<PAGE>
<TABLE>
<S> <C>
OMNISOURCE-SM-
GROUP FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
TELEPHONE: (800) 861-1408 [LOGO]
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus describes information you should know before you enroll for
coverage under the OmniSource-SM- group flexible premium variable life insurance
policy. Please read it carefully.
The OmniSource-SM- group flexible premium variable life insurance policy is a
contract issued by Hartford Life and Annuity Insurance Company to an employer, a
trust sponsored by an employer or an employer sponsored program. We will issue
you a certificate of insurance that describes your rights, benefits, obligations
and options under the group policy, including your payment of premiums and our
payment of a death benefit to your beneficiaries. Your certificate is:
x Flexible premium, because you have options when selecting the timing and
amounts of your premium payments.
x Variable, because the value of your life insurance coverage may fluctuate
with the performance of the underlying Portfolio(s).
- --------------------------------------------------------------------------------
After you enroll, you allocate your payments to separate divisions of our
separate account, known as Investment Divisions. The current Investment
Divisions available are:
<TABLE>
<CAPTION>
INVESTMENT DIVISION PURCHASES SHARES OF:
<S> <C>
Alger American Growth Investment Division (EFFECTIVE Alger American Growth Portfolio of The Alger
JULY 5, 2000, CLOSED TO NEW PREMIUMS AND TRANSFER OF American Fund
INVESTMENT VALUE)
Alger American Small Capitalization Investment Division Alger American Small Capitalization Portfolio of
(EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND The Alger American Fund
TRANSFER OF INVESTMENT VALUE)
American Funds Global Growth Investment Division Class 2 of the Global Growth Fund of American
Funds Insurance Series
American Funds Global Small Capitalization Investment Class 2 of the Global Small Capitalization Fund of
Division American Funds Insurance Series
American Funds Growth Investment Division Class 2 of the Growth Fund of American Funds
Insurance Series
American Funds International Investment Division Class 2 of the International Fund of American
Funds Insurance Series
American Funds Asset Allocation Investment Division Class 2 of the Asset Allocation Fund of American
Funds Insurance Series
Deutsche VIT EAFE-Registered Trademark- Equity Index EAFE-Registered Trademark- Equity Index Fund of
Investment Division the Deutsche Asset Management VIT Funds
Deutsche VIT Equity 500 Index Investment Division Equity 500 Index Fund of the Deutsche Asset
Management VIT Funds
Deutsche VIT Small Cap Index Investment Division Small Cap Index Fund of the Deutsche Asset
Management VIT Funds
Franklin Small Cap Investment Division Class 2 of the Franklin Small Cap Fund of the
Franklin Templeton Variable Insurance Products
Trust
Franklin Strategic Income Securities Investment Division Class 1 of the Franklin Strategic Income
Securities Fund of the Franklin Templeton Variable
Insurance Products Trust
Franklin Templeton Mutual Shares Securities Investment Class 2 of the Mutual Shares Securities Fund of
Division the Franklin Templeton Variable Insurance Products
Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISION PURCHASES SHARES OF:
<S> <C>
Templeton Growth Securities Investment Division Class 2 of the Templeton Growth Securities Fund of
the Franklin Templeton Variable Insurance Products
Trust
Templeton International Securities Investment Division Class 2 of the Templeton International Securities
Fund of the Franklin Templeton Variable Insurance
Products Trust
Hartford Capital Appreciation Investment Division Class IA of Hartford Capital Appreciation HLS Fund
Hartford Stock Investment Division Class IA of Hartford Stock HLS Fund
Hartford Advisers Investment Division Class IA of Hartford Advisers HLS Fund
Hartford Bond Investment Division Class IA of Hartford Bond HLS Fund
Hartford Money Market Investment Division Class IA of Hartford Money Market HLS Fund
Janus Aspen Aggressive Growth Investment Division Service Shares of the Aggressive Growth Portfolio
of the Janus Aspen Series
Janus Aspen International Growth Investment Division Service Shares of the International Growth
Portfolio of the Janus Aspen Series
Janus Aspen Worldwide Growth Investment Division Service Shares of the Worldwide Growth Portfolio
of the Janus Aspen Series
Janus Aspen Balanced Investment Division Service Shares of the Balanced Portfolio of the
Janus Aspen Series
Janus Aspen Flexible Income Investment Division Service Shares of the Flexible Income Portfolio of
the Janus Aspen Series
J.P. Morgan Bond Investment Division J.P. Morgan Bond Portfolio of the J.P. Morgan
Series Trust II
J.P. Morgan International Opportunities Investment J.P. Morgan International Opportunities Portfolio
Division of the J.P. Morgan Series Trust II
J.P. Morgan Small Company Investment Division J.P. Morgan Small Company Portfolio of the
J.P. Morgan Series Trust II
J.P. Morgan U.S. Disciplined Equity Investment Division J.P. Morgan U.S. Disciplined Equity Portfolio of
the J.P. Morgan Series Trust II
MFS Emerging Growth Investment Division MFS-Registered Trademark- Emerging Growth Series
of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
MFS Capital Opportunities Investment Division MFS-Registered Trademark- Capital Opportunities
Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
MFS Growth with Income Investment Division MFS-Registered Trademark- Growth with Income
Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
MFS New Discovery Investment Division MFS-Registered Trademark- New Discovery Series of
the MFS-Registered Trademark- Variable Insurance
Trust-SM-
MFS High Income Investment Division MFS-Registered Trademark- High Income Series of
the MFS-Registered Trademark- Variable Insurance
Trust-SM-
MSAM Emerging Markets Equity Investment Division Emerging Markets Equity Portfolio of The Universal
Institutional Funds, Inc.
MSAM Equity Growth Investment Division (EFFECTIVE JULY 5, Equity Growth Portfolio of The Universal
2000, CLOSED TO NEW PREMIUMS AND TRANSFER OF INVESTMENT Institutional Funds, Inc.
VALUE)
MAS Fixed Income Investment Division Fixed Income Portfolio of The Universal
Institutional Funds, Inc.
MSAM Global Equity Investment Division (EFFECTIVE JULY 5, Global Equity Portfolio of The Universal
2000, CLOSED TO NEW PREMIUMS AND TRANSFER OF INVESTMENT Institutional Funds, Inc.
VALUE)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT DIVISION PURCHASES SHARES OF:
<S> <C>
MAS High Yield Investment Division High Yield Portfolio of The Universal
Institutional Funds, Inc.
MAS Mid Cap Growth Investment Division Mid Cap Growth Portfolio of The Universal
Institutional Funds, Inc.
MSAM Technology Investment Division Technology Portfolio of The Universal
Institutional Funds, Inc.
MAS Value Investment Division (EFFECTIVE JULY 5, 2000, Value Portfolio of The Universal Institutional
CLOSED TO NEW PREMIUMS AND TRANSFER OF INVESTMENT VALUE) Funds, Inc.
Neuberger Berman Advisers Management Trust Balanced Balanced Portfolio of the Neuberger Berman
Investment Division (EFFECTIVE JULY 5, 2000, CLOSED TO NEW Advisers Management Trust
PREMIUMS AND TRANSFER OF INVESTMENT VALUE)
Neuberger Berman Advisers Management Trust Limited Limited Maturity Bond Portfolio of the Neuberger
Maturity Bond Investment Division (EFFECTIVE JULY 5, 2000, Berman Advisers Management Trust
CLOSED TO NEW PREMIUMS AND TRANSFER OF INVESTMENT VALUE)
Neuberger Berman Advisers Management Trust Partners Partners Portfolio of Neuberger Berman Advisers
Investment Division (EFFECTIVE JULY 5, 2000, CLOSED TO NEW Management Trust
PREMIUMS AND TRANSFER OF INVESTMENT VALUE)
Variable Insurance Products Fund Equity-Income Investment Initial Class of the Equity-Income Portfolio of
Division (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS the Variable Insurance Products Fund
AND TRANSFER OF INVESTMENT VALUE)
Variable Insurance Products Fund High Income Investment Initial Class of the High Income Portfolio of the
Division (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS Variable Insurance Products Fund
AND TRANSFER OF INVESTMENT VALUE)
Variable Insurance Products Fund Overseas Investment Initial Class of the Overseas Portfolio of the
Division (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS Variable Insurance Products Fund
AND TRANSFER OF INVESTMENT VALUE)
Variable Insurance Products Fund II Asset Manager Initial Class of the Asset Manager Portfolio of
Investment Division (EFFECTIVE JULY 5, 2000, CLOSED TO NEW the Variable Insurance Products Fund II
PREMIUMS AND TRANSFER OF INVESTMENT VALUE)
</TABLE>
If you decide to enroll for coverage under this group life insurance policy, you
should keep this Prospectus for your records.
The Hartford prospectus included in this OmniSource-SM- Prospectus contains
information relating to all of the Funds they offer. Not all of the Funds in the
Hartford prospectus are available to you. Please review this OmniSource-SM-
product prospectus for details regarding available Funds.
Although we file this Prospectus with the Securities and Exchange Commission,
the Commission doesn't approve or disapprove these securities or determine if
the information is truthful or complete. Anyone who represents that the
Securities and Exchange Commission does these things may be guilty of a criminal
offense.
This Prospectus can also be obtained from the Securities and Exchange
Commission's website (HTTP://WWW.SEC.GOV).
- --------------------------------------------------------------------------------
PROSPECTUS DATED: MAY 1, 2000
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ----------------------------------------------------------------------
<S> <C>
SUMMARY OF BENEFITS AND RISKS 6
- ----------------------------------------------------------------------
Benefits of Your Policy 6
- ----------------------------------------------------------------------
What Does Your Premium Pay For? 6
- ----------------------------------------------------------------------
Risks of Your Policy 6
- ----------------------------------------------------------------------
FEE TABLES 7
- ----------------------------------------------------------------------
ABOUT US 12
- ----------------------------------------------------------------------
Hartford Life and Annuity Insurance Company 12
- ----------------------------------------------------------------------
ICMG Registered Variable Life Separate Account One 12
- ----------------------------------------------------------------------
The Funds 12
- ----------------------------------------------------------------------
CHARGES AND DEDUCTIONS 15
- ----------------------------------------------------------------------
Deductions from Premium 15
- ----------------------------------------------------------------------
Deductions from Investment Value 16
- ----------------------------------------------------------------------
YOUR CERTIFICATE 17
- ----------------------------------------------------------------------
Ownership Rights 17
- ----------------------------------------------------------------------
Beneficiary 17
- ----------------------------------------------------------------------
Assignment 17
- ----------------------------------------------------------------------
Statements 17
- ----------------------------------------------------------------------
Issuance of Your Certificate 17
- ----------------------------------------------------------------------
Right to Examine the Certificate 17
- ----------------------------------------------------------------------
PREMIUMS 17
- ----------------------------------------------------------------------
Premium Payment Flexibility 17
- ----------------------------------------------------------------------
Allocation of Premium Payments 17
- ----------------------------------------------------------------------
Accumulation Units 18
- ----------------------------------------------------------------------
Accumulation Unit Values 18
- ----------------------------------------------------------------------
Premium Limitation 18
- ----------------------------------------------------------------------
DEATH BENEFITS AND POLICY VALUES 18
- ----------------------------------------------------------------------
Values Under the Certificate 18
- ----------------------------------------------------------------------
Death Benefits 19
- ----------------------------------------------------------------------
MAKING WITHDRAWALS FROM THE CERTIFICATE 20
- ----------------------------------------------------------------------
Surrender 20
- ----------------------------------------------------------------------
Partial Withdrawals 20
- ----------------------------------------------------------------------
TRANSFERS AMONG INVESTMENT DIVISIONS 21
- ----------------------------------------------------------------------
Amount and Frequency of Transfers 21
- ----------------------------------------------------------------------
Transfers to or from Investment Divisions 21
- ----------------------------------------------------------------------
Asset Rebalancing 21
- ----------------------------------------------------------------------
Dollar Cost Averaging 21
- ----------------------------------------------------------------------
Procedures for Telephone Transfers 22
- ----------------------------------------------------------------------
Processing of Transactions 22
- ----------------------------------------------------------------------
LOANS 22
- ----------------------------------------------------------------------
Loan Interest 22
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
- ----------------------------------------------------------------------
<S> <C>
Credited Interest 22
- ----------------------------------------------------------------------
Loan Repayments 23
- ----------------------------------------------------------------------
Termination Due to Excessive Debt 23
- ----------------------------------------------------------------------
Effect of Loans on Investment Value 23
- ----------------------------------------------------------------------
LAPSE AND REINSTATEMENT 23
- ----------------------------------------------------------------------
Lapse and Grace Period 23
- ----------------------------------------------------------------------
Reinstatement 23
- ----------------------------------------------------------------------
TERMINATION OF POLICY 23
- ----------------------------------------------------------------------
CONTRACT LIMITATIONS 24
- ----------------------------------------------------------------------
Partial Withdrawals 24
- ----------------------------------------------------------------------
Transfers of Account Value 24
- ----------------------------------------------------------------------
Face Amount Increases or Decreases 24
- ----------------------------------------------------------------------
Valuation of Payments and Transfers 24
- ----------------------------------------------------------------------
Deferral of Payments 24
- ----------------------------------------------------------------------
CHANGES TO CONTRACT OR SEPARATE ACCOUNT 24
- ----------------------------------------------------------------------
Modification of Policy 24
- ----------------------------------------------------------------------
Substitution of Funds 24
- ----------------------------------------------------------------------
Change in Operation of the Separate Account 24
- ----------------------------------------------------------------------
Separate Account Taxes 24
- ----------------------------------------------------------------------
SUPPLEMENTAL BENEFITS 24
- ----------------------------------------------------------------------
Maturity Date Extension Rider 24
- ----------------------------------------------------------------------
OTHER MATTERS 24
- ----------------------------------------------------------------------
Reduced Charges for Eligible Groups 24
- ----------------------------------------------------------------------
Our Rights 25
- ----------------------------------------------------------------------
Limit on Right to Contest 25
- ----------------------------------------------------------------------
Misstatement as to Age or Sex 25
- ----------------------------------------------------------------------
Assignment 25
- ----------------------------------------------------------------------
Dividends 25
- ----------------------------------------------------------------------
TAXES 25
- ----------------------------------------------------------------------
General 25
- ----------------------------------------------------------------------
Taxation of Hartford and the Separate Account 25
- ----------------------------------------------------------------------
Income Taxation of Certificate Benefits 26
- ----------------------------------------------------------------------
Modified Endowment Contracts 26
- ----------------------------------------------------------------------
Diversification Requirements 26
- ----------------------------------------------------------------------
Ownership of the Assets in the Separate Account 27
- ----------------------------------------------------------------------
Tax Deferral During Accumulation Period 27
- ----------------------------------------------------------------------
Federal Income Tax Withholding 27
- ----------------------------------------------------------------------
Other Tax Considerations 27
- ----------------------------------------------------------------------
PERFORMANCE RELATED INFORMATION 28
- ----------------------------------------------------------------------
LEGAL PROCEEDINGS 28
- ----------------------------------------------------------------------
GLOSSARY OF SPECIAL TERMS 29
- ----------------------------------------------------------------------
WHERE YOU CAN FIND MORE INFORMATION 30
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SUMMARY OF BENEFITS AND RISKS
BENEFITS OF YOUR POLICY
FLEXIBILITY -- We designed the policy to be flexible to meet your specific life
insurance needs. You have the flexibility to choose death benefit options,
investment options, and premiums you pay.
DEATH BENEFIT -- We will pay a death benefit to your beneficiary if the Insured
dies while the Certificate is in force. You select one of two death benefit
options. These options are:
- Option A -- Under Option A the death benefit is equal to the larger of:
- The Face Amount; and
- The Variable Insurance Amount.
- Option B -- Under Option B the death benefit is equal to the larger of:
- The Face Amount plus the Cash Value; and
- The Variable Insurance Amount.
We reduce the death benefit by any money you owe us, such as outstanding Loans
or Loan interest. You may change your death benefit option under certain
circumstances. You may also increase or decrease the Face Amount on your
Certificate under certain circumstances.
INVESTMENT OPTIONS -- You may invest in up to 20 different Investment Divisions,
from a choice of 49 Investment Divisions available under your Certificate. You
may transfer money among the Investment Divisions, subject to restrictions.
PREMIUM PAYMENTS -- You have the flexibility to choose when and in what amounts
you pay premiums.
RIGHT TO EXAMINE YOUR CERTIFICATE -- For 10 days after you receive your
Certificate, you may cancel it without paying a sales charge. Some states
provide a longer examination period.
WITHDRAWALS -- You may withdraw all or part of amounts available under your
Certificate, subject to certain limitations.
LOANS -- You may take a Loan under the Certificate. The Certificate secures the
Loan.
PAYMENT OPTIONS -- Your beneficiary may choose to receive the proceeds due under
the Certificate,
- - in a lump sum; or
- - over a period of time by using one of several payment options.
DOLLAR COST AVERAGING -- You may elect to allocate your Net Premiums among the
Investment Divisions using the dollar cost averaging option program. The main
objective of this program is to minimize the impact of short-term price
fluctuations to allow you to take advantage of market fluctuations.
ASSET REBALANCING -- You may elect to have us automatically reallocate
Investment Value periodically in order to maintain a particular percentage
allocation among the Investment Divisions that you selected ("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.
WHAT DOES YOUR PREMIUM PAY FOR?
Your premium payment does three things: (1) it pays for insurance coverage;
(2) it acts as an investment in the Investment Divisions; and (3) it pays for
sales loads and other charges.
RISKS OF YOUR POLICY
INVESTMENT PERFORMANCE -- The value of your Certificate will fluctuate with the
performance of its Investment Divisions. Your investment options may decline in
value, or they may not perform to your expectations. We do not guarantee your
Investment Value in the Investment Divisions.
TERMINATION --
- - CERTIFICATE -- Your Certificate could terminate if the Cash Surrender Value
becomes too low to pay the charges due under the Certificate. If this occurs,
Hartford will notify you in writing. You will then have sixty-one (61) days to
pay additional amounts to prevent the Certificate from terminating.
- - POLICY -- Hartford or the employer may terminate participation in the Policy.
The party terminating the Policy must provide you with a notice of the
termination, at your last known address, at least fifteen (15) days prior to
the date of termination.
PARTIAL WITHDRAWAL LIMITATIONS -- We limit you to twelve (12) partial
withdrawals per Coverage Year. These withdrawals will reduce your Cash Surrender
Value, may reduce your death benefit, and may be subject to a processing charge.
TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers and
remaining balances, and to limit the number and frequency of transfers among the
Investment Divisions.
LOANS -- Taking a Loan under your Certificate may increase the risk that your
Certificate will lapse, may have a permanent effect on your Investment Value,
and may reduce the Death Proceeds.
ADVERSE TAX CONSEQUENCES -- You may be subject to income tax if you receive any
Loans, withdrawals or other amounts under the Certificate. You may also be
subject to a 10% penalty tax.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
FEE TABLES
The following tables describe the MAXIMUM fees and expenses that you will pay
under the Certificate.
MAXIMUM TRANSACTION FEES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
<S> <C> <C>
- --------------------------------------------------------------------------------------------
Sales Charge (1) When you pay premium. 9% of any premium paid for
Coverage Years 1 through 7, and
7% of any premium paid in
Coverage Years 8 and later.
- --------------------------------------------------------------------------------------------
Premium Tax Charge When you pay premium. Generally, between 0% and 4% of
any premium you pay. The
percentage we deduct will vary
by locale depending on the tax
rates in effect there.
- --------------------------------------------------------------------------------------------
Deferred Acquisition When you pay premium. 1.25% of each premium you pay.
Cost Tax Charge We will adjust the charge based
on changes in the applicable tax
law.
- --------------------------------------------------------------------------------------------
Transfer Fees When you make a transfer after $50 per transfer.
the 12th transfer in any
Coverage Year.
- --------------------------------------------------------------------------------------------
Partial Withdrawal Fee When you take a withdrawal. $25 per partial withdrawal.
<CAPTION>
CHARGE CERTIFICATES FROM WHICH CHARGE IS DEDUCTED
<S> <C>
- ------------------------
Sales Charge (1) All
- ------------------------
Premium Tax Charge All
- ------------------------
Deferred Acquisition All
Cost Tax Charge
- ------------------------
Transfer Fees Those Certificates with more than 12
transfers per Contract Year.
- ------------------------
Partial Withdrawal Fee Those Certificates where a partial
withdrawal is made.
</TABLE>
(1) The current front end sales load charged 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 next table describes the MAXIMUM fees and expenses that you will pay
periodically, not including Fund fees and expenses.
MAXIMUM ANNUAL CHARGES OTHER THAN FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CHARGE WHEN CHARGE IS DEDUCTED AMOUNT DEDUCTED
<S> <C> <C>
- --------------------------------------------------------------------------------------------
Cost of Insurance Monthly. The charge is the cost of
Charges insurance rate times the net
amount at risk. The cost of
insurance rates depend on issue
age, sex, insurance class and
substandard rating.
The monthly cost of insurance
charge ranges from $0.084 per
$1,000 to $85.527 per $1,000.
- --------------------------------------------------------------------------------------------
Mortality and Expense Daily. On an annual basis, .65% of the
Risk Charge value of each Investment
Division's assets.
- --------------------------------------------------------------------------------------------
Administrative Charge Monthly. $10 per Coverage Month.
- --------------------------------------------------------------------------------------------
Rider Charges Monthly. Individualized based on optional
rider selected.
<CAPTION>
CHARGE CERTIFICATES FROM WHICH CHARGE IS DEDUCTED
<S> <C>
- ------------------------
Cost of Insurance All
Charges
- ------------------------
Mortality and Expense All
Risk Charge
- ------------------------
Administrative Charge All
- ------------------------
Rider Charges Only those Certificates with benefits
provided by rider.
</TABLE>
The next table describes the Fund fees and expenses that you will pay
periodically. The table shows the annual fees and expenses charged by the Funds
for the year ended December 31, 1999. The prospectus for each Fund contains more
detail concerning each Fund's fees and expenses.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses
as of Each Fund's Fiscal Year End
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL
OPERATING
EXPENSES
OTHER (AFTER WAIVERS
MANAGEMENT FEE EXPENSES (AFTER AND/OR
(AFTER WAIVERS) 12B-1 FEES REIMBURSEMENTS) REIMBURSEMENTS)(1)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio (2) 0.75% N/A 0.04% 0.79%
- -------------------------------------------------------------------------------------------------------------------------------
Alger American Small Capitalization Portfolio (2) 0.85% N/A 0.05% 0.90%
- -------------------------------------------------------------------------------------------------------------------------------
American Funds Global Growth Fund -- Class 2 0.68% 0.25% 0.03% 0.96%
- -------------------------------------------------------------------------------------------------------------------------------
American Funds Global Small Capitalization Fund --
Class 2 0.78% 0.25% 0.03% 1.06%
- -------------------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund -- Class 2 0.38% 0.25% 0.01% 0.64%
- -------------------------------------------------------------------------------------------------------------------------------
American Funds International Fund -- Class 2 0.55% 0.25% 0.05% 0.85%
- -------------------------------------------------------------------------------------------------------------------------------
American Funds Asset Allocation Fund -- Class 2 0.43% 0.25% 0.01% 0.69%
- -------------------------------------------------------------------------------------------------------------------------------
Deutsche VIT EAFE-Registered Trademark- Equity Index
Fund (3) 0.26% N/A 0.39% 0.65%
- -------------------------------------------------------------------------------------------------------------------------------
Deutsche VIT Equity 500 Index Fund (3) 0.14% N/A 0.16% 0.30%
- -------------------------------------------------------------------------------------------------------------------------------
Deutsche VIT Small Cap Index Fund (3) 0.13% N/A 0.32% 0.45%
- -------------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund -- Class 2 (4)(5) 0.55% 0.25% 0.27% 1.07%
- -------------------------------------------------------------------------------------------------------------------------------
Franklin Strategic Income Securities Fund --
Class 1 (6) 0.43% N/A 0.32% 0.75%
- -------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund -- Class 2 (4)(7) 0.60% 0.25% 0.19% 1.04%
- -------------------------------------------------------------------------------------------------------------------------------
Templeton Growth Securities Fund -- Class 2 (4)(8) 0.83% 0.25% 0.05% 1.13%
- -------------------------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund --
Class 2 (4)(9) 0.69% 0.25% 0.19% 1.13%
- -------------------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund -- Class IA 0.64% N/A 0.02% 0.66%
- -------------------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund -- Class IA 0.46% N/A 0.02% 0.48%
- -------------------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund -- Class IA 0.63% N/A 0.02% 0.65%
- -------------------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund -- Class IA 0.49% N/A 0.03% 0.52%
- -------------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund -- Class IA 0.45% N/A 0.02% 0.47%
- -------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio -- Service
Shares (10) 0.67% 0.25% 0.02% 0.94%
- -------------------------------------------------------------------------------------------------------------------------------
Janus Aspen International Growth Portfolio -- Service
Shares (10) 0.65% 0.25% 0.11% 1.01%
- -------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio -- Service
Shares (10) 0.65% 0.25% 0.05% 0.95%
- -------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio -- Service Shares (10) 0.65% 0.25% 0.02% 0.92%
- -------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio -- Service
Shares (10) 0.65% 0.25% 0.07% 0.97%
- -------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Bond Portfolio (11) 0.30% N/A 0.45% 0.75%
- -------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan International Opportunities Portfolio (11) 0.60% N/A 0.60% 1.20%
- -------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Small Company Portfolio (11) 0.60% N/A 0.55% 1.15%
- -------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio (11) 0.35% N/A 0.50% 0.85%
- -------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series (12) 0.75% N/A 0.09% 0.84%
- -------------------------------------------------------------------------------------------------------------------------------
MFS Capital Opportunities Series (12)(13) 0.75% N/A 0.16% 0.91%
- -------------------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Series (12) 0.75% N/A 0.13% 0.88%
- -------------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series (12)(13) 0.90% N/A 0.17% 1.07%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
OPERATING EXPENSES
OTHER (AFTER ANY WAIVERS
MANAGEMENT FEE EXPENSES (AFTER AND/OR
(AFTER WAIVERS) 12B-1 FEES REIMBURSEMENTS) REIMBURSEMENTS)(1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
MFS High Income Series (12)(13) 0.75% N/A 0.16% 0.91%
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Emerging
Markets Equity Portfolio (14) 0.42% N/A 1.37% 1.79%
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Equity
Growth Portfolio (2)(14) 0.29% N/A 0.56% 0.85%
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Fixed Income
Portfolio (14) 0.14% N/A 0.56% 0.70%
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Global
Equity Portfolio (2)(14) 0.47% N/A 0.68% 1.15%
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. High Yield
Portfolio (14) 0.19% N/A 0.61% 0.80%
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Mid Cap
Growth Portfolio (14) 0.00%* N/A 1.05%* 1.05%*
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Technology
Portfolio (14) 0.00%* N/A 1.15%* 1.15%*
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Value
Portfolio (2)(14) 0.18% N/A 0.67% 0.85%
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Advisers Management Trust Balanced
Portfolio (2) 0.85% N/A 0.17% 1.02%
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Advisers Management Trust Limited
Maturity Bond Portfolio (2) 0.65% N/A 0.11% 0.76%
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Advisers Management Trust Partners
Portfolio (2) 0.80% N/A 0.07% 0.87%
- --------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund Equity-Income
Portfolio (2)(15) 0.48% N/A 0.08% 0.56%
- --------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund High Income
Portfolio (2) 0.58% N/A 0.11% 0.69%
- --------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund Overseas
Portfolio (2)(15) 0.73% N/A 0.14% 0.87%
- --------------------------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II Asset Manager
Portfolio (2)(15) 0.53% N/A 0.09% 0.62%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
(1) "Management Fee" generally represents the fee paid to the investment adviser
or its affiliate for investment and administrative services provided. "Other
Expenses" are operating expenses (other than management fees) deducted from
the Portfolios, including legal, accounting and custodian fees. For a
complete description of the nature of the services provided in consideration
of the operating expenses deducted, please see the Fund prospectuses.
(2) Effective July 5, 2000, closed to new premiums or transfer of Investment
Value.
(3) The investment advisor, Bankers Trust Company, has contractually agreed to
waive its management fee and reimburse certain expenses. Such waivers by
Bankers Trust Company will stay in effect until at least April 30, 2001.
Without expense waivers and reimbursements, it is estimated that Management
Fees, Other Expenses and Total Operating Expenses for Deutsche VIT EAFE
Equity Index Fund, Deutsche VIT Equity 500 Index Fund and Deutsche VIT Small
Cap Index Fund would have been as follows:
<TABLE>
<CAPTION>
OTHER TOTAL OPERATING
MANAGEMENT FEE 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Deutsche VIT EAFE Equity Index Fund 0.45% N/A 0.69% 1.14%
- -----------------------------------------------------------------------------------------------------------
Deutsche VIT Equity 500 Index Fund 0.20% N/A 0.23% 0.43%
- -----------------------------------------------------------------------------------------------------------
Deutsche VIT Small Cap Index Fund 0.35% N/A 0.83% 1.18%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(4) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus. While the maximum amount payable under the fund's
class 2 rule 12b-1 plan is 0.35% per year of the fund's average daily net
assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at 0.25% per year.
(5) On 2/8/00, a merger and reorganization was approved that combined the assets
of the fund with a similar fund of the Templeton Variable Products
Series Fund, effective 5/1/00. On 2/8/00, fund shareholders approved new
management fees, which apply to the combined fund effective 5/1/00. The
table shows restated total expenses based on the new fees and assets of the
fund as of 12/31/99, and not the assets of the combined fund. However, if
the table reflected both the new fees and the combined assets, the fund's
expenses after 5/1/00 would be estimated as: Management Fees 0.55%,
Distribution and Service Fees 0.25%, Other Expenses 0.27%, and Total Fund
Operating Expenses 1.07%.
(6) The manager and administrator have agreed in advance to waive or limit their
respective fees and the manager to assume as its own expense certain
expenses otherwise payable by the fund so that total annual fund operating
expenses do not exceed 0.75% for the current fiscal year. After
December 31, 2001, the manager and administrator may end this arrangement at
any time. The management fees shown are based on the fund's maximum
contractual amount. Other expenses are estimated.
<TABLE>
<CAPTION>
OTHER TOTAL OPERATING
MANAGEMENT FEE 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Franklin Strategic Income Securities Fund 0.43% N/A 0.52% 0.95%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(7) On 2/8/00, a merger and reorganization was approved that combined the fund
with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based on the fund's assets as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 0.60%, Distribution and Service Fees 0.25%,
Other Expenses 0.19%, and Total Fund Operating Expenses 1.04%.
(8) On 2/8/00, a merger and reorganization was approved that combined the fund
with a similar fund of Templeton Variable Products Series Fund, effective
5/1/00. The table shows total expenses based on the fund's assets as of
12/31/99, and not the assets of the combined fund. However, if the table
reflected combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 0.80%, Distribution and Service Fees 0.25%,
Other Expenses 0.05%, and Total Fund Operating Expenses 1.10%. The fund
administration fee is paid indirectly through the management fee.
(9) On 2/8/00, shareholders approved a merger and reorganization that combined
the fund with the Templeton International Equity Fund, effective 5/1/00. The
shareholders of that fund had approved new management fees, which apply to
the combined fund effective 5/1/00. The table shows restated total expenses
based on the new fees and the assets of the fund as of 12/31/99, and not the
assets of the combined fund. However, if the table reflected both the new
fees and the combined assets, the fund's expenses after 5/1/00 would be
estimated as: Management Fees 0.65%, Distribution and Service Fees 0.25%,
Other Expenses 0.20%, and Total Fund Operating Expenses 1.10%.
(10) All expenses are based on the estimated expenses that the new Service
Shares Class of each Portfolio expects to incur in its initial fiscal year.
All expenses are shown without the effect of expense offset arrangements.
(11) Pursuant to a contractual agreement, through at least April 30, 2001, fees
and expenses were reimbursed to the extent expenses exceeded .75%, .85%,
1.15% and 1.20% of the average daily net assets of J.P. Morgan Bond
Portfolio, J.P. Morgan U.S. Disciplined Equity Portfolio, J.P. Morgan Small
Company Portfolio and J.P. Morgan International Opportunities Portfolio,
respectively. Without such reimbursement, Management Fees, Other Expenses
and Total Operating Expenses would have been as follows:
<TABLE>
<CAPTION>
OTHER TOTAL OPERATING
MANAGEMENT FEE 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
J.P. Morgan Bond Portfolio 0.30% N/A 0.45% 0.75%
- -----------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Disciplined Equity Portfolio 0.37% N/A 0.50% 0.87%
- -----------------------------------------------------------------------------------------------------------
J.P. Morgan Small Company Portfolio 0.60% N/A 1.97% 2.57%
- -----------------------------------------------------------------------------------------------------------
J.P. Morgan International Opportunities Portfolio 0.60% N/A 1.38% 1.98%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(12) Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent. Each Series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the Series' expenses. "Other Expenses" do
not take into account the expense reductions, and are therefore higher than
the actual expenses of the Series.
(13) MFS has contractually agreed through at least May 1, 2001 to bear expenses
for these Series so that "Other Expenses" will not exceed 0.15% of the
average daily net assets of the Series during the current fiscal year.
Without this waiver the following would have been deducted:
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OTHER TOTAL OPERATING
MANAGEMENT FEE 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
MFS Capital Opportunities Series 0.75% N/A 0.27% 1.02%
- -----------------------------------------------------------------------------------------------------------
MFS New Discovery Series 0.90% N/A 1.59% 2.49%
- -----------------------------------------------------------------------------------------------------------
MFS High Income Series 0.75% N/A 0.22% 0.97%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(14) With respect to the The Universal Institutional Funds, Inc. the investment
adviser has waived a portion or all of the management fee and reimbursed
other expenses of the portfolio to the extent total annualized operating
expenses exceed the following percentages: Emerging Markets Equity Portfolio
1.75%; Equity Growth 0.85%; Fixed Income 0.70%; Global Equity 1.15%; High
Yield 0.80%; Mid Cap Growth 1.05%; Technology 1.15%; Value 0.85%. These
waivers shall remain in effect until May 1, 2001 at which time the adviser
may terminate this waiver at its sole discretion. With such reductions, the
"Management Fees", "Other Expenses" and "Total Annual Expenses" would be as
follows:
<TABLE>
<CAPTION>
OTHER TOTAL OPERATING
MANAGEMENT FEE 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Emerging
Markets Equity Portfolio 1.25% N/A 1.37% 2.62%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Equity
Growth Portfolio 0.55% N/A 0.56% 1.11%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Fixed
Income Portfolio 0.40% N/A 0.56% 0.96%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Global
Equity Portfolio 0.80% N/A 0.68% 1.48%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. High
Yield Portfolio 0.50% N/A 0.61% 1.11%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Mid Cap
Growth Portfolio* 0.75% N/A 7.31% 8.06%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc.
Technology Portfolio* 0.80% N/A 11.77% 12.57%
- -----------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Value
Portfolio 0.55% N/A 0.67% 1.22%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Additionally, in determining the actual amount of management fee waiver
and/or expense reimbursement for a Portfolio, if any, the adviser excludes
from total annual operating expenses certain investment related expenses,
such as foreign country tax expense and interest expense on borrowing.
Included in "Other Expenses" of the Emerging Markets Equity Portfolio are
0.04% of such investment related expenses.
* Annualized.
(15) 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 whereby credits realized, as a result of
uninvested cash balances were used to reduce custodian expenses. These
reductions will continue through at least December 31, 2000 pursuant to an
agreement between the adviser and the funds. Without these reductions
Management Fees, Other Expenses and Total Operating Expenses for Variable
Insurance Products Fund Equity-Income Portfolio, Variable Insurance Products
Fund Overseas Portfolio and Variable Insurance Products Fund II Asset
Manager Portfolio would have been as follows:
<TABLE>
<CAPTION>
OTHER TOTAL OPERATING
MANAGEMENT FEE 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund Equity-Income
Portfolio 0.48% N/A 0.09% 0.57%
- -----------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund Overseas
Portfolio 0.73% N/A 0.18% 0.91%
- -----------------------------------------------------------------------------------------------------------
Variable Insurance Products Fund II Asset Manager
Portfolio 0.53% N/A 0.10% 0.63%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
ABOUT US
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company 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, the District of Columbia and
Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from
ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity
Insurance Company. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
- --------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
- --------------------------------------------------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
- --------------------------------------------------------------------------------
</TABLE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
The Investment Divisions are separate divisions of our separate account, called
ICMG Registered Variable Life Separate Account One (the "Separate Account"). The
Separate Account exists to keep your life insurance policy assets separate from
our company assets. As such, the investment performance of the Separate Account
is independent from the investment performance of our other assets. We use our
other assets to pay our insurance obligations under the Policy. We hold your
assets in the Separate Account exclusively for your benefit and we may not use
them for any other liability of ours. We established the Separate Account on
October 9, 1995 under the laws of Connecticut.
The Separate Account has 49 Investment Divisions dedicated to the Policies. Each
of these Investment Divisions invests solely in a corresponding Portfolio of the
Funds. You choose the Investment Divisions that meet your investment style. We
may establish additional Investment Divisions at our discretion. The Separate
Account may include other Investment Divisions that will not be available under
the Policy.
THE FUNDS
The Funds sell shares of the Portfolios to the Separate Account. The Portfolios
are set up exclusively for variable annuity and variable life insurance
products. The Portfolios are not the same mutual funds that you buy through your
stockbroker or through a retail mutual fund. However, they may have similar
investment strategies and the same portfolio managers as retail mutual funds.
We do not guarantee the investment results of any of the Portfolios. Since each
Portfolio has different investment objectives, each is subject to different
risks. The prospectuses for the Funds and the Funds' Statement of Additional
Information describe these risks and the Portfolio's expenses. We have included
the Funds' prospectuses in this Prospectus.
The following Portfolios are available under your Certificate:
ALGER AMERICAN GROWTH PORTFOLIO -- Seeks long-term capital appreciation. It
focuses on growing companies that generally have broad product lines, markets,
financial resources and depth of management. Under normal circumstances, the
portfolio invests primarily in the equity securities of large companies. The
portfolio considers a large company to have a market capitalization of
$1 billion or greater. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND
TRANSFERS OF INVESTMENT VALUE)
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO -- Seeks long-term capital
appreciation. It focuses on small, fast-growing companies that offer innovative
products, services or technologies to a rapidly expanding marketplace. Under
normal circumstances, the portfolio invests primarily in the equity securities
of small capitalization companies. A small capitalization company is one that
has a market capitalization within the range of the Russell-Registered
Trademark- 2000 Growth Index or the S&P-Registered Trademark- SmallCap 600
Index. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF
INVESTMENT VALUE)
AMERICAN FUNDS GLOBAL GROWTH FUND: CLASS 2 -- Seeks long-term growth of capital
by investing primarily in common stocks of issuers domiciled around the world.
AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND: CLASS 2 -- Seeks long-term
growth of capital by investing primarily in equity securities of smaller
companies located around the world that typically have market capitalizations of
$50 million to $1.5 million.
AMERICAN FUNDS GROWTH FUND: CLASS 2 -- Seeks long-term growth of capital by
investing primarily in common stocks which demonstrate the potential for
appreciation.
AMERICAN FUNDS INTERNATIONAL FUND: CLASS 2 -- Seeks long-term growth of capital
by investing primarily in common stocks of issuers domiciled outside the United
States.
AMERICAN FUNDS ASSET ALLOCATION FUND: CLASS 2 -- Seeks high total return,
including income and capital gains, consistent with the preservation of capital
over the long term through a diversified portfolio that can include common
stocks and other equity-type securities, bonds and other intermediate and long-
term fixed income securities and money market instruments in any combination.
DEUTSCHE VIT EAFE-REGISTERED TRADEMARK- EQUITY INDEX FUND -- Seeks to match as
closely as possible (before deduction for expenses) the total return of the
Morgan Stanley Capital International Europe, Australia, Far East Index (the
"MSCI EAFE-Registered Trademark- Index"). The Fund
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
invests in a statistically selected sample of the equity securities included in
the MSCI EAFE-Registered Trademark- Index. The MSCI EAFE-Registered Trademark-
Index is a capitalization-weighted index containing approximately 1,100 equity
securities of companies located outside the United States.(1)
DEUTSCHE VIT EQUITY 500 INDEX FUND -- Seeks to match as closely as possible
(before deduction for expenses) the total return of the Standard & Poor's
500-Registered Trademark- Composite Stock Price Index (the "S&P 500-Registered
Trademark- Index"). The S&P 500-Registered Trademark- Index is an index of 500
common stocks, most of which trade on the New York Stock Exchange.(2)
DEUTSCHE VIT SMALL CAP INDEX FUND -- Seeks to match as closely as possible
(before deduction for expenses) the total return of the Russell 2000-Registered
Trademark- Small Stock Index (the "Russell 2000-Registered Trademark-"). The
Russell 2000-Registered Trademark- is composed of approximately 2,000 small-
capitalization common stocks.(3)
FRANKLIN SMALL CAP FUND: CLASS 2 -- Seeks long-term capital growth.
FRANKLIN STRATEGIC INCOME SECURITIES FUND: CLASS 1 -- Seeks to earn a high level
of current income. Its secondary goal is long-term capital appreciation.
MUTUAL SHARES SECURITIES FUND: CLASS 2 -- Seeks capital appreciation. Its
secondary goal is income.
TEMPLETON GROWTH SECURITIES FUND: CLASS 2 (PREVIOUSLY TEMPLETON GLOBAL GROWTH
FUND) -- Seeks long-term capital growth.
TEMPLETON INTERNATIONAL SECURITIES FUND: CLASS 2 (PREVIOUSLY TEMPLETON
INTERNATIONAL FUND) -- Seeks long-term capital growth.
HARTFORD CAPITAL APPRECIATION HLS FUND: CLASS IA -- Seeks growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation.
HARTFORD STOCK HLS FUND: CLASS IA -- Seeks long-term growth by investing
primarily in equity securities.
HARTFORD ADVISERS HLS FUND: CLASS IA -- Seeks maximum long-term total rate of
return by investing in common stock and other equity securities, bond and other
debt securities, and money market instruments.
HARTFORD BOND HLS FUND: CLASS IA -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc."
HARTFORD MONEY MARKET HLS FUND: CLASS IA -- Seeks maximum current income
consistent with liquidity and preservation of capital.
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO: SERVICE SHARES -- Seeks long-term
growth of capital. This Portfolio is non-diversified and normally invests at
least 50% of its equity assets in medium-sized companies.
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES -- Seeks long-term
growth of capital by investing primarily in stocks of foreign issuers.
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO: SERVICE SHARES -- Seeks long-term growth
of capital in a manner consistent with the preservation of capital. This
Portfolio invests primarily in stocks of foreign and domestic issuers.
JANUS ASPEN BALANCED PORTFOLIO: SERVICE SHARES -- Seeks long-term growth of
capital, consistent with the preservation of capital and balanced by current
income.
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO: SERVICE SHARES -- Seeks to obtain maximum
total return, consistent with the preservation of capital.
J.P. MORGAN BOND PORTFOLIO -- Seeks high total return consistent with moderate
risk of capital and maintenance of liquidity.
J.P. MORGAN INTERNATIONAL OPPORTUNITIES PORTFOLIO -- seeks high total return
from a portfolio of equity securities of foreign corporations in developed and,
to a lesser extent, emerging markets.
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
its total assets in the common stock of small U.S. companies primarily with a
market capitalization of less than $1 billion.
J.P. MORGAN U.S. DISCIPLINED 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 companies in
the United States.
MFS EMERGING GROWTH SERIES -- Seeks to provide long-term growth of capital.
(1) The EAFE-Registered Trademark- Index is the exclusive property of Morgan
Stanley. Morgan Stanley Capital International is a service mark of Morgan
Stanley and has been licensed for use by Bankers Trust Company.
(2) "S&P 500-Registered Trademark-" and "Standard & Poor's-Registered
Trademark-" are trademarks of the McGraw-Hill Companies and have been
licensed for use by Bankers Trust Company.
(3) "Russell 2000-Registered Trademark-" is a trademark of the Frank Russell
Company and has been licensed for use by Bankers Trust Company.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MFS CAPITAL OPPORTUNITIES SERIES -- Seeks capital appreciation.
MFS GROWTH WITH INCOME SERIES -- Seeks to provide reasonable current income and
long-term growth of capital and income.
MFS NEW DISCOVERY SERIES -- Seeks capital appreciation.
MFS HIGH INCOME SERIES -- Seeks high current income by investing primarily in a
professionally managed diversified portfolio of fixed income securities, some of
which may involve equity features.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. EMERGING MARKETS EQUITY
PORTFOLIO -- Seeks long-term capital appreciation by investing primarily in
equity securities of issuers in emerging market countries.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. EQUITY GROWTH PORTFOLIO -- Seeks
long-term capital appreciation by investing primarily in growth-oriented equity
securities of medium and large capitalization companies. (EFFECTIVE JULY 5,
2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF INVESTMENT VALUE)
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. FIXED INCOME PORTFOLIO -- Seeks
above-average total return over a market cycle of three to five years by
investing primarily in a diversified mix of dollar denominated investment grade
fixed income securities, particularly U.S. Government, corporate and mortgage
securities. The Portfolio ordinarily will maintain an average weighted maturity
in excess of five years. The Portfolio may invest opportunistically in
non-dollar denominated securities and below investment grade securities. The
investment adviser may use futures, swaps and other types of derivatives in
managing the Portfolio.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. GLOBAL EQUITY PORTFOLIO -- Seeks
long-term capital appreciation by investing primarily in equity securities of
issuers throughout the world, including in the United States and emerging market
countries. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF
INVESTMENT VALUE)
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. HIGH YIELD PORT-
FOLIO -- Seeks above average total return over a market cycle of three to five
years by investing primarily in high yield securities commonly referred to as
"junk bonds". The Portfolio also may invest in investment grade fixed income
securities, including U.S. Government securities, corporate bonds and mortgage
securities; it may invest to a limited extent in foreign fixed income
securities, including emerging market securities. The investment adviser may use
futures, swaps and other types of derivatives in managing the Portfolio.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MID CAP GROWTH PORTFOLIO -- Seeks
long-term capital growth by investing primarily in common stocks of companies
with capitalizations in the range of companies included in the S&P MidCap 400
Index (currently $500 million to $6 billion). Adviser focuses on companies that
demonstrate one or more of the following characteristics: high earnings growth
rates, growth stability, rising profitability and the ability to produce
earnings that consistently beat market expectations.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. TECHNOLOGY PORT-
FOLIO -- Seeks long-term capital appreciation by investing primarily in equity
securities of companies that the investment adviser expects to benefit from
their involvement in technology and technology-related industries.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. VALUE PORTFOLIO -- Seeks above average
total return over a market cycle of three to five years by investing primarily
in common stocks of companies with equity capitalizations greater than
$2.5 billion. The Portfolio focuses on stocks that are undervalued in comparison
with the stock market as a whole, as measured by the S&P 500 Index. The
Portfolio may purchase stocks that do not pay dividends. The Portfolio may
invest, to a limited extent, in foreign equity securities. (EFFECTIVE JULY 5,
2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF INVESTMENT VALUE)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST BALANCED PORTFOLIO -- Seeks growth of
capital and reasonable current income without undue risk to principal. The
portfolio invests primarily in equity securities of medium capitalization
companies and fixed income securities from U.S. government and corporate
issuers. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF
INVESTMENT VALUE)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST LIMITED MATURITY BOND
PORTFOLIO -- Seeks to provide the highest current income consistent with low
risk to principal and liquidity; and secondarily, total return. The Portfolio
invests in short- to intermediate-term debt securities, primarily investment
grade. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF
INVESTMENT VALUE)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST PARTNERS PORTFOLIO -- Seeks capital
growth by investing mainly in common stocks of established mid- to
large-capitalization companies. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS
AND TRANSFERS OF INVESTMENT VALUE)
VARIABLE INSURANCE PRODUCTS FUND EQUITY-INCOME PORTFOLIO: INITIAL CLASS -- Seeks
reasonable income by investing primarily in income-producing securities. The
potential for capital appreciation is also considered when choosing investments.
The fund seeks a yield that exceeds the yield on the securities comprising the
Standard & Poor's 500. (EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND
TRANSFERS OF INVESTMENT VALUE)
VARIABLE INSURANCE PRODUCTS FUND HIGH INCOME PORTFOLIO: INITIAL CLASS -- Seeks
high current income by investing primarily in all types of income-producing debt
securities, preferred stocks and convertible securities. The Fund also considers
growth of capital in choosing investments. (EFFECTIVE JULY 5,
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF INVESTMENT VALUE)
VARIABLE INSURANCE PRODUCTS FUND OVERSEAS PORTFOLIO: INITIAL CLASS -- Seeks
long-term growth of capital by investing primarily in foreign securities.
(EFFECTIVE JULY 5, 2000, CLOSED TO NEW PREMIUMS AND TRANSFERS OF INVESTMENT
VALUE)
VARIABLE INSURANCE PRODUCTS FUND II ASSET MANAGER PORTFOLIO: INITIAL
CLASS -- Seeks high total return with reduced risk over the long-term by
allocating assets among stocks, bonds, short-term and money market instruments,
and other instruments of U.S. and foreign issuers. (EFFECTIVE JULY 5, 2000,
CLOSED TO NEW PREMIUMS AND TRANSFERS OF INVESTMENT VALUE)
INVESTMENT ADVISERS -- The Alger American Fund is managed by Fred Alger
Management, Inc. The American Funds Insurance Series is managed by Capital
Research and Management Company. Deutsche Asset Management VIT Funds are managed
by Bankers Trust Company, a wholly owned subsidiary of Deutsche Bank AG. The
Franklin Small Cap Fund is managed by Franklin Advisers, Inc. The Franklin
Strategic Income Securities Fund is managed by Franklin Advisers, Inc. The
Mutual Shares Securities Fund is managed by Franklin Mutual Advisers, LLC. The
Templeton Growth Securities Fund is managed by Templeton Global Advisers
Limited. The Templeton International Securities Fund is managed by Templeton
Investment Counsel, Inc. Hartford Capital Appreciation HLS Fund, Inc., Hartford
Bond HLS Fund, Inc., and Hartford Money Market HLS Fund, Inc. are collectively
the "Hartford Funds" and are managed by HL Investment Advisors, LLC. Wellington
Management Company, LLP serves as sub-investment advisor for Hartford Capital
Appreciation HLS Fund, Inc. Hartford Investment Management Company serves as
sub-investment advisor for Hartford Bond HLS Fund, Inc. and Hartford Money
Market HLS Fund, Inc. Janus Aspen Series is managed by Janus Capital
Corporation. J.P. Morgan Series Trust II is managed by J.P. Morgan Investment
Management Inc. The MFS-Registered Trademark- Variable Insurance Trust is
managed by MFS Investment Management. The Universal Institutional Funds, Inc. is
managed by either Morgan Stanley Asset Management ("MSAM") or Miller Anderson &
Sherrerd, LLP ("MAS"). Neuberger Berman Advisers Management Trust is managed by
Neuberger Berman Management Inc. Variable Insurance Products Fund and Variable
Insurance Products Fund II are managed by Fidelity Management & Research
Company.
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of policy owners, owners of other
policies or owners of variable annuity contracts with values allocated to one or
more of these other separate accounts investing in any one of the Funds. In the
event of any such material conflicts, we will consider what action may be
appropriate, including removing the Fund from the Separate Account or replacing
the Fund with another underlying fund. There are certain risks associated with
mixed and shared funding, as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We will notify you of shareholder's meetings of the Funds
purchased by those Investment Divisions you have invested in. We will send you
proxy materials and instructions for you to vote the shares held for your
benefit by those Investment Divisions. We will arrange for the handling and
tallying of proxies received from you or other policy owners. If you give no
instructions, we will vote those shares in the same proportion as shares for
which we received instructions.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any shareholder meeting at which shares held for your Policy may be
voted. After we begin to make payouts to you, the number of votes you have will
decrease.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These agreements may be different for each Fund
or each Fund family.
CHARGES AND DEDUCTIONS
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DEDUCTIONS FROM PREMIUM
We deduct a percentage of your premium payment for a front-end sales load, a
premium tax charge and the deferred acquisition cost ("DAC") tax charge before
we allocate it to the Investment Divisions. The amount of each premium we
allocate to the Investment Divisions is your net premium ("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.
PREMIUM TAX CHARGE -- We deduct a tax charge from each premium you pay. The
premium tax charge covers taxes assessed against us by a state and/or other
governmental entity. The range of this charge, generally, is between 0% and 4%.
DAC TAX CHARGE -- We deduct 1.25% of each premium to cover a federal premium tax
assessed against us. This charge is reasonable in relation to our federal income
tax burden, under
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Section 848 of the Internal Revenue Code of 1986 ("the Code"), resulting from
the receipt of premiums. We will adjust this charge based on changes in the
applicable tax law.
DEDUCTIONS FROM INVESTMENT VALUE
MONTHLY DEDUCTION AMOUNT -- Each month we will deduct an amount from your
Investment Value to pay for the benefits provided under the Certificate. We call
this amount the Monthly Deduction Amount and it equals the sum of:
(a) the administrative expense charge;
(b) the cost of insurance charge;
(c) the charges for additional benefits provided by rider, if any.
The Monthly Deduction Amount will vary from month to month.
Following is an explanation of the administrative expense charge and the charges
for cost of insurance and rider benefits.
(a) Administrative Expense Charge -- We will assess a monthly administrative
charge to compensate us for administrative costs in connection with the
Certificates. We will initially charge $5 per Coverage Month and we guarantee
that the charge will never exceed $10.00 per Coverage Month.
(b) Cost of Insurance Charge -- The cost of insurance charge is equal to:
- - the cost of insurance rate per $1,000; multiplied by
- - the net amount at risk; divided by
- - $1,000.
The net amount at risk equals the death benefit minus the Cash Value on the date
we calculate this charge. The cost of insurance charge is shown on the
specification pages of the Policy and Certificate.
The purpose of the cost of insurance charge is to cover our anticipated
mortality costs. The current cost of insurance rates for standard risks will not
exceed those based on the 1980 Commissioners Standard Ordinary Mortality Table
(ANB), Male or Female, age nearest birthday. We will charge substandard risks a
higher cost of insurance rate. The cost of insurance rates for substandard risks
will not exceed rates based on a multiple of the 1980 Commissioners Standard
Ordinary Mortality Table (ANB), Male or Female, age nearest birthday. In
addition, the use of simplified underwriting or guaranteed issue procedures,
rather than medical underwriting, may result in a higher cost of insurance
charge for some individuals than if medical underwriting procedures were used.
We will make any changes in the cost of insurance uniformly for all insureds of
the same issue ages, sexes, risk classes and whose coverage has been in-force
for the same length of time. No change in insurance class or cost will occur as
a result of the deterioration of the Insured's health.
The rate class of an Insured affects the cost of insurance rate. We and the
employer will agree on the number of rate classes and characteristics of each
rate class. The rate classes may vary by smokers and nonsmokers, active and
retired status, preferred and standard and/or any other nondiscriminatory
classes agreed to by the employer.
(c) Rider Charge -- If the Certificate includes riders, we deduct a charge from
the Investment Value on each Processing Date. We specify the applicable charge
on the rider. This charge is to compensate us for the anticipated cost of
providing the rider benefits.
For a description of the riders available, see "Supplemental Benefits."
MORTALITY AND EXPENSE RISK CHARGE -- For assuming mortality and expense risks
under the Policy, we may deduct a maximum daily charge of .001781% which is
equal to .65% per year of the value of each Investment Division's assets in all
Coverage Years. We may pay an expense credit reflecting a reduction in the
mortality and expense risk rate. We will pay these credits at the end of each
Coverage Month and will use them to purchase additional Accumulation Units at
the end of that Coverage Month.
Currently, in Coverage Years 1 through 10, we will pay an expense credit of
.30%. The result is a net annual mortality and expense risk rate of .35%. In
Coverage Years 11 through 15, we will pay an expense credit of .40%. The result
is a net annual mortality and expense risk rate of .25%. In Coverage Years 16
and later, we will pay an expense credit of .55%. The result is a net annual
mortality and expense risk rate of .10%.
The mortality and expense risk charge is equal to:
- - the mortality and expense risk rate; multiplied by
- - the portion of the Cash Value allocated to the Investment Divisions and the
Loan Account.
The mortality risk we assume is that the actual cost of insurance charges
specified in the Certificate will be insufficient to meet actual claims. The
expense risk we assume is that expenses we incur for issuing and administering
the Certificates will exceed the administrative charges we deducted from
Investment Value.
If these charges are insufficient to cover actual costs and assumed risks, the
loss will fall on us. However, if the charge proves more than sufficient, we
will add any excess to our surplus.
TRANSFER FEE -- We deduct a $50 transfer fee when you transfer amounts from one
Investment Division to another for each transfer in excess of 12 transfers per
year.
PARTIAL WITHDRAWAL FEE -- We deduct a partial withdrawal fee for each withdrawal
you make. The fee is the lesser of 2% of the amount withdrawn or $25.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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YOUR CERTIFICATE
OWNERSHIP RIGHTS
As long as your Certificate is in force, you may exercise all rights under the
Certificate while the Insured is alive and you have not named an irrevocable
beneficiary.
BENEFICIARY
You name the beneficiary in your enrollment form for the Certificate. You may
change the beneficiary (unless irrevocably named) while the Insured is alive by
notifying us, in writing. If no beneficiary is living when the Insured dies, we
will pay the Death Proceeds to you if living; or, otherwise, to your estate.
ASSIGNMENT
You may assign your rights under the Certificate. Until you notify us in
writing, no assignment is effective against us. We are not responsible for the
validity of any assignment.
STATEMENTS
We will send you a statement at least once each year, showing:
- - the Certificate's current Cash Value, Cash Surrender Value and Face Amount;
- - the premiums paid, Monthly Deduction Amounts and any Loans since your last
statement;
- - the amount of any outstanding Debt;
- - any notifications required by the provisions of your Certificate; and
- - any other information required by the Insurance Department of the state where
we delivered your Certificate.
ISSUANCE OF YOUR CERTIFICATE
To purchase a Certificate you must submit an enrollment form to our Customer
Service Center. The specific form you complete will depend on the underwriting
classification and plan design of the Policy. Generally, we will only issue a
Certificate on the lives of Insureds between the ages of 20 and 79 who supply
evidence of insurability satisfactory to us. In addition, in most cases, we will
not issue a Certificate with a Face Amount of less than the minimum Face Amount.
Acceptance is subject to our underwriting rules and we reserve the right to
reject an enrollment form for any reason. If we accept your enrollment form,
your Certificate will become effective on the Coverage Date only after we
receive all outstanding delivery requirements and the initial premium payment
shown in your Certificate.
In the event you are exchanging an existing contract(s) for a new Certificate
under Section 1035 of the Internal Revenue Code, the Coverage Date will be the
date that you make the 1035 exchange. You make this 1035 exchange by assigning
the existing contract(s) to us and completing an enrollment form. Upon receipt
of the assignment form, we will surrender the existing contract(s) for its cash
surrender value. We will apply the surrender proceeds we receive as premium to
the Certificate. During the time between the Coverage Date and the date we
receive the cash surrender value of the existing contract(s) or a premium
payment, there will be no gap in coverage. We will make charges and deductions
(other than those of the Portfolios) for this period; however, you will not
experience investment returns.
RIGHT TO EXAMINE THE CERTIFICATE
You have a limited right to return your Certificate for cancellation. You may
deliver or mail the Certificate to us or to the agent who sold you the
Certificate within ten (10) calendar days after delivery of the Certificate to
you. Some states provide for a longer period.
In the event you return your Certificate, we will return to you within seven (7)
days of our receipt of the Certificate, either:
- - the total amount of premiums; or
- - the Cash Value plus charges deducted under the Certificate.
The amount we return depends upon the state we issued your Certificate in.
PREMIUMS
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PREMIUM PAYMENT FLEXIBILITY
You have considerable flexibility as to when, in what amounts and what level of
premiums, within a range determined by us, you pay under the Certificate. You
choose a premium once you have determined the level and pattern of the death
benefit.
You must pay a minimum initial premium to make your coverage effective on the
Coverage Date. You may pay additional premiums at any time, subject to the
premium limitations set by the Internal Revenue Code. For details on these
premium limitations see, "Premium Limitation." You have the right to pay
additional premiums of at least $100.00 at any time, unless otherwise agreed to
by us.
Your Certificate may lapse if the value of your Certificate becomes insufficient
to cover the Monthly Deduction Amounts. If this happens you may pay additional
premiums in order to prevent your Certificate from terminating. For details see,
"Lapse and Reinstatement."
ALLOCATION OF PREMIUM PAYMENTS
During the right to examine period, we allocate your initial premium payment in
accordance with state law requirements. If you choose to cancel your
Certificate, some states require the return of your initial premium, while
others require the return of the Certificate's Cash Value.
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18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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- - STATE OF ISSUE REQUIRES RETURN OF INITIAL PREMIUM -- If the state of issue of
your Certificate requires that we return your initial premium, we will, when
we issue your Certificate and until the end of the right to examine period,
allocate your initial Net Premium to the Hartford Money Market Investment
Division. Upon the expiration of the right to examine period, we will, at a
later date, invest the initial Net Premium according to your initial
allocation instructions. However, any accrued interest will remain in the
Hartford Money Market Investment Division if you selected it 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 requirements to put the Certificate in force.
We will allocate any additional premiums received prior to this later date to
the Hartford Money Market Investment Division.
- - STATE OF ISSUE REQUIRES RETURN OF CERTIFICATE'S CASH VALUE -- If the state of
issue of your Certificate requires that we return the Certificate's Cash
Value, we will allocate the initial Net Premium among your chosen Investment
Divisions. In this case you will bear full investment risk for any amounts we
allocate to the Investment Division during the right to examine period. This
automatic immediate investment feature only applies if specified in your
Certificate. Please check with your agent to determine the status of your
Certificate.
You may change the Net Premium allocation if you notify us in writing. Portions
you allocate to the Investment Divisions must be whole percentages of 5% or
more. We will allocate subsequent Net Premiums 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; and
- - If the asset rebalancing option is in effect, we will allocate Net Premiums
accordingly, until you terminate this option. (See "Transfers Among Investment
Divisions -- Asset Rebalancing.")
You will receive several different types of notification that explain what your
current premium allocation is. The Certificate shows the initial allocation you
chose on the enrollment form. In addition, we will send you written
confirmation, after we receive your premium payment, that shows you how we
allocated your premium. A Certificate's annual statement will also summarize
your current premium allocation.
ACCUMULATION UNITS
We use Net Premiums allocated to the Investment Divisions to credit Accumulation
Units under the Certificates.
We determine 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) as follows:
- - Multiply the Net Premium by the appropriate allocation percentage to determine
the portion we will invest in the Investment Division; then
- - Divide each portion to be invested in an Investment Division by the
Accumulation Unit value of that particular Investment Division we computed
following the receipt of the payment.
Deductions made for the monthly deduction amount on each Processing Date will
reduce the number of Accumulation Units under the Certificate. (See "Deductions
from Investment Value -- Monthly Deduction Amount.")
ACCUMULATION UNIT VALUES
The Accumulation Unit value for each Investment Division will vary daily to
reflect the investment experience and charges of the applicable Portfolio, as
well as the daily deduction for mortality and expense risks. We will determine
the Accumulation Unit value 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 us.
PREMIUM LIMITATION
If we receive premiums that 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 any
applicable interest no later than sixty (60) days after the end of a Coverage
Year.
We will accept a premium payment that results in an increase in the death
benefit greater than the amount of the premium, only after we approve evidence
of insurability.
DEATH BENEFITS AND POLICY VALUES
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VALUES UNDER THE CERTIFICATE
CASH SURRENDER VALUE -- 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.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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INVESTMENT 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."
DEATH BENEFITS
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 "Taxes -- Income Taxation of Certificate
Benefits." Each Certificate must qualify under either the GPT or the CVAT. Prior
to issue, you choose the procedure under which a Certificate will qualify. Once
you choose either the GPT or the CVAT 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. This is necessary in order for the
Certificate to meet the current federal tax definition of life insurance, which
places limitations on the amount of premiums that may be paid and the Cash
Values that can accumulate relative to the death benefit. The factors used to
determine the Variable Insurance Amount depend on the testing procedure chosen
and are in the Certificate.
Under the GPT, there is also a maximum amount of premium that may be paid with
respect to each Certificate.
Use of the CVAT can be advantageous if you intend to maximize the total amount
of premiums paid under a Certificate. An offsetting consideration, however, is
that the factors we use to determine the Variable Insurance Amount are higher
under the CVAT, which can result in a higher death benefit over time and a
higher total cost of insurance.
DEATH BENEFITS 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.
- DEATH BENEFIT OPTION A -- the death benefit is the greater of (a) the Face
Amount and (b) the Variable Insurance Amount.
- 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
will be the Death Proceeds.
OPTION CHANGE -- While the Certificate is in force, you may change the death
benefit option you selected. You must make your request to change your death
benefit option in writing and during the lifetime of the Insured.
CHANGE FROM OPTION A TO OPTION B -- If the change is from Death Benefit Option A
to Death Benefit Option B, the Insured must provide us with satisfactory
evidence of insurability. 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.
CHANGE FROM OPTION B TO OPTION A -- 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 our approval of the change. We
will notify you when we have made the change.
PAYMENT OPTIONS -- We may pay the Death Proceeds under the Certificate in a lump
sum or we may apply the proceeds to one of our payment options. The minimum
amount that may be placed under a payment option is $5,000 unless we consent to
a lesser amount. Once payments under payment options 2, 3 or 4 begin, you may
not surrender the Certificate to receive a lump sum settlement in place of the
life insurance payments. The following options are available under the
Certificate:
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.
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20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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, we may make payments less often. The first, second and third payment
options are based on a net investment rate of 3% per annum. We may, however,
from time to time, at our discretion if mortality appears more favorable and
interest rates justify, apply other tables that will result in higher monthly
payments for each $1,000 applied under one or more of the four payment options.
We may agree to other arrangements for income payments.
INCREASES AND DECREASES IN FACE AMOUNT -- In most cases, the minimum Face Amount
of the Certificate is $50,000. At any time after purchasing a Certificate, you
may request a change in the Face Amount by making a written request to us at our
Customer Service Center.
You must request an increase in the Face Amount in writing to us. All requests
are subject to evidence of insurability satisfactory to us and subject to our
current rules. Any increase we approve 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 generally must not be less
than $50,000. We will apply decreases:
- - to the most recent increase; then
- - successively to each prior increase, and then
- - 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 coverage maturity date,
which equals attained age 100 ("Maturity Date"), we will pay you the Cash
Surrender Value on the date you surrender the Certificate. However, on the
Maturity Date, the Certificate will terminate and we will have no further
obligations under the Certificate.
MAKING WITHDRAWALS FROM THE CERTIFICATE
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SURRENDER
At any time prior to the Maturity Date, provided the Certificate is in effect
and has a Cash Surrender Value, you 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 written request for surrender to us.
We will determine the Cash Surrender Value as of the Valuation Day we receive
the request, in a written form satisfactory to us, at our Customer Service
Center, or the date that you request, whichever is later.
The Cash Surrender Value is the net amount available upon surrender of the
Certificate and equals the Cash Value, minus Debt, minus any charges accrued but
not yet deducted. We will terminate the Certificate on the date of receipt of
the written request, or the date you request the surrender to be effective,
whichever is later.
We may pay the Cash Surrender Value in cash or you may allocate it to any other
payment option agreed upon by us.
PARTIAL WITHDRAWALS
At any time before the Maturity Date, and subject to our rules then in effect,
we allow twelve (12) partial withdrawals per Coverage Year. However, we allow
only one (1) partial withdrawal 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, minus outstanding Debt.
We currently impose a charge for processing partial withdrawals which is the
lesser of:
- - 2% of the amount withdrawn; and
- - $25.00.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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A partial withdrawal will reduce the Cash Surrender Value, Cash Value and
Investment Value. Any partial withdrawal will permanently affect the Cash
Surrender Value and may permanently affect the death benefit payable. If Death
Benefit Option A is in effect, we reduce the Face Amount by the amount of the
partial withdrawal and the charge for processing the withdrawal. Unless
specified otherwise, we will deduct partial withdrawals on a Pro Rata Basis from
the Investment Divisions. A Pro Rata Basis is an allocation method based on the
proportion of the Investment Value in each Investment Division. You must submit
requests for partial withdrawals to us in writing. The effective date of a
partial withdrawal will be the Valuation Day closest to the date that we receive
the request, in writing, at our Customer Service Center. If your Certificate is
deemed to be a modified endowment contract, a 10% penalty tax may be imposed on
income distributed before the insured attains age 59 1/2. See "Taxes -- Modified
Endowment Contracts."
TRANSFERS AMONG INVESTMENT DIVISIONS
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AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as the Certificate is in effect, you may transfer
amounts among the Investment Divisions up to twelve (12) times per Coverage Year
without charge. 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. You must make transfer requests in writing on a form that we approve
or by telephone in accordance with established procedures. Our rules then in
effect will limit the amounts that you may transfer. The amounts that you
transfer must be in whole percentages of 5% or more, unless otherwise agreed to
by us. Currently, the minimum value of Accumulation Units that you may transfer
from one Investment Division to another is the lesser of:
- - $500; and
- - 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, we will
transfer the entire remaining amount.
Currently there are no restrictions on transfers other than those described in
this Prospectus. We reserve 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, we will reduce the
number of Accumulation Units that we credit to that Investment Division. We will
determine the reduction by dividing:
- - the amount transferred by,
- - the Accumulation Unit value for that Investment Division determined on the
Valuation Day we receive your written request for transfer.
In the event of a transfer to an Investment Division, we will increase the
number of Accumulation Units credited. The increase will equal:
- - the amount transferred divided by,
- - the Accumulation Unit value for that Investment Division determined on the
Valuation Day we receive your written request.
ASSET REBALANCING
Subject to our current rules, you may authorize us to automatically reallocate
Investment Value periodically in order to maintain a particular percentage
allocation among the Investment Divisions that you have selected. This
reallocation is known as 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, we must receive a written request from you. If you
elect Asset Rebalancing, you must include all Investment Value in the automatic
reallocation. The percentages that you select under Asset Rebalancing will
override any prior percentage allocations that you have chosen and we will
allocate all future Net Premiums accordingly. We will count all transfers made
pursuant to Asset Rebalancing on the same day as one (1) transfer toward the
twelve (12) transfers per Coverage Year that we permit without charge. Once
elected, you may instruct us, in a written form satisfactory to us, at any time
to terminate the option. In addition, we will terminate your participation in
Asset Rebalancing if you make any transfer outside of Asset Rebalancing.
DOLLAR COST AVERAGING
You may elect to allocate your Net Premiums among the Investment Divisions under
the dollar cost averaging option program ("DCA Program"). If you choose to
participate in the DCA Program, we will deposit your Net Premiums into the
Hartford Money Market Investment Division. Each month, we will withdraw amounts
from that Division and allocate them to the other Investment Divisions in
accordance with your allocation instructions. The transfer date will be the
monthly anniversary of your first transfer under your initial DCA election. We
will make the first transfer within five (5) business days after we receive your
initial election, either in writing or by telephone, subject to the telephone
transfer procedures described in this Prospectus.
We will allocate your Net Premium to the Investment Divisions that you specify,
in the proportions that you specify. If, on any
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22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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transfer date, your Investment Value that we have allocated to the Hartford
Money Market Investment Division is less than the amount you have elected to
transfer, we will terminate your participation in the DCA Program. Any transfers
made in connection with the DCA Program must be whole percentages of 5% or more,
unless we otherwise agree. In addition, transfers made under the DCA Program
count toward the twelve (12) transfers per coverage year that we permit you
without charge.
You may also cancel your DCA election by notifying us in writing.
The main objective of the DCA Program is to minimize the impact of short-term
price fluctuations. The DCA Program allows you to take advantage of market
fluctuations. Since we transfer the same dollar amount to other Investment
Divisions at set intervals, the DCA Program allows you to purchase more
Accumulation Units when prices are low and fewer Accumulation Units when prices
are high. Therefore, you may achieve a lower average cost per Accumulation Unit
over the long-term. However, it is important to understand that a DCA Program
does not assure a profit or protect against loss in a declining market. If you
choose to participate in the DCA Program you should have the financial ability
to continue making investments through periods of low price levels.
You cannot make transfers under Asset Rebalancing and participate in the DCA
Program at the same time.
PROCEDURES FOR TELEPHONE TRANSFERS
You may make telephone transfers in two ways. You may directly contact a
customer service representative. You 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. If you intend to conduct telephone transfers through the
VRU, you will be asked to complete a Telephone Authorization Form.
We 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 you. 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 us through a written letter. Moreover, all VRU transactions will
be assigned a unique confirmation number which will become part of the
Certificate's history. We are not liable for any loss, cost or expense for
action on telephone instructions which are believed to be genuine in accordance
with these procedures.
PROCESSING OF TRANSACTIONS
Generally, we process your transactions only on a Valuation Day. We will process
requests that we receive on a Valuation Day before the close of trading on the
New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on that same
day, except as otherwise indicated in this Prospectus. We will process requests
that we receive after the close of the NYSE as of the next Valuation Day.
LOANS
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As long as the Certificate is in effect, you may obtain without the consent of
the beneficiary (provided the designation of beneficiary is not irrevocable), a
cash Loan from us. The maximum Loan amount is equal to the sum of the Cash
Surrender Value plus outstanding Debt, multiplied by .90, minus outstanding
Debt.
We will transfer the amount of each Loan on a Pro Rata Basis from each of the
Investment Divisions (unless you specify otherwise) to the Loan Account. We use
the Loan Account 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. We will transfer the difference between the
value of the Loan Account and any outstanding Debt from the Investment Divisions
to the Loan Account on each Certificate Anniversary. Interest payments are due
as shown in the Certificate. If you do not pay interest within five (5) days of
its due date, we will add it 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 (2) months prior to
the date on which we determine the adjustable loan interest rate.
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
We will credit interest on amounts in the Loan Account for Coverage Years 1
through 10 at a rate equal to the adjustable loan interest rate, minus 1%. We
will credit interest on amounts in the Loan Account for Coverage Years 11 and
later at a rate equal to the adjustable loan interest rate, minus .20%.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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LOAN REPAYMENTS
You can repay any part of or the entire Loan at any time. We will allocate the
amount of the Loan repayment to your chosen Investment Divisions on a Pro Rata
Basis, determined as of the date of the Loan repayment. Unless specified
otherwise, we will treat any additional premium payments that we receive during
the period when a Loan is outstanding as Loan repayments.
TERMINATION DUE TO EXCESSIVE DEBT
If total outstanding Debt equals or exceeds the Cash 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 you do not make sufficient
Loan repayment by the end of this 31-day period, the Certificate will terminate
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, your 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, your 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.
LAPSE AND REINSTATEMENT
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LAPSE AND GRACE PERIOD
We provide a sixty-one (61) calendar day grace period, from the date we mail you
notice that the Cash Surrender Value is insufficient to pay the charges due
under the Certificate. Unless you have given us written notice of termination in
advance of the date of termination of the Certificate, insurance will continue
in force during this period. You will be liable to us for all unpaid charges due
under the Certificate for the period that the Certificate remains in force.
In the event that total outstanding Debt equals or exceeds the Cash 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 you do
not make sufficient Loan repayment 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 Policy is terminated or
(ii) the Certificate has been surrendered for cash, we may reinstate the
Certificate prior to the Maturity Date, provided:
- - you make your request within three (3) years of the date of lapse. Some states
provide a longer period; and
- - you submit satisfactory evidence of insurability to us.
We will not require evidence of insurability, if you reinstate your Certificate
within one (1) month after the end of the 61-calendar day grace period, provided
the Insured is alive.
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:
- - The Investment Value at the time of termination; plus
- - Net Premiums attributable to premiums paid at the time of reinstatement.
Upon reinstatement, you must repay or carry over to the reinstated certificate
any Debt at the time of termination.
TERMINATION OF POLICY
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The group policyholder or we may terminate participation in the Policy. 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, we will not
accept any new enrollment forms for new Insureds on or after the date that we
receive or send notice of discontinuance, whichever is applicable. In addition,
we will not issue any new Certificates. If you discontinue premium payments, we
will continue insurance coverage under the Certificate as long as the Cash
Surrender Value is sufficient to cover the charges due. We will not continue the
coverage under the Certificate beyond attained age 100 unless your Certificate
includes the Maturity Date Extension Rider. Attained age means the Insured's age
on the birthday nearest to the Coverage Date plus the period since the Coverage
Date. In addition, we will not continue any optional benefit rider beyond the
Certificate's date of termination. If the 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 Policy, provided you
have not canceled or surrendered it, subject to our qualifications then in
effect. You will then pay Certificate premiums directly to us.
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24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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CONTRACT LIMITATIONS
PARTIAL WITHDRAWALS
We limit you to twelve (12) partial withdrawals per Coverage Year.
TRANSFERS OF ACCOUNT VALUE
We reserve the right to limit the size of transfers and remaining balances and
to limit the number and frequency of transfers among the Investment Divisions.
FACE AMOUNT INCREASES OR DECREASES
We reserve the right to limit the number of Face Amount increases or decreases
made under the Certificate to no more than one (1) in any twelve (12) month
period.
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 New York
Stock Exchange is closed for some reason other than a regular holiday or
Weekend, trading is restricted by the Securities and Exchange Commission ("SEC")
or the SEC declares that an emergency exists.
DEFERRAL OF PAYMENTS
We may defer payment of any Cash Surrender Values, withdrawals and loan amounts
that are not attributable to the Investment Divisions for up to six (6) months
from the date of the request. If we defer payment for more than thirty (30)
days, we will pay you interest.
CHANGES TO CONTRACT OR SEPARATE ACCOUNT
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MODIFICATION OF POLICY
The only way we may modify the policy is by a written agreement signed by our
President, or one of our Vice Presidents, Secretaries, or Assistant Secretaries.
SUBSTITUTION OF FUNDS
We reserve the right to substitute the shares of any other registered investment
company for the shares of any Fund already purchased or to be purchased in the
future by the Separate Account provided that the substitution has been approved
by the Securities and Exchange Commission.
CHANGE IN OPERATION OF THE
SEPARATE ACCOUNT
We may modify the operation of the Separate Account to the extent permitted by
law, including deregistration under the securities laws.
SEPARATE ACCOUNT TAXES
Currently, we do not make a charge to the Separate Account for federal, state
and local taxes that may be allocable to the Separate Account. In the future, we
may begin to charge the Separate Account for federal, state and local taxes if
the applicable federal, state or local tax laws that impose tax on us and/or the
Separate Account change. We may make charges for other taxes that are imposed on
the Separate Account.
SUPPLEMENTAL BENEFITS
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The following supplemental benefit will automatically be included in a
Certificate, subject to current restrictions, limitations and state approval,
unless you notify us in writing that you do not want it.
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 "Taxes -- Income Taxation of Certificate Benefits."
OTHER MATTERS
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REDUCED CHARGES FOR ELIGIBLE GROUPS
We may reduce or eliminate certain of the charges and deductions described above
(including, sales load, mortality and expense risk charge, cost of insurance
charge and administrative charge) for Policies issued in connection with a
specific plan, in accordance with our current internal policies as of the date
we approve the application for a policy. We determine eligibility for reduction
in charges and the amount of any reduction by a number of factors, including:
- - the size of the plan;
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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- - the expected number of participants;
- - the anticipated premium payment from the plan;
- - the nature of the group; and
- - any other circumstances that are rationally related to the expected reduction
in expenses.
We 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 policy
owners invested in the Separate Account.
OUR RIGHTS
We reserve the right to take certain actions in connection with our operations
and the operations of the Separate Account. We will take these actions in
accordance with applicable laws (including obtaining any required approval of
the Securities and Exchange Commission). If necessary, we will seek your
approval.
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 your voting rights or of any other persons who
have voting rights as to the Separate Account.
We also reserve the right to change the name of the Separate Account.
LIMIT ON RIGHT TO CONTEST
We may not contest the validity of the Certificate after it has been in effect
during the Insured's lifetime for two (2) years from the Issue Date. If we
reinstate the Certificate, the 2-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 2 years from its effective date. In addition, if the Insured
commits suicide in the 2-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, we will appropriately
adjust the amount of all benefits payable, as specified in the Certificate.
ASSIGNMENT
The Certificate may be assigned as collateral for a loan or other obligation. We
are not responsible for any payment made or action taken before receipt of
written notice of such assignment. You must file proof of interest with any
claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Certificates.
TAXES
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GENERAL
Since federal tax law is complex, the tax consequences of purchasing this policy
will vary depending on your situation. You may need tax or legal advice to help
you determine whether purchasing this policy is right for you.
Our general discussion of the tax treatment of this policy is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this policy cannot be made in the prospectus. We also do not discuss
state, municipal or other tax laws that may apply to this policy. For detailed
information, you should consult with a qualified tax adviser familiar with your
situation.
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 "Death Benefits and Policy Values --
Values Under the Certificate"). 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.
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26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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INCOME TAXATION OF CERTIFICATE BENEFITS
For Federal income tax purposes, the Certificates should be treated as life
insurance policies under Section 7702 of the Code. The death benefit under a
life insurance policy is excluded from the gross income of the beneficiary.
Also, a life insurance policy owner is not taxed on increments in the policy
value until the policy is partially or completely surrendered. Section 7702
limits the amount of premiums that may be invested in a policy that is treated
as life insurance. Hartford intends to monitor premium levels to assure
compliance with the Section 7702 standards.
During the first fifteen policy years, an "income first" rule generally applies
to any distribution of cash that is required under Code Section 7702 because of
a reduction in benefits under the Certificate.
Hartford also believes that any Loan received under a Certificate will be
treated as Debt of the owner, and that no part of any Loan under a Certificate
will constitute income to the owner. A surrender or assignment of the
Certificate may have tax consequences depending upon the circumstances. Owners
should consult qualified tax advisers concerning the effect of such changes.
Federal, state, and local estate tax, inheritance, and other tax consequences of
ownership or receipt of Certificate proceeds depend on the circumstances of each
owner or beneficiary.
The Maturity Date Extension Rider allows an owner to extend the Maturity Date to
the date of the death of the Insured. Although Hartford believes that the
Certificate will continue to be treated as a life insurance contract for federal
income tax purposes after the scheduled Maturity Date, due to the lack of
specific guidance on this issue, this result is not certain. If the Certificate
is not treated as a life insurance contract for federal income tax purposes
after the Maturity Date, among other things, the Death Proceeds may be taxable
to the recipient. The owner should consult a competent tax adviser regarding the
possible adverse tax consequences resulting from an extension of the scheduled
Maturity Date.
MODIFIED ENDOWMENT CONTRACTS
Code Section 7702A applies an additional test, the "seven-pay" test, to life
insurance contracts. A modified endowment contract is a life insurance policy
which satisfies the Section 7702 definition of life insurance but fails the
seven-pay test of Section 7702A. A policy fails the seven-pay test if the
accumulated amount paid into the Certificate at any time during the first seven
Coverage Years exceeds the sum of the net level premiums that would have been
paid up to that point if the Certificate provided for paid-up future benefits
after the payment of seven level annual premiums. Computational rules for the
seven-pay test are described in Section 7702A(c).
A policy that is classified as a modified endowment contract is eligible for
certain aspects of the beneficial tax treatment accorded to life insurance. That
is, the death benefit is excluded from income and increments in value are not
subject to current taxation. However, withdrawals and loans from a modified
endowment contract are treated first as income, then as a recovery of basis.
Taxable withdrawals are subject to a 10% federal income tax penalty, with
certain exceptions. Generally, only distributions and loans made in the first
year in which a policy becomes a modified endowment contract, 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. In addition, if there is a reduction in benefits
under the Certificate within the first seven Coverage years, the seven-pay test
is applied as if the Certificate had initially been issued at the reduced
benefit level. Any reduction in benefits attributable to the nonpayment of
premiums will not be taken into account for purposes of the seven-pay test if
the benefits are reinstated within 90 days after the reduction.
If the Certificate satisfies the seven-pay test for seven years, distributions
and loans made thereafter will not be subject to the modified endowment contract
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.
Before assigning, pledging, or requesting a Loan under a Certificate that is a
modified endowment contract, an owner should consult a qualified tax adviser.
All modified endowment contracts 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 contract 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
The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a policy is not treated as a life insurance contract, the policy
owner will be subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account 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.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
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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 the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
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 still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the policy owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
policies subject to the diversification requirements in a manner that will
maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN THE
SEPARATE ACCOUNT
In order for a variable life insurance contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the policy owner, such as the ability
to select and control investments in a separate account, will cause the policy
owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable policy."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Whether partial withdrawals (or other
such amounts deemed to be distributed) from the Policy constitute income to the
Policy Owner depends, in part, upon whether the Policy is considered a modified
endowment policy for Federal income tax purposes.
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.
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Investment Divisions. Performance information about an Investment
Division is based on the Investment Division's past performance only and is no
indication of future performance.
Each Investment Division may include total return in advertisements, sales
literature, and other promotional materials. When an Investment Division
advertises its total return, it will usually be calculated for one year, three
years, five years, and ten years or some other relevant periods if the
Investment Division has not been in existence for at least ten years. Total
return may also be calculated for the most recent fiscal quarter and for the
period since underlying fund inception. Total return is measured by comparing
the value of an investment in the Investment Division at the beginning of the
relevant period to the value of the investment at the end of the period.
If applicable, the Investment Divisions may advertise yield in addition to total
return. The yield will be computed in the following manner: The net investment
income per unit earned during a recent one month period is divided by the unit
value on the last day of the period. This figure reflects the Certificate
charges described below.
The Investment Division investing in the Hartford Money Market HLS Fund may
advertise yield and effective yield. The yield of an Investment Division is
based upon the income earned by the Investment Division over a seven-day period
and then annualized, i.e., the income earned in the period is assumed to be
earned every seven days over a 52-week period and stated as a percentage of the
investment. Effective yield is calculated similarly, but when annualized, the
income earned by the investment is assumed to be reinvested in Division units
and thus compounded in the course of a 52-week period. Yield reflects the
Certificate charges described below.
Total return for an Investment Division includes deductions for the maximum
sales load charge, mortality and expense risk charge, DAC tax charge, and the
administrative expense charge, and is therefore lower than total return at the
Portfolio level, where there are no comparable charges. The performance results
do not reflect the cost of insurance or any state or local premium taxes. If
these charges were included, the total return figures would be lower. Total
return may also be calculated to include deductions for Separate Account
charges, but not include deductions for the sales load charge, DAC tax charge or
any state or local premium taxes. If reflected, the total return figures would
reduce the performance quoted. Yield for an Investment Division includes all
recurring charges (except sales charges) and is therefore lower than yield at
the Portfolio level, where there are no comparable charges.
We may provide information on various topics to current and prospective owners
in advertising, sales literature or other materials. These topics may include
the relationship between sectors of the economy and the economy as a whole and
its effect on various securities markets, investment strategies and techniques
(such as value investing, dollar cost averaging and asset allocation), plan and
trust arrangements, the advantages and disadvantages of investing in
tax-advantaged and taxable instruments, current and prospective owner profiles
and hypothetical purchase scenarios, financial management and tax and retirement
planning, and investment alternatives, including comparisons between the
Certificates and the characteristics of and market for such alternatives.
LEGAL PROCEEDINGS
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The Separate Account is not a party to any pending material legal proceedings.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
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GLOSSARY OF SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCUMULATION UNIT: A unit of measure we use to calculate the value of an
Investment Division.
CASH SURRENDER VALUE: The Cash Value, minus Debt, minus accrued charges that we
have not deducted.
CASH VALUE: The Investment Value plus the Loan Account Value.
CERTIFICATE: The form evidencing and describing your rights, benefits, and
options under the Policy. The Certificate will describe, among other things,
(i) the benefits payable upon the death of the named Insured, (ii) to whom the
benefits are payable and (iii) the limits and other terms of the Policy as they
pertain to the Insured.
CERTIFICATE ANNIVERSARY: An anniversary of the Coverage Date.
COVERAGE DATE: The date insurance under the Certificate is effective as to an
Insured and from which we determine Coverage Months and Coverage Years.
COVERAGE MONTH(S): The 1-month period and each successive 1-month period
following the Coverage Date.
COVERAGE YEAR(S): The 12-month period and each successive 12-month period
following the Coverage Date.
CUSTOMER SERVICE CENTER: The service area of Hartford Life and Annuity Insurance
Company located at 100 Campus Drive, Suite 250, Florham Park, New Jersey 07932.
DEATH PROCEEDS: The amount that we will pay on the death of the Insured. This
equals the death benefit minus any outstanding Debt plus any rider benefits
payable.
DEBT: The aggregate amount of outstanding Loans, plus any interest accrued at
the adjustable loan interest rate.
FACE AMOUNT: The minimum death benefit as long as the Certificate is in force.
We specify the Face Amount you chose on your Certificate. We may change the Face
Amount after certificate issuance on your request or due to a change in death
benefit option or a partial withdrawal.
FUNDS: The underlying investment vehicles for the Separate Account. Each Fund is
a registered management investment company, and may be divided into series of
Portfolios.
HARTFORD OR US OR WE OR OUR: Hartford Life and Annuity Insurance Company.
INSURED: The person on whose life we issue the Certificate. We identify the
Insured 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.
INVESTMENT VALUE: The sum of the values of assets in the Investment Divisions
under the Certificate.
LOAN: Any amount borrowed against the Investment Value under the Certificate.
LOAN ACCOUNT: An account in our general account, established for any amounts
transferred from the Investment Divisions for requested loans. The Loan Account
credits a fixed rate of interest that is not based on the investment experience
of the Separate Account.
LOAN ACCOUNT VALUE: The amounts of the Investment Value transferred to (or from)
our 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%.
MONTHLY DEDUCTION AMOUNT: The fees and charges deducted from the Investment
Value on the Processing Date.
NET PREMIUM: The amount of premium credited to the Investment Divisions.
PORTFOLIO: A division or series of a Fund that serves as the underlying
investment vehicle of an Investment Division of the Separate Account. Each
Investment Division purchases shares of a Portfolio of a Fund.
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 date.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (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.
YOU OR YOUR: The person or legal entity designated as the owner in the
enrollment form or as subsequently changed. This person or legal entity may be
someone other than the Insured. You possess all rights under the Policy with
respect to the Certificate.
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
WHERE YOU CAN FIND MORE INFORMATION
You can call your representative with questions or write to us at:
International Corporate Marketing Group
Attn: Registered Products
100 Campus Drive, Suite 250
Florham Park, NJ 07932
The Statement of Additional Information, which is attached to this prospectus,
contains more information about this life insurance policy. Like this
prospectus, it is filed with the Securities and Exchange Commission. You should
read the Statement of Additional Information because you are bound by the terms
contained in it.
We file other information with the Securities and Exchange Commission. You may
read and copy any document we file at the SEC's public reference room in
Washington, DC 20549-6009. Please call the SEC at 1-800-SEC-0330 for further
information. Our SEC filings are also available to the public at the SEC's
website at http://www.sec.gov.
<PAGE>
PART B
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE
OMNISOURCE
This Statement of Additional Information is not a prospectus. We will send you a
prospectus if you write us at International Corporate Marketing Group, Attn:
Registered Products, 100 Campus Drive, Suite 250, Florham Park, NJ 07932.
DATE OF PROSPECTUS: MAY 1, 2000
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 1, 2000
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY 3
- ----------------------------------------------------------------------
SERVICES 5
- ----------------------------------------------------------------------
EXPERTS 5
- ----------------------------------------------------------------------
DISTRIBUTION OF THE POLICIES 5
- ----------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT CHARGES 6
- ----------------------------------------------------------------------
ILLUSTRATION OF DEATH BENEFITS 8
- ----------------------------------------------------------------------
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 3
- --------------------------------------------------------------------------------
GENERAL INFORMATION AND HISTORY
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("HARTFORD") -- Hartford Life and
Annuity Insurance Company 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, the District of Columbia and Puerto Rico,
except New York. On January 1, 1998, Hartford's name changed from ITT Hartford
Life and Annuity Insurance Company to Hartford Life and Annuity Insurance
Company. We were originally incorporated under the laws of Wisconsin on
January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999.
Hartford Life and Annuity Insurance Company is controlled by Hartford Life
Insurance Company, which is controlled by Hartford Life & Accident Insurance
Company, which is controlled by Hartford Life Inc., which is controlled by
Hartford Accident & Indemnity Company, which is controlled by Hartford Fire
Insurance Company, which is controlled by Nutmeg Insurance Company, which is
controlled by The Hartford Financial Services Group, Inc. Each of these
companies is engaged in the business of insurance and financial services.
The following table shows a brief description of the business experience of
officers and directors of Hartford Life and Annuity Insurance Company:
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
David A. Carlson Vice President, 1999 Assistant Vice President and Director of Taxes
(1998-1999), Hartford; Assistant Vice President and
Director of Taxes (1998-1999), Hartford; CIGNA Corporation
(1975-1998).
Peter W. Cummins 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.
Timothy M. Fitch 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.
Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Officer (1998-Present),
Accounting Officer, 1998 Hartford Life Insurance Company; Vice President & Chief
Accounting Officer (1998-Present), Royal Life Insurance
Company of America; Vice President & Chief Accounting
Officer (1998-Present) Alpine Life Insurance Company;
Chief Accounting Officer (1997-Present), Hartford Life,
Inc.; Director, Finance (1995-1997), Value Health, Inc.;
Senior Manager (1993-1995), Coopers and Lybrand; Audit
Manager (1993-1996) Arthur Andersen & Co.
David T. Foy Senior Vice President, Chief Senior Vice President (1998-present), Vice President
Financial Officer & (1998), Assistant Vice President (1995-1998), Hartford;
Treasurer, 1998 Senior Vice President (1998-Present), Hartford Life and
Director, 1999* Accident Insurance Company; Director, Strategic Planning
Corporate Finance (1995-1996), IA Product Development
(1994-1995), Hartford; Various Actuarial Roles
(1989-1993), Milliman & Robertson.
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
Lynda Godkin Senior Vice President, 1997 Associate General Counsel (1995-1996); Assistant General
General Counsel, 1996 Counsel and Secretary (1994-1995), Hartford; Director
Corporate Secretary, 1996 (1997-Present); Senior Vice President (1997-Present);
Director, 1997* General Counsel (1996-Present); 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.
Lois W. Grady Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice
Vice President, 1994 President (1998-Present); Vice President (1993-1997);
Assistant Vice President (1987-1993), Hartford Life and
Accident Insurance Company; Senior Vice President
(1998-Present); Vice President (1994-1997); Assistant Vice
President (1987-1994), Hartford Life Insurance Company.
Stephen T. Joyce Senior Vice President, 1999 Vice President (1997-1999), Assistant Vice President
(1995-1997), Hartford; Assistant Vice President
(1994-1997), Hartford Life and Accident Insurance Company;
Vice President (1997-Present); Vice President (1997-1999);
Assistant Vice President (1994-1997), Hartford Life
Insurance Company.
Michael D. Keeler Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company; Vice President (1995-1997), Providian
Insurance; Supervisor/Manager (1985-1995), U.S. West
Communications.
Robert A. Kerzner Senior Vice President, 1998 Director of Individual Life (1998-Present); Vice President
(1994-1998), Hartford; Senior Vice President
(1998-Present); Vice President (1994-1997); Regional Vice
President (1991-1994), Hartford Life Insurance Company.
Thomas M. Marra President, 2000 Executive Vice President (1996-2000), Senior Vice
Director, 1994* President (1993-1996); Hartford; Director (1994-Present);
Executive Vice President (1995-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); Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1995), Hartford Life
Insurance Company; Chief Operating Officer (2000-present),
Executive Vice President, Individual Life and Annuities
(1997-2000), Hartford Life, Inc.
Craig R. Raymond 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.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 5
- --------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
Lowndes A. Smith Chief Executive Officer, 1997 President (1989-2000), Chief Operating Officer
Director, 1985* (1989-1997), Hartford; Director (1981-Present); President
(1989-Present); Chief Executive Officer (1997-Present);
Chief Operating Officer (1989-1997), Hartford Life and
Accident Insurance Company; Director (1985-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.
David M. Znamierowski Senior Vice President & Chief Vice President (1997); Senior Vice President (1997);
Investment Officer, 1997 Director, Risk Management Strategy (1996); Director
Director, 1998 (1998), Hartford; Director (1998-Present); Senior Vice
President (1997-Present), Hartford Life and Accident
Insurance Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice President,
Investment Strategy & Policy (1991-1996), Aetna Life and
Casualty.
</TABLE>
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE was established as a separate
account under Connecticut law on October 9, 1995. The Separate Account is
classified as a unit investment trust registered with the Securities and
Exchange Commission under the Investment Company Act of 1940.
SERVICES
- --------------------------------------------------------------------------------
SAFEKEEPING OF ASSETS -- Title to the assets of the Separate Account is held by
Hartford. The assets are kept physically segregated and are held separate and
apart from Hartford's general corporate assets. Records are maintained of all
purchases and redemptions of Fund shares held in each of the Investment
Divisons.
EXPERTS
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS -- The audited financial statements included in
this 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
financial statements of Hartford Life and Annuity Insurance Company which states
the statutory 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.
ACTUARIAL EXPERT -- The hypothetical Policy illustrations included in this
Statement of Additional Information and the registration statement with respect
to the Separate Account have been approved by James M. Hedreen, FSA, MAAA,
Actuary, for Hartford, and are included in reliance upon his opinion as to their
reasonableness.
DISTRIBUTION OF THE POLICIES
- --------------------------------------------------------------------------------
Hartford Equity Sales Company, Inc. ("HESCO") serves as principal underwriter
for the Certificates and will offer the Policies on a continuous basis. HESCO is
an affiliate of Hartford. Both HESCO and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. The principal address of HESCO is
the same as Hartford. HESCO is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. ("NASD").
The Policies will be sold by salespersons who represent Hartford as insurance
agents and who are registered representatives of HESCO or certain other
registered broker-dealers who have entered into distribution agreements with
HESCO.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers, and other registered broker-dealers is 12% of the premiums
paid. Additionally, expense allowances, service fees and asset-based trail
commissions may be paid.
Broker-dealers or financial institutions are compensated according to a schedule
set forth HESCO and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on premium payments. This
compensation is usually paid from the sales charges described in the 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 other financial institutions based
on total sales by the broker-dealer or financial institution of insurance
products. These payments, which may be different for broker-dealers or financial
institutions, will be made by HESCO, its affiliates or Hartford out of their
assets and will not effect the amounts paid by the policy owners or contract
owners to purchase, hold or surrender variable insurance products.
The following table shows officers and directors of HESCO:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES
<S> <C> <C>
- --------------------------------------------------------------------
David A. Carlson Vice President
- --------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- --------------------------------------------------------------------
David T. Foy Treasurer
- --------------------------------------------------------------------
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary
- --------------------------------------------------------------------
George R. Jay Controller
- --------------------------------------------------------------------
Robert A. Kerzner Executive Vice President, Director
- --------------------------------------------------------------------
Thomas M. Marra President, Director
- --------------------------------------------------------------------
Donald R. Salama Vice President
- --------------------------------------------------------------------
Lowndes A. Smith Chief Executive Officer, Director
- --------------------------------------------------------------------
</TABLE>
ADDITIONAL INFORMATION ABOUT CHARGES
- --------------------------------------------------------------------------------
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 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 the expenses related to the sale and distribution of
the Certificates.
REDUCED CHARGES FOR ELIGIBLE GROUPS -- Certain of the charges and deductions
described above (including, sales load, mortality and expense risk charge, cost
of insurance charge and administrative charge) may be reduced for certain sales
of the Certificates. To qualify for this 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 the Certificates are purchased
and certain characteristics of the plan's members. From time to time, we may
modify 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 Certificate Owners invested in ICMG
Registered Variable Life Separate Account One.
UNDERWRITING PROCEDURES -- To purchase a Certificate you must submit an
enrollment form to us. Within limits, you may choose the initial Premium and the
initial Face Amount. Certificates generally will be issued only on the lives of
insureds ages 79 and under who supply evidence of insurability satisfactory to
us. Acceptance is subject to our underwriting rules and we reserve the right to
reject an enrollment form for any reason. No change in the terms or conditions
of a Certificate will be made without your consent.
The cost of insurance charge is to cover our anticipated mortality costs. We use
various underwriting procedures, including medical underwriting procedures,
depending on the characteristics of the group to which the 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
Policy that are agreed to by Hartford and the employer. The actual monthly cost
of insurance rates will be based on our expectations as to future experience. We
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 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, preferred and standard and/or any other nondiscriminatory classes agreed
to by the 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.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 7
- --------------------------------------------------------------------------------
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.
INCREASES IN FACE AMOUNT -- At any time after purchasing a Certificate, You may
request In Writing to change the Face Amount. In most cases, the minimum Face
Amount of the Certificate is $50,000.
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
Us 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. We reserve the
right to limit the number of increases made under the Certificate to not more
than one in any 12 month period.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
The following tables illustrate how the death benefit, Cash Value and Cash
Surrender Value of a Policy may change with the investment experience of the
Separate Account. They 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. They
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 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 0.87%. The 0.87% figure is based on an
average of the current management fees and expenses of the available Portfolios.
Actual fees and expenses of the Portfolios associated with a Certificate may be
more or less than 0.87%, 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
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>
STATEMENT OF ADDITIONAL INFORMATION 9
- --------------------------------------------------------------------------------
GROUP 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% (-0.87% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 14,807 12,352 12,352 250,000 11,029 11,029 250,000
2 30,355 24,470 24,470 250,000 21,890 21,890 250,000
3 46,680 36,395 36,395 250,000 32,585 32,585 250,000
4 63,821 48,150 48,150 250,000 43,120 43,120 250,000
5 81,819 59,750 59,750 250,000 53,496 53,496 250,000
6 100,717 71,198 71,198 250,000 63,717 63,717 250,000
7 120,560 82,504 82,504 250,000 73,779 73,779 250,000
8 126,588 81,111 81,111 250,000 71,360 71,360 250,000
9 132,917 79,701 79,701 250,000 68,817 68,817 250,000
10 139,563 78,270 78,270 250,000 66,127 66,127 250,000
11 146,541 76,875 76,875 250,000 63,274 63,274 250,000
12 153,868 75,428 75,428 250,000 60,240 60,240 250,000
13 161,561 73,921 73,921 250,000 57,009 57,009 250,000
14 169,639 72,350 72,350 250,000 53,561 53,561 250,000
15 178,121 70,710 70,710 250,000 49,871 49,871 250,000
16 187,027 68,827 68,827 250,000 45,904 45,904 250,000
17 196,378 66,822 66,822 250,000 41,616 41,616 250,000
18 206,197 64,703 64,703 250,000 36,950 36,950 250,000
19 216,507 62,447 62,447 250,000 31,840 31,840 250,000
20 227,332 60,036 60,036 250,000 26,214 26,214 250,000
25 290,140 45,617 45,617 250,000 0 0 0
30 370,300 25,731 25,731 250,000 0 0 0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GROUP 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% (5.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 14,807 13,105 13,105 250,000 11,732 11,732 250,000
2 30,355 26,749 26,749 250,000 23,992 23,992 250,000
3 46,680 40,999 40,999 250,000 36,812 36,812 250,000
4 63,821 55,905 55,905 250,000 50,228 50,228 250,000
5 81,819 71,517 71,517 250,000 64,273 64,273 250,000
6 100,717 87,869 87,869 250,000 78,990 78,990 250,000
7 120,560 105,010 105,010 250,000 94,417 94,417 250,000
8 126,588 109,660 109,660 250,000 97,533 97,533 250,000
9 132,917 114,514 114,514 252,179 100,707 100,707 250,000
10 139,563 119,574 119,574 256,050 103,931 103,931 250,000
11 146,541 124,957 124,957 260,287 107,205 107,205 250,000
12 153,868 130,554 130,554 264,681 110,527 110,527 250,000
13 161,561 136,372 136,372 269,201 113,899 113,899 250,000
14 169,639 142,419 142,419 273,850 117,322 117,322 250,000
15 178,121 148,706 148,706 278,637 120,797 120,797 250,000
16 187,027 155,274 155,274 283,623 124,317 124,317 250,000
17 196,378 162,090 162,090 288,761 127,876 127,876 250,000
18 206,197 169,178 169,178 294,086 131,463 131,463 250,000
19 216,507 176,540 176,540 299,613 135,064 135,064 250,000
20 227,332 184,182 184,182 305,358 138,669 138,669 250,000
25 290,140 227,358 227,358 338,132 156,649 156,649 250,000
30 370,300 280,346 280,346 379,410 173,833 173,833 250,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
STATEMENT OF ADDITIONAL INFORMATION 11
- --------------------------------------------------------------------------------
GROUP 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% (11.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
1 14,807 13,858 13,858 250,000 12,435 12,435 250,000
2 30,355 29,118 29,118 250,000 26,180 26,180 250,000
3 46,680 45,975 45,975 250,000 41,388 41,388 250,000
4 63,821 64,626 64,626 250,000 58,233 58,233 250,000
5 81,819 85,283 85,283 250,000 76,907 76,907 250,000
6 100,717 108,164 108,164 258,536 97,633 97,633 250,000
7 120,560 133,437 133,437 309,753 120,487 120,487 279,863
8 126,588 147,326 147,326 332,262 131,929 131,929 297,725
9 132,917 162,654 162,654 356,537 144,409 144,409 316,754
10 139,563 179,562 179,562 382,731 158,010 158,010 337,025
11 146,541 198,389 198,389 411,340 172,825 172,825 358,619
12 153,868 219,146 219,146 442,237 188,956 188,956 381,621
13 161,561 242,021 242,021 475,550 206,518 206,518 406,122
14 169,639 267,230 267,230 511,472 225,635 225,635 432,221
15 178,121 295,010 295,010 550,222 246,437 246,437 460,019
16 187,027 325,686 325,686 592,152 269,059 269,059 489,627
17 196,378 359,460 359,460 637,417 293,637 293,637 521,164
18 206,197 396,671 396,671 686,360 320,315 320,315 554,753
19 216,507 437,644 437,644 739,318 349,236 349,236 590,530
20 227,332 482,746 482,746 796,658 380,558 380,558 628,635
25 290,140 787,282 787,282 1,165,460 580,117 580,117 859,773
30 370,300 1,282,401 1,282,401 1,727,546 872,257 872,257 1,176,692
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GROUP 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% (-0.87% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 14,807 12,346 12,346 262,369 10,976 10,976 261,082
2 30,355 24,440 24,440 274,485 21,727 21,727 271,852
3 46,680 36,322 36,322 286,384 32,248 32,248 282,392
4 63,821 48,009 48,009 298,088 42,537 42,537 292,700
5 81,819 59,519 59,519 309,612 52,584 52,584 302,767
6 100,717 70,847 70,847 320,955 62,384 62,384 312,587
7 120,560 82,005 82,005 332,127 71,919 71,919 322,144
8 126,588 80,456 80,456 330,579 68,949 68,949 319,185
9 132,917 78,882 78,882 329,007 65,828 65,828 316,077
10 139,563 77,275 77,275 327,403 62,533 62,533 312,796
11 146,541 75,683 75,683 325,810 59,051 59,051 309,330
12 153,868 74,018 74,018 324,151 55,364 55,364 305,660
13 161,561 72,269 72,269 322,409 51,464 51,464 301,777
14 169,639 70,432 70,432 320,579 47,336 47,336 297,668
15 178,121 68,505 68,505 318,659 42,962 42,962 293,314
16 187,027 66,201 66,201 316,387 38,312 38,312 288,688
17 196,378 63,746 63,746 313,944 33,352 33,352 283,753
18 206,197 61,152 61,152 311,363 28,036 28,036 278,467
19 216,507 58,396 58,396 308,619 22,314 22,314 272,778
20 227,332 55,457 55,457 305,696 16,135 16,135 266,637
25 290,140 38,246 38,246 288,558 0 0 0
30 370,300 15,828 15,828 266,235 0 0 0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
STATEMENT OF ADDITIONAL INFORMATION 13
- --------------------------------------------------------------------------------
GROUP 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% (5.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 14,807 13,098 13,098 263,059 11,676 11,676 261,725
2 30,355 26,716 26,716 276,633 23,813 23,813 273,823
3 46,680 40,915 40,915 290,782 36,425 36,425 286,395
4 63,821 55,739 55,739 305,552 49,531 49,531 299,459
5 81,819 71,231 71,231 320,988 63,141 63,141 313,026
6 100,717 87,419 87,419 337,117 77,270 77,270 327,111
7 120,560 104,344 104,344 353,979 91,921 91,921 341,718
8 126,588 108,745 108,745 358,365 94,137 94,137 343,938
9 132,917 113,310 113,310 362,916 96,265 96,265 346,074
10 139,563 118,038 118,038 367,630 98,276 98,276 348,095
11 146,541 123,032 123,032 372,602 100,149 100,149 349,979
12 153,868 128,175 128,175 377,732 101,855 101,855 351,700
13 161,561 133,463 133,463 383,008 103,377 103,377 353,237
14 169,639 138,898 138,898 388,430 104,687 104,687 354,565
15 178,121 144,483 144,483 394,002 105,754 105,754 355,654
16 187,027 150,052 150,052 399,572 106,534 106,534 356,457
17 196,378 155,721 155,721 405,233 106,972 106,972 356,925
18 206,197 161,509 161,509 411,011 107,003 107,003 356,990
19 216,507 167,393 167,393 416,887 106,548 106,548 356,577
20 227,332 173,358 173,358 422,845 105,531 105,531 355,607
25 290,140 204,727 204,727 454,171 89,258 89,258 339,676
30 370,300 237,869 237,869 487,292 43,254 43,254 294,327
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GROUP 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% (11.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
1 14,807 13,851 13,851 263,745 12,376 12,376 262,366
2 30,355 29,083 29,083 278,856 25,983 25,983 275,866
3 46,680 45,880 45,880 295,517 40,947 40,947 290,711
4 63,821 64,429 64,429 313,913 57,407 57,407 307,041
5 81,819 84,933 84,933 334,246 75,512 75,512 325,002
6 100,717 107,595 107,595 356,720 95,429 95,429 344,760
7 120,560 132,657 132,657 381,572 117,330 117,330 366,488
8 126,588 146,321 146,321 395,123 127,705 127,705 376,789
9 132,917 161,405 161,405 410,083 138,996 138,996 388,000
10 139,563 178,054 178,054 426,596 151,274 151,274 400,193
11 146,541 196,603 196,603 444,979 164,631 164,631 413,455
12 153,868 217,069 217,069 465,277 179,160 179,160 427,882
13 161,561 239,648 239,648 487,671 194,977 194,977 443,586
14 169,639 264,563 264,563 512,382 212,201 212,201 460,687
15 178,121 292,059 292,059 544,716 230,962 230,962 479,314
16 187,027 322,426 322,426 586,226 251,390 251,390 499,597
17 196,378 355,862 355,862 631,036 273,624 273,624 521,673
18 206,197 392,700 392,700 679,489 297,808 297,808 545,687
19 216,507 433,262 433,262 731,916 324,091 324,091 571,787
20 227,332 477,912 477,912 788,680 352,642 352,642 600,140
25 290,140 779,394 779,394 1,153,783 536,547 536,547 795,199
30 370,300 1,269,549 1,269,549 1,710,233 806,690 806,690 1,088,239
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
STATEMENT OF ADDITIONAL INFORMATION 15
- --------------------------------------------------------------------------------
GROUP 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% (-0.87% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 6,300 5,145 5,145 250,000 3,974 3,974 250,000
2 12,915 10,134 10,134 250,000 7,828 7,828 250,000
3 19,861 15,005 15,005 250,000 11,559 11,559 250,000
4 27,154 19,776 19,776 250,000 15,167 15,167 250,000
5 34,812 24,464 24,464 250,000 18,643 18,643 250,000
6 42,853 29,066 29,066 250,000 21,985 21,985 250,000
7 51,296 33,591 33,591 250,000 25,177 25,177 250,000
8 60,161 38,159 38,159 250,000 28,326 28,326 250,000
9 69,469 42,645 42,645 250,000 31,299 31,299 250,000
10 79,242 47,043 47,043 250,000 34,079 34,079 250,000
11 89,504 51,387 51,387 250,000 36,657 36,657 250,000
12 100,279 55,622 55,622 250,000 39,022 39,022 250,000
13 111,593 59,746 59,746 250,000 41,171 41,171 250,000
14 123,473 63,757 63,757 250,000 43,093 43,093 250,000
15 135,947 67,659 67,659 250,000 44,775 44,775 250,000
16 149,044 71,287 71,287 250,000 46,194 46,194 250,000
17 162,796 74,781 74,781 250,000 47,322 47,322 250,000
18 177,236 78,156 78,156 250,000 48,121 48,121 250,000
19 192,398 81,396 81,396 250,000 48,546 48,546 250,000
20 208,318 84,495 84,495 250,000 48,553 48,553 250,000
25 300,684 98,138 98,138 250,000 40,679 40,679 250,000
30 418,569 108,361 108,361 250,000 10,880 10,880 250,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GROUP 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% (5.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 6,300 5,462 5,462 250,000 4,249 4,249 250,000
2 12,915 11,088 11,088 250,000 8,630 8,630 250,000
3 19,861 16,924 16,924 250,000 13,144 13,144 250,000
4 27,154 22,998 22,998 250,000 17,798 17,798 250,000
5 34,812 29,338 29,338 250,000 22,592 22,592 250,000
6 42,853 35,953 35,953 250,000 27,531 27,531 250,000
7 51,296 42,867 42,867 250,000 32,608 32,608 250,000
8 60,161 50,222 50,222 250,000 37,947 37,947 250,000
9 69,469 57,908 57,908 250,000 43,426 43,426 250,000
10 79,242 65,936 65,936 250,000 49,038 49,038 250,000
11 89,504 74,384 74,384 250,000 54,791 54,791 250,000
12 100,279 83,203 83,203 250,000 60,686 60,686 250,000
13 111,593 92,412 92,412 250,000 66,737 66,737 250,000
14 123,473 102,036 102,036 250,000 72,952 72,952 250,000
15 135,947 112,104 112,104 250,000 79,343 79,343 250,000
16 149,044 122,625 122,625 250,000 85,913 85,913 250,000
17 162,796 133,660 133,660 250,000 92,667 92,667 250,000
18 177,236 145,254 145,254 252,498 99,606 99,606 250,000
19 192,398 157,327 157,327 267,008 106,735 106,735 250,000
20 208,318 169,892 169,892 281,667 114,063 114,063 250,000
25 300,684 241,089 241,089 358,552 154,747 154,747 250,000
30 418,569 328,670 328,670 444,810 204,274 204,274 276,847
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
STATEMENT OF ADDITIONAL INFORMATION 17
- --------------------------------------------------------------------------------
GROUP 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% (11.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
1 6,300 5,779 5,779 250,000 4,526 4,526 250,000
2 12,915 12,080 12,080 250,000 9,466 9,466 250,000
3 19,861 18,999 18,999 250,000 14,864 14,864 250,000
4 27,154 26,623 26,623 250,000 20,772 20,772 250,000
5 34,812 35,045 35,045 250,000 27,240 27,240 250,000
6 42,853 44,349 44,349 250,000 34,333 34,333 250,000
7 51,296 54,643 54,643 250,000 42,109 42,109 250,000
8 60,161 66,170 66,170 250,000 50,777 50,777 250,000
9 69,469 78,928 78,928 250,000 60,298 60,298 250,000
10 79,242 93,052 93,052 250,000 70,770 70,770 250,000
11 89,504 108,788 108,788 250,000 82,313 82,313 250,000
12 100,279 126,226 126,226 254,725 95,062 95,062 250,000
13 111,593 145,473 145,473 285,842 109,183 109,183 250,000
14 123,473 166,697 166,697 319,054 124,865 124,865 250,000
15 135,947 190,097 190,097 354,549 142,205 142,205 265,451
16 149,044 215,936 215,936 392,609 161,087 161,087 293,143
17 162,796 244,402 244,402 433,388 181,631 181,631 322,369
18 177,236 275,774 275,774 477,172 203,962 203,962 353,241
19 192,398 310,331 310,331 524,247 228,205 228,205 385,876
20 208,318 348,384 348,384 574,925 254,498 254,498 420,400
25 300,684 605,424 605,424 896,245 422,622 422,622 626,354
30 418,569 1,023,429 1,023,429 1,378,680 669,838 669,838 903,625
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GROUP 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% (-0.87% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 6,300 5,143 5,143 255,159 3,953 3,953 254,052
2 12,915 10,122 10,122 260,152 7,766 7,766 257,877
3 19,861 14,974 14,974 265,015 11,434 11,434 261,556
4 27,154 19,718 19,718 269,768 14,952 14,952 265,087
5 34,812 24,369 24,369 274,426 18,311 18,311 268,459
6 42,853 28,921 28,921 278,986 21,504 21,504 271,666
7 51,296 33,385 33,385 283,458 24,512 24,512 274,689
8 60,161 37,880 37,880 287,960 27,437 27,437 277,631
9 69,469 42,277 42,277 292,365 30,140 30,140 280,352
10 79,242 46,567 46,567 296,664 32,598 32,598 282,830
11 89,504 50,777 50,777 300,880 34,798 34,798 285,052
12 100,279 54,848 54,848 304,963 36,725 36,725 287,002
13 111,593 58,772 58,772 308,899 38,371 38,371 288,670
14 123,473 62,544 62,544 312,684 39,721 39,721 290,045
15 135,947 66,163 66,163 316,316 40,759 40,759 291,109
16 149,044 69,349 69,349 319,538 41,456 41,456 291,834
17 162,796 72,330 72,330 322,535 41,777 41,777 292,187
18 177,236 75,120 75,120 325,342 41,679 41,679 292,124
19 192,398 77,695 77,695 327,934 41,112 41,112 291,595
20 208,318 80,036 80,036 330,295 40,025 40,025 290,552
25 300,684 88,473 88,473 338,825 25,444 25,444 276,234
30 418,569 90,493 90,493 340,961 0 0 0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
STATEMENT OF ADDITIONAL INFORMATION 19
- --------------------------------------------------------------------------------
GROUP 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% (5.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1 6,300 5,459 5,459 255,449 4,228 4,228 254,306
2 12,915 11,074 11,074 261,051 8,562 8,562 258,631
3 19,861 16,889 16,889 266,849 12,999 12,999 263,060
4 27,154 22,929 22,929 272,869 17,541 17,541 267,592
5 34,812 29,219 29,219 279,139 22,178 22,178 272,221
6 42,853 35,767 35,767 285,664 26,907 26,907 276,943
7 51,296 42,593 42,593 292,466 31,710 31,710 281,739
8 60,161 49,835 49,835 299,683 36,698 36,698 286,722
9 69,469 57,376 57,376 307,199 41,731 41,731 291,751
10 79,242 65,223 65,223 315,020 46,784 46,784 296,802
11 89,504 73,434 73,434 323,200 51,844 51,844 301,861
12 100,279 81,952 81,952 331,691 56,889 56,889 306,908
13 111,593 90,778 90,778 340,492 61,909 61,909 311,930
14 123,473 99,923 99,923 349,609 66,884 66,884 316,909
15 135,947 109,399 109,399 359,057 71,791 71,791 321,822
16 149,044 119,002 119,002 368,649 76,593 76,593 326,632
17 162,796 128,908 128,908 378,529 81,245 81,245 331,297
18 177,236 139,145 139,145 388,738 85,690 85,690 335,760
19 192,398 149,702 149,702 399,268 89,861 89,861 339,955
20 208,318 160,576 160,576 410,115 93,689 93,689 343,812
25 300,684 220,444 220,444 469,825 105,343 105,343 355,698
30 418,569 290,014 290,014 539,225 94,610 94,610 345,484
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
GROUP 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% (11.13% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
1 6,300 5,776 5,776 255,738 4,503 4,503 254,559
2 12,915 12,065 12,065 261,983 9,391 9,391 259,414
3 19,861 18,960 18,960 268,824 14,699 14,699 264,685
4 27,154 26,542 26,542 276,346 20,465 20,465 270,412
5 34,812 34,900 34,900 284,637 26,727 26,727 276,630
6 42,853 44,113 44,113 293,775 33,529 33,529 283,385
7 51,296 54,280 54,280 303,859 40,906 40,906 290,712
8 60,161 65,636 65,636 315,122 49,033 49,033 298,784
9 69,469 78,166 78,166 327,549 57,834 57,834 307,526
10 79,242 91,986 91,986 341,257 67,356 67,356 316,985
11 89,504 107,313 107,313 356,452 77,659 77,659 327,219
12 100,279 124,207 124,207 373,209 88,805 88,805 338,293
13 111,593 142,826 142,826 391,677 100,876 100,876 350,282
14 123,473 163,350 163,350 412,035 113,951 113,951 363,270
15 135,947 185,986 185,986 434,486 128,116 128,116 377,340
16 149,044 210,866 210,866 459,169 143,455 143,455 392,576
17 162,796 238,302 238,302 486,382 160,052 160,052 409,063
18 177,236 268,591 268,591 516,422 177,991 177,991 426,885
19 192,398 302,019 302,019 549,575 197,359 197,359 446,128
20 208,318 338,910 338,910 586,163 218,250 218,250 466,886
25 300,684 589,587 589,587 872,800 350,066 350,066 597,863
30 418,569 997,624 997,624 1,343,918 540,677 540,677 787,333
- -------------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and mortality and expense risk rates and front-end sales
loads.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and 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.
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 Hartford Life and Annuity Insurance Company ICMG Registered Variable Life
Separate Account One OmniSource and to the Owners of Units of Interest therein:
We have audited the accompanying statements of assets and liabilities of
Hartford Life and Annuity Insurance Company ICMG Registered Variable Life
Separate Account One OmniSource (Hartford Bond, Hartford Capital Appreciation,
Hartford Money Market, Neuberger Berman AMT Partners, Neuberger Berman AMT
Balanced, Neuberger Berman AMT Limited Maturity Bond, Fidelity VIP Fund
Equity-Income, Fidelity VIP Fund High Income, Fidelity VIP Fund Overseas,
Fidelity VIP Fund II Asset Manager, Alger American Small Capitalization, Alger
American Growth, J.P. Morgan Bond, J.P. Morgan U.S. Disciplined Equity, J.P.
Morgan Small Company, J.P. Morgan International Opportunities, MSDW Universal
Funds Fixed Income, MSDW Universal Funds High Yield, MSDW Universal Funds Equity
Growth, MSDW Universal Funds Value, MSDW Universal Funds Global Equity, MSDW
Universal Funds Emerging Markets Equity, BT Equity 500 Index, BT Small Cap Index
and BT EAFE Equity Index Investment Divisions) (collectively, the Account) as of
December 31, 1999, and the related statements of operations and the statements
of changes in net assets for the periods presented. 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 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 24, 2000 ARTHUR ANDERSEN LLP
SA-1
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Assets & Liabilities
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Hartford Hartford Hartford Neuberger Neuberger
Bond Capital Money Market Berman Berman
Investment Appreciation Investment AMT Partners AMT Balanced
Division Investment Division Investment Investment
Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS IN THE HARTFORD HLS MUTUAL FUNDS:
- ------------------------------------------------------------------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. - CLASS IA
Shares 1,113,527
Cost $1,170,274
...................................................................................................................................
Market Value: $1,106,692 $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS FUND, INC. - CLASS IA
Shares 157,392
Cost $776,862
...................................................................................................................................
Market Value: -- 959,365 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS FUND, INC - CLASS IA
Shares 2,043,553
Cost $2,043,553
...................................................................................................................................
Market Value: -- -- 2,043,553 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
- ------------------------------------------------------------------------------------------------------------------------------------
PARTNERS PORTFOLIO
Shares 110,191
Cost $2,138,023
...................................................................................................................................
Market Value: -- -- -- 2,164,142 --
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCED PORTFOLIO
Shares 95,291
Cost $1,495,125
...................................................................................................................................
Market Value: -- -- -- -- 1,990,620
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 1,038 107,050 -- -- 294,593
...................................................................................................................................
Receivable from fund shares sold -- -- 38,720 -- --
...................................................................................................................................
TOTAL ASSETS 1,107,730 1,066,415 2,082,273 2,164,142 2,285,213
...................................................................................................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company -- -- 12,938 12,375 --
...................................................................................................................................
Payable for fund shares purchased 3,266 9,478 -- 8,977 40,961
...................................................................................................................................
TOTAL LIABILITIES 3,266 9,478 12,938 21,352 40,961
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,104,464 $1,056,937 $2,069,335 $2,142,790 $2,244,252
- ------------------------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 94,558 53,952 179,377 143,120 125,844
Unit price $ 11.56 $ 19.23 $ 11.48 $ 14.87 $ 17.69
...................................................................................................................................
Units owned by Hartford Life and Annuity Insurance Company 1,000 1,000 948 1,000 1,000
Unit price $ 11.56 $ 19.23 $ 11.48 $ 14.87 $ 17.69
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Neuberger Fidelity Fidelity Fidelity
Berman AMT VIP Fund VIP Fund VIP Fund
Limited Equity-Income High Income Overseas
Maturity Bond Investment Investment Investment
Investment Division Division Division
Division
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
INVESTMENTS IN NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
- ----------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY BOND PORTFOLIO
Shares 33,247
Cost $453,545
.....................................................................................................................
Market Value: $440,193 $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS:
- ----------------------------------------------------------------------------------------------------------------------
EQUITY-INCOME PORTFOLIO
Shares 78,318
Cost $1,916,064
.....................................................................................................................
Market Value: -- 2,013,550 -- --
- ----------------------------------------------------------------------------------------------------------------------
HIGH INCOME PORTFOLIO
Shares 22,600
Cost $258,184
.....................................................................................................................
Market Value: -- -- 255,601 --
- ----------------------------------------------------------------------------------------------------------------------
OVERSEAS PORTFOLIO
Shares 73,722
Cost $1,485,387
.....................................................................................................................
Market Value: -- -- -- 2,022,927
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS
II:
- ----------------------------------------------------------------------------------------------------------------------
ASSET MANAGER PORTFOLIO
Shares 97,350
Cost $1,690,045
.....................................................................................................................
Market Value: -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 2,376 51,314 19,670 35,946
.....................................................................................................................
Receivable from fund shares sold -- -- -- --
.....................................................................................................................
TOTAL ASSETS 442,569 2,064,864 275,271 2,058,873
.....................................................................................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company -- -- -- --
.....................................................................................................................
Payable for fund shares purchased -- 5,391 2,548 3,034
.....................................................................................................................
TOTAL LIABILITIES -- 5,391 2,548 3,034
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS $442,569 $2,059,473 $272,723 $2,055,839
- ----------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 38,801 136,314 21,476 112,561
Unit price $ 11.12 $ 15.00 $ 12.13 $ 18.00
.....................................................................................................................
Units owned by Hartford Life and Annuity Insurance Company 1,000 988 1,000 1,661
Unit price $ 11.12 $ 15.00 $ 12.13 $ 18.00
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
December 31, 1999 Fidelity
VIP Fund II
Asset Manager
Investment
Division
- -----------------------------------------------------------------------------------------
ASSETS
INVESTMENTS IN NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST:
- -------------------------------------------------------------------------------------------------------
LIMITED MATURITY BOND PORTFOLIO
Shares 33,247
Cost $453,545
...........................................................
Market Value: $ --
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS:
- ----------------------------------------------------------------------------------------------------------------------
EQUITY-INCOME PORTFOLIO
Shares 78,318
Cost $1,916,064
...........................................................
Market Value: --
- ----------------------------------------------------------------------------------------------------------------------
HIGH INCOME PORTFOLIO
Shares 22,600
Cost $258,184
...........................................................
Market Value: --
- ----------------------------------------------------------------------------------------------------------------------
OVERSEAS PORTFOLIO
Shares 73,722
Cost $1,485,387
...........................................................
Market Value: --
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS
II:
- ----------------------------------------------------------------------------------------------------------------------
ASSET MANAGER PORTFOLIO
Shares 97,350
Cost $1,690,045
...........................................................
Market Value: 1,817,525
- ----------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 28,098
...........................................................
Receivable from fund shares sold --
...........................................................
TOTAL ASSETS 1,845,623
...........................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company --
...........................................................
Payable for fund shares purchased 2,526
...........................................................
TOTAL LIABILITIES 2,526
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,843,097
- ----------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 119,968
Unit price $ 15.24
...........................................................
Units owned by Hartford Life and Annuity Insurance Company 1,000
Unit price $ 15.24
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Alger American Alger J.P. Morgan J.P. Morgan J.P. Morgan
Small American Bond U.S. Small
Capitalization Growth Investment Disciplined Company
Investment Investment Division Equity Investment
Division Division Investment Division
Division
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS IN THE ALGER AMERICAN FUNDS:
- -----------------------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
Shares 11,386
Cost $474,345
..................................................................................................................................
Market Value: $627,955 $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
ALGER AMERICAN GROWTH PORTFOLIO
Shares 50,396
Cost $2,560,070
..................................................................................................................................
Market Value: -- 3,244,471 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN J.P. MORGAN SERIES TRUST II:
- -----------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN BOND PORTFOLIO
Shares 96,427
Cost $1,105,563
..................................................................................................................................
Market Value: -- -- 1,083,842 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN EQUITY PORTFOLIO
Shares 381,593
Cost $6,147,906
..................................................................................................................................
Market Value: -- -- -- 6,620,638 --
- -----------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN SMALL COMPANY PORTFOLIO
Shares 108,268
Cost $1,370,996
..................................................................................................................................
Market Value: -- -- -- -- 1,811,328
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 32,609 78,178 2,456 -- --
..................................................................................................................................
Receivable from fund shares sold -- -- -- -- --
..................................................................................................................................
TOTAL ASSETS 660,564 3,322,649 1,086,298 6,620,638 1,811,328
..................................................................................................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company -- -- -- 470,423 11,897
..................................................................................................................................
Payable for fund shares purchased 3,289 12,733 -- -- --
..................................................................................................................................
TOTAL LIABILITIES 3,289 12,733 -- 470,423 11,897
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $657,275 $3,309,916 $1,086,298 $6,150,215 $1,799,431
- -----------------------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 35,706 136,816 102,551 419,445 126,530
Unit price $ 17.91 $ 24.02 $ 10.49 $ 14.63 $ 14.11
..................................................................................................................................
Units owned by Hartford Life and Annuity Insurance Company 1,002 1,000 1,000 991 1,000
Unit price $ 17.91 $ 24.02 $ 10.49 $ 14.63 $ 14.11
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 J.P. Morgan MSDW MSDW MSDW MSDW
International Universal Universal Universal Universal
Opportunities Funds Fixed Funds Funds Funds
Investment Income High Yield Equity Growth Value
Division Investment Investment Investment Investment
Division Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS IN J.P. MORGAN SERIES TRUST II:
- ------------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN INTERNATIONAL OPPORTUNITIES PORTFOLIO
Shares 194,552
Cost $2,122,588
...................................................................................................................................
Market Value: $2,690,652 $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN THE MORGAN STANLEY DEAN WITTER UNIVERSAL
FUNDS, INC.:
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO
Shares 464,157
Cost $4,951,937
...................................................................................................................................
Market Value: -- 4,664,775 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
Shares 47,197
Cost $504,069
...................................................................................................................................
Market Value: -- -- 483,296 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY GROWTH PORTFOLIO
Shares 51,206
Cost $809,168
...................................................................................................................................
Market Value: -- -- -- 1,039,998 --
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE PORTFOLIO
Shares 39,730
Cost $423,276
...................................................................................................................................
Market Value: -- -- -- -- 427,495
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 1,068 19,411 648 22,183 24,105
...................................................................................................................................
Receivable from fund shares sold -- -- -- -- --
...................................................................................................................................
TOTAL ASSETS 2,691,720 4,684,186 483,944 1,062,181 451,600
...................................................................................................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company -- -- -- -- --
...................................................................................................................................
Payable for fund shares purchased 20,440 -- -- 20,454 20,464
...................................................................................................................................
TOTAL LIABILITIES 20,440 -- -- 20,454 20,464
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $2,671,280 $4,684,186 $483,944 $1,041,727 $431,136
- ------------------------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 188,166 443,119 43,193 62,660 43,084
Unit price $ 14.12 $ 10.57 $ 10.95 $ 16.36 $ 9.78
...................................................................................................................................
Units owned by Hartford Life and Annuity Insurance Company 1,000 -- 1,000 1,000 1,000
Unit price $ 14.12 $ 10.57 $ 10.95 $ 16.36 $ 9.78
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 MSDW MSDW BT Equity BT Small
Universal Funds Universal 500 Index Cap Index
Global Equity Funds Emerging Investment Investment
Investment Markets Equity Division Division
Division Investment
Division
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
INVESTMENTS IN THE MORGAN STANLEY DEAN WITTER UNIVERSAL
FUNDS, INC.:
- ------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY PORTFOLIO
Shares 50,028
Cost $623,956
.......................................................................................................................
Market Value: $644,358 $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS EQUITY PORTFOLIO
Shares 69,829
Cost $771,061
.......................................................................................................................
Market Value: -- $966,436 -- --
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN BT INSURANCE FUNDS TRUST:
- ------------------------------------------------------------------------------------------------------------------------
EQUITY 500 INDEX FUND
Shares 284,481
Cost $3,577,517
.......................................................................................................................
Market Value: -- -- 4,318,420 --
- ------------------------------------------------------------------------------------------------------------------------
SMALL CAP INDEX FUND
Shares 11,724
Cost $124,469
.......................................................................................................................
Market Value: -- -- -- 136,120
- ------------------------------------------------------------------------------------------------------------------------
EAFE EQUITY INDEX FUND
Shares 7,507
Cost $88,947
.......................................................................................................................
Market Value: -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 339 148 7,338 57
.......................................................................................................................
Receivable from fund shares sold -- -- -- --
.......................................................................................................................
TOTAL ASSETS 644,697 966,584 4,325,758 136,177
.......................................................................................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company -- -- -- --
.......................................................................................................................
Payable for fund shares purchased -- -- -- --
.......................................................................................................................
TOTAL LIABILITIES -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $644,697 $966,584 $4,325,758 $136,177
- ------------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 54,501 61,222 296,755 11,074
Unit price $ 11.62 $ 15.53 $ 14.58 $ 11.28
.......................................................................................................................
Units owned by Hartford Life and Annuity Insurance Company 1,000 1,000 1,000 1,000
Unit price $ 11.62 $ 15.53 $ 14.58 $ 11.28
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
December 31, 1999 BT EAFE
Equity Index
Investment
Division
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
INVESTMENTS IN THE MORGAN STANLEY DEAN WITTER UNIVERSAL
FUNDS, INC.:
- ------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY PORTFOLIO
Shares 50,028
Cost $623,956
...........................................................
Market Value: $ --
- ------------------------------------------------------------------------------------------------------------------------
EMERGING MARKETS EQUITY PORTFOLIO
Shares 69,829
Cost $771,061
...........................................................
Market Value: --
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN BT INSURANCE FUNDS TRUST:
- ------------------------------------------------------------------------------------------------------------------------
EQUITY 500 INDEX FUND
Shares 284,481
Cost $3,577,517
...........................................................
Market Value: --
- ------------------------------------------------------------------------------------------------------------------------
SMALL CAP INDEX FUND
Shares 11,724
Cost $124,469
...........................................................
Market Value: --
- ------------------------------------------------------------------------------------------------------------------------
EAFE EQUITY INDEX FUND
Shares 7,507
Cost $88,947
...........................................................
Market Value: 102,089
- ------------------------------------------------------------------------------------------------------------------------
Receivable from Hartford Life and Annuity Insurance Company 3
...........................................................
Receivable from fund shares sold --
...........................................................
TOTAL ASSETS 102,092
...........................................................
LIABILITIES
Payable to Hartford Life and Annuity Insurance Company --
...........................................................
Payable for fund shares purchased --
...........................................................
TOTAL LIABILITIES --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $102,092
- ------------------------------------------------------------------------------------------------------------------------
VARIABLE LIFE INSURANCE POLICIES
Units owned by participants 6,267
Unit price $ 14.05
...........................................................
Units owned by Hartford Life and Annuity Insurance Company 1,000
Unit price $ 14.05
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Hartford Hartford Hartford Neuberger Neuberger
December 31, 1999 Bond Capital Money Market Berman Berman
Investment Appreciation Investment AMT Partners AMT Balanced
Division Investment Division Investment Investment
Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 59,863 $ 2,741 $ 83,177 $ 13,632 $ 13,435
...................................................................................................................................
EXPENSES:
Mortality and expense risk undertakings (5,950) (3,971) (11,460) (11,999) (8,072)
...................................................................................................................................
Net investment income (loss) 53,913 (1,230) 71,717 1,633 5,363
...................................................................................................................................
CAPITAL GAINS INCOME 5,853 19,061 33 23,709 19,904
...................................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
...................................................................................................................................
Net realized (loss) gain on security transactions (7,751) 2,164 -- 93,495 9,884
...................................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (74,990) 157,434 -- (57,401) 445,839
...................................................................................................................................
Net (loss) gain on investments (82,741) 159,598 -- 36,094 455,723
- ------------------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(22,975) $177,429 $ 71,750 $ 61,436 $480,990
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Neuberger Fidelity Fidelity Fidelity
December 31, 1999 Berman AMT VIP Fund VIP Fund VIP Fund
Limited Equity-Income High Income Overseas
Maturity Bond Investment Investment Investment
Investment Division Division Division
Division
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 20,784 $ 19,532 $13,493 $ 16,797
.....................................................................................................................
EXPENSES:
Mortality and expense risk undertakings (3,790) (10,540) (1,353) (9,948)
.....................................................................................................................
Net investment income 16,994 8,992 12,140 6,849
.....................................................................................................................
CAPITAL GAINS INCOME -- 43,177 504 27,092
.....................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
.....................................................................................................................
Net realized gain on security transactions 3,125 2,644 743 47,868
.....................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (16,365) 14,549 (2,065) 544,724
.....................................................................................................................
Net (loss) gain on investments (13,240) 17,193 (1,322) 592,592
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,754 $ 69,362 $11,322 $626,533
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended Fidelity
December 31, 1999 VIP Fund II
Asset Manager
Investment
Division
- -----------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 23,847
...........................................................
EXPENSES:
Mortality and expense risk undertakings (7,286)
...........................................................
Net investment income 16,561
...........................................................
CAPITAL GAINS INCOME 30,207
...........................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
...........................................................
Net realized gain on security transactions 16,076
...........................................................
Net unrealized (depreciation) appreciation of investments
during the period 70,129
...........................................................
Net (loss) gain on investments 86,205
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $132,973
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Alger American Alger J.P. Morgan J.P. Morgan J.P.
December 31, 1999 Small American Bond U.S. Morgan
Capitalization Growth Investment Disciplined Small
Investment Investment Division Equity Company
Division Division Investment Investment
Division* Division
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ 2,422 $ 23,348 $ 19,743 $ 860
.................................................................................................................................
EXPENSES:
Mortality and expense risk undertakings (2,569) (14,507) (5,927) (34,760) (8,027)
.................................................................................................................................
Net investment (loss) income (2,569) (12,085) 17,421 (15,017) (7,167)
.................................................................................................................................
CAPITAL GAINS INCOME 34,451 165,374 2,842 458,922 36,692
.................................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
.................................................................................................................................
Net realized gain (loss) on security transactions 843 10,484 (43) 6,124 (36,948)
.................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 131,562 510,463 (30,809) 460,601 568,417
.................................................................................................................................
Net gain (loss) on investments 132,405 520,947 (30,852) 466,725 531,469
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $164,287 $674,236 $(10,589) $910,630 $560,994
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Formerly J.P. Morgan Equity Investment Division.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended J.P. Morgan MSDW MSDW MSDW MSDW
December 31, 1999 International Universal Universal Universal Universal
Opportunities Funds Fixed Funds Funds Funds
Investment Income High Yield Equity Growth Value
Division Investment Investment Investment Investment
Division Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 18,387 $ 211,995 $ 36,740 $ 556 $ 4,913
...................................................................................................................................
EXPENSES:
Mortality and expense risk undertakings (12,518) (26,289) (2,953) (4,173) (992)
...................................................................................................................................
Net investment income (loss) 5,869 185,706 33,787 (3,617) 3,921
...................................................................................................................................
CAPITAL GAINS INCOME 74,628 676 -- 32,934 --
...................................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
...................................................................................................................................
Net realized gain (loss) on security transactions 7,066 1,373 (11,446) (1,160) 23,060
...................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 590,581 (265,379) 15,300 203,783 5,789
...................................................................................................................................
Net gain (loss) on investments 597,647 (264,006) 3,854 202,623 28,849
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $678,144 $ (77,624) $ 37,641 $231,940 $32,770
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended MSDW MSDW BT Equity BT Small
December 31, 1999 Universal Funds Universal 500 Index Cap Index
Global Equity Funds Emerging Investment Investment
Investment Markets Equity Division Division
Division Investment
Division
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 7,452 $ 17 $ 27,604 $ 1,336
.......................................................................................................................
EXPENSES:
Mortality and expense risk undertakings (3,218) (1,840) (21,727) 445
.......................................................................................................................
Net investment income (loss) 4,234 (1,823) 5,877 1,781
.......................................................................................................................
CAPITAL GAINS INCOME 28,420 -- 12,981 3,825
.......................................................................................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
.......................................................................................................................
Net realized (loss) gain on security transactions (98) 54,040 2,328 (1,490)
.......................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (17,393) 197,420 579,301 12,605
.......................................................................................................................
Net (loss) gain on investments (17,491) 251,460 581,629 11,115
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,163 $249,637 $600,487 $16,721
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended BT EAFE
December 31, 1999 Equity Index
Investment
Division
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1,623
...........................................................
EXPENSES:
Mortality and expense risk undertakings (323)
...........................................................
Net investment income (loss) 1,300
...........................................................
CAPITAL GAINS INCOME 3,032
...........................................................
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
...........................................................
Net realized (loss) gain on security transactions 853
...........................................................
Net unrealized (depreciation) appreciation of investments
during the period 12,819
...........................................................
Net (loss) gain on investments 13,672
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $18,004
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Hartford Hartford Hartford Neuberger Neuberger
December 31, 1999 Bond Capital Money Market Berman Berman
Investment Appreciation Investment AMT Partners AMT Balanced
Division Investment Division Investment Investment
Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 53,913 $ (1,230) $ 71,717 $ 1,633 $ 5,363
...................................................................................................................................
Capital gains income 5,853 19,061 33 23,709 19,904
...................................................................................................................................
Net realized (loss) gain on security transactions (7,751) 2,164 -- 93,495 9,884
...................................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (74,990) 157,434 -- (57,401) 445,839
...................................................................................................................................
Net (decrease) increase in net assets resulting from
operations (22,975) 177,429 71,750 61,436 480,990
...................................................................................................................................
UNIT TRANSACTIONS:
Purchases 283,754 462,253 1,753,189 999,255 1,030,499
...................................................................................................................................
Net transfers (9,776) 403 (591,485) (1,316,308) (5,012)
...................................................................................................................................
Surrenders, including death benefits (3,186) (19,980) (121,096) (13,275) (107,024)
...................................................................................................................................
Cost of insurance and other fees (5,227) (11,882) (320,311) (72,884) (37,042)
...................................................................................................................................
Other activity 4,282 62,154 (19,015) 37,329 58,655
...................................................................................................................................
Net increase (decrease) in net assets resulting from unit
transactions 269,847 492,948 701,282 (365,881) 940,076
...................................................................................................................................
Net increase (decrease) in net assets 246,872 670,377 773,032 (304,445) 1,421,066
...................................................................................................................................
NET ASSETS:
Beginning of period 857,592 386,560 1,296,303 2,447,235 823,186
- ------------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,104,464 $1,056,937 $2,069,335 $ 2,142,790 $2,244,252
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Neuberger Fidelity Fidelity Fidelity
December 31, 1999 Berman AMT VIP Fund VIP Fund VIP Fund
Limited Equity-Income High Income Overseas
Maturity Bond Investment Investment Investment
Investment Division Division Division
Division
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 16,994 $ 8,992 $ 12,140 $ 6,849
.....................................................................................................................
Capital gains income -- 43,177 504 27,092
.....................................................................................................................
Net realized gain on security transactions 3,125 2,644 743 47,868
.....................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (16,365) 14,549 (2,065) 544,724
.....................................................................................................................
Net increase in net assets resulting from operations 3,754 69,362 11,322 626,533
.....................................................................................................................
UNIT TRANSACTIONS:
Purchases 97,401 685,496 104,915 485,285
.....................................................................................................................
Net transfers (248,256) (29,136) (4,779) (100,873)
.....................................................................................................................
Surrenders, including death benefits (2,295) (19,312) (2,901) (44,390)
.....................................................................................................................
Cost of insurance and other fees (9,412) (46,257) (2,283) (39,078)
.....................................................................................................................
Other activity (4) 3,532 3,253 (15,618)
.....................................................................................................................
Net (decrease) increase in net assets resulting from unit
transactions (162,566) 594,323 98,205 285,326
.....................................................................................................................
Net (decrease) increase in net assets (158,812) 663,685 109,527 911,859
.....................................................................................................................
NET ASSETS:
Beginning of period 601,381 1,395,788 163,196 1,143,980
- ----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 442,569 $2,059,473 $272,723 $2,055,839
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended Fidelity
December 31, 1999 VIP Fund II
Asset Manager
Investment
Division
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 16,561
...........................................................
Capital gains income 30,207
...........................................................
Net realized gain on security transactions 16,076
...........................................................
Net unrealized (depreciation) appreciation of investments
during the period 70,129
...........................................................
Net increase in net assets resulting from operations 132,973
...........................................................
UNIT TRANSACTIONS:
Purchases 809,350
...........................................................
Net transfers (85,736)
...........................................................
Surrenders, including death benefits (15,898)
...........................................................
Cost of insurance and other fees (24,046)
...........................................................
Other activity 29,554
...........................................................
Net (decrease) increase in net assets resulting from unit
transactions 713,224
...........................................................
Net (decrease) increase in net assets 846,197
...........................................................
NET ASSETS:
Beginning of period 996,900
- -------------------------------------------------------------------------------------------------------
END OF PERIOD $1,843,097
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Alger American Alger J.P. Morgan J.P. Morgan J.P. Morgan
December 31, 1999 Small American Bond U.S. Small
Capitalization Growth Investment Disciplined Company
Investment Investment Division Equity Investment
Division Division Investment Division
Division*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income $ (2,569) $ (12,085) $ 17,421 $ (15,017) $ (7,167)
..................................................................................................................................
Capital gains income 34,451 165,374 2,842 458,922 36,692
..................................................................................................................................
Net realized gain (loss) on security transactions 843 10,484 (43) 6,124 (36,948)
..................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 131,562 510,463 (30,809) 460,601 568,417
..................................................................................................................................
Net (decrease) increase in net assets resulting from
operations 164,287 674,236 (10,589) 910,630 560,994
..................................................................................................................................
UNIT TRANSACTIONS:
Purchases 224,992 722,797 583,521 2,654,980 355,767
..................................................................................................................................
Net transfers (3,053) 508,409 44,919 25,353 (81,593)
..................................................................................................................................
Surrenders, including death benefits (19,333) (35,761) (92,301) (397,658) (75,547)
..................................................................................................................................
Cost of insurance and other fees (10,672) (49,191) (21,588) (115,837) (34,536)
..................................................................................................................................
Other activity 18,336 40,284 (2,978) (108,183) (2,775)
..................................................................................................................................
Net increase in net assets resulting from unit transactions 210,270 1,186,538 511,573 2,058,655 161,316
..................................................................................................................................
Net increase in net assets 374,557 1,860,774 500,984 2,969,285 722,310
..................................................................................................................................
NET ASSETS:
Beginning of period 282,718 1,449,142 585,314 3,180,930 1,077,121
- -----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $657,275 $3,309,916 $1,086,298 $6,150,215 $1,799,431
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Formerly J.P. Morgan Equity Investment Division.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-14
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended J.P. Morgan MSDW MSDW MSDW MSDW
December 31, 1999 International Universal Universal Universal Universal
Opportunities Funds Fixed Funds Funds Funds
Investment Income High Yield Equity Growth Value
Division Investment Investment Investment Investment
Division Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 5,869 $ 185,706 $ 33,787 $ (3,617) $ 3,921
...................................................................................................................................
Capital gains income 74,628 676 -- 32,934 --
...................................................................................................................................
Net realized gain (loss) on security transactions 7,066 1,373 (11,446) (1,160) 23,060
...................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 590,581 (265,379) 15,300 203,783 5,789
...................................................................................................................................
Net increase (decrease) in net assets resulting from
operations 678,144 (77,624) 37,641 231,940 32,770
...................................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,122,383 2,245,643 14,381 228,107 57,962
...................................................................................................................................
Net transfers (606) 81,746 (136,977) 300,345 301,711
...................................................................................................................................
Surrenders, including death benefits (123,342) (206,379) (5,250) (5,367) (2,730)
...................................................................................................................................
Cost of insurance and other fees (37,722) (104,304) (14,253) (22,565) (5,335)
...................................................................................................................................
Other activity (2,993) (11,755) (179) 39,748 (9,140)
...................................................................................................................................
Net increase (decrease) in net assets resulting from unit
transactions 957,720 2,004,951 (142,278) 540,268 342,468
...................................................................................................................................
Net increase (decrease) in net assets 1,635,864 1,927,327 (104,637) 772,208 375,238
NET ASSETS:
Beginning of period 1,035,416 2,756,859 588,581 269,519 55,898
- ------------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $2,671,280 $4,684,186 $ 483,944 $1,041,727 $431,136
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-15
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended MSDW MSDW BT Equity BT Small
December 31, 1999 Universal Funds Universal 500 Index Cap Index
Global Equity Funds Emerging Investment Investment
Investment Markets Equity Division Division
Division Investment
Division
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 4,234 $ (1,823) $ 5,877 $ 1,781
.......................................................................................................................
Capital gains income 28,420 -- 12,981 3,825
.......................................................................................................................
Net realized (loss) gain on security transactions (98) 54,040 2,328 (1,490)
.......................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (17,393) 197,420 579,301 12,605
.......................................................................................................................
Net increase in net assets resulting from operations 15,163 249,637 600,487 16,721
.......................................................................................................................
UNIT TRANSACTIONS:
Purchases 211,892 37,428 1,463,520 102,473
.......................................................................................................................
Net transfers 21,634 601,300 725,443 305
.......................................................................................................................
Surrenders, including death benefits (125) (2,654) (227,693) --
.......................................................................................................................
Cost of insurance and other fees (17,489) (9,032) (92,479) (1,657)
.......................................................................................................................
Other activity 1,428 73,255 36,208 3,512
.......................................................................................................................
Net increase in net assets resulting from unit transactions 217,340 700,297 1,904,999 104,633
.......................................................................................................................
Net increase in net assets 232,503 949,934 2,505,486 121,354
.......................................................................................................................
NET ASSETS:
Beginning of period 412,194 16,650 1,820,272 14,823
- ------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $644,697 $966,584 $4,325,758 $136,177
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended BT EAFE
December 31, 1999 Equity Index
Investment
Division
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 1,300
...........................................................
Capital gains income 3,032
...........................................................
Net realized (loss) gain on security transactions 853
...........................................................
Net unrealized (depreciation) appreciation of investments
during the period 12,819
...........................................................
Net increase in net assets resulting from operations 18,004
...........................................................
UNIT TRANSACTIONS:
Purchases 69,894
...........................................................
Net transfers 2,022
...........................................................
Surrenders, including death benefits --
...........................................................
Cost of insurance and other fees (998)
...........................................................
Other activity 877
...........................................................
Net increase in net assets resulting from unit transactions 71,795
...........................................................
Net increase in net assets 89,799
...........................................................
NET ASSETS:
Beginning of period 12,293
- ------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $102,092
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-16
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Hartford Hartford Hartford Neuberger Neuberger
December 31, 1998 Bond Capital Money Market Berman Berman
Investment Appreciation Investment AMT Partners AMT Balanced
Division Investment Division Investment Investment
Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 36,498 $ 11,347 $ 142,195 $ 27,599 $ 39,128
...................................................................................................................................
Net realized (loss) gain on security transactions (761) 31,050 -- 1,413,821 (50,729)
...................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 9,876 14,591 -- (1,395,711) 48,011
...................................................................................................................................
Net increase in net assets resulting from operations 45,613 56,988 142,195 45,709 36,410
...................................................................................................................................
UNIT TRANSACTIONS:
Purchases 552,435 203,278 1,890,368 2,228,027 795,242
...................................................................................................................................
Net transfers 183 4,815 (1,463,668) 75,164 9,453
...................................................................................................................................
Surrenders, including death benefits (162) (551) (43,121) (996) (29,598)
...................................................................................................................................
Cost of insurance and other fees (3,098) (8,638) (334,174) (83,175) (22,933)
...................................................................................................................................
Other activity 1,303 (12,761) (85,977) (56,790) 2,715
...................................................................................................................................
Net increase (decrease) in net assets resulting from unit
transactions 550,661 186,143 (36,572) 2,162,230 754,879
...................................................................................................................................
Net increase in net assets 596,274 243,131 105,623 2,207,939 791,289
...................................................................................................................................
NET ASSETS:
Beginning of period 261,318 143,429 1,190,680 239,296 31,897
- ------------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $857,592 $386,560 $ 1,296,303 $ 2,447,235 $823,186
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-17
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Neuberger Fidelity Fidelity Fidelity
December 31, 1998 Berman AMT VIP Fund VIP Fund VIP Fund
Limited Equity-Income High Income Overseas
Maturity Bond Investment Investment Investment
Investment Division Division Division
Division
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 13,139 $ 26,489 $ 13,177 $ 21,316
.....................................................................................................................
Net realized (loss) gain on security transactions (1,135) 41,758 (11,427) 82,278
.....................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 998 52,334 (8,964) (79,115)
.....................................................................................................................
Net increase in net assets resulting from operations 13,002 120,581 (7,214) 24,479
.....................................................................................................................
UNIT TRANSACTIONS:
Purchases 349,098 933,346 68,929 443,775
.....................................................................................................................
Net transfers (985) (117,771) 2,571 389,508
.....................................................................................................................
Surrenders, including death benefits -- (18,115) (346) (13,018)
.....................................................................................................................
Cost of insurance and other fees (7,230) (28,676) (3,219) (22,571)
.....................................................................................................................
Other activity 1,231 11,411 (1,139) 5,597
.....................................................................................................................
Net increase in net assets resulting from unit transactions 342,114 780,195 66,796 803,291
.....................................................................................................................
Net increase in net assets 355,116 900,776 59,582 827,770
.....................................................................................................................
NET ASSETS:
Beginning of period 246,265 495,012 103,614 316,210
- ----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $601,381 $1,395,788 $ 163,196 $1,143,980
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended Fidelity
December 31, 1998 VIP Fund II
Asset Manager
Investment
Division
- -----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 10,020
...........................................................
Net realized (loss) gain on security transactions 13,011
...........................................................
Net unrealized appreciation (depreciation) of investments
during the period 50,219
...........................................................
Net increase in net assets resulting from operations 73,250
...........................................................
UNIT TRANSACTIONS:
Purchases 869,105
...........................................................
Net transfers (13,088)
...........................................................
Surrenders, including death benefits (425)
...........................................................
Cost of insurance and other fees (20,757)
...........................................................
Other activity (4,680)
...........................................................
Net increase in net assets resulting from unit transactions 830,155
...........................................................
Net increase in net assets 903,405
...........................................................
NET ASSETS:
Beginning of period 93,495
- -------------------------------------------------------------------------------------------------------
END OF PERIOD $996,900
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-18
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended Alger American Alger J.P. Morgan J.P. Morgan J.P. Morgan
December 31, 1998 Small American Bond U.S. Small
Capitalization Growth Investment Disciplined Company
Investment Investment Division Equity Investment
Division Division Investment Division
Division*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 16,568 $ 102,845 $ 20,471 $ 280,182 $ 24,521
..................................................................................................................................
Net realized gain (loss) on security transactions 966 136,216 2,709 31,667 (14,378)
..................................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 6,222 139,319 9,089 12,131 (128,085)
..................................................................................................................................
Net increase (decrease) in net assets resulting from
operations 23,756 378,380 32,269 323,980 (117,942)
..................................................................................................................................
UNIT TRANSACTIONS:
Purchases 160,544 300,718 602,426 3,312,134 443,237
..................................................................................................................................
Net transfers 6,345 270,043 -- 2,042 800,330
..................................................................................................................................
Surrenders, including death benefits (376) (200) (33,818) (389,431) (17,262)
..................................................................................................................................
Cost of insurance and other fees (6,461) (11,461) (16,860) (77,193) (20,452)
..................................................................................................................................
Other activity 6,983 (38,412) 1,297 9,398 (10,790)
..................................................................................................................................
Net increase in net assets resulting from unit transactions 167,035 520,688 553,045 2,856,950 1,195,063
..................................................................................................................................
Net increase in net assets 190,791 899,068 585,314 3,180,930 1,077,121
..................................................................................................................................
NET ASSETS:
Beginning of period 91,927 550,074 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $282,718 $1,449,142 $585,314 $3,180,930 $1,077,121
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Formerly J.P. Morgan Equity Investment Division.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-19
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended J.P. Morgan MSDW MSDW MSDW MSDW
December 31, 1998 International Universal Universal Universal Universal
Opportunities Funds Fixed Funds Funds Funds
Investment Income High Yield Equity Growth Value
Division Investment Investment Investment Investment
Division Division Division Division
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ (576) $ 114,702 $ 38,495 $ (358) $ 1,926
...................................................................................................................................
Net realized (loss) gain on security transactions (15,713) 17,081 (1,770) 30,437 25
...................................................................................................................................
Net unrealized (depreciation) appreciation of investments
during the period (22,518) (21,782) (36,073) 21,047 (1,520)
...................................................................................................................................
Net (decrease) increase in net assets resulting from
operations (38,807) 110,001 652 51,126 431
...................................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,270,619 2,528,927 255,358 125,859 53,331
...................................................................................................................................
Net transfers 310 435,379 343,711 113,615 2,306
...................................................................................................................................
Surrenders, including death benefits (141,156) (283,284) -- -- --
...................................................................................................................................
Cost of insurance and other fees (26,336) (81,110) (10,501) (7,429) (508)
...................................................................................................................................
Other activity (29,214) 31,770 (639) (13,652) 338
...................................................................................................................................
Net increase in net assets resulting from unit transactions 1,074,223 2,631,682 587,929 218,393 55,467
...................................................................................................................................
Net increase in net assets 1,035,416 2,741,683 588,581 269,519 55,898
...................................................................................................................................
NET ASSETS:
Beginning of period -- 15,176 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,035,416 $2,756,859 $588,581 $269,519 $55,898
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-20
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
For the Period Ended MSDW MSDW BT Equity BT Small
December 31, 1998 Universal Funds Universal 500 Index Cap Index
Global Equity Funds Emerging Investment Investment
Investment Markets Equity Division** Division**
Division* Investment
Division*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 3,131 $ 12 $ 44,608 $ (384)
.......................................................................................................................
Net realized gain (loss) on security transactions 719 (912) 30,074 (39,253)
.......................................................................................................................
Net unrealized appreciation (depreciation) of investments
during the period 37,796 (2,046) 161,603 (955)
.......................................................................................................................
Net increase (decrease) in net assets resulting from
operations 41,646 (2,946) 236,285 (40,592)
.......................................................................................................................
UNIT TRANSACTIONS:
Purchases 203,345 22,054 1,671,457 773,076
.......................................................................................................................
Net transfers 175,845 (1,288) 24,566 (717,418)
.......................................................................................................................
Surrenders, including death benefits -- -- (60,017) --
.......................................................................................................................
Cost of insurance and other fees (13,733) (320) (45,110) (6,519)
.......................................................................................................................
Other activity 5,091 (850) (6,909) 6,276
.......................................................................................................................
Net increase in net assets resulting from unit transactions 370,548 19,596 1,583,987 55,415
.......................................................................................................................
Net increase in net assets 412,194 16,650 1,820,272 14,823
.......................................................................................................................
NET ASSETS:
Beginning of period -- -- -- --
.......................................................................................................................
END OF PERIOD $412,194 $16,650 $1,820,272 $ 14,823
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended BT EAFE
December 31, 1998 Equity Index
Investment
Division**
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (165)
...........................................................
Net realized gain (loss) on security transactions 9,068
...........................................................
Net unrealized appreciation (depreciation) of investments
during the period 322
...........................................................
Net increase (decrease) in net assets resulting from
operations 9,225
...........................................................
UNIT TRANSACTIONS:
Purchases 342,476
...........................................................
Net transfers (341,967)
...........................................................
Surrenders, including death benefits --
...........................................................
Cost of insurance and other fees (2,908)
...........................................................
Other activity 5,467
...........................................................
Net increase in net assets resulting from unit transactions 3,068
...........................................................
Net increase in net assets 12,293
...........................................................
NET ASSETS:
Beginning of period --
...........................................................
END OF PERIOD $ 12,293
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* From inception, January 27, 1998 to December 31, 1998.
** From inception, February 10, 1998 to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-21
<PAGE>
ICMG REGISTERED VARIABLE LIFE SEPARATE ACCOUNT ONE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
OMNISOURCE
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION:
ICMG Registered Variable Life Separate Account One, OmniSource (the Account), is
a component of ICMG Registered Variable Life Separate Account One, a separate
investment account within 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 twenty-five Divisions. 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
insurance policyowners of the Company in various mutual funds (the Funds), as
directed by the policyowners.
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). Realized gains and losses on the
sales of securities are computed on the basis of identified cost of the fund
shares. Dividend income is accrued as of the ex-dividend date. Capital gains
income represents those dividends from the Funds which are characterized as
capital gains under tax regulations.
B) SECURITY VALUATION -- The investments 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, 1999.
C) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values
calculated at the close of the business day.
D) 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.
E) 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) COST OF INSURANCE -- In accordance with the terms of the policies, the
Company assesses cost of insurance charges to cover the Company's anticipated
mortality costs. Because a policy's account value and death benefit may vary
from month to month, the cost of insurance charges may also vary. These charges
are reflected as a component of unit transactions on the accompanying statements
of changes in net assets.
B) MORTALITY AND EXPENSE RISK UNDERTAKINGS -- The Company, as issuer of variable
life insurance policies, provides the mortality and expense undertakings and,
with respect to the Account, receives an annual fee of up to 0.65% of the
Account's average daily net assets. These charges are reflected as a component
of operating expenses on the accompanying statements of operations.
C) ADMINISTRATIVE AND ISSUE CHARGES -- The Company assesses a monthly
administrative charge to compensate the Company for administrative costs in
connection with the policies. This charge covers the average expected cost for
these services at a maximum of $10 per month. These charges are reflected as a
component of cost of insurance and other fees on the accompanying statements of
changes in net assets.
D) DEDUCTION OF OTHER FEES -- In accordance with the terms of the policies, the
Company makes deductions for state premium taxes and other insurance charges.
These charges are deducted through termination of units of interest from
applicable policyowners' accounts and are reflected as a component of cost of
insurance and other fees on the accompanying statements of changes in net
assets.
SA-22
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1999 and
1998, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1999. These statutory 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 auditing standards generally accepted
in the United States. 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 2 of notes to statutory financial
statements. When financial statements are presented for purposes other than for
filing with a regulatory agency, auditing standards generally accepted in the
United States require that an auditors' report on them state whether they are
presented in conformity with accounting principles generally accepted in the
United States. The accounting practices used by the Company vary from accounting
principles generally accepted in the United States as explained and quantified
in Note 2.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of the Company as of December 31, 1999 and
1998, or the results of its operations or its cash flows for each of the three
years in the period ended December 31, 1999.
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, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with statutory accounting practices as described in Note 2.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BALANCE SHEETS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Bonds $ 1,465,815 $ 1,453,792
Common stocks 42,430 40,650
Mortgage loans 63,784 59,548
Policy loans 59,429 47,212
Cash and short-term investments 267,579 469,955
- ------------------------------------------------------------------------------------------------
Other invested assets 2,892 2,188
- ------------------------------------------------------------------------------------------------
Total cash and invested assets 1,901,929 2,073,345
Investment income due and accrued 21,069 20,126
Other assets 39,576 45,691
Separate account assets 44,865,042 32,876,278
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS $46,827,616 $35,015,440
- ------------------------------------------------------------------------------------------------
LIABILITIES
Aggregate reserves for future benefits $ 591,621 $ 579,140
Policy and contract claim liabilities 7,677 5,667
Liability for premium and other deposit funds 1,969,262 2,011,672
Asset valuation reserve 4,935 21,782
Payable to affiliates 14,084 19,271
Accrued expense allowances and other amounts due from
separate accounts (1,377,927) (1,173,513)
Remittances and items not allocated 111,582 87,449
Other liabilities 118,464 111,182
Separate account liabilities 44,865,042 32,876,278
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 46,304,740 34,538,928
- ------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS
Common stock 2,500 2,500
Gross paid-in and contributed surplus 226,043 226,043
Unassigned funds 294,333 247,969
- ------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 522,876 476,512
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $46,827,616 $35,015,440
- ------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-2
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums and annuity considerations $ 621,789 $ 469,343 $ 296,645
Annuity and other fund deposits 2,991,363 2,051,251 1,981,246
Net investment income 122,322 129,982 102,285
Commissions and expense allowances on reinsurance ceded 379,905 444,241 396,921
Reserve adjustment on reinsurance ceded 1,411,342 3,185,590 3,672,076
Fee income 647,565 448,260 290,675
Other revenues 842 9,930 (2,043)
- -------------------------------------------------------------------------------------------------------
TOTAL REVENUES 6,175,128 6,738,597 6,737,805
- -------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Death and annuity benefits 47,372 43,152 65,961
Disability and other benefits 6,270 6,352 7,532
Surrenders and other fund withdrawals 1,250,813 739,663 454,417
Commissions 467,338 435,994 470,334
Increase (Decrease) in aggregate reserves for future
benefits 12,481 (10,711) 33,213
(Decrease) Increase in liability for premium and other
deposit funds (47,852) 218,642 640,840
General insurance expenses 192,196 190,979 77,237
Net transfers to separate accounts 4,160,501 4,956,007 4,914,980
Other expenses 35,385 22,091 15,671
- -------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 6,124,504 6,602,169 6,680,185
- -------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS
Before federal income tax (benefit) expense 50,624 136,428 57,620
Federal income tax (benefit) expense (10,231) 35,887 (14,878)
- -------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 60,855 100,541 72,498
Net realized capital (losses) gains, after tax (36,428) 2,085 1,544
- -------------------------------------------------------------------------------------------------------
NET INCOME $ 24,427 $ 102,626 $ 74,042
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-3
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Beginning and end of year $ 2,500 $ 2,500 $ 2,500
- -------------------------------------------------------------------------------------------------
GROSS PAID-IN AND CONTRIBUTED SURPLUS
Beginning and end of year 226,043 226,043 226,043
- -------------------------------------------------------------------------------------------------
UNASSIGNED FUNDS
Balance, beginning of year 247,969 143,257 74,570
Net income 24,427 102,626 74,042
Change in net unrealized capital gains on common stocks
and other invested assets 2,258 1,688 2,186
Change in asset valuation reserve 16,847 (8,112) (6,228)
Change in non-admitted assets 6,557 (1,277) (1,313)
Credit on reinsurance ceded (3,725) 9,787 --
- -------------------------------------------------------------------------------------------------
Balance, end of year 294,333 247,969 143,257
- -------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS,
End of year $522,876 $476,512 $371,800
- -------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-4
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums and annuity considerations $3,613,217 $2,520,655 $2,277,874
Net investment income 122,998 127,425 101,991
Fee income 647,565 448,260 290,675
Other income 1,799,323 3,644,704 4,091,043
- -------------------------------------------------------------------------------------------------------
Total income 6,183,103 6,741,044 6,761,583
- -------------------------------------------------------------------------------------------------------
Benefits paid 1,303,801 790,051 529,733
Federal income tax (recoveries) payments (8,815) 25,780 (14,499)
Net transfers to separate accounts 4,364,914 5,222,144 5,199,354
Other expenses 669,525 626,240 547,692
- -------------------------------------------------------------------------------------------------------
Total benefits and expenses 6,329,425 6,664,215 6,262,280
- -------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (146,322) 76,829 499,303
- -------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD
Bonds 753,358 633,926 614,413
Common stocks 939 34,010 11,481
Mortgage loans 53,704 85,275 --
Other 1,490 19,990 152
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT PROCEEDS 809,491 773,201 626,046
- -------------------------------------------------------------------------------------------------------
COST OF INVESTMENTS ACQUIRED
Bonds 804,947 586,913 848,267
Common stocks 464 7,012 28,302
Mortgage loans 57,665 59,702 85,103
Other 14,211 11,847 26,227
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS ACQUIRED 877,287 665,474 987,899
- -------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES $ (67,796) $ 107,727 $ (361,853)
- -------------------------------------------------------------------------------------------------------
FINANCING AND MISCELLANEOUS ACTIVITIES
Net other cash provided (used) 11,742 (24,033) (4,848)
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING
AND MISCELLANEOUS ACTIVITIES 11,742 (24,033) (4,848)
- -------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and short-term investments (202,376) 160,523 132,602
Cash and short-term investments, beginning of year 469,955 309,432 176,830
- -------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 267,579 $ 469,955 $ 309,432
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
Hartford Life and Annuity Insurance Company (the "Company") is a wholly owned
subsidiary of Hartford Life Insurance Company ("HLIC"), which is an indirect
subsidiary of Hartford Life, Inc. ("HLI"). HLI is indirectly majority owned by
The Hartford Financial Services Group, Inc. ("The Hartford"). 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 approximately 18.6% of the
equity ownership of HLI.
In 1998, the Company changed its name to Hartford Life and Annuity Insurance
Company from ITT Hartford Life and Annuity Insurance Company.
The Company offers a complete line of fixed and variable annuities, as well as
variable, universal and traditional individual life insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying statutory basis financial statements of the Company 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. Certain reclassifications have
been made to prior year financial information to conform to the current year
presentation.
Current prescribed statutory accounting practices include accounting
publications of the NAIC, as well as state laws, regulations and general
administrative rules. Permitted statutory accounting practices encompass
accounting practices approved by state insurance departments. The Company does
not follow any permitted statutory accounting practices that have a material
effect on statutory surplus, statutory net income or risk-based capital.
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 periods. Actual results could
differ from those estimates. The most significant estimates include those used
in 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 VERSUS GAAP
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, etc.) which are charged to expense when incurred for statutory
purposes rather than on a pro-rata basis over the expected life and gross
profit stream of the policy for GAAP purposes;
(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 only consist of charges assessed to policy
account balances for cost of insurance, policy administration and
surrenders. When policy charges received relate to coverage or services to
be provided in the future, the charges are recognized as revenue on a
pro-rata basis over the expected life and gross profit stream of the policy.
Also, for GAAP purposes, premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders;
(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 under GAAP;
(4) providing for income taxes based on current taxable income 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 or required under GAAP;
(5) excluding certain assets designated as non-admitted assets (e.g., negative
Interest Maintenance Reserve, and past due agents' balances) from the
balance sheet for statutory purposes by directly charging surplus;
(6) the calculation of post retirement benefits obligation which, for statutory
accounting, excludes non-vested employees whereas GAAP liabilities include a
provision for such employees; statutory and GAAP accounting permit either
immediate recognition of the liability or straight-line amortization of the
liability over a period not to exceed 20 years. For GAAP, The Hartford's
obligation was immediately recognized, whereas for statutory accounting, the
obligation is being recognized ratably over a 20 year period;
F-6
<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) for statutory purposes; as well as the deferral and
amortization of realized gains and losses, caused 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) for
statutory purposes; 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 for
statutory purposes; 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 for statutory purposes,
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 separate component of Stockholder's
Equity; as well as the change in the basis of the Company's other invested
assets, which consist primarily of limited partnership investments, which is
recognized as income under GAAP and as a change in surplus under statutory
accounting; and
(10) statutory accounting calculates separate account liabilities using
prescribed actuarial methodologies, which approximate the market value of
separate account assets less applicable surrender charges. The separate
account surplus generated by these reserving methods is recorded as an
amount due to or from the separate account on the statutory basis balance
sheet, with changes reflected in the statutory basis results of operations.
On a GAAP basis, separate account assets and liabilities are held at fair
value.
As of and for the years ended December 31, the significant differences between
Statutory and GAAP basis net income and capital and surplus for the Company are
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
----------------------------------------
GAAP Net Income $ 75,654 $ 74,525 $ 58,050
Deferral and amortization of policy
acquisition costs, net (272,171) (331,882) (345,657)
Change in unearned revenue reserve (64,915) 23,118 4,058
Deferred taxes 57,833 2,476 47,092
Separate account expense allowance 214,388 259,287 282,818
Asset impairments and write-downs (17,250) 17,250 --
Benefit reserve adjustment 11,491 5,360 24,666
Gain on commutation of reinsurance
(Note 4) -- 52,026 --
Prepaid reinsurance premium (3,524) -- --
Statutory voluntary reserve (6,286) -- --
Other, net 29,207 466 3,015
----------------------------------------
STATUTORY NET INCOME $ 24,427 $ 102,626 $ 74,042
----------------------------------------
GAAP Stockholder's Equity $ 676,428 $ 648,097 $ 570,469
Deferred policy acquisition costs (1,887,824) (1,615,653) (1,283,771)
Unearned revenue reserve 95,965 160,951 134,789
Deferred taxes 122,105 68,936 64,522
Separate account expense allowance 1,398,030 1,183,642 924,355
Asset impairments and write-downs -- 17,250 --
Unrealized losses (gains) on
investments 26,292 (24,955) (21,451)
Benefit reserve adjustment 81,111 69,233 16,378
Asset valuation reserve (4,935) (21,782) (13,670)
Adjustment relating to Lyndon
contribution (Note 4) -- -- (23,671)
Prepaid reinsurance premium (7,728) (4,204) --
Statutory voluntary reserve (6,286) -- --
Other, net 29,718 (5,003) 3,850
----------------------------------------
STATUTORY CAPITAL AND SURPLUS $ 522,876 $ 476,512 $ 371,800
----------------------------------------
</TABLE>
F-7
<PAGE>
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 applicable 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 the Commissioners Annuity Reserve Valuation Method
("CARVM").
The Company has established separate accounts to segregate the assets and
liabilities of certain life insurance and annuity contracts that must be
segregated from the Company's general assets under the terms of its contracts.
The assets consist primarily of marketable securities and are reported at market
value. Premiums, benefits and expenses of these contracts are reported in the
statutory basis statements of operations.
An analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1999 (including general and separate account
liabilities) is as follows:
<TABLE>
<CAPTION>
% of
Amount Total
<S> <C> <C>
--------------------
Subject to discretionary withdrawal:
--------------------
With market value adjustment $ 4,564 0.0%
At book value less current surrender charge of 5% or more 1,427,302 3.2%
At market value 42,431,996 95.4%
--------------------
Total with adjustment or at market value 43,863,862 98.6%
At book value without adjustment (minimal or no charge or
adjustment): 573,583 1.3%
Not subject to discretionary withdrawal: 34,816 0.1%
--------------------
Total, gross 44,472,261 100.0%
Reinsurance ceded --
------------
Total, net $44,472,261
------------
</TABLE>
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that 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 reduction in
the value of a security is deemed to be unrecoverable, the decline in value is
reported as a realized loss and the carrying value is adjusted accordingly.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. Common stocks are carried at fair value with the
current year change in the difference from cost reflected in surplus. Mortgage
loans, which are carried at cost and approximate fair value, include investments
in assets backed by mortgage loan pools. 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 AVR balances were $4,935 and $21,782
as of December 31, 1999 and 1998, respectively. Additionally, the Interest
Maintenance Reserve ("IMR") captures net realized capital gains and losses, net
of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the life of the bond or
mortgage sold. The IMR balance as of December 31, 1999 is an asset balance of
$981 and is reflected as a component of non-admitted assets in Unassigned Funds
in accordance with statutory accounting practices. The IMR balance as of
December 31, 1998 is a liability balance of $452 and is reflected as an other
liability. The net capital (losses) gains transferred to the IMR in 1999, 1998
and 1997 were $(1,255), $852 and $(719), respectively. The amount of income
(expense) amortized from the IMR in 1999, 1998 and 1997 included in the
Company's Statements of Operations, was $178, $(207), and $(85), respectively.
Realized capital gains and losses, net of taxes, not included in the IMR are
reported in the statutory basis statements of operations. Realized investment
gains and losses are determined on a specific identification basis.
CODIFICATION
The NAIC adopted the Codification of Statutory Accounting Principles in March
1998. The proposed effective date for this statutory accounting guidance is
January 1, 2001. It is expected that Connecticut, the Company's domiciliary
state, will adopt these accounting standards and, therefore, the Company will
make the necessary accounting and reporting changes required for implementation.
The Company has not yet determined the impact that these new accounting
standards will have on its statutory basis financial statements.
F-8
<PAGE>
3. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
-----------------------------
Interest income from bonds and short-term investments $113,646 $123,370 $100,475
Interest income from policy loans 3,494 3,133 1,958
Interest and dividends from other investments 6,371 4,482 1,005
-----------------------------
Gross investment income 123,511 130,985 103,438
Less: investment expenses 1,189 1,003 1,153
-----------------------------
NET INVESTMENT INCOME $122,322 $129,982 $102,285
-----------------------------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
-----------------------------
Gross unrealized capital gains $ 561 $ 10,905 $23,357
Gross unrealized capital losses (6,441) (833) (1,906)
-----------------------------
Net unrealized capital (losses) gains (5,880) 10,072 21,451
Balance, beginning of year 10,072 21,451 7,979
-----------------------------
CHANGE IN NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND
SHORT-TERM INVESTMENTS $(15,952) $(11,379) $13,472
-----------------------------
</TABLE>
(c) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $2,508 $ 2,204 $ 537
Gross unrealized capital losses (24) (1,871) (1,820)
--------------------------
Net unrealized capital gains (losses) 2,484 333 (1,283)
Balance, beginning of year 333 (1,283) (3,447)
--------------------------
CHANGE IN NET UNREALIZED CAPITAL GAINS ON COMMON STOCKS $2,151 $ 1,616 $ 2,164
--------------------------
</TABLE>
(d) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Bonds and short-term investments $(37,959) $1,314 $ (120)
Common stocks 104 1,624 421
Other invested assets 172 (1) (307)
--------------------------
Realized capital (losses) gains (37,683) 2,937 (6)
Capital gains benefit -- -- (831)
--------------------------
Net realized capital (losses) gains (37,683) 2,937 825
Less: amounts transferred to the IMR (1,255) 852 (719)
--------------------------
NET REALIZED CAPITAL (LOSSES) GAINS $(36,428) $2,085 $1,544
--------------------------
</TABLE>
Sales and maturities of investments in bonds and short-term investments for the
years ended December 31, 1999, 1998 and 1997 resulted in proceeds of $1,367,027,
$1,354,563 and $1,435,820, gross realized capital gains of $1,106, $1,705, and
$964 and gross realized capital losses of $39,065, $391, and $1,084,
respectively, before transfers to the IMR. Sale of common stocks for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $939, $33,088,
and $10,168, gross realized capital gains of $115, $1,688, and $421 and gross
realized capital losses of $11, $64, and $0, respectively.
(e) DERIVATIVE INVESTMENTS
The Company had no significant derivative holdings as of December 31, 1999, 1998
or 1997.
(f) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is not
exposed to any significant concentrations of credit risk in fixed maturities of
a single issuer greater than 10% of capital and surplus as of December 31, 1999.
F-9
<PAGE>
(g) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1999
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
----------------------------------------------
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored $ 4,768 $ 1 $ (37) $ 4,732
-- Guaranteed and sponsored -- asset backed 170,746 -- -- 170,746
States, municipalities and political subdivisions 10,401 -- (48) 10,353
International governments 7,351 94 (15) 7,430
Public utilities 18,413 92 (73) 18,432
All other corporate -- excluding asset-backed 592,233 374 (6,194) 586,413
All other corporate -- asset-backed 539,688 -- -- 539,688
Short-term investments 228,105 -- -- 228,105
Certificates of deposit 5,158 -- (74) 5,084
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
----------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,693,920 $561 $(6,441) $1,688,040
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
--------------------------------------------
Common stock -- unaffiliated $ 4,562 $1,105 $ (24) $ 5,643
Common stock -- affiliated 35,384 1,403 -- 36,787
--------------------------------------------
TOTAL COMMON STOCKS $39,946 $2,508 $ (24) $42,430
--------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1999
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
----------------------------------------------
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored $ 4,982 $ 35 $ (2) $ 5,015
-- Guaranteed and sponsored -- asset-backed 75,615 -- -- 75,615
States, municipalities and political subdivisions 10,402 415 -- 10,817
International governments 7,466 568 -- 8,034
Public utilities 94,475 1,330 (39) 95,766
All other corporate -- excluding asset-backed 607,679 8,473 (792) 615,360
All other corporate -- asset-backed 505,900 -- -- 505,900
Short-term investments 343,783 -- -- 343,783
Certificates of deposit 130,216 84 -- 130,300
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
----------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,897,575 $10,905 $(833) $1,907,647
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
--------------------------------------------
Common stock -- unaffiliated $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated 35,384 1,914 (1,821) 35,477
--------------------------------------------
TOTAL COMMON STOCKS $40,317 $2,204 $(1,871) $40,650
--------------------------------------------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term investments
as of December 31, 1999 by estimated maturity year are shown below. Asset-backed
securities, including mortgage-backed securities and collaterialized mortgage
obligations, are distributed to maturity year based on the Company's estimates
of the rate of
F-10
<PAGE>
future prepayments of principal over the remaining lives of the securities.
Expected maturities differ from contractual maturities due to call or prepayment
provisions.
<TABLE>
<CAPTION>
Amortized Estimated
Maturity Cost Fair Value
<S> <C> <C>
--------------------------
One year or less $ 545,290 $ 543,397
Over one year through five years 692,881 690,476
Over five years through ten years 370,835 369,548
Over ten years 84,914 84,619
--------------------------
TOTAL $1,693,920 $1,688,040
--------------------------
</TABLE>
Bonds with a carrying value of $10,457 were on deposit as of December 31, 1999
with various regulatory authorities as required.
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS-BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1999 1998
------------------------------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------------
ASSETS
Bonds and short-term investments $1,694 $1,688 $1,898 $1,908
Common stocks 42 42 41 41
Policy loans 59 59 47 47
Mortgage loans 64 64 60 60
Other invested assets 3 3 2 2
LIABILITIES
Deposit funds and other benefits $2,051 $2,017 $2,078 $2,053
</TABLE>
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments: fair value of bonds, short-term
investments, common stock, and other invested assets approximate those
quotations published by the NAIC; policy loans and mortgage loans carrying
amounts approximates fair value; and fair value of liabilities on deposit funds
and other benefits is determined by forecasting future cash flows and
discounting the forecasted cash flows at current market rates.
4. REINSURANCE:
The Company cedes insurance to other insurers in order to limit its maximum
losses. Such transfer does not relieve the Company of its primary liability to
the policyholder. Failure of reinsurers to honor their obligations could result
in losses to the Company. The Company reduces this risk by evaluating the
financial condition of reinsurers and monitoring for possible concentrations of
credit risk.
The Company cedes significant portions of its variable annuity business written
since 1994 to RGA Reinsurance Company ("RGA"). Certain core annuity products
were excluded from this reinsurance arrangement beginning in the second quarter
of 1999 and, as such, the amounts ceded to RGA have declined significantly.
In 1995, The Hartford was "spun-off" from ITT Industries, Inc. and became its
own, autonomous entity. In conjunction with this spin-off, the assets and
liabilities of Lyndon Insurance Company (Lyndon) were merged into the Company.
The statutory net assets contributed to the Company as a result of this
transaction were approximately $112 million and were reflected as an increase in
Gross Paid-In and Contributed Surplus at December 31, 1995. This amount was
approximately $41 million lower than the value of net assets contributed on a
GAAP basis.
The majority of the business written in Lyndon was assumed from an unaffiliated
insurer. In 1998, this unaffiliated insurer recaptured the inforce blocks of
business it had been ceding to the Company through Lyndon. In conjunction with
this commutation transaction, the Company transferred statutory basis reserves
of $26,404. Additionally, the Company received fair value consideration for the
bonds it transferred which exceeded the statutory statement value of these
assets by $25,622. As a result of this activity, the Company recognized a
pre-tax gain from this transaction of $52,026 in its 1998 Statements of
Operations.
There were no material reinsurance recoverables from reinsurers outstanding as
of and for the years ended, December 31, 1999 and 1998.
F-11
<PAGE>
The effect of reinsurance as of and for the years ended December 31, is
summarized as follows:
<TABLE>
<CAPTION>
1999 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Aggregate Reserves for Future
Benefits $ 784,502 $ 53 $ (192,934) $ 591,621
Policy and Contract Claim
Liabilities $ 7,827 $ 203 $ (353) $ 7,677
Premium and Annuity Considerations $ 674,219 $ 1,261 $ (53,691) $ 621,789
Annuity and Other Fund Deposits $6,195,917 $ -- $(3,204,554) $2,991,363
Death, Annuity, Disability and
Other Benefits $ 65,251 $ 1,104 $ (12,713) $ 53,642
Surrenders $2,541,449 $ -- $(1,290,636) $1,250,813
</TABLE>
<TABLE>
<CAPTION>
1998 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Aggregate Reserves for Future
Benefits $ 713,375 $ 50 $ (134,285) $ 579,140
Policy and Contract Claim
Liabilities $ 5,895 $ 85 $ (313) $ 5,667
Premium and Annuity Considerations $ 483,328 $24,954 $ (38,939) $ 469,343
Annuity and Other Fund Deposits $6,461,470 $ -- $(4,410,219) $2,051,251
Death, Annuity, Disability and
Other Benefits $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders $1,481,797 $ -- $ (742,134) $ 739,663
</TABLE>
<TABLE>
<CAPTION>
1997 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Premium and Annuity Considerations $ 266,427 $51,630 $ (21,412) $ 296,645
Annuity and Other Fund Deposits $6,515,347 $ -- $(4,534,101) $1,981,246
Death, Annuity, Disability and
Other Benefits $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders $ 882,094 $ -- $ (427,677) $ 454,417
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates, relate principally to tax
settlements, reinsurance, insurance coverages, rental and service fees, capital
contributions and payments of dividends. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and benefit
plan expenses, are initially paid by The Hartford. Direct expenses are allocated
using specific identification and indirect expenses are allocated using other
applicable methods. Indirect expenses include those for corporate areas which,
depending on type, are allocated based on either a percentage of direct expenses
or on utilization.
The Company has also invested in bonds of its affiliates, Hartford Financial
Services Corporation and HL Investment Advisors, Inc., and common stock of its
subsidiary, Hartford Life, LTD.
For additional information, see Notes 4, 6, and 8.
6. 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 filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own 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 affiliated group of
which The Hartford is the common parent. The Hartford and its non-life
subsidiaries filed a single consolidated Federal income tax return for 1998 and
1997 and intend to file a separate consolidated Federal income tax return for
1999. The life insurance companies filed a separate consolidated Federal income
tax return for 1998 and 1997 and intend to file a separate consolidated Federal
income tax return for 1999. Federal income taxes (received) paid by the Company
for operations and capital gains (losses) were $(8,815), $25,780, and $(14,499)
in 1999, 1998 and 1997, respectively. The effective tax rate was (73)%, 27%, and
(28)% in 1999, 1998 and 1997, respectively.
F-12
<PAGE>
The following schedule provides a reconciliation of the tax provision (including
realized capital gains(losses)) at the U.S. Federal Statutory rate to Federal
income tax (benefit) expense (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------
Tax provision at U.S. Federal Statutory rate $ 5 $48 $ 20
Tax deferred acquisition costs 31 25 25
Statutory to tax reserve differences (7) 8 1
Investments (31) (60) (61)
Other (8) 15 (1)
------------------
FEDERAL INCOME TAX (BENEFIT) EXPENSE $(10) $36 $(16)
------------------
</TABLE>
7. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid to shareholders by Connecticut
domiciled insurance companies, without prior approval, is generally restricted
to the greater of 10% of surplus as of the preceding December 31st or the net
gain from operations for the previous year. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1999,
1998 or 1997. The amount available for dividend in 2000 is approximately
$60,855.
8. PENSION, RETIREMENT, AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
All employees that work for The Hartford's life insurance companies 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 Hartford'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,
as amended, and the maximum amount that can be deducted for U.S. Federal income
tax purposes. Generally, pension costs are funded through the purchase of group
pension contracts sold by affiliates. The costs that were allocated to the
Company for pension related expenses were $762, $1,045 and $840 for 1999, 1998
and 1997, respectively.
Employees of The Hartford's life insurance companies are also provided, through
The Hartford, certain health care and life insurance benefits for eligible
retired employees. The contribution for health care benefits depends on the
retiree's date of retirement and years of service. In addition, this benefit
plan has a defined dollar cap, which limits average company contributions. The
Hartford 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. Postretirement health care and life insurance benefits
expense allocated to the Company was not material to the results of operations
for 1999, 1998 or 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
the health care trend rates by one percent per year would have an immaterial
impact on the accumulated postretirement benefit obligation and the annual
expense. To the extent that the actual experience differs from the inherent
assumptions, the effect will be amortized over the average future service of
covered employees.
Substantially all of The Hartford's life insurance companies' employees are
eligible to participate in The Hartford's Investment and Savings Plan. Under
this plan, designated contributions, which may be invested in Class A Common
Stock of HLI or certain other investments, are matched to a limit of 3% of
compensation.
9. SEPARATE ACCOUNTS:
The Company maintains separate account assets totaling $44.9 billion and $32.9
billion as of December 31, 1999 and 1998, respectively. Separate account assets
are segregated from other investments and reported at fair value. Separate
account liabilities are determined in accordance with prescribed actuarial
methodologies, which approximate the market value less applicable surrender
charges. The resulting surplus is recorded in the general account statement of
operations as a component of Net Transfers to Separate Accounts. The Company's
separate accounts are non-guaranteed, wherein the policyholder assumes
substantially all the investment risk and rewards. Investment income (including
investment gains and losses) and interest credited to policyholders on separate
account assets are not separately reflected in the statutory statements of
operations.
Separate account management fees, net of minimum guarantees, were $493 million,
$363 million, and $252 million in 1999, 1998 and 1997, respectively, and are
recorded as a component of fee income on the Company's statutory basis
Statements of Operations.
F-13
<PAGE>
10. COMMITMENTS AND CONTINGENT LIABILITIES:
(a) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for alleged economic and punitive damages
have been asserted. Some of these cases have been filed as purported class
actions and some cases have been filed in certain jurisdictions that permit
punitive damage awards disproportionate to the actual damages incurred. Although
there can be no assurances, at the present time, the Company does not anticipate
that the ultimate liability, arising from such pending or threatened litigation,
will have a material adverse effect on the statutory capital and surplus of the
Company.
(b) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred if it would threaten an insurer's solvency and
further provide annual limits on such assessments. Part of the assessments paid
by the Company pursuant to these laws may be used as credits for a portion of
the associated premium taxes. The Company paid guaranty fund assessments of
approximately $523, $1,043 and $1,544 in 1999, 1998, and 1997, respectively, of
which $318, $995, and $548 in 1999, 1998 and 1997, respectively were estimated
to be creditable against premium taxes.
(c) TAX MATTERS
The Company's Federal income tax returns are routinely audited by the Internal
Revenue Service ("IRS"). The Company's 1997 and 1996 Federal income tax returns
are currently under audit by the IRS. As of March 31, 2000, the audit was in its
initial stage and no material issues had been raised.
F-14
