certificate plus any rider
benefits payable. The Death Benefit depends on the Death Benefit option You
select and is determined as of the date of the death of the Insured.
MINIMUM DEATH BENEFIT TESTING PROCEDURES
Section 7702 of the Code defines alternative testing procedures, the
guideline premium test ("GPT") and the cash value accumulation test ("CVAT") in
order to meet the definition of life insurance under the Code. See "Federal Tax
Considerations -- Income Taxation of Certificate Benefits." Each Certificate
must qualify under either the GPT or the CVAT. Prior to issue, the Owner chooses
the procedure under which a Certificate will qualify. Once either the GPT or the
CVAT is chosen to test a Certificate, it cannot be changed while the Certificate
is in force.
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Under both testing procedures, there is a minimum Death Benefit required at
all times equal to the Variable Insurance Amount. The factors used to determine
the Variable Insurance Amount depend on the testing procedure chosen and are set
forth in the Certificate.
Under the GPT, there is also a maximum amount of premium which may be paid
with respect to each Certificate.
Use of the CVAT can be advantageous if an Owner intends to maximize the
total amount of premiums paid under a Certificate. An offsetting consideration,
however, is that the factors used to determine the Variable Insurance Amount are
higher under the CVAT, which can result in a higher Death Benefit over time and
thus, a higher total cost of insurance.
DEATH BENEFIT OPTIONS
Regardless of the minimum death benefit testing procedure chosen, there are
two Death Benefit options: Death Benefit Option A and Death Benefit Option B.
1. Under 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.
Hartford will make any other arrangements for income payments as may be
agreed on.
LEGAL DEVELOPMENTS REGARDING INCOME PAYMENTS
In those states affected by the 1983 Supreme Court decision in Arizona
Governing Committee v. Norris, income payment options involving life income are
based on unisex
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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actuarial tables. In addition, legislation has previously been introduced in
Congress which, had it been enacted, would have required the use of tables that
do not vary on the basis of sex for some or all annuities. Currently, several
states have enacted such laws.
BENEFICIARY
The Owner names the Beneficiary in the Enrollment Form for the Certificate.
The Owner may change the Beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to Hartford. If no Beneficiary is living
when the Insured dies, the Death Proceeds will be paid to the Owner if living;
otherwise to the Owner's estate.
INCREASES AND DECREASES IN FACE AMOUNT
The minimum Face Amount of the Certificate is $50,000. At any time after
purchasing a Certificate, the Owner may request a change in the Face Amount by
making a request In Writing to Hartford and directing such request to Hartford's
Customer Service Center.
All requests to increase the Face Amount must be applied for on a new
Enrollment Form. All requests will be subject to evidence of insurability
satisfactory to 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 twelve (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 his or her last known address,
at least fifteen (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 will follow the date We mail notice to the Owner 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 thirty-one (31) calendar 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 (i) the Group Policy is
terminated (see "Termination of Participation in the Group Policy" above) or
(ii) the Certificate has been surrendered for cash, the Certificate may be
reinstated prior to the Maturity Date, provided:
(a) you make Your request within three (3) years of the date of lapse; and
(b) satisfactory evidence of insurability is submitted.
To reinstate Your Certificate, you must remit a premium payment large enough
to keep the coverage under the Certificate in force for at least three (3)
months
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 Hartford. 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 ten
(10) calendar days after delivery of the Certificate to the Owner, Hartford will
return either (i) the total amount of premiums or (ii) the Cash Value plus
charges deducted under the Certificate to the Owner within seven (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 Fidelity VIP 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 PREMIUM
Before allocating the Net Premium to the Investment Divisions, a deduction
as a percentage of premium is made for the front-end sales load, premium taxes
and the DAC tax charge. The amount of each premium allocated to the Investment
Divisions is Your Net Premium.
FRONT-END SALES LOAD
The current 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 in 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
Hartford deducts 1.25% of each premium to cover a federal premium tax
assessed against Hartford. This charge is reasonable in relation to Hartford's
federal income tax burden, under Section 848 of the Code, resulting from the
receipt of premiums. We will adjust this charge based on changes in the
applicable tax law.
DEDUCTIONS AND CHARGES
FROM INVESTMENT VALUE
MONTHLY DEDUCTION AMOUNT
On the Coverage Date and on each subsequent Processing Date, Hartford will
deduct 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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to month. It 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
(c) the charges for additional benefits provided by rider, if any.
(A) 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.
(B) 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.
(C) Rider Charge
If the Certificate includes riders, a charge is deducted from the
Investment Value on each Processing Date. The charge applicable to a rider
is specified on the rider and is to compensate Hartford for the anticipated
cost of providing the benefits thereunder.
The riders available are described on page 21 under "Supplemental
Benefits."
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 1 through 10 at an
effective annual rate of .65% of the value of each Investment Division's assets
and for Coverage Years 11 and later at an effective annual rate of .50% of an
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.
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 Portfolios should no longer be available for investment, or if, in
the judgment of Hartford's management, further investment in shares of any
Portfolio should become inappropriate in view of the purposes of the Group
Policies, Hartford may substitute shares of another Portfolio for shares already
purchased, or to be purchased in the future, under the Group Policies. No
substitution of securities will take place without notice to and consent of
Owners and without prior approval of the SEC to the extent required by the 1940
Act. Subject to Owner approval, if required, 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.
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
"Detailed Description of Certificate Benefits and Provisions -- Loans," page 15)
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 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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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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 Life and Annuity
Insurance Company or any part of it. We may allow the Separate Account and other
entities to use Our name or part of it, but We may also withdraw this right.
STATEMENTS TO OWNERS
We will send You a statement at least once each Coverage Year, showing:
(a) the current Cash Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, Monthly Deduction Amounts and Loans since the last
report;
(c) the amount of any outstanding Debt;
(d) notifications required by the provisions of the Certificate; and
(e) any other information required by the Insurance Department of the State
where the Certificate was delivered.
LIMIT ON RIGHT TO CONTEST
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 may in the future be included in a
Certificate, subject to the restrictions and limitations set forth therein.
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 26.
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Bossen, Wendell J., 64 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.
Boyko, Gregory A., 46 Senior Vice President, Chief Vice President & Controller (1995-1997), Hartford; Director
Financial Officer & (1997-Present); Senior Vice President, Chief Financial
Treasurer, 1997 Officer & Treasurer (1997-Present); Vice President &
Director, 1997* Controller (1995-1997), 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.
Cummins, Peter W., 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);
Senior Vice President (1997-Present); Vice President
(1989-1997), Hartford Life Insurance Company.
deRaismes, Ann M., 47 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice President
Director of Human Resources, (1997-Present); Vice President (1994-1997); Assistant
1994 Vice President (1992-1994); Director of Human Resources
(1991-Present), Hartford Life and Accident Insurance
Company; Senior Vice President (1997-Present); Vice
President (1994-1997); Assistant Vice President
(1992-1994); Director of Human Resources (1991-Present),
Hartford Life Insurance Company; Vice President, Human
Resources (1997-Present), Hartford Life, Inc.
Dooley, James R., 61 Vice President, 1993 Director, Information Services (1973-1997), Hartford Life
Insurance Company.
Fitch, Timothy M., 45 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.
Foy, David T., 31 Vice President, 1998 Assistant Vice President (1995-1998), Hartford; Vice
President (1998-Present); Assistant Vice President
(1995-1998), Hartford Life Insurance Company.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Garrett, J. Richard, 53 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.
Gillette, Donald J., 52 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.
Godfrey, III, William A., 41 Senior Vice President, 1997 Senior Vice President (1997-Present), Hartford; Senior Vice
President (1997-Present), Hartford Life and Accident
Insurance Company; Vice President Information Technology
(1997-Present), Hartford Life, Inc.
Godkin, Lynda, 44 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); Corporate
Director, 1997* Secretary (1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life and
Accident Insurance 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.
Grady, Lois W., 53 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1994 (1993-1997); Assistant Vice President (1987-1993),
Hartford Life and Accident Insurance Company; Senior Vice
President (1998-Present); Vice President (1993-1997);
Assistant Vice President (1987-1993), Hartford Life
Insurance Company.
Graham, Christopher, 47 Vice President, 1997
Hunt, Mark E., 37 Vice President, 1998 Assistant Vice President (1997-1998), Hartford; Vice
President (1998-Present), Hartford Life and Accident
Insurance Company.
Joyce, Stephen T., 39 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.
Keeler, Michael D., 37 Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company.
</TABLE>
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Kerzner, Robert A., 46 Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1997 (1994-1998), Hartford; Senior Vice President
(1998-Present); Vice President (1994-1997); Regional Vice
President (1991-1994), Hartford Life Insurance Company.
Levenson, David N., 31 Vice President, 1998 Assistant Vice President (1997-1998), Hartford.
Malchodi, Jr., William B., 50 Vice President, 1994 [Director of Taxes (1992-1998), Hartford;] Vice President
Director of Taxes, 1992 [delete?] (1994-Present); Director of Taxes (1992-[1998] Present),
Hartford Life and Accident Insurance Company; Vice
President (1994-Present); Director of Taxes
(1991-Present), Hartford Life Insurance Company.
Marra, Thomas M., 38 Executive Vice President, 1996 Senior Vice President (1993-1996); Director of Individual
Director, Individual Life Annuities (1991-1993), Hartford; Director (1994-Present);
and Annuity Division, 1993 Executive Vice President (1995-Present); Director,
Director, 1994* Individual Life and Annuity Division (1994-Present);
Senior Vice President (1994-1995); Vice President
(1989-1994); Actuary (1987-1997), Hartford Life and
Accident Insurance Company; Director (1994-Present);
Executive Vice President (1995-Present); Director,
Individual Life and Annuity Division (1994-Present);
Senior Vice President (1994-1995); Vice President
(1989-1994); Actuary (1987-1995), Hartford Life Insurance
Company; Executive Vice President, Individual Life and
Annuities (1997-Present), Hartford Life, Inc.
Matthieson, Steven L., 53 Vice President, 1984 Director of New Business (1984-1997), Hartford.
O'Halloran, C. Michael, 51 Vice President, 1997 Vice President (1997-Present), Hartford Life and Accident
Insurance Company; 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.
O'Sullivan, Daniel E., 43 Vice President, 1998 Vice President (1998-Present), Hartford; Vice President
(1988-Present), Hartford Life Insurance Company.
Raymond, Craig R., 37 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 (1995-Present);
Vice President (1993-1997); Actuary (1990-1995), Hartford
Life and Accident Insurance Company; 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.
Schrandt, David T., 50 Vice President, 1987 Treasurer (1987-1997); Controller (1987-1997), Hartford.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- -----------------------------------------------------------
<S> <C> <C>
Smith, Lowndes A., 58 President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief Executive
Director, 1985* Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident Insurance
Company; Director (1981-Present); President
(1989-Present), Chief Executive Officer (1997-Present);
Chief Operating Officer (1989-1997), Hartford Life
Insurance Company; Chief Executive Officer and President
and Director (1997-Present), Hartford Life, Inc.
Welsh, Walter C., 51 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice President
(1994-1997); Assistant Vice President (1992-1995),
Hartford Life and Accident Insurance Company; Senior Vice
President (1997-Present); Vice President (1995-1997);
Assistant Vice President (1992-1995), Hartford Life
Insurance Company; Vice President, Government Affairs
(1997-Present), Hartford Life, Inc.
Znamierowski, David M., 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, 1998 (1997-Present), Hartford Life and Accident Insurance
Company; Director (1998-Present); 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
Company.
- ---------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
</TABLE>
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 POLICY
Hartford intends to sell the Group Policy in all jurisdictions where it is
licensed to do business. The Group Policy 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 Policy. 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, service fees and asset-based trail commissions 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.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HESCO and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided.
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
HESCO, its affiliates or Hartford may also make compensation arrangements with
certain broker-dealers or financial institutions based on total sales by the
broker-dealer or financial institution of insurance products. These payments,
which may be different for different broker-dealers or financial institutions,
will be made by HESCO, its affiliates or Hartford out of their own assets and
will not affect the amounts paid by the policyholders or contract owners to
purchase, hold or surrender variable insurance products.
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.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE OWNER INVOLVED AND THE TYPE OF PLAN UNDER WHICH THE
GROUP POLICY IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A GROUP POLICY DESCRIBED
HEREIN.
It should be understood that any detailed description of the Federal income
tax consequences regarding the purchase of the Group Policy 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's understanding of current
Federal income tax laws as they are currently interpreted.
TAXATION OF HARTFORD 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 "Detailed Description of 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
insurance contract for federal income tax purposes after the Maturity Date,
among other things, the Death Proceeds may be taxable to the recipient. The
Owner should consult a competent tax adviser regarding the possible adverse tax
consequences resulting from an extension of the scheduled Maturity Date.
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance contracts. A modified endowment contract is a life insurance policy
which satisfies the Section 7702 definition of life insurance but fails the
seven-pay test of Section 7702A. A policy fails the seven-pay test if the
accumulated amount paid into the Certificate at any time during the first seven
Coverage Years exceeds the sum of the net level premiums that would have been
paid up to that point if the Certificate provided for paid-up future benefits
after the payment of seven level annual premiums. Computational rules for the
seven-pay test are described in Section 7702A(c).
A policy that is classified as a modified endowment contract is eligible for
certain aspects of the beneficial tax treatment accorded to life insurance. That
is, the death benefit is excluded from income and increments in value are not
subject to current taxation. However, withdrawals and loans from a modified
endowment policy are treated first as income, then as a recovery of basis.
Taxable withdrawals are subject to a 10% additional tax, with certain
exceptions. Generally, only distributions and loans made in the first year in
which a policy becomes a modified endowment policy, and in subsequent years, are
taxable. However, distributions and loans made in the two years prior to a
policy's failing the seven-pay test are deemed to be in anticipation of failure
and are subject to tax.
If the Certificate satisfies the seven-pay test for seven years,
distributions and loans made thereafter will not be subject to the modified
endowment policy rules, unless the Certificate is changed materially. The
seven-pay test will be applied anew at any time the Certificate undergoes a
material change, which includes an increase in the Face Amount.
All modified endowment policies that are issued within any calendar year to
the same policy owner by one company or its affiliates shall be treated as one
modified endowment policy for the purpose of determining the taxable portion of
any loan or distribution.
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 meet the diversification
requirements, Hartford may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either Hartford or Owner
must agree to pay the tax due for the period during which the diversification
standards were not met. The amount required to be paid shall be an amount based
upon the tax that would have been owed by the policy owner if they were treated
as receiving the income on the policy for such period or periods.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Owner, such
amounts will be subject to Federal income tax withholding and reporting,
pursuant to Section 3405 of the Internal Revenue Code.
OTHER TAX CONSIDERATIONS
Qualified tax advisers should be consulted concerning the estate and gift
tax consequences of Certificate ownership and distributions under federal, state
and local law.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party.
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
EXPERTS
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 the report on the
statutory-basis financial statements of Hartford Life and Annuity Insurance
Company (formerly 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, and are not presented in accordance with generally accepted
accounting principles. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, Connecticut 06103.
The hypothetical illustrations included in this Prospectus and Registration
Statement have been approved by Pauline Gyllenhammer, ASA, MAAA, Senior
Actuarial Associate, are included in reliance upon her opinion as to their
reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFIT, CASH VALUE
AND CASH SURRENDER VALUE
The following tables illustrate how the Death Benefit, Cash Value and Cash
Surrender Value of a Group Policy may change with the investment experience of
the Separate Account. The tables show how the Death Benefit, Cash Value and Cash
Surrender Value of a Certificate issued to an Insured of a given age would vary
over time if the investment return on the assets held in each Portfolio were a
uniform, gross annual rate of 0%, 6% and 12%. The Death Benefit, Cash Value and
Cash Surrender Value 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 30 to 41 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 Benefit, Cash Value and Cash Surrender Value 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 Portfolios.
This is because these tables assume an investment management fee and other
estimated Portfolio expenses totaling 0.850%. The 0.850% figure is based on an
average of the current management fees and expenses of the available thirteen
Portfolios, taking into account any applicable expense caps or reimbursement
arrangements. Actual fees and expenses of the Portfolios associated with a
Certificate may be more or less than 0.850%, 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 front-end sales load, 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
Group 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>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.85% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- -----------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,238 12,238 250,000 10,996 10,996 250,000
2 30,355 24,212 24,212 250,000 21,795 21,795 250,000
3 46,680 35,930 35,930 250,000 32,398 32,398 250,000
4 63,821 47,427 47,427 250,000 42,812 42,812 250,000
5 81,819 58,722 58,722 250,000 53,039 53,039 250,000
6 100,717 69,930 69,930 250,000 63,084 63,084 250,000
7 120,560 80,961 80,961 250,000 72,942 72,942 250,000
8 126,588 79,288 79,288 250,000 70,327 70,327 250,000
9 132,917 77,594 77,594 250,000 67,595 67,595 250,000
10 139,563 75,869 75,869 250,000 64,723 64,723 250,000
11 146,541 74,205 74,205 250,000 61,697 61,697 250,000
12 153,868 72,472 72,472 250,000 58,496 58,496 250,000
13 161,561 70,649 70,649 250,000 55,106 55,106 250,000
14 169,639 68,728 68,728 250,000 51,506 51,506 250,000
15 178,121 66,704 66,704 250,000 47,673 47,673 250,000
16 187,027 64,502 64,502 250,000 43,569 43,569 250,000
17 196,378 62,178 62,178 250,000 39,153 39,153 250,000
18 206,197 59,717 59,717 250,000 34,367 34,367 250,000
19 216,507 57,103 57,103 250,000 29,145 29,145 250,000
20 227,332 54,317 54,317 250,000 23,414 23,414 250,000
25 290,140 36,875 36,875 250,000 -- -- --
30 370,300 9,901 9,901 250,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- -----------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,986 12,986 250,000 11,697 11,697 250,000
2 30,355 26,471 26,471 250,000 23,887 23,887 250,000
3 46,680 40,481 40,481 250,000 36,596 36,596 250,000
4 63,821 55,077 55,077 250,000 49,858 49,858 250,000
5 81,819 70,305 70,305 250,000 63,702 63,702 250,000
6 100,717 86,302 86,302 250,000 78,166 78,166 250,000
7 120,560 103,020 103,020 250,000 93,282 93,282 250,000
8 126,588 107,205 107,205 250,000 96,062 96,062 250,000
9 132,917 111,552 111,552 250,000 98,871 98,871 250,000
10 139,563 116,064 116,064 250,000 101,699 101,699 250,000
11 146,541 120,915 120,915 251,932 104,545 104,545 250,000
12 153,868 125,932 125,932 255,376 107,401 107,401 250,000
13 161,561 131,108 131,108 258,880 110,268 110,268 250,000
14 169,639 136,449 136,449 262,445 113,143 113,143 250,000
15 178,121 141,962 141,962 266,078 116,022 116,022 250,000
16 187,027 147,608 147,608 269,715 118,893 118,893 250,000
17 196,378 153,439 153,439 273,444 121,743 121,743 250,000
18 206,197 159,458 159,458 277,288 124,555 124,555 250,000
19 216,507 165,671 165,671 281,270 127,306 127,306 250,000
20 227,332 172,083 172,083 285,402 129,976 129,976 250,000
25 290,140 207,227 207,227 308,329 141,498 141,498 250,000
30 370,300 247,892 247,892 335,668 146,722 146,722 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------------- ------------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ------------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,735 13,735 250,000 12,398 12,398 250,000
2 30,355 28,819 28,819 250,000 26,064 26,064 250,000
3 46,680 45,402 45,402 250,000 41,141 41,141 250,000
4 63,821 63,681 63,681 250,000 57,792 57,792 250,000
5 81,819 83,857 83,857 250,000 76,199 76,199 250,000
6 100,717 106,237 106,237 253,998 96,568 96,568 250,000
7 120,560 130,873 130,873 303,886 118,983 118,983 276,434
8 126,588 144,008 144,008 324,870 129,913 129,913 293,246
9 132,917 158,444 158,444 347,408 141,801 141,801 311,106
10 139,563 174,300 174,300 371,624 154,716 154,716 330,078
11 146,541 191,983 191,983 398,159 168,744 168,744 350,233
12 153,868 211,398 211,398 426,714 183,971 183,971 371,641
13 161,561 232,690 232,690 457,341 200,501 200,501 394,382
14 169,639 256,040 256,040 490,194 218,440 218,440 418,536
15 178,121 281,643 281,643 525,447 237,903 237,903 444,193
16 187,027 309,621 309,621 563,141 259,005 259,005 471,443
17 196,378 340,290 340,290 603,635 281,865 281,865 500,387
18 206,197 373,899 373,899 647,190 306,602 306,602 531,129
19 216,507 410,724 410,724 694,093 333,339 333,339 563,781
20 227,332 451,060 451,060 744,639 362,207 362,207 598,461
25 290,140 717,639 717,639 1,062,834 544,374 544,374 806,988
30 370,300 1,134,111 1,134,111 1,528,601 807,007 807,007 1,088,923
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.85% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,227 12,227 262,261 10,944 10,944 261,052
2 30,355 24,170 24,170 274,227 21,633 21,633 271,762
3 46,680 35,827 35,827 285,907 32,063 32,063 282,214
4 63,821 47,228 47,228 297,329 42,234 42,234 292,406
5 81,819 58,389 58,389 308,510 52,136 52,136 302,331
6 100,717 69,460 69,460 319,589 61,767 61,767 311,984
7 120,560 80,319 80,319 330,466 71,107 71,107 321,348
8 126,588 78,464 78,464 328,612 67,954 67,954 318,205
9 132,917 76,576 76,576 326,727 64,661 64,661 314,924
10 139,563 74,640 74,640 324,795 61,206 61,206 311,482
11 146,541 72,742 72,742 322,894 57,575 57,575 307,866
12 153,868 70,748 70,748 320,908 53,751 53,751 304,058
13 161,561 68,630 68,630 318,801 49,727 49,727 300,050
14 169,639 66,384 66,384 316,565 45,488 45,488 295,829
15 178,121 64,005 64,005 314,197 41,017 41,017 291,377
16 187,027 61,396 61,396 311,607 36,284 36,284 286,665
17 196,378 58,639 58,639 308,863 31,255 31,255 281,661
18 206,197 55,720 55,720 305,957 25,886 25,886 276,320
19 216,507 52,626 52,626 302,877 20,126 20,126 270,592
20 227,332 49,339 49,339 299,606 13,926 13,926 264,430
25 290,140 29,212 29,212 279,588 -- -- --
30 370,300 269 269 250,818 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- -----------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ----------- --------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 12,975 12,975 262,946 11,641 11,641 261,694
2 30,355 26,425 26,425 276,355 23,708 23,708 273,724
3 46,680 40,363 40,363 290,252 36,212 36,212 286,191
4 63,821 54,841 54,841 304,684 49,167 49,167 299,108
5 81,819 69,894 69,894 319,688 62,581 62,581 312,483
6 100,717 85,698 85,698 335,428 76,467 76,467 326,328
7 120,560 102,161 102,161 351,835 90,822 90,822 340,643
8 126,588 106,049 106,049 355,713 92,721 92,721 342,550
9 132,917 110,048 110,048 359,703 94,513 94,513 344,351
10 139,563 114,148 114,148 363,794 96,167 96,167 346,016
11 146,541 118,505 118,505 368,129 97,660 97,660 347,523
12 153,868 122,938 122,938 372,556 98,965 98,965 348,844
13 161,561 127,421 127,421 377,035 100,064 100,064 349,960
14 169,639 131,950 131,950 381,560 100,927 100,927 350,844
15 178,121 136,520 136,520 386,126 101,525 101,525 351,464
16 187,027 141,031 141,031 390,643 101,811 101,811 351,777
17 196,378 145,563 145,563 395,173 101,732 101,732 351,728
18 206,197 150,099 150,099 399,708 101,221 101,221 351,255
19 216,507 154,624 154,624 404,234 100,202 100,202 350,279
20 227,332 159,117 159,117 408,730 98,597 98,597 348,723
25 290,140 180,077 180,077 429,743 79,070 79,070 329,545
30 370,300 194,721 194,721 444,535 29,468 29,468 280,602
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------------- -------------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ ------------- ----------- ------------ ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 14,807 13,723 13,723 263,628 12,339 12,339 262,332
2 30,355 28,769 28,769 278,558 25,868 25,868 275,758
3 46,680 45,268 45,268 294,931 40,703 40,703 290,478
4 63,821 63,402 63,402 312,923 56,974 56,974 306,624
5 81,819 83,353 83,353 332,716 74,818 74,818 324,331
6 100,717 105,467 105,467 354,641 94,392 94,392 343,754
7 120,560 129,838 129,838 378,815 115,851 115,851 365,049
8 126,588 142,682 142,682 391,557 125,710 125,710 374,840
9 132,917 156,801 156,801 405,565 136,398 136,398 385,456
10 139,563 172,313 172,313 420,956 147,977 147,977 396,957
11 146,541 189,620 189,620 438,105 160,522 160,522 409,419
12 153,868 208,632 208,632 456,969 174,114 174,114 422,919
13 161,561 229,499 229,499 477,674 188,851 188,851 437,556
14 169,639 252,411 252,411 500,408 204,834 204,834 453,430
15 178,121 277,578 277,578 525,377 222,170 222,170 470,649
16 187,027 305,131 305,131 554,975 240,968 240,968 489,319
17 196,378 335,355 335,355 594,880 261,338 261,338 509,552
18 206,197 368,475 368,475 637,802 283,394 283,394 531,461
19 216,507 404,765 404,765 684,023 307,253 307,253 555,163
20 227,332 444,515 444,515 733,834 333,046 333,046 580,788
25 290,140 707,220 707,220 1,047,404 496,999 496,999 743,666
30 370,300 1,117,639 1,117,639 1,506,401 736,367 736,367 993,607
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.85% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------ --------- -------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,049 5,049 250,000 3,961 3,961 250,000
2 12,915 9,929 9,929 250,000 7,792 7,792 250,000
3 19,861 14,640 14,640 250,000 11,489 11,489 250,000
4 27,154 19,214 19,214 250,000 15,053 15,053 250,000
5 34,812 23,666 23,666 250,000 18,476 18,476 250,000
6 42,853 28,129 28,129 250,000 21,756 21,756 250,000
7 51,296 32,494 32,494 250,000 24,876 24,876 250,000
8 60,161 36,879 36,879 250,000 27,946 27,946 250,000
9 69,469 41,159 41,159 250,000 30,831 30,831 250,000
10 79,242 45,325 45,325 250,000 33,514 33,514 250,000
11 89,504 49,434 49,434 250,000 35,989 35,989 250,000
12 100,279 53,406 53,406 250,000 38,244 38,244 250,000
13 111,593 57,225 57,225 250,000 40,276 40,276 250,000
14 123,473 60,890 60,890 250,000 42,074 42,074 250,000
15 135,947 64,404 64,404 250,000 43,626 43,626 250,000
16 149,044 67,701 67,701 250,000 44,910 44,910 250,000
17 162,796 70,845 70,845 250,000 45,896 45,896 250,000
18 177,236 73,830 73,830 250,000 46,548 46,548 250,000
19 192,398 76,652 76,652 250,000 46,821 46,821 250,000
20 208,318 79,303 79,303 250,000 46,670 46,670 250,000
25 300,684 89,584 89,584 250,000 37,931 37,931 250,000
30 418,569 93,380 93,380 250,000 7,138 7,138 250,000
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ----------------------------------- ---------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- ---------- --------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,362 5,362 250,000 4,236 4,236 250,000
2 12,915 10,868 10,868 250,000 8,590 8,590 250,000
3 19,861 16,522 16,522 250,000 13,063 13,063 250,000
4 27,154 22,363 22,363 250,000 17,661 17,661 250,000
5 34,812 28,413 28,413 250,000 22,383 22,383 250,000
6 42,853 34,817 34,817 250,000 27,231 27,231 250,000
7 51,296 41,480 41,480 250,000 32,198 32,198 250,000
8 60,161 48,540 48,540 250,000 37,406 37,406 250,000
9 69,469 55,884 55,884 250,000 42,731 42,731 250,000
10 79,242 63,518 63,518 250,000 48,165 48,165 250,000
11 89,504 71,550 71,550 250,000 53,711 53,711 250,000
12 100,279 79,896 79,896 250,000 59,371 59,371 250,000
13 111,593 88,560 88,560 250,000 65,154 65,154 250,000
14 123,473 97,565 97,565 250,000 71,067 71,067 250,000
15 135,947 106,937 106,937 250,000 77,116 77,116 250,000
16 149,044 116,653 116,653 250,000 83,302 83,302 250,000
17 162,796 126,792 126,792 250,000 89,624 89,624 250,000
18 177,236 137,386 137,386 250,000 96,080 96,080 250,000
19 192,398 148,465 148,465 252,058 102,665 102,665 250,000
20 208,318 159,940 159,940 265,263 109,383 109,383 250,000
25 300,684 223,492 223,492 332,530 145,632 145,632 250,000
30 418,569 298,157 298,157 403,731 189,217 189,217 256,500
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
38 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------- ---------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- --------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,675 5,675 250,000 4,511 4,511 250,000
2 12,915 11,845 11,845 250,000 9,422 9,422 250,000
3 19,861 18,559 18,559 250,000 14,771 14,771 250,000
4 27,154 25,908 25,908 250,000 20,608 20,608 250,000
5 34,812 33,976 33,976 250,000 26,979 26,979 250,000
6 42,853 42,974 42,974 250,000 33,944 33,944 250,000
7 51,296 52,891 52,891 250,000 41,555 41,555 250,000
8 60,161 63,959 63,959 250,000 50,014 50,014 250,000
9 69,469 76,166 76,166 250,000 59,275 59,275 250,000
10 79,242 89,628 89,628 250,000 69,427 69,427 250,000
11 89,504 104,631 104,631 250,000 80,578 80,578 250,000
12 100,279 121,210 121,210 250,000 92,853 92,853 250,000
13 111,593 139,470 139,470 274,120 106,401 106,401 250,000
14 123,473 159,515 159,515 305,395 121,394 121,394 250,000
15 135,947 181,516 181,516 338,644 137,997 137,997 257,657
16 149,044 205,594 205,594 373,936 156,050 156,050 284,044
17 162,796 232,006 232,006 411,551 175,636 175,636 311,802
18 177,236 260,966 260,966 451,711 196,863 196,863 341,027
19 192,398 292,713 292,713 494,664 219,842 219,842 371,822
20 208,318 327,505 327,505 540,666 244,691 244,691 404,295
25 300,684 557,733 557,733 826,011 402,120 402,120 596,110
30 418,569 917,936 917,936 1,237,232 630,215 630,215 850,372
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (-0.85% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED -------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- --------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,044 5,044 255,069 3,941 3,941 254,040
2 12,915 9,912 9,912 259,951 7,730 7,730 257,843
3 19,861 14,597 14,597 264,652 11,365 11,365 261,490
4 27,154 19,132 19,132 269,199 14,840 14,840 264,978
5 34,812 23,529 23,529 273,607 18,147 18,147 268,299
6 42,853 27,937 27,937 278,014 21,281 21,281 271,447
7 51,296 32,233 32,233 282,320 24,221 24,221 274,403
8 60,161 36,533 36,533 286,629 27,071 27,071 277,271
9 69,469 40,708 40,708 290,814 29,692 29,692 279,911
10 79,242 44,745 44,745 294,863 32,062 32,062 282,302
11 89,504 48,694 48,694 298,819 34,170 34,170 284,431
12 100,279 52,469 52,469 302,609 36,000 36,000 286,284
13 111,593 56,043 56,043 306,199 37,545 37,545 287,853
14 123,473 59,412 59,412 309,585 38,792 38,792 289,124
15 135,947 62,572 62,572 312,762 39,725 39,725 290,083
16 149,044 65,428 65,428 315,643 40,316 40,316 290,703
17 162,796 68,063 68,063 318,297 40,532 40,532 290,949
18 177,236 70,463 70,463 320,717 40,330 40,330 290,782
19 192,398 72,617 72,617 322,891 39,660 39,660 290,151
20 208,318 74,508 74,508 324,804 38,476 38,476 289,010
25 300,684 79,249 79,249 329,682 23,517 23,517 274,310
30 418,569 73,562 73,562 324,193 -- -- --
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
40 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (5.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED --------------------------------- ---------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,357 5,357 255,356 4,214 4,214 254,293
2 12,915 10,849 10,849 260,836 8,522 8,522 258,593
3 19,861 16,474 16,474 266,450 12,919 12,919 262,983
4 27,154 22,266 22,266 272,228 17,406 17,406 267,462
5 34,812 28,245 28,245 278,191 21,972 21,972 272,022
6 42,853 34,570 34,570 284,486 26,615 26,615 276,658
7 51,296 41,130 41,130 291,027 31,313 31,313 281,351
8 60,161 48,057 48,057 297,932 36,178 36,178 286,212
9 69,469 55,230 55,230 305,085 41,067 41,067 291,099
10 79,242 62,647 62,647 312,481 45,956 45,956 295,988
11 89,504 70,396 70,396 320,201 50,830 50,830 300,863
12 100,279 78,379 78,379 328,164 55,666 55,666 305,703
13 111,593 86,576 86,576 336,343 60,454 60,454 310,494
14 123,473 94,990 94,990 344,739 65,171 65,171 315,218
15 135,947 103,625 103,625 353,355 69,795 69,795 319,850
16 149,044 112,390 112,390 362,109 74,287 74,287 324,353
17 162,796 121,371 121,371 371,072 78,602 78,602 328,683
18 177,236 130,563 130,563 380,246 82,683 82,683 332,783
19 192,398 139,959 139,959 389,624 86,460 86,460 336,587
20 208,318 149,549 149,549 399,197 89,865 89,865 340,023
25 300,684 199,758 199,758 449,350 98,967 98,967 349,370
30 418,569 251,085 251,085 500,688 85,019 85,019 335,951
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
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% (11.15% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
ACCUMULATED ---------------------------------- --------------------------------
END OF AT 5% CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- ------------- ---------- --------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 6,300 5,670 5,670 255,642 4,488 4,488 254,546
2 12,915 11,824 11,824 261,753 9,347 9,347 259,372
3 19,861 18,504 18,504 268,387 14,607 14,607 264,597
4 27,154 25,794 25,794 275,624 20,304 20,304 270,256
5 34,812 33,769 33,769 283,540 26,472 26,472 276,383
6 42,853 42,659 42,659 292,349 33,150 33,150 283,017
7 51,296 52,426 52,426 302,040 40,370 40,370 290,189
8 60,161 63,291 63,291 312,820 48,300 48,300 298,068
9 69,469 75,224 75,224 324,660 56,859 56,859 306,572
10 79,242 88,323 88,323 337,657 66,086 66,086 315,741
11 89,504 102,834 102,834 352,045 76,034 76,034 325,626
12 100,279 118,754 118,754 367,842 86,757 86,757 336,281
13 111,593 136,202 136,202 385,156 98,325 98,325 347,776
14 123,473 155,331 155,331 404,139 110,808 110,808 360,180
15 135,947 176,314 176,314 424,961 124,280 124,280 373,565
16 149,044 199,243 199,243 447,720 138,809 138,809 388,001
17 162,796 224,408 224,408 472,689 154,464 154,464 403,559
18 177,236 252,028 252,028 500,095 171,313 171,313 420,303
19 192,398 282,349 282,349 530,180 189,420 189,420 438,301
20 208,318 315,634 315,634 563,207 208,861 208,861 457,625
25 300,684 537,578 537,578 796,161 329,582 329,582 577,629
30 418,569 886,074 886,074 1,194,287 499,083 499,083 746,208
</TABLE>
<TABLE>
<C> <S>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, MORTALITY AND EXPENSE RISK RATES, AND FRONT-END
SALES LOADS.
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>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford Life
and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory financial statements referred to above do not
present fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)
<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. 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 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. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
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, for universal life policies and
investment products, generally, 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 recorded upon adoption of the applicable standard;
<PAGE>
- --------------------------------------------------------------------------------
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost, 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 bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) 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, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY 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 6%. 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 Statements of
Income.
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 fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.
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 increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
- --------------------------------------------------------------------------------
("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1997 and 1996.
(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.
<PAGE>
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 58,761 $ 6 $ (195) $ 58,572
Guaranteed and sponsored -- asset-backed... 78,237 1,477 (609) 79,105
States, municipalities and political
subdivisions................................ 25,958 163 (2) 26,119
International governments.................... 7,447 205 0 7,652
Public utilities............................. 70,116 396 (424) 70,088
All other corporate.......................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed.......... 485,953 2,654 (1,081) 487,526
Short-term investments....................... 148,094 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated................... 35,379 0 (4,160) 31,219
----------- ---------- ---------- -----------
Total common stocks.......................... $ 48,443 $ 713 $(4,160) $ 44,996
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, 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>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>
The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts 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. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
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 HLI, 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 (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</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 1997 or
1996. 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
<PAGE>
- --------------------------------------------------------------------------------
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
$265, $358, and $1,034 in 1997, 1996 and 1995, 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 1997, 1996 and 1995.
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 8.5% for 1997, 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
1997, 1996 and 1995.
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 1997, 1996 and 1995.
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>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>
The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, 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 $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1997 and 1996, 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 $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
<PAGE>
PART II
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
----------------------------------
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectuses consisting of 85 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 Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of
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 Hartford. (3)
(A6b) Bylaws of Hartford. (2)
(A7) Not Applicable.
- -----------------
(1) Incorporated by reference to the Initial Submission to the
Registration Statement File No. 33-63731, filed on October 30,
1995.
(2) Incorporated by reference to the Pre-Effective Amendment No. 1 to
the Registration Statement File No. 33-63731, filed on May 21,
1996.
(3) Incorporated by reference to the Post-Effective Amendement No. 4
to the Registration Statement File No. 33-63731, filed on
February 18, 1998.
<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 Counsel 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) Copy of Power of Attorney.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
----------------------------------------
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
------------------------------
Under Section 33-772 of the Connecticut General Statutes, unless limited by
its certificate of incorporation, the Registrant must indemnify a director
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with
the proceeding.
The Registrant may indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the 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 Registrant, and, with respect to any
criminal proceeding, had no reason to believe his conduct was unlawful. Conn.
Gen. Stat. Section 33-771(a). Additionally, pursuant to Conn. Gen. Stat.
Section 33-776, the Registrant may indemnify officers and employees or agents
for liability incurred and for any expenses to which they becomes subject by
reason of being or having been an employees or officers of the Registrant.
Connecticut law does not prescribe standards for the indemnification of
officers, employees and agents and expressly states that their
indemnification may be broader than the right of indemnification granted to
directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
<PAGE>
Notwithstanding the fact that Connecticut law obligates the Registrant to
indemnify only a director that was successful on the merits in a suit, under
Article VIII, Section 2 of the Registrant's bylaws, the Registrant must
indemnify both directors and officers of the Registrant who are parties or
threatened to be parties to a legal proceeding by reason of his being or
having been a director or officer of the Registrant for any expenses 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 criminal
proceedings, had no reason to believe his conduct was unlawful. Unless
otherwise mandated by a court, no indemnification shall be made if such
officer or director is adjudged to be liable for negligence or misconduct in
the performance of his duty to the Registrant.
Additionally, the directors and officers of Hartford and Hartford Equity
Sales Company, Inc. ("HESCO") are covered under a directors and officers
liability insurance policy issued to The Hartford Financial Services Group,
Inc. and its subsidiaries. Such policy will reimburse the Registrant for any
payments that it shall make to directors and officers pursuant to law and
will, subject to certain exclusions contained in the policy, further pay any
other costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in his
past or present capacity as such, and for which he may be liable, except as
to any liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities 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, 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 10th day of April 1998.
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
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: April 10, 1998
David M. Znamierowski, -----------------
Senior Vice President,
Director *
<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, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Copy of Power of Attorney
<PAGE>
EXHIBIT 2
April 10, 1998 LYNDA GODKIN, Senior Vice
President, General Counsel &
Corporate Secretary
Law Department
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
FILE NO. 33-63731
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance
Company (the "Company"), a Connecticut insurance company, and 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.
<PAGE>
Board of Directors
Hartford Life and Annuity Insurance Company
April 10, 1998
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,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
[LOGO]
HARTFORD LIFE
Pauline Gyllenhammer, FSA, MAAA
Senior Actuarial Associate
April 10, 1998
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 1993, as amended ("Securities Act"), of
a certain group flexible premium variable life insurance policy (the
"Policy") that will be offered and sold by 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,
/s/ Pauline Gyllenhammer
Pauline Gyllenhammer
Senior Actuarial Associate
<PAGE>
EXHIBIT 6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement FIle No. 33-63731 for Hartford Life and Annuity
Insurance Company ICMG Registered Variable Life Separate Account One on Form
S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 15, 1998
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Gregory A. Boyko
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life and Annuity Insurance Company under the
Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Gregory A. Boyko Dated as of March 16, 1998
- ------------------------------ --------------------------
Gregory A. Boyko
/s/ Lynda Godkin Dated as of March 16, 1998
- ------------------------------ --------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
- ------------------------------ --------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
- ------------------------------ --------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of March 16, 1998
- ------------------------------ --------------------------
David M. Znamierowski
