<PAGE>
As filed with the Securities and Exchange Commission on November 1, 1999.
File No. 333-83057
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
PRE-EFFECTIVE AMENDMENT NO. 3
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: Separate Account VL I
B. Name of depositor: Hartford Life and Annuity Insurance Company
C. Complete address of depositor's principal executive offices:
P. O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Marianne O'Doherty, Esq.
Hartford Life and Annuity Insurance Company
P. O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to paragraph (b) of Rule 485
_X__ on November 1, 1999 pursuant to paragraph (b) of Rule 485
____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
____ on __________, 1999 pursuant to paragraph (a)(1) of Rule 485
____ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
E. Title and amount of securities being registered: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant has registered
an indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the
securities being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable
after the effective date of this registration statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
<TABLE>
<CAPTION>
Item No. of Form N-8B-2 Caption In Prospectus
- ----------------------- ---------------------
<S> <C>
1. Cover Page
2. Cover Page
3. Not Applicable
4. Statement of Additional Information - Distribution of
the Policies
5. About Us - Separate Account VL I
6. About Us - Separate Account VL I
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. About Us - Separate Account VL I; The Funds
11. About Us - Separate Account VL I; The Funds
12. About Us - The Funds
13. Fee Table; Charges and Deductions
14. Premiums
15. Premiums
16. Premiums
17. Making Withdrawals From Your Policy
18. About Us - The Funds; Charges and Deductions
19. Your Policy - Contract Rights
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. About Us - Hartford Life and Annuity Insurance Company
26. Not Applicable
27. About Us - Hartford Life and Annuity Insurance Company
28. Statement of Additional Information - General
Information and History
29. About Us - Hartford Life and Annuity Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Statement of Additional Information - Distribution of
the Policies
36. Not required by Form S-6
37. Not Applicable
38. Statement of Additional Information - Distribution of
the Policies
39. Statement of Additional Information - Distribution of
the Policies
40. Not Applicable
41. Statement of Additional Information - Distribution of
the Policies
42. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item No. of Form N-8B-2 Caption In Prospectus
- ----------------------- ---------------------
<S> <C>
43. Not Applicable
44. Premiums
45. Not Applicable
46. Premiums; Making Withdrawals From Your Policy
47. About Us - The Funds
48. Cover Page; About Us - Hartford Life and Annuity
Insurance Company
49. Not Applicable
50. About Us - Separate Account VL I
51. Not Applicable
52. About Us - The Funds
53. Taxes
54. Not Applicable
55. Not Applicable
56. Not Required by Form S-6
57. Not Required by Form S-6
58. Not Required by Form S-6
59. Not Required by Form S-6
</TABLE>
<PAGE>
PART A
<PAGE>
<TABLE>
<S> <C>
STAG PROTECTOR VARIABLE UNIVERSAL LIFE
SEPARATE ACCOUNT VL I
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999
TELEPHONE: (800) 231-5453 [LOGO]
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This prospectus describes information you should know before you purchase the
Stag Protector Variable Universal Life insurance policy. Please read it
carefully.
Stag Protector Variable Universal Life is a contract between you and Hartford
Life and Annuity Insurance Company. You agree to make sufficient premium
payments to us, and we agree to pay a death benefit to your beneficiary. The
policy is a flexible premium variable universal life insurance policy. It is:
x Flexible premium, because you may add payments to your policy after the first
payment.
x Variable, because the value of your life insurance policy will fluctuate with
the performance of the investment options you select and the Fixed Account.
- --------------------------------------------------------------------------------
The following Sub-Accounts are available under the policy:
<TABLE>
<CAPTION>
<S> <C>
Sub-Account Purchases shares of:
<CAPTION>
<S> <C>
Hartford Advisers Fund Sub-Account Class IA of Hartford Advisers HLS Fund, Inc.
Hartford Bond Fund Sub-Account Class IA of Hartford Bond HLS Fund, Inc.
Hartford Capital Appreciation Fund Sub-Account Class IA of Hartford Capital Appreciation HLS
Fund, Inc.
Hartford Dividend and Growth Fund Sub-Account Class IA of Hartford Dividend and Growth HLS
Fund, Inc.
Hartford Growth and Income Fund Sub-Account Class IA of Hartford Growth and Income HLS Fund of
Hartford Series Fund, Inc.
Hartford Index Fund Sub-Account Class IA of Hartford Index HLS Fund, Inc.
Hartford International Advisers Fund Sub-Account Class IA of Hartford International Advisers HLS
Fund, Inc.
Hartford International Opportunities Fund Sub-Account Class IA of Hartford International Opportunities
HLS Fund, Inc.
Hartford MidCap Fund Sub-Account Class IA of Hartford MidCap HLS Fund, Inc.
Hartford Mortgage Securities Fund Sub-Account Class IA of Hartford Mortgage Securities HLS
Fund, Inc.
Hartford Money Market Fund Sub-Account Class IA of Hartford Money Market HLS Fund, Inc.
Hartford Small Company Fund Sub-Account Class IA of Hartford Small Company HLS Fund, Inc.
Hartford Stock Fund Sub-Account Class IA of Hartford Stock HLS Fund, Inc.
Putnam VT Asia Pacific Growth Fund Sub-Account Class IA of Putnam VT Asia Pacific Growth Fund of
the Putnam Variable Trust
Putnam VT Diversified Income Fund Sub-Account Class IA of Putnam VT Diversified Income Fund of
Putnam Variable Trust
Putnam VT Global Asset Allocation Fund Sub-Account Class IA of Putnam VT Global Asset Allocation Fund
of Putnam Variable Trust
Putnam VT Global Growth Fund Sub-Account Class IA of Putnam VT Global Growth Fund of Putnam
Variable Trust
Putnam VT Growth and Income Fund Sub-Account Class IA of Putnam VT Growth and Income Fund of
Putnam Variable Trust
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Sub-Account Purchases shares of:
<CAPTION>
Putnam VT Health Sciences Fund Sub-Account Class IA of Putnam VT Health Sciences Fund of Putnam
<S> <C>
Variable Trust
Putnam VT High Yield Fund Sub-Account Class IA of Putnam VT High Yield Fund of Putnam
Variable Trust
Putnam VT Income Fund Sub-Account Class IA of Putnam VT Income Fund of Putnam Variable
Trust
Putnam VT International Growth Fund Sub-Account Class IA of Putnam VT International Growth Fund of
Putnam Variable Trust
Putnam VT International Growth and Income Fund Sub-Account Class IA of Putnam VT International Growth and Income
Fund of Putnam Variable Trust
Putnam VT International New Opportunities Fund Sub-Account Class IA of Putnam VT International New Opportunities
Fund of Putnam Variable Trust
Putnam VT Investors Fund Sub-Account Class IA of Putnam VT Investors Fund of Putnam
Variable Trust
Putnam VT Money Market Fund Sub-Account Class IA of Putnam VT Money Market Fund of Putnam
Variable Trust
Putnam VT New Opportunities Fund Sub-Account Class IA of Putnam VT New Opportunities Fund of
Putnam Variable Trust
Putnam VT New Value Fund Sub-Account Class IA of Putnam VT New Value Fund of Putnam
Variable Trust
Putnam VT OTC & Emerging Growth Fund Sub-Account Class IA of Putnam VT OTC & Emerging Growth Fund of
Putnam Variable Trust
Putnam VT The George Putnam Fund of Boston Sub-Account Class IA of Putnam VT The George Putnam Fund of
Boston of Putnam Variable Trust
Putnam VT Utilities Growth and Income Fund Sub-Account Class IA of Putnam VT Utilities Growth and Income
Fund of Putnam Variable Trust
Putnam VT Vista Fund Sub-Account Class IA of Putnam VT Vista Fund of Putnam Variable
Trust
Putnam VT Voyager Fund Sub-Account Class IA of Putnam VT Voyager Fund of Putnam Variable
Trust
Fidelity VIP Equity-Income Portfolio Sub-Account Fidelity VIP Equity-Income Portfolio of Variable
Insurance Products Fund
Fidelity VIP Overseas Portfolio Sub-Account Fidelity VIP Overseas Portfolio of Variable Insurance
Products Fund
Fidelity VIP II Asset Manager Portfolio Sub-Account Fidelity VIP II Asset Manager Portfolio of Variable
Insurance Products Fund II
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The policy may not be available for sale in all states.
This Prospectus can also be obtained from the Securities and Exchange
Commission's website (HTTP://WWW.SEC.GOV).
This life insurance policy IS NOT:
- a bank deposit or obligation
- federally insured
- endorsed by any bank or governmental agency
- --------------------------------------------------------------------------------
PROSPECTUS DATED: NOVEMBER 1, 1999
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
- ----------------------------------------------------------------------
Summary of Benefits and Risks 5
- ----------------------------------------------------------------------
Fee Tables 6
- ----------------------------------------------------------------------
About Us 8
- ----------------------------------------------------------------------
Hartford Life and Annuity Insurance Company 8
- ----------------------------------------------------------------------
Separate Account VL I 8
- ----------------------------------------------------------------------
The Funds 8
- ----------------------------------------------------------------------
The Fixed Account 11
- ----------------------------------------------------------------------
Charges and Deductions 11
- ----------------------------------------------------------------------
Deductions from Premium 11
- ----------------------------------------------------------------------
Deductions from Account Value 11
- ----------------------------------------------------------------------
Charges For the Funds 12
- ----------------------------------------------------------------------
Your Policy 12
- ----------------------------------------------------------------------
Contract Rights 12
- ----------------------------------------------------------------------
Contract Limitations 13
- ----------------------------------------------------------------------
Changes to Contract or Separate Account 13
- ----------------------------------------------------------------------
Other Benefits 13
- ----------------------------------------------------------------------
Class of Purchasers 14
- ----------------------------------------------------------------------
Premiums 15
- ----------------------------------------------------------------------
Death Benefits and Policy Values 16
- ----------------------------------------------------------------------
Making Withdrawals From Your Policy 17
- ----------------------------------------------------------------------
Loans 17
- ----------------------------------------------------------------------
Lapse and Reinstatement 18
- ----------------------------------------------------------------------
Taxes 19
- ----------------------------------------------------------------------
General 19
- ----------------------------------------------------------------------
Taxation of Hartford and the Separate Account 19
- ----------------------------------------------------------------------
Income Taxation of Policy Benefits -- Generally 19
- ----------------------------------------------------------------------
Modified Endowment Contracts 20
- ----------------------------------------------------------------------
Estate and Generation Skipping Taxes 20
- ----------------------------------------------------------------------
Diversification Requirements 21
- ----------------------------------------------------------------------
Ownership of the Assets in the Separate Account 21
- ----------------------------------------------------------------------
Tax Deferral During Accumulation Period 21
- ----------------------------------------------------------------------
Life Insurance Purchased for Use in Split Dollar
Arrangements 22
- ----------------------------------------------------------------------
Federal Income Tax Withholding 22
- ----------------------------------------------------------------------
Non-Individual Ownership of Policies 22
- ----------------------------------------------------------------------
Other 22
- ----------------------------------------------------------------------
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations 22
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
<S> <C>
- ----------------------------------------------------------------------
Legal Proceedings 22
- ----------------------------------------------------------------------
Other Matters 22
- ----------------------------------------------------------------------
Year 2000 22
- ----------------------------------------------------------------------
Glossary of Special Terms 24
- ----------------------------------------------------------------------
Where You Can Find More Information 25
- ----------------------------------------------------------------------
Statement of Additional Information
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
Summary of Benefits and Risks
Benefits of Your Policy
Flexibility -- The policy is designed 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 -- While the policy is inforce and when the insured dies, we pay a
death benefit to your beneficiary. You select one of three death benefit
options:
- Level Option: The death benefit equals the current Face Amount.
- Return of Account Value Option: The death benefit is the current Face Amount
plus the Account Value of your policy.
- Return of Premium Option: The death benefit is the current Face Amount plus
the sum of premiums paid. However, it will be no more than the current Face
Amount plus the Option C limit, which is currently $2.5 million.
The death benefit is reduced by any money you owe us, such as outstanding loans,
loan interest, or unpaid charges. You may change your death benefit option under
certain circumstances. You may increase or decrease the Face Amount on your
policy under certain circumstances.
Investment Choices -- You may invest in up to 9 different investment choices
within your policy, from a choice of 36 investment options and a Fixed Account.
You may transfer money among your investment choices, subject to restrictions.
Premium Payments -- You have the flexibility to choose how you pay premiums. You
can choose a planned premium when you purchase the policy. You may change your
planned premium, subject to certain limitations.
Right to Examine Your Policy -- You have a limited right to return the policy
for cancellation after purchase. See "Your Policy -- Contract Rights -- Right to
Examine a Policy."
Surrender -- You may surrender your policy at any time prior to the maturity
date for its Cash Surrender Value. (See "Risks of Your Policy," below).
Loans -- You may take a loan on the policy. The policy secures the loan.
Settlement Options -- You or your beneficiary may choose to receive the proceeds
of the policy over a period of time by using one of several settlement options.
Optional Coverage -- You may add other coverages to your policy. See "Your
Policy-Other Benefits."
What Does Your Premium Pay For?
Your premium pays for three things. It pays for insurance coverage, it acts as
an investment in the Sub-Accounts, and it pays for sales loads and other
charges.
Risks of Your Policy
Investment Performance -- The value of your policy will fluctuate with the
performance of the investment options you choose. Your investment options may
decline in value, or they may not perform to your expectations. Your policy
values in the Sub-Accounts are not guaranteed.
Unsuitable for Short-Term Savings -- The policy is designed for long term
financial planning. You should not purchase the policy if you will need the
premium payment in a short time period.
Risk of Lapse -- Your policy could terminate if the value of the policy becomes
too low to support the policy's monthly charges. If this occurs, we will notify
you in writing. You will then have a 61-day grace period to pay additional
amounts to prevent the policy from terminating.
Withdrawal Limitations -- One partial withdrawal is allowed each month. The
minimum allowed is $500, and the maximum allowed is the Cash Surrender Value
minus $1,000. Withdrawals will reduce your policy's death benefit, and may be
subject to a surrender 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
your investment options and the Fixed Account.
Loans -- Taking a loan from your policy may increase the risk that your policy
will lapse, will have a permanent effect on the policy's Account Value, and will
reduce the death proceeds.
Adverse Tax Consequences -- You may be subject to income tax if you receive any
loans, withdrawals or other amounts from the policy, and you may be subject to a
10% penalty tax. See "Taxes."
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Fee Tables
The following tables describe the maximum fees and expenses that you will pay
when buying, owning, and surrendering the policy. The first table describes the
maximum fees and expenses that you will pay at the time that you buy the policy,
surrender the policy, or transfer cash value between investment options. Your
specific fees and charges are described on the specification page of your
policy.
Transaction Fees
<TABLE>
Charge When Charge is Deducted Amount Deducted
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Front-end sales load When you pay premium. Policy Years Amount
Years 1 -20 8%*
Policy Years 20 + 6%*
- ------------------------------------------------------------------------------------------------
Tax Charge on Premium When you pay premium. A percent of premium which varies
Payments by your state and municipality of
residence. The range of tax charge
is generally between 0% and 4%.
This rate will change if your state
or municipality changes its tax
charges. It may change if you
change your state or municipality
of residence.
- ------------------------------------------------------------------------------------------------
Surrender Charge When you surrender your policy. The Surrender Charge varies based
When you make certain Face Amount on the Insured's age, sex, and
decreases. insurance class on the date of
When you take certain withdrawals. issue.
The initial charge will be at least
$2.09 per 1,000 of initial face
amount but will not exceed $50.60
per 1,000 of initial face amount.
- ------------------------------------------------------------------------------------------------
Face Amount Increase Each month for 12 months beginning The rate is a per $1,000 amount
Fee on the effective date of any that varies by attained age of the
unscheduled increase in Face Amount Insured.
you request. The monthly fee will be at least
$.17 per 1,000 of increase but will
not exceed $.50 per 1,000 of
increase.
- ------------------------------------------------------------------------------------------------
Transfer Fees When you make a transfer after the $25 per transfer.
first transfer in any month.
- ------------------------------------------------------------------------------------------------
Withdrawal Charge When you take a withdrawal. $10 per withdrawal.
<S> <C>
Policies from Which Charge is
Charge Deducted
- ----------------------
Front-end sales load All
- ----------------------
Tax Charge on Premium All
Payments
- ----------------------
Surrender Charge Policies surrendered during the first
nine policy years.
Policies where the Face Amount is
reduced below the initial Face Amount
during the first nine policy years.
- ----------------------
Face Amount Increase Policies where the owner has made an
Fee unscheduled increase.
- ----------------------
Transfer Fees Those policies with more than one
transfer per month.
- ----------------------
Withdrawal Charge Those policies where the owner has
made a withdrawal.
</TABLE>
The next table describes the maximum fees and expenses that you will pay
periodically during the time that you own the policy, not including Fund fees
and expenses.
Annual Charges Other Than Fund Operating Expenses
<TABLE>
Charge When Charge is Deducted Amount Deducted
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Cost of Insurance Monthly. The charge is the maximum cost of
Charges insurance rate times the net amount
at risk. Maximum cost of insurance
rates are individualized, depending
on issue age, sex, insurance class,
Initial Face Amount, substandard
rating, and age of policy.
The maximum monthly coi's for
unrated individuals ranges from a
minimum of $.0143 per 1,000 per
month to a maximum of $83.333 per
1,000 per month.
- ------------------------------------------------------------------------------------------------
Mortality and Expense Monthly. Per the Sub-Account accumulated
Risk Charge value:
- 1/12 of 0.75% per month for
policy years 1-10.
- 1/12 of 0.50% per month after the
10th policy year.
Per $1000 of initial Face Amount
during the first 10 policy years:
- individualized based on insured's
initial Face Amount, issue age,
sex, insurance class.
The monthly charge will be at least
$.0458 per 1,000 of initial face
amount but will not exceed $.6917
per 1,000 of initial face amount.
- ------------------------------------------------------------------------------------------------
Administrative Charge Monthly. $10
- ------------------------------------------------------------------------------------------------
Rider Charges Monthly. Individualized based on optional
rider selected.
<S> <C>
Policies from Which Charge is
Charge Deducted
- ----------------------
Cost of Insurance All
Charges
- ----------------------
Mortality and Expense All
Risk Charge
- ----------------------
Administrative Charge All
- ----------------------
Rider Charges Only those policies with benefits
provided by rider.
</TABLE>
* In Oregon, the maximum is 10% in years 1-20 and 8% thereafter.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
The next table is an example of the Fund fees and expenses that you will pay
periodically during the time that you own the policy. The table shows the actual
annual fees and expenses charged by the Funds for the year ended December 31,
1998. More detail concerning each Fund's fees and expenses is contained in the
prospectus for each Fund.
Annual Fund Operating Expenses
<TABLE>
<CAPTION>
Total Fund
Management Fees Other Operating Expenses
(including waivers) Expenses (including waivers)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 0.48% 0.09% 0.57%
- ------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 0.53% 0.10% 0.63%
- ------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 0.72% 0.17% 0.89%
- ------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.62% 0.02% 0.63%
- ------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.48% 0.02% 0.50%
- ------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 0.62% 0.02% 0.64%
- ------------------------------------------------------------------------------------------------------------------
Hartford Dividend & Growth HLS Fund 0.64% 0.02% 0.66%
- ------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 0.77% 0.04% 0.81%
- ------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.38% 0.02% 0.40%
- ------------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 0.76% 0.11% 0.86%
- ------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS Fund 0.68% 0.09% 0.77%
- ------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% 0.03% 0.79%
- ------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.43% 0.02% 0.45%
- ------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 0.43% 0.03% 0.46%
- ------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% 0.02% 0.77%
- ------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.44% 0.02% 0.46%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Asia Pacific Growth Fund 0.80% 0.32% 1.12%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund 0.67% 0.11% 0.78%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund 0.65% 0.13% 0.78%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Global Growth Fund 0.60% 0.12% 0.72%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund 0.46% 0.04% 0.50%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 0.40% 0.21% 0.61%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT High Yield Fund 0.64% 0.07% 0.71%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Income Fund 0.60% 0.07% 0.67%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Fund 0.80% 0.27% 1.07%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund 0.80% 0.19% 0.99%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund 1.18% 0.42% 1.60%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 0.39% 0.18% 0.57%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Money Market Fund 0.45% 0.08% 0.53%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund 0.56% 0.05% 0.61%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Fund 0.70% 0.11% 0.81%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 0.00% 0.60% 0.60%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT The George Putnam Fund of Boston 0.16% 0.41% 0.57%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Utilities Growth and Income Fund 0.65% 0.07% 0.72%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Fund 0.65% 0.12% 0.77%
- ------------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Fund 0.54% 0.04% 0.58%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8 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 6/1/98 AA Insurer financial strength
- ----------------------------------------------------------------------------
Duff & Phelps 12/21/98 AA+ Claims paying ability
- ----------------------------------------------------------------------------
</TABLE>
Separate Account VL I
The Sub-Accounts are subdivisions of our separate account, called Separate
Account VL I. 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
Hartford's other assets. Hartford's other assets are utilized to pay you
insurance obligations under the policy. Your assets in the Separate Account are
held exclusively for your benefit and may not be used for any other liability of
Hartford. Separate Account VL I was established on June 8, 1995 under the laws
of Connecticut.
The Funds
The Sub-Accounts of the Separate Account purchase shares of mutual funds set up
exclusively for variable annuity and variable life insurance products. These
funds are not the same mutual funds that you buy through your stockbroker or
through a retail mutual fund, but they may have similar investment strategies
and the same portfolio managers as retail mutual funds. You choose the
Sub-Accounts that meet your investment style.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are described in the
prospectuses for the Funds, which are attached to this Prospectus, and the
Funds' Statements of Additional Information, which may be ordered from us. You
should read the following investment objectives and the prospectuses for each of
the Funds listed below for detailed information about each Fund before
investing. All Funds may not be available in all states.
You may also allocate some or all of your premium payments to the "Fixed
Account," which pays a declared interest rate. See "The Fixed Account."
Hartford Advisers HLS Fund -- Seeks maximum long-term total rate of return by
investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.
Hartford Bond HLS Fund -- 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." Sub-advised by HIMCO.
Hartford Capital Appreciation HLS Fund -- Seeks growth of capital by investing
in equity securities selected solely on the basis of potential for capital
appreciation. Sub-advised by Wellington Management.
Hartford Dividend and Growth HLS Fund -- Seeks a high level of current income
consistent with growth of capital by investing primarily in dividend paying
equity securities. Sub-advised by Wellington Management.
Hartford Growth and Income HLS Fund -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.
Hartford Index HLS Fund -- Seeks to provide investment results which approximate
the price and yield performance of publicly-traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index.* Sub-advised by HIMCO.
Hartford International Advisers HLS Fund -- Seeks maximum long-term total return
by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and
* "Standard & Poor's-Registered Trademark-," "S&P-Registered Trademark-," "S&P
500-Registered Trademark-," "Standard & Poor's 500," and "500" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by Hartford Life
and Annuity Insurance Company. The Hartford Index Fund, Inc. ("Index Fund") is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Index Fund.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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will be traded in non-U.S. markets. Sub-advised by Wellington Management.
Hartford International Opportunities HLS Fund -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
Hartford MidCap HLS Fund -- Seeks to achieve long-term capital growth through
capital appreciation by investing primarily in equity securities of companies
with market capitalizations within the range represented by the Standard &
Poor's MidCap 400 Index. Sub-advised by Wellington Management.
Hartford Money Market HLS Fund -- Seeks maximum current income consistent with
liquidity and preservation of capital. Sub-advised by HIMCO.
Hartford Mortgage Securities HLS Fund -- Seeks maximum current income consistent
with safety of principal and maintenance of liquidity by investing primarily in
mortgage-related securities, including securities issued by the Government
National Mortgage Association. Sub-advised by HIMCO.
Hartford Small Company HLS Fund -- Seeks growth of capital by investing
primarily in equity securities within a range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
Hartford Stock HLS Fund -- Seeks long-term growth of capital by investing
primarily in equity securities. Sub-advised by Wellington Management.
Putnam VT Asia Pacific Growth Fund -- Seeks capital appreciation by investing
primarily in securities of companies located in Asia and in the Pacific Basin.
The fund's investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks.
Putnam VT Diversified Income Fund -- Seeks high current income consistent with
capital preservation by investing in the following three sectors of the fixed
income securities markets: a U.S. Government and Investment Grade Sector, a High
Yield Sector (which invests primarily in securities commonly known as "junk
bonds"), and an International Sector. See the special considerations for
investments in high yield securities described in the Fund prospectus.
Putnam VT The George Putnam Fund of Boston -- Seeks to provide a balanced
investment composed of a well-diversified portfolio of stocks and bonds which
will produce both capital growth and current income.
Putnam VT Global Asset Allocation Fund -- Seeks a high level of long-term total
return consistent with preservation of capital by investing in U.S. equities,
international equities, U.S. fixed income securities, and international fixed
income securities.
Putnam VT Global Growth Fund -- Seeks capital appreciation through a globally
diversified portfolio of common stocks.
Putnam VT Growth and Income Fund -- Seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
Putnam VT Health Sciences Fund -- Seeks capital appreciation by investing
primarily in common stocks and other securities of companies in the health
sciences industries.
Putnam VT High Yield Fund -- Seeks high current income and, when consistent with
this objective, a secondary objective of capital growth, by investing primarily
in high-yielding, lower-rated fixed income securities, constituting a portfolio
which Putnam Management believes does not involve undue risk to income or
principal. See the special considerations for investments in high yield
securities described in the Fund prospectus.
Putnam VT Income Fund -- Seeks high current income consistent with what Putnam
Management believes to be prudent risk. The Fund will normally invest mostly in
bonds and other debt securities, and, to a lesser degree, in preferred stocks.
Putnam VT International Growth Fund -- Seeks capital appreciation by investing
primarily in equity securities of companies located in a country other than the
United States.
Putnam VT International Growth and Income Fund -- Seeks capital growth, and a
secondary objective of high current income by investing primarily in common
stocks that Putnam Management believes offer potential for capital growth and
may, when consistent with its investment objectives, invest in common stocks
that Putnam Management believes offer potential for current income. Under normal
market conditions, the fund expects to invest substantially all of its assets in
securities principally traded on markets outside the United States.
Putnam VT International New Opportunities Fund -- Seeks long term capital
appreciation by investing in companies that have above-average growth prospects
due to the fundamental growth of their market sector. Under normal market
conditions, the fund expects to invest substantially all of its total assets,
other than cash or short-term investments held pending investment, in common
stocks, preferred stocks, convertible preferred stocks, convertible bonds and
other equity securities principally traded in securities markets outside the
United States.
Putnam VT Investors Fund -- Seeks long-term growth of capital and any increased
income that results from this growth by investing primarily in common stocks
that Putnam Management believes afford the best opportunity for capital growth
over the long term.
Putnam VT Money Market Fund -- Seeks as high a rate of current income as Putnam
Management believes is consistent with preservation of capital and maintenance
of liquidity by investing in high-quality money market instruments.
Putnam VT New Opportunities Fund -- Seeks long-term capital appreciation by
investing principally in common stocks of
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10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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companies in sectors of the economy which Putnam Management believes possess
above-average long-term growth potential.
Putnam VT New Value Fund -- Seeks long-term capital appreciation by investing
primarily in common stocks that Putnam Management believes are undervalued at
the time of purchase and have the potential for long-term capital appreciation.
Putnam VT OTC & Emerging Growth Fund -- Seeks capital appreciation by investing
primarily in common stocks that Putnam Management believes have potential for
capital appreciation significantly greater than that of market averages.
Putnam VT Utilities Growth and Income Fund -- Seeks capital growth and current
income by concentrating its investments in debt and equity securities issued by
companies in the public utilities industries.
Putnam VT Vista Fund -- Seeks capital appreciation by investing in a diversified
portfolio of common stocks which Putnam Management believes have the potential
for above-average capital appreciation.
Putnam VT Voyager Fund -- Seeks capital appreciation by investing primarily in
common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.
Fidelity VIP Equity-Income Portfolio -- Seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these securities,
the Portfolio Manager will also consider the potential for capital appreciation.
The Portfolio's goal is to achieve a yield which exceeds the composite yield on
the securities comprising the Standard & Poor's Index 500.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
Fidelity VIP Overseas Portfolio -- Seeks long-term growth of capital primarily
through investments in foreign securities and provides a means for aggressive
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
International funds have increased economic and political risks as they are
exposed to events and factors in the various world markets. These risks may be
greater for funds that invest in emerging markets.
Fidelity VIP II Asset Manager Portfolio -- Seeks high total return with reduced
risk over the long-term by allocating its assets among stocks, bonds and
short-term money market instruments.
In addition, the Portfolio may invest in high yield, lower-rated securities
(commonly referred to as "junk bonds") which are subject to greater risk than
investments in higher-rated securities. For a further discussion of lower-rated
securities, see "Risks of Lower-Rated Debt Securities" in the Fidelity
prospectus for this Portfolio.
Investment Advisers -- HL Investment Advisors, LLC is investment adviser for the
Hartford Funds. Wellington Management Company, LLP ("Wellington Management") is
investment sub-adviser for Hartford Advisers HLS Fund, Inc., Hartford Capital
Appreciation HLS Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc.,
Hartford Growth and Income HLS Fund, Hartford International Advisers HLS Fund,
Inc., Hartford International Opportunities HLS Fund, Inc., Hartford MidCap HLS
Fund, Inc., Hartford Small Company HLS Fund, Inc., and Hartford Stock HLS Fund,
Inc. The Hartford Investment Management Company, Inc. ("HIMCO") is investment
sub-adviser for Hartford Bond HLS Fund, Inc., Hartford Index HLS Fund, Inc.,
Hartford Mortgage Securities HLS Fund, Inc., and Hartford Money Market HLS Fund,
Inc. Each Hartford Fund, except for the Hartford Growth and Income HLS Fund, is
a separate Maryland corporation registered with the Securities and Exchange
Commission as an open-end management investment company. The Hartford Growth and
Income HLS Fund is a diversified series of Hartford Series Fund, Inc., a
Maryland corporation, also registered with the Securities and Exchange
Commission as an open-end management investment company. The shares of each Fund
have been divided into Class IA and Class IB. Only Class IA shares are available
in this policy.
Putnam Investment Management, Inc. ("Putnam Management") serves as the
investment manager for the Putnam Funds. Putnam Management is ultimately
controlled by Marsh & McLennan Companies, Inc., a publicly owned holding company
whose principal businesses are international insurance brokerage and employee
benefit consulting.
Fidelity Management & Research Company is investment adviser for the Fidelity
VIP Funds.
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, and of owners of
other contracts whose contract values are 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 prospectuses for the Funds.
Voting Rights -- For Sub-Accounts in which you have invested, we will notify you
of shareholder's meetings of the Funds purchased by those Sub-Accounts. We will
send you proxy materials and instructions for you to vote the shares held for
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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your benefit by those Sub-Accounts. 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.
The Fixed Account
You may allocate amounts to the Fixed Account. The Fixed Account is not a part
of the Separate Account, but is a part of our general assets. As such, the Fixed
Account (and this description of the Fixed Account) is not subject to the same
securities laws as the Separate Account.
The Fixed Account credits at least 3.5% per year. We are not obligated to, but
may, credit more than 3.5% per year. If we do, such rates are determined at our
sole discretion. You assume the risk that, at any time, the Fixed Account may
credit no more than 3.5%.
Charges and Deductions
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Deductions from Premium
Before your premium is allocated to the Sub-Accounts and/or the Fixed Account,
we deduct a percentage from your premium for a sales load and a tax charge. The
amount allocated after the deductions is called your Net Premium.
Front-End Sales Load -- We deduct a front-end sales load from each premium you
pay. The current and maximum sales load in policy year 1 is 8%. The current
sales load after policy year 1 is 4%. The maximum sales load is 8% in policy
years 2 through 20 and 6% thereafter. In Oregon, the current and maximum sales
load in policy year 1 is 10%. The current sales load in Oregon after policy
year 1 is 6%. The maximum sales load in Oregon is 10% in policy years 2 through
20 and 8% thereafter.
Tax Charge -- We deduct a tax charge from each premium you pay. The tax charge
covers taxes assessed against us by a state and/or other governmental entity.
The range of such charge generally is between 0% and 4%.
Deductions from Account Value
Monthly Deduction Amounts -- Each month we will deduct an amount from your
Account Value to pay for the benefits provided by your policy. This amount is
called the Monthly Deduction Amount and equals the sum of:
(1) the charge for the cost of insurance;
(2) the monthly administrative charge;
(3) the mortality and expense risk charge;
(4) any Face Amount increase fee;
(5) the charges for additional benefits provided by rider, if any.
Cost of Insurance Charge -- The charge for the cost of insurance equals:
(i) the cost of insurance rate per $1,000, multiplied by
(ii) the amount at risk, divided by
(iii) $1,000.
On any Monthly Activity Date, the amount at risk equals the Death Benefit less
the Account Value on that date, prior to assessing the Monthly Deduction Amount.
Cost of insurance rates will be determined on each policy anniversary based on
our future expectations of such factors as mortality, expenses, interest,
persistency and taxes. The cost of insurance rates will not exceed those based
on the 1980 Commissioners' Standard Ordinary Mortality Table (ALB), Male or
Female, Nonsmoker or Smoker Table, age last birthday (unisex rates may be
required in some states). A table of guaranteed cost of insurance rates per
$1,000 will be included in your policy, however, we reserve the right to use
rates less than those shown in the table. The maximum rates that can be charged
are on page 3E of the contract. Substandard risks will be charged higher cost of
insurance rates that will not exceed rates based on a multiple of 1980
Commissioners' Standard Ordinary Mortality Table (ALB), Male or Female,
Nonsmoker or Smoker Table, age last birthday (unisex rates may be required in
some states) plus any flat extra amount assessed. The multiple will be based on
the insured's substandard rating.
Any changes in the cost of insurance rates will be made 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 on account of deterioration of the insured's health.
Because your Account Value and death benefit may vary from month to month, the
cost of insurance may also vary on each Monthly Activity Date. The cost of
insurance depends on your policy's amount at risk. Items which may affect the
amount at risk include the amount and timing of premium payments, investment
performance, fees and charges assessed, rider charges, policy loans and changes
to the Face Amount.
Monthly Administrative Charge -- We deduct a monthly administrative charge from
your Account Value to compensate us for issue and administrative costs of the
policy. The current monthly administrative charge is $7.50 for initial Face
Amounts of $100,000 and above. The current charge for initial Face Amounts below
$100,000 is $10 per month. The maximum administrative charge is $10 per month
for all initial Face Amounts.
Mortality and Expense Risk Charge -- We deduct a mortality and expense risk
charge each month from your Account Value. There are two components to the
mortality and expense risk charge. Part of the charge is assessed according to
your
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12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Account Value attributable to the Sub-Accounts, and the other part is assessed
based on the initial Face Amount of your policy. The mortality and expense risk
charge each month is equal to the sum of (a) and (b) where
(a) equals:
(i) the monthly accumulated value mortality and expense risk rate; multiplied
by
(ii) the sum of your accumulated values in the Sub-Accounts on the Monthly
Activity Date, prior to assessing the Monthly Deduction Amount.
and
(b) equals:
(i) the monthly mortality and expense risk rate per $1,000; multiplied by
(ii) the initial Face Amount; divided by
(iii) $1,000.
During the first 10 years, the current and maximum accumulated value mortality
and expense risk rate is 1/12 of 0.75% per month. Thereafter, the current rate
is 1/12 of 0.25% per month and the maximum rate is 1/12 of .50% per month.
During the first 10 years, the Face Amount mortality and expense risk rate per
$1,000 of initial Face Amount is individualized based on the Insured's initial
Face Amount, issue age, sex, and insurance class. The charge is on page 3A of
the contract. Thereafter, there is no charge.
The mortality and expense risk charge compensates us for mortality and expense
risks assumed under the policies. The mortality risk assumed is that the cost of
insurance charges are insufficient to meet actual claims. The expense risk
assumed is that the expense incurred in issuing, distributing and administering
the policies exceed the administrative charges and sales loads collected.
Hartford may keep any difference between cost it incurs and the charges it
collects.
Face Amount Increase Fee -- We deduct a dollar amount from your Account Value
for an unscheduled increase of the Face Amount on your policy. We deduct the fee
each month for twelve months after the increase. The fee is a per $1,000 amount
that varies by the attained age of the Insured. The monthly increase per 1,000
is on page 3C of the contract.
Rider Charge -- If your policy includes riders, a charge applicable to the
riders is made from the Account Value each month. The charge applicable to these
riders is to compensate Hartford for the anticipated cost of providing these
benefits and is specified on the applicable rider. The maximum charge for any
rider chosen is shown on page 3 of the contract. For a description of the riders
available, see "Your Policy -- Supplemental Benefits."
Surrender Charge -- During the first 9 policy years, surrender charges will be
deducted from your Account Value if
- - you surrender your policy;
- - you decrease the Face Amount to an amount lower than it has ever been; or
- - you take a withdrawal that causes the Face Amount to fall below the lowest
previous Face Amount.
The amount of surrender charge is individualized based on the Insured's age,
sex, and insurance class on the date of issue. The surrender charges by policy
year are on page 3B of the contract. The charge compensates us for expenses
incurred in issuing the policy and the recovery of acquisition costs. Hartford
may keep any difference between cost it incurs and the charges it collects. For
partial surrender charges applicable to a decrease in the Face Amount or
withdrawal, see "Unscheduled Increases and Decreases in the Face Amount."
Charges For the Funds
The investment performance of each Fund reflects the management fee that the
Fund pays to its investment manager as well as other operating expenses that the
Fund incurs. Investment management fees are generally daily fees computed as a
percentage of a Fund's average daily net assets as an annual rate. Please read
the prospectus for each Fund for complete details.
Your Policy
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Contract Rights
Policy Owner, or "you" -- As long as your policy is in force, you may exercise
all rights under the policy while the insured is alive and no beneficiary has
been irrevocably named.
Beneficiary -- You name the beneficiary in your application for the policy. 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,
the death benefit will be paid to you if living; or, otherwise, to your estate.
Assignment -- You may assign your policy. Until you notify us in writing, no
assignment will be 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 current Account Value, Cash Surrender Value and Face Amount;
- - the premiums paid, monthly deduction amounts and any loans since your last
statement;
- - the amount of any Indebtedness;
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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- - any notifications required by the provisions of your policy; and
- - any other information required by the Insurance Department of the state where
your policy was delivered.
Right to Examine a Policy -- You have a limited right to return your policy for
cancellation. You may deliver or mail the policy to us or to the agent from whom
it was purchased any time during your free look period. Your free look period
begins on the day you get your policy and ends ten days after you get it (or
longer in some states). In such event, the policy will be rescinded and we will
pay an amount equal to the greater of the premiums paid for the policy less any
Indebtedness or the sum of: i) the Account Value less any Indebtedness, on the
date the returned policy is received by us or the agent from whom it was
purchased; and, ii) any deductions under the policy or charges associated with
the Separate Account. If your policy is replacing another policy, your free look
period and the amount paid to you upon the return of your policy vary by state.
Contract Limitations
Allocations to Sub-Accounts and the Fixed Account -- You may allocate amounts to
a maximum of nine (9) Sub-Accounts, or eight (8) Sub-Accounts and the Fixed
Account.
Transfers of Account Value -- You may transfer amounts among the Fixed Account
and the Sub-Accounts subject to a charge described below. You may request
transfers in writing or by calling us at 1-800-231-5453. Transfers by telephone
may be made by your agent of record or by your attorney-in-fact pursuant to a
power of attorney. Telephone transfers may not be permitted in some states. We
will not be responsible for losses that result from acting upon telephone
requests reasonably believed to be genuine. We will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine. The
procedures we follow for transactions initiated by telephone include requiring
callers to provide certain identifying information. All transfer instructions
communicated to us by telephone are tape recorded.
You may make one transfer per calendar month free of charge, excluding any
transfers made pursuant to your enrollment in the Dollar Cost Averaging Program.
Each subsequent transfer in excess of one per calendar month will be subject to
a transfer charge of up to $25. We reserve the right to limit at a future date
the size of transfers and remaining balances and to limit the number and
frequency of transfers.
Transfers from the Fixed Account -- Except for transfers made under the Dollar
Cost Averaging Program, any transfers from the Fixed Account must occur during
the 30-day period following each policy anniversary, and, the maximum amount
transferred in any Policy Year will be the greater of $1,000 or 25% of the
Accumulated Value in the Fixed Account on the date of the transfer.
Deferral of Payments -- We may defer payment of any Cash Surrender Values,
withdrawals and loan amounts which are not attributable to the Sub-Accounts for
up to six months from the date of the request. If we defer payment for more than
30 days, we will pay you interest.
Changes to Contract or Separate Account
Modification of Policy -- The only way the policy may be modified 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 -- The operation of the Separate
Account may be modified to the extent permitted by law, including deregistration
under the securities laws.
Separate Account Taxes -- Currently, no charge is made to the Separate Account
for federal, state and local taxes that may be allocable to the Separate
Account. A change in the applicable federal, state or local tax laws which
impose tax on Hartford and/ or the Separate Account may result in a charge
against the policy in the future. Charges for other taxes, if any, allocable to
the Separate Account may also be made.
Other Benefits
Dollar Cost Averaging Program -- You may elect to allocate your Net Premiums
among the Sub-Accounts and the Fixed Account pursuant to the Dollar Cost
Averaging (DCA) program. If you choose the DCA program, your Net Premiums will
be deposited into the Hartford Money Market HLS Fund Sub-Account or the Fixed
Account. Amounts will be transferred monthly to the other investment options in
accordance with your premium allocation instructions. The dollar amount will be
allocated to the investment options that you specify, in the proportions that
you specify. If, on any transfer date, your Account Value allocated to the
Dollar Cost Averaging program is less than the amount you have elected to
transfer, your DCA program will terminate.
You may cancel your DCA election by notice in writing or by calling us at
1-800-231-5453. We reserve the right to change or discontinue the DCA program.
The main objective of a DCA program is to minimize the impact of short-term
price fluctuations. The DCA program allows you to take advantage of market
fluctuations. Since the same dollar amount is transferred to your selected
investment options 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, a lower average cost per accumulation unit may be achieved
over the long term. However, it is important to understand that the DCA program
does not assure a profit or protect against loss in a declining market.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Supplemental Benefits -- The following supplemental benefits are among the
options that may be included in a policy by rider, subject to the restrictions
and limitations set forth in the rider.
- - Term Life Rider -- While the rider is in force, we will pay the term life
insurance amount upon receipt of due proof of death of the designated insured,
subject to the conditions stated in the rider.
- - Deduction Amount Waiver Rider -- We will waive the Monthly Deduction Amount in
the event of total disability prior to the insured reaching age 65 and
continuing for at least six months. If the Deduction Amount Waiver Rider is
added to your policy, the Monthly Deduction Amounts will be increased to
include the charges for the rider.
- - Waiver of Specified Amount Disability Benefit Rider -- If the insured becomes
totally disabled, we will credit the policy with an amount equal to the
Specified Amount Disability Benefit as defined in your policy, for as long as
the insured remains totally disabled.
- - Accidental Death Benefit Rider -- We will increase in the amount paid upon the
death of the insured if the death results from an accident.
Settlement Options -- Proceeds under your policy may be paid in a lump sum or
may be applied to one of our four settlement options. The minimum amount that
may be placed under a settlement option is $5,000 (unless we consent to a lesser
amount), subject to our then-current rules. Once payments under the Second
Option, the Third Option or the Fourth Option begin, no surrender may be made
for a lump sum settlement in lieu of the life insurance payments. The following
payment options are available to you or your beneficiary. If a payment option is
not selected, proceeds will be paid in a lump sum. Your beneficiary may choose a
settlement option.
First Option -- Interest Income
Payments of interest at the rate we declare (but not less than 3% per year) on
the amount applied under this option.
Second Option -- Income of Fixed Amount
Equal payments of the amount chosen until the amount applied under this option
(with interest of not less than 3% per year) is exhausted. The final payment
will be for the balance remaining.
Third Option -- Payments for a Fixed Period
An amount payable monthly for the number of years selected, which may be from
one 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.
- 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 policy provides for guaranteed dollar amounts of monthly payments for each
$1,000 applied under the four payment options. Under the Fourth Option, the
amount of each payment 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 table for the Fourth Option is based on the 1983a Individual Annuity
Mortality Table, set back one year and with a net investment rate of 3% per
annum. The tables for the First, Second and Third 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 which will result in higher monthly payments for each $1,000
applied under one or more of the four payment options.
Other arrangements for income payments may be agreed upon.
Benefits at Maturity -- The scheduled maturity date is the last date on which
you may elect to make premium payments. Unless you elect to continue the policy
beyond this date, the policy will terminate and any Cash Surrender Value will be
paid to you.
If elected, the policy may continue in force after the scheduled maturity date
if (a) the policy was in force on the scheduled maturity date; and (b) the owner
of the policy (including any assignee of record) agrees in writing to this
continuation.
At the scheduled maturity date:
- - the death benefit will be reduced to the Account Value;
- - the Account Value, if any, will continue to fluctuate with investment
performance;
- - any loans will continue to accrue interest and become part of Indebtedness;
- - no future Monthly Deduction Amounts will be deducted;
- - no further premium payments will be accepted.
All additional benefits provided by rider will deem to have terminated at the
scheduled maturity date.
Otherwise, the policy will terminate on the scheduled maturity date.
Class of Purchasers
Reduced Charges for Eligible Groups -- Certain of the charges and deductions
described above may be reduced for policies issued in connection with a specific
plan, in accordance with our rules in effect as of the date the application for
a policy is approved. To qualify for such a reduction, a plan must satisfy
certain criteria, e.g., as to size of the plan, expected number of participants
and anticipated premium payment from the plan. Generally, the sales contacts and
effort, administrative costs and mortality cost per policy vary, based on such
factors as the size of
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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the plan, the purposes for which policies are purchased and certain
characteristics of the plan's members. The amount of reduction and the criteria
for qualification will be reflected in the reduced sales effort and
administrative costs resulting from, and the different mortality experience
expected as a result of, sales to qualifying plans. 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.
Premiums
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Application for a Policy -- To purchase a policy you must submit an application
to us. Within limits, you may choose the initial Face Amount. Policies generally
will be issued only on the lives of insureds age 85 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 application for any
reason. No change in the terms or conditions of a policy will be made without
your consent. The minimum initial premium is the amount required to keep the
policy in force for one month, but not less than $50.
Your policy will be effective on the policy date only after we receive all
outstanding delivery requirements and the initial premium payment. The policy
date is the date used to determine all future cyclical transactions on the
policy, such as Monthly Activity Date and policy years.
Premium Payment Flexibility -- You have flexibility as to when and in what
amounts you pay premiums. Prior to policy issue, you can choose a planned
premium, within a range we determined, based on the Face Amount and the
insured's sex (except where unisex rates apply), issue age and risk
classification. We will send you premium notices for planned premium. Such
notices may be sent on an annual, semi-annual or quarterly basis. You may also
have premium payments automatically deducted monthly from your checking account.
The planned premium and payment mode you select are shown on your policy's
specifications page. You may change the planned premium at any time, subject to
our minimum amount rules then in effect.
After the first premium has been paid, your subsequent premium payments are
flexible. The actual amount and frequency of payment will affect the Account
Value and could affect the amount and duration of insurance provided by the
policy. Your policy may lapse if the value of your policy becomes insufficient
to cover the Monthly Deduction Amounts. In such case you may be required to pay
additional premiums in order to prevent the policy from terminating. For details
see, "Lapse and Reinstatement."
You may pay additional premiums at any time prior to the scheduled maturity
date, subject to the following limitations:
- - The minimum premium that we will accept is $50 or the amount required to keep
the policy in force.
- - We reserve the right to refund any excess premiums that would cause the policy
to fail to meet the definition of life insurance under the Internal Revenue
Code.
- - We reserve the right to require evidence of insurability for any premium
payment that results in an increase in the death benefit greater than the
amount of the premium.
- - Any premium payment in excess of $1,000,000 is subject to our approval.
Allocation of Premium Payments -- The initial Net Premium (and any additional
Net Premiums received by us before the end of the right to examine period) will
be allocated to the Hartford Money Market HLS Fund Sub-Account on the later of
the policy date or the date we receive the initial premium payment. We will then
allocate the value in the Hartford Money Market HLS Fund Sub-Account to the
Fixed Account and the Sub-Accounts according to the premium allocation specified
in the policy application upon the expiration of the right to examine policy
period, or the date we receive the final requirement to put the policy in force,
whichever is later.
You may change your premium allocation upon request in writing. Subsequent Net
Premiums will be allocated to the Fixed Account and the Sub-Accounts according
to your most recent written instructions as long as the number of investment
choices you are allocated to does not exceed nine (9), and the percentage you
allocate to each Sub-Account and/or the Fixed Account is in whole percentages.
If we receive a premium payment with a premium allocation instruction that does
not comply with the above rules, we will allocate the Net Premium pro rata based
on the values of your existing investment choices.
You will receive several different types of notifications as to what your
current premium allocation is. Each transaction confirmation received after we
receive a premium payment will show how a Net Premium has been allocated.
Additionally, each quarterly statement summarizes the current premium allocation
in effect for such policy.
Accumulation Units -- Net Premiums allocated to the Sub-Accounts are used to
credit accumulation units to such Sub-Accounts.
The number of accumulation units in each Sub-Account to be credited to a policy
(including the initial allocation to the Hartford Money Market HLS Fund
Sub-Account) and the amount to be credited to the Fixed Account will be
determined, first, by multiplying the Net Premium by the appropriate allocation
percentage in order to determine the portion of Net Premiums or transferred
Account Value to be invested in the Fixed Account or the Sub-Account. Each
portion of the Net Premium or transferred Account Value to be invested in a
Sub-Account is then divided by the accumulation unit value in a particular Sub-
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Account next computed following its receipt. The resulting figure is the number
of accumulation units to be credited to each Sub-Account.
Accumulation Unit Values -- The accumulation unit value for each Sub-Account
will vary to reflect the investment experience of the applicable Fund and will
be determined on each Valuation Day by multiplying the accumulation unit value
of the particular Sub-Account on the preceding Valuation Day by the net
investment factor for that Sub-Account for the Valuation Period then ended. The
net investment factor for each of the Sub-Accounts is equal to the net asset
value per share of the corresponding Fund at the end of the Valuation Period
(plus the per share amount of any dividend or capital gain distributions paid by
that Fund in the Valuation Period then ended) divided by the net asset value per
share of the corresponding Fund at the beginning of the Valuation Period.
All valuations in connection with a policy, e.g., with respect to determining
Account Value, in connection with policy loans, or in calculation of death
benefits, or with respect to determining the number of accumulation units to be
credited to a policy with each premium payment other than the initial premium
payment will be made on the date the request or payment is received by us at the
National Service Center, provided such date is a Valuation Day; otherwise such
determination will be made on the next succeeding date which is a Valuation Day.
Account Values -- Each policy will have an Account Value. There is no minimum
guaranteed Account Value.
The Account Value of a policy changes on a daily basis and will be computed on
each Valuation Day. The Account Value will vary to reflect the investment
experience of the Sub-Accounts, the interest credited to the Fixed Account and
the Loan Account, and the Monthly Deduction Amounts, Net Premiums paid, and any
withdrawals taken.
A policy's Account Value is related to the net asset value of the Funds
associated with the Sub-Accounts, if any, to which Net Premiums on the policy
have been allocated. The Account Value in the Sub-Accounts on any Valuation Day
is calculated by, first, multiplying the number of accumulation units in each
Sub-Account as of the Valuation Day by the then current value of the
accumulation units in that Sub-Account and then totaling the result for all of
the Sub-Accounts. A policy's Account Value equals the policy's value in all of
the Sub-Accounts, the Fixed Account, and the Loan Account. A policy's Cash Value
is equal to the Account Value less any applicable surrender charges. A policy's
Cash Surrender Value, which is the net amount available upon surrender of the
policy, is the Cash Value less any Indebtedness. See "Accumulation Unit Values,"
above.
We will pay death proceeds, Cash Surrender Values, partial withdrawals, and loan
amounts allocable to the Sub-Accounts within seven days after we receive all the
information needed to process the payment, unless the New York Stock Exchange is
closed for other than a regular holiday or weekend, trading is restricted by the
Commission or the Commission declares that an emergency exists.
Death Benefits and Policy Values
- --------------------------------------------------------------------------------
Death Benefit -- Your policy provides for the payment of the death proceeds to
the named beneficiary upon receipt of due proof of the death of the insured.
Your policy will be effective on the policy date only after we receive all
outstanding delivery requirements and the initial premium payment. You must
notify us in writing as soon as possible after the death of the insured. The
death proceeds payable to the beneficiary equal the death benefit less any
Indebtedness and less any due and unpaid Monthly Deduction Amount occurring
during a grace period. The death benefit depends on the death benefit option you
select.
Death Benefit Options -- There are three death benefit options: the Level Death
Benefit Option ("Option A"), the Return of Account Value Death Benefit Option
("Option B") and the Return of Premium Death Benefit Option ("Option C").
Subject to the minimum death benefit described below, the death benefit under
each option is as follows:
- - Under Option A, the current Face Amount.
- - Under Option B, the current Face Amount plus the Account Value.
- - Under Option C, the current Face Amount plus the sum of premiums paid.
However, it will be no more than the current Face Amount plus the Option C
limit, which is currently $2.5 million.
Option Change -- You may change your death benefit option by notifying us in
writing. Any change will become effective on the Monthly Activity Date following
the date we receive your request. If you elect to change to Option A, the Face
Amount will become that amount available as a death benefit immediately prior to
such option change. If you elect to change to Option B, the Face Amount will
become the amount available as a death benefit immediately prior to such option
change, minus the then-current Account Value. Changing your death benefit option
may result in a Surrender Charge. You should consult a tax adviser regarding the
possible adverse tax consequences resulting from a change in your death benefit
option.
Minimum Death Benefit -- Your policy has a minimum death benefit. We will
automatically increase the death benefit so that it will never be less than the
Account Value multiplied by the minimum death benefit percentage for the then
current year. This percentage varies according to the policy year and insured's
issue age, sex (where unisex rates are not used) and insurance class.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
Examples of Minimum Death Benefit
<TABLE>
<CAPTION>
A B
<S> <C> <C>
- -----------------------------------------------------
Face Amount $100,000 $100,000
- -----------------------------------------------------
Account Value 46,500 34,000
- -----------------------------------------------------
Specified Percentage 250% 250%
- -----------------------------------------------------
Death Benefit Option Level Level
- -----------------------------------------------------
</TABLE>
In Example A, the death benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the date of death of
$46,500, multiplied by the specified percentage of 250%). This amount, less any
outstanding Indebtedness, constitutes the death proceeds payable to the
beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
Unscheduled Increases and Decreases in Face Amount -- At any time after the
first policy year, you may request in writing to change the Face Amount. The
minimum amount by which the Face Amount can be increased or decreased is based
on our rules then in effect.
We reserve the right to limit the number of increases or decreases made under a
policy to no more than one in any 12 month period.
All requests to increase the Face Amount must be applied for on a new
application and accompanied by your policy. All requests will be subject to
evidence of insurability satisfactory to us. Any increase approved by us will be
effective on the Monthly Activity Date shown on the new policy specifications
page, provided that the Monthly Deduction Amount for the first month after the
effective date of the increase is made. We deduct a dollar amount from your
Account Value for an unscheduled increase of the Face Amount of your policy. We
deduct the fee each month for twelve months after the increase. The fee is a per
$1,000 amount that varies by the attained age of the insured.
A decrease in the Face Amount will be effective on the Monthly Activity Date
following the date we receive your request in writing. The remaining Face Amount
must not be less than that specified in our minimum rules then in effect. If
during the surrender charge period, you decrease your Face Amount to an amount
lower than it has ever been, a partial surrender charge will be assessed.
The surrender charge assessed will be:
(a) the surrender charge applicable to the then current policy year, if any;
multiplied by
(b) the percentage described below.
The percentage will be determined by:
(i) subtracting the new Face Amount from the lowest previous Face Amount; and
(ii) dividing that difference by the lowest previous Face Amount.
The surrender charge assessed will be deducted from your Account Value on the
Monthly Activity Date on which the decrease becomes effective. We will also
reduce the surrender charges applicable to future policy years and provide you a
revised schedule of surrender charges.
Charges and Contract Values -- Your contract values decrease due to the
deduction of policy charges. Contract values may increase or decrease depending
on investment performance. Investment expenses and fees reduce the investment
performance of the Sub-Accounts. Fluctuations in your account value may have an
effect on your death benefit. If your contract lapses, the contract terminates
and no death benefit will be paid.
Making Withdrawals From Your Policy
- --------------------------------------------------------------------------------
Surrender -- Provided your policy has a Cash Surrender Value, you may surrender
your policy to us. We will pay you the Cash Surrender Value. Our liability under
the policy will cease as of the date of your request for surrender, or the date
you request to have your policy surrendered, if later.
Withdrawals -- One withdrawal is allowed per calendar month. Withdrawals may be
subject to a surrender charge, see "Surrender Charge." You may request a
withdrawal in writing. The minimum withdrawal allowed is $500. The maximum
partial withdrawal is the Cash Surrender Value, minus $1,000. If the death
benefit option then in effect is Option A or Option C, the Face Amount will be
reduced by the amount of any partial withdrawal. Unless specified, the
withdrawal will be deducted on a pro rata basis from the Fixed Account and the
Sub-Accounts. You may be assessed a charge of up to $10 for each partial
withdrawal.
Loans
- --------------------------------------------------------------------------------
Availability of Loans -- At any time while the policy is in force, you may
borrow against the policy by assigning it as sole security to us. Any new loan
taken together with any existing Indebtedness may not exceed the Cash Surrender
Value on the date we grant a loan. The minimum loan amount that we will allow is
$500.
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Unless you specify otherwise, all loan amounts will be transferred on a pro rata
basis from the Fixed Account and each of the Sub-Accounts to the Loan Account.
If total Indebtedness equals or exceeds the Cash Value on any Monthly Activity
Date, the policy will then go into default. See "Lapse and Reinstatement."
Preferred Indebtedness -- If, at any time after the tenth (10th) policy
anniversary, your Account Value exceeds the total of all premiums paid since
issue, a portion of your Indebtedness may qualify as preferred. Preferred
Indebtedness is charged a lower interest rate than non-preferred Indebtedness,
if any. The maximum amount of preferred Indebtedness is the amount by which the
Account Value exceeds the total premiums paid and is determined on each Monthly
Activity Date.
Loan Repayments -- You can repay all or any part of a loan at any time while
your policy is in force and the insured is alive. The amount of your policy loan
repayment will be deducted from the Loan Account. It will be allocated among the
Fixed Account and Sub-Accounts in the same percentage as premiums are allocated.
Effect of Loans on Account Value -- A loan, whether or not repaid, will have a
permanent effect on your Account Value. This effect occurs because the
investment results of each Sub-Account will apply only to the amount remaining
in such Sub-Accounts. In addition, the rate of interest credited to the Fixed
Account will usually be different than the rate credited to the Loan Account.
The longer a loan is outstanding, the greater the effect on your Account Value
is likely to be. Such effect could be favorable or unfavorable. If the Fixed
Account and the Sub-Accounts earn more than the annual interest rate for funds
held in the Loan Account, your Account Value will not increase as rapidly as it
would have had no loan been made. If the Fixed Account and the Sub-Accounts earn
less than the Loan Account, then your Account Value will be greater than it
would have been had no loan been made. Additionally, if not repaid, the
aggregate amount of the outstanding Indebtedness will reduce the death proceeds
and the Cash Surrender Value otherwise payable.
Credited Interest -- Any amounts in the Loan Account will be credited with
interest at an annual rate of 3.5%.
Interest Charged on Indebtedness -- Interest will accrue daily on the
Indebtedness at the policy loan rate. Because the interest charged on
Indebtedness may exceed the rate credited to the Loan Account, the Indebtedness
may grow faster than the Loan Account. If this happens, any difference between
the value of the Loan Account and the Indebtedness will be transferred on each
Monthly Activity Date from the Fixed Account and Sub-Accounts to the Loan
Account on a pro rata basis.
Policy Loan Rates -- The table below shows the interest rates we will charge on
your Indebtedness.
<TABLE>
<CAPTION>
Interest Rate
Portion of Charged
During Policy Years Indebtedness Equals 3.5% Plus:
<S> <C> <C>
- ----------------------------------------------------------
1-10 All 2%
- ----------------------------------------------------------
11 and later Preferred 0%
Non-Preferred 1%
- ----------------------------------------------------------
</TABLE>
Lapse and Reinstatement
- --------------------------------------------------------------------------------
Lapse and Grace Period -- During the first three policy years, your policy will
be in default on any Monthly Activity Date on which the Account Value less
Indebtedness is not sufficient to cover the Monthly Deduction Amount.
During the fourth policy year and thereafter, your policy will be in default on
any Monthly Activity Date if the Cash Surrender Value is not sufficient to cover
the Monthly Deduction Amount.
A 61-day "Grace Period" will begin from the date of any policy default. Upon
default, we will mail you and any assignee written notice of the amount of
premium that will be required to continue the policy in force. The premium
required will be no greater than the amount required to pay three Monthly
Deduction Amounts as of the date the Policy Grace period began. If the No-Lapse
Guarantee is available and sufficient premium has not been paid by the end of
the Grace Period, the death benefit option will become level, any policy riders
will terminate and any future unscheduled increases are cancelled. If the
insured dies during the Grace Period, we will pay the death proceeds.
No-Lapse Guarantee Default and Grace Period -- On every Monthly Activity Date
during the No-Lapse Guarantee period, we will compare the cumulative premium
payments received, less Indebtedness and less withdrawals, to the Cumulative
No-Lapse Guarantee Premium.
If the cumulative premium payments received, less Indebtedness and less
withdrawals, are less than the Cumulative No-Lapse Guarantee Premium, the
No-Lapse Guarantee will be deemed to be in default as of that Monthly Activity
Date and the No-Lapse Guarantee Grace Period will begin. We will mail you and
any assignee written notice of the amount of premium required to continue the
No-Lapse Guarantee.
The No-Lapse Guarantee will be removed from the policy at the end of the
No-Lapse Guarantee Grace Period if we have not received the amount of premium
required to continue such guarantee.
No-Lapse Guarantee -- The policy will remain in force at the end of the policy
Grace Period as long as the No-Lapse Guarantee is available, as described below.
The No-Lapse Guarantee is available so long as:
(a) the policy is in the No-Lapse Guarantee Period; and
(b) on each Monthly Activity Date during that period, the cumulative premiums
paid into the policy, less Indebtedness
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
and less withdrawals from the policy, equal or exceed an amount known as the
Cumulative No-Lapse Guarantee Premium.
The length of the No-Lapse Guarantee Period is the lesser of 10 years and to age
80. Some states may limit the maximum length of the No-Lapse Guarantee Period.
In Massachusetts, Texas and Florida, the maximum length of the No-Lapse
Guarantee Period is five (5) years. The No-Lapse Guarantee is not available in
New Jersey and Maryland. In Illinois, this provision is referred to as the
"Policy Coverage Protection Benefit." The Cumulative No-Lapse Guarantee Premium
is the premium required to maintain the No-Lapse Guarantee.
If the No-Lapse Guarantee is available and you fail to pay the required premium
as defined in your lapse notice by the end of the policy grace period, the
No-Lapse Guarantee will then go into effect. The policy will remain in force,
however:
(a) all riders will terminate;
(b) the Death Benefit Option becomes Level;
(c) The Death Benefit will equal the current Face Amount; and
(d) Any future scheduled Increases in the Face Amount will be canceled.
As long as the policy remains in default and the No-Lapse Guarantee is
available, the No-Lapse Guarantee will remain in effect on each subsequent
Monthly Activity Dates. You may be required to make premium payments to keep the
No-Lapse Guarantee available, as described above.
If during the No-Lapse Guarantee Period, the Face Amount is increased or
decreased, or riders are added or increased, deleted or reduced, a new monthly
No-Lapse Guarantee Premium will be calculated. We will send you a notice of the
new Monthly No-Lapse Guarantee Premium, which will be used in calculating the
Cumulative No-Lapse Guarantee Premium in subsequent months.
Reinstatement -- Prior to the death of the insured, a policy may be reinstated
prior to the maturity date, provided such policy has not been surrendered for
cash, and provided further that:
1. You request reinstatement in writing within five years after termination;
2. You submit satisfactory evidence of insurability to us;
3. Any Indebtedness existing at the time the policy was terminated is repaid or
carried over to the reinstated policy; and
4. You pay a premium sufficient to cover (a) all Monthly Deduction Amounts that
are due and unpaid during the Grace Period and (b) the sum of Monthly
Deduction Amounts for the next three months after the date the policy is
reinstated.
The Account Value on the reinstatement date equals:
1. The Cash Value at the time of policy termination; plus
2. Net Premiums derived from premiums paid at the time of policy reinstatement;
minus
3. the Monthly Deduction Amounts that were due and unpaid during the Grace
Period; plus
4. the Surrender Charge at the time of policy reinstatement. The Surrender
Charge is based on the duration from the original policy date.
Taxes
- --------------------------------------------------------------------------------
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 Subchapter L of the Internal Revenue Code of 1986, as
amended (the "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
Funds) are reinvested and are taken into account in determining the value of the
Accumulation Units. As a result, such investment income and realized capital
gains are automatically applied to increase reserves under the policy. (See
"Premiums -- Accumulation Unit Values").
Hartford does not expect to incur any federal income tax on the earnings or
realized capital gains attributable to the Separate Account. Based upon this
expectation, 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 such taxes against the Separate Account.
Income Taxation of Policy Benefits -- Generally
For federal income tax purposes, the Policies should be treated as life
insurance contracts under Section 7702 of the Code. The
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
death benefit under a life insurance contract is generally excluded from the
gross income of the beneficiary. Also, a life insurance policy owner is
generally not taxed on increments in the contract 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
requirements.
Hartford also believes that any loan received under a policy will be treated as
Indebtedness of the policy owner, and that no part of any loan under a policy
will constitute income to the policy owner. A surrender or assignment of the
policy may have tax consequences depending upon the circumstances. Policy owners
should consult a qualified tax adviser concerning the effect of such changes.
During the first fifteen policy years, an "income first" rule generally applies
to distributions of cash required to be made under Code Section 7702 because of
a reduction in benefits under the policy.
The Maturity Date Extension Provision allows a policy owner to extend the
Maturity Date to the date of the death of the insured. If the Maturity Date of
the policy is extended, Hartford believes that the policy will continue to be
treated as a life insurance contract for federal income tax purposes after the
scheduled Maturity Date. However, due to the lack of specific guidance on this
issue, the result is not certain. If the policy is not treated as a life
insurance contract for federal income tax purposes after the scheduled Maturity
Date, among other things, the Death Proceeds may be taxable to the recipient.
The policy owner should consult a qualified 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. The seven-pay test provides that premiums cannot be paid at
a rate more rapidly than that allowed by the payment of seven annual premiums
using specified computational rules described in Section 7702A(c). A modified
endowment contract ("MEC") is a life insurance policy that either:
(i) satisfies the Section 7702 definition of life insurance, but fails the
seven-pay test of Section 7702A or (ii) is exchanged for a MEC.
If the policy satisfies the seven-pay test at issuance, distributions and loans
made thereafter will not be subject to the MEC rules, unless the policy is
changed materially. The seven-pay test will be applied anew at any time the
policy undergoes a material change, which includes an increase in the Face
Amount. In addition, if there is a reduction in benefits under the policy within
the first seven years, the seven-pay test is applied as if the policy 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.
A policy that is classified as a MEC 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, if the contract is classified as a MEC then withdrawals from
the contract will be considered first as withdrawals of income and then as a
recovery of premium payments. Thus, withdrawals will be includible in income to
the extent the contract value exceeds the investment in the contract. The amount
of any loan (including unpaid interest thereon) under the contract will be
treated as a withdrawal from the contract for tax purposes. In addition, if the
owner assigns or pledges any portion of the value of a contract (or agrees to
assign or pledge any portion), then such portion will be treated as a withdrawal
from the contract for tax purposes. Taxable withdrawals are subject to an
additional 10% tax, with certain exceptions. The owner's investment in the
contract is increased by the amount includible in income with respect to such
assignment, pledge, or loan, though it is not affected by any other aspect of
the assignment, pledge, or loan (including its release or repayment).
Generally, only distributions and loans made in the first year in which a policy
becomes a MEC, 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.
Before assigning, pledging, or requesting a loan under a policy that is a MEC,
an owner should consult a qualified tax adviser.
All MEC policies that are issued within any calendar year to the same policy
owner by one company or its affiliates are treated as one MEC policy for the
purpose of determining the taxable portion of any loan or distribution.
Hartford has instituted procedures to monitor whether a policy may become
classified as a MEC after issue.
Estate and Generation Skipping Taxes
When the Insured dies, the death proceeds will generally be includible in the
policy owner's estate for purposes of federal estate tax if the Insured owned
the policy. If the policy owner was not the Insured, the fair market value of
the policy would be included in the policy owner's estate upon the policy
owner's death. The policy would not be includible in the Insured's estate if the
Insured neither retained incidents of ownership at death nor had given up
ownership within three years before death.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $650,000 (for 1999) from
the estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the
credit over the next seven years to $1,000,000. In addition, an unlimited
marital deduction may be available for federal estate and gift tax purposes. The
unlimited marital deduction permits the deferral of taxes until the death of the
surviving spouse.
If the policy owner (whether or not he or she is the Insured) transfers
ownership of the policy to someone two or more
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
generations younger, the transfer may be subject to the generation skipping
transfer tax, the taxable amount being the value of the policy. The
generation-skipping transfer tax provisions generally apply to transfers which
would be subject to the gift and estate tax rules. Individuals are generally
allowed an aggregate generation skipping transfer exemption of $1 million as
adjusted for inflation. Because these rules are complex, the policy owner should
consult with a qualified tax adviser for specific information if ownership is
passing to younger generations.
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 contract 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.
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 contract."
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
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 contract for
Federal income tax purposes.
Life Insurance Purchased for Use in Split Dollar Arrangements
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
Federal Income Tax Withholding
If any amounts are deemed to be current taxable income to the policy owner, such
amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
Non-Individual Ownership of Policies
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance contracts. Prospective policy
owners which are not individuals should consult a qualified tax adviser to
determine the potential impact on the purchaser.
Other
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of policy proceeds depend on the
circumstances of each policy owner or beneficiary. A qualified tax adviser
should be consulted to determine the impact of these taxes.
Life Insurance Purchases by Nonresident Aliens and Foreign Corporations
The discussion above provides general information regarding U.S. federal income
tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
Legal Proceedings
- --------------------------------------------------------------------------------
There are no pending material legal proceedings to which the Separate Account is
a party.
Other Matters
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Year 2000
In General -- The Year 2000 issue relates to the ability or inability of
computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments and field offices. Hartford
also has business relationships with numerous third parties that affect
virtually all aspects of Hartford's business, including, without limitation,
suppliers, computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of financial products, many of
which provide date sensitive
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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data to Hartford, and whose operations are important to Hartford's business.
Internal Year 2000 Efforts and Timetable -- Beginning in 1990, Hartford began
working on making its IT systems Year 2000 ready, either through installing new
programs or replacing systems. Since January 1998, Hartford's Year 2000 efforts
have focused on the remaining Year 2000 issues related to IT and non-IT systems
in all of Hartford's business segments. These Year 2000 efforts include the
following five main initiatives: (1) identifying and assessing Year 2000 issues;
(2) taking actions to remediate IT and non-IT systems so that they are Year 2000
ready; (3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying
such remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Hartford substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Hartford has
begun initiative (5) and management currently anticipates that such activity
will continue into the fourth quarter of 1999.
Third Party Year 2000 Efforts and Timetable -- Hartford's Year 2000 efforts
include assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.
Year 2000 Costs -- The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
Risks and Contingency Plans -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its business and Hartford may be exposed to the risk that
issuers of investments held by it will be adversely impacted by Year 2000
issues. Given the uncertain nature of Year 2000 problems that may arise,
especially those related to the readiness of third parties discussed above,
management cannot determine at this time whether the consequences of Year 2000
related problems that could arise will have a material impact on Hartford's
financial condition or results of operations.
Hartford is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the impact
of such problems may be avoided or minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Glossary of Special Terms
Account Value: the total of all amounts in the Fixed Account, Loan Account and
Sub-Accounts.
Cash Surrender Value: the Cash Value less all Indebtedness
Cash Value: the Account Value less any applicable Surrender Charges.
Cumulative No-Lapse Guarantee Premium: the premium required to maintain the
No-Lapse guarantee. Initially, the Cumulative No-Lapse Guarantee Premium is the
No-Lapse Guarantee Premium. On each Monthly Activity Date thereafter, the
Cumulative No-Lapse Guarantee Premium is: (a) the Cumulative No-Lapse Guarantee
Premium on the previous Monthly Activity Date; plus (b) the current No-Lapse
Guarantee Premium.
Face Amount: an amount we use to determine the Death Benefit. On the policy
date, the Face Amount equals the initial Face Amount shown in your policy.
Thereafter, it may change under the terms of the policy.
Fixed Account: part of our general account to which all or a portion of the
Account Value may be allocated.
Funds: the registered open-end management companies in which assets of the
Separate Account may be invested.
Indebtedness: all loans taken on the policy, plus any interest due or accrued
minus any loan repayments.
Loan Account: an account established for any amounts transferred from the Fixed
Account and Sub-Accounts as a result of loans. The amounts in the Loan Account
are credited with interest and are not subject to the investment experience of
any Sub-Accounts.
Monthly Activity Date: the policy date and the same date in each succeeding
month as the policy date. However, whenever the Monthly Activity Date falls on a
date other than a Valuation Day, the Monthly Activity Date will be deemed to be
the next Valuation Day.
Net Premium: the amount of premium credited to Account Value. It is premium paid
minus the sales load and tax charge.
No-Lapse Guarantee Premium: the amount of monthly premium required to keep the
No-Lapse guarantee available, as shown in the policy's specifications page, and
used to calculate the Cumulative No-Lapse Guarantee Premium.
Separate Account: an account which has been established by us to separate the
assets funding the variable benefits for the class of contracts to which the
policy belongs from our other assets.
Sub-Account: the subdivisions of the Separate Account
Surrender Charge: a charge that may be assessed if you surrender your policy or
the Face Amount is decreased.
Valuation Day: the date on which a Sub-Account is valued. This occurs every day
the New York Stock Exchange is open for trading.
We, us, our: Hartford Life and Annuity Insurance Company.
You, your: the owner of the policy.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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Where you can find more information
You can call us at 1-800-231-5453 to ask us questions, or to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this life insurance policy and, like this
prospectus, 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 web
site at http://www.sec.gov.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Statement of Additional Information
Separate Account VL I
This Statement of Additional Information is not a prospectus. We will send you a
prospectus if you write us at P.O. Box 2999, Hartford, CT 06104-2999, or if you
call us at 1-800-231-5453.
DATE OF PROSPECTUS: NOVEMBER 1, 1999
DATE OF STATEMENT OF ADDITIONAL INFORMATION: NOVEMBER 1, 1999
<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 6
- ----------------------------------------------------------------------
Additional Information About Charges 6
- ----------------------------------------------------------------------
Illustration of 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. We are ultimately controlled by The Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
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>
Wendell J. Bossen Vice President, 1995** Vice President (1992-Present), Hartford Life and Accident
Insurance Company; Vice President (1992-Present), Hartford
Life Insurance Company; President (1992-Present),
International Corporate Marketing Group, Inc.
Gregory A. Boyko Senior Vice President, Vice President & Controller (1995-1997), Hartford Life
Director, 1997* Insurance Company; Director (1997-Present); Senior Vice
President (1997-present), Chief Financial Officer &
Treasurer (1997-1998); Vice President & Controller
(1995-1997), Hartford Life and Accident Insurance Company;
Director (1997-Present); Senior Vice President, Chief
Financial Officer & Treasurer (1997-Present); Vice President
and Controller (1995-1997), Hartford Life Insurance Company;
Senior Vice President, Chief Financial Officer & Treasurer
(1997-Present), Hartford Life, Inc.; Chief Financial Officer
(1994-1995), IMG American Life; Senior Vice President
(1992-1994), Connecticut Mutual Life Insurance Company.
Peter W. Cummins Senior Vice President, Vice President (1993-1997), Hartford; Senior Vice President,
1997 (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.
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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<TABLE>
<S> <C> <C>
Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Office (1998-Present),
Accounting Officer, Hartford Life Insurance Company; Vice President & Chief
1998 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 & Senior Vice President (1998-present), Vice President (1998),
Treasurer, 1998 Assistant Vice President (1995-1998), Hartford; Senior Vice
President (1998-Present), Hartford Life and Accident
Insurance Company; Director, Strategic Planning Corporate
Finance (1995-1996), IA Product Development (1994-1995),
Hartford; Various Actuarial Roles (1989-1993) Milliman &
Robertson
Lynda Godkin Senior Vice President, Assistant General Counsel and Secretary (1994-1995),
1997 Hartford; Director (1997-Present); Senior Vice President
General Counsel, 1996 (1997-Present); General Counsel (1996-Present); Corporate
Corporate Secretary, Secretary (1995-Present); Associate General Counsel
1996 (1995-1996); Assistant General Counsel and Secretary
Director, 1997* (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, Vice President (1994-1998), Hartford; Senior Vice President
1998 (1998-Present); Vice President (1993-1997); Assistant Vice
Vice President, 1994 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 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1994-1997), Hartford Life and Accident
Insurance Company; Vice President (1997-Present); Assistant
Vice President (1994-1997), Hartford Life Insurance Company.
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, Senior Vice President (1998-Present); Vice President
1998 (1994-1998), Hartford; Senior Vice President (1998-Present);
Vice President, 1997 Vice President (1994-1997); Regional Vice President
(1991-1994), Hartford Life Insurance Company.
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 5
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<TABLE>
<S> <C> <C>
Thomas M. Marra Executive Vice Senior Vice President (1993-1996); Director of Individual
President, 1996 Annuities (1991-1993), Hartford; Director (1994-Present);
Director, Individual Executive Vice President (1995-Present); Director,
Life Individual Life and Annuity Division (1994-Present); Senior
and Annuity Division, Vice President (1994-1995); Vice President (1989-1994);
1993 Actuary (1987-1997), Hartford Life and Accident Insurance
Director, 1994* Company; Director (1994-Present); Executive Vice President
(1995-Present); Director, Individual Life and Annuity
Division (1994-Present); Senior Vice President (1994-1995);
Vice President (1989-1994); Actuary (1987-1995), Hartford
Life Insurance Company; Executive Vice President, Individual
Life and Annuities (1997-Present), Hartford Life, Inc.
Steven L. Matthieson Vice President, 1984 Director of New Business (1984-1997), Hartford.
Craig R. Raymond Senior Vice President, Vice President (1993-1997); Assistant Vice President
1997 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
Chief Actuary, 1994 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.
Lowndes A. Smith President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive (1981-Present); President (1989-Present); Chief Executive
Officer, 1997 Officer (1997-Present); Chief Operating Officer (1989-1997),
Director, 1985* Hartford Life and Accident Insurance Company; Director
(1981-Present); President (1989-Present), Chief Executive
Officer (1997-Present); Chief Operating Officer (1989-1997),
Hartford Life Insurance Company; Chief Executive Officer and
President and Director (1997-Present), Hartford Life, Inc.
David M. Znamierowski Senior Vice President, Vice President (1997) Senior Vice President (1997) Director,
1997 Risk Management Strategy (1996) Director (1998), Hartford;
Director, 1998 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>
Separate Account VL I -- was established as a separate account under
Connecticut law on June 8, 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
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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 Sub-Accounts.
Experts
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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
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 Kenneth A. McCullum, FSA, MAAA,
Assistant Vice President and Director, Individual Life Product Development, 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 policies and will offer the policies on a continuous basis. HESCO is
controlled by Hartford and is located at the same address 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.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HESCO and any applicable rules or regulations for variable
insurance compensation. The compensation payable may vary with the distribution
agreements with HESCO. Compensation is generally based on premium payments. This
compensation is usually paid from the sales charges described in the Prospectus.
During the first Policy Year, the most common schedule of commission we pay is
70% of the premium paid up to the Target Premium and 2.0% of the premium in
excess of the Target Premium. The Target Premium is an amount used to calculate
sales commissions where the Target Premium amounts vary by the: (1) age; (2)
sex; and (3) insurance class of the Insured. In Policy Years 2 and later, this
schedule allows for a commission of 2% of Premiums paid. A sales representative
may be required to return all or a portion of the commissions paid if the Policy
terminates prior to the Policy's first Policy Anniversary.
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 owner 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>
Lowndes A. Smith President and Chief Executive Officer,
Director
- ------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director
- ------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
- ------------------------------------------------------------------
Donald E. Waggaman, Jr. Treasurer
- ------------------------------------------------------------------
George R. Jay Controller
- ------------------------------------------------------------------
</TABLE>
Additional Information About Charges
- --------------------------------------------------------------------------------
Sales Load -- The front-end sales load is a charge deducted from each premium
payment. The current and maximum sales load in policy year 1 is 8%. The current
sales load after policy year 1 is 4%. The maximum sales load is 8% in policy
years 2 through 20 and 6% thereafter.
The front-end load under the policies may be used to cover expenses related to
the sale and distribution of the policies.
Reduced Charges for Eligible Groups -- Certain of the charges and deductions
described above may be reduced for policies issued in connection with a specific
plan, in accordance with our rules in effect as of the date the application for
a policy is approved. To qualify for such a reduction, a plan must satisfy
certain criteria, e.g., as to size of the plan, expected number of participants
and anticipated premium payment from the plan. Generally, the sales contacts and
effort, administrative costs and mortality cost per policy vary, based on such
factors as the size of the plan, the purposes for which policies are purchased
and certain characteristics of the plan's members. The amount of reduction and
the criteria for qualification will be reflected in the reduced sales effort and
administrative costs resulting from, and the different mortality experience
expected as a result of, sales to qualifying plans. 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 Separate
Account VL I.
Underwriting Procedures -- To purchase a policy you must submit an application
to us. Within limits, you may choose the
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 7
- --------------------------------------------------------------------------------
initial Face Amount. Policies generally will be issued only on the lives of
insureds the ages of 0 and 85 who supply evidence of insurability satisfactory
to us. Acceptance is subject to our underwriting rules and we reserve the right
to reject an application for any reason.
Cost of insurance rates will be determined on each policy anniversary based on
our future expectations of such factors as mortality, expenses, interest,
persistency and taxes. For preferred and standard risks, the cost of insurance
rate will not exceed those based on the 1980 Commissioners' Standard Ordinary
Mortality Table (ALB), Male or Female, Nonsmoker or Smoker Table, age last
birthday (unisex rates may be required in some states). A table of guaranteed
cost of insurance rates per $1,000 will be included in your policy, however, we
reserve the right to use rates less than those shown in the table. Special risk
classes are used when mortality experience in excess of the standard risk
classes is expected. These substandard risks will be charged a higher cost of
insurance rate that will not exceed rates based on a multiple of 1980
Commissioners' Standard Ordinary Mortality Table (ALB), Male or Female,
Nonsmoker or Smoker Table, age last birthday (unisex rates may be required in
some states) plus any flat extra amount assessed. The multiple will be based on
the insured's substandard rating.
No change in the terms or conditions of a policy will be made without your
consent.
Unscheduled Increases in Face Amount -- At any time after the first policy
year, you may request in writing to change the Face Amount. The minimum amount
by which the Face Amount can be increased is based on our rules then in effect.
We reserve the right to limit the number of increases or decreases made under a
policy to no more than one in any 12 month period.
All requests to increase the Face Amount must be applied for on a new
application and accompanied by your policy. All requests will be subject to
evidence of insurability satisfactory to us. Any increase approved by us will be
effective on the Monthly Activity Date shown on the new policy specifications
page, provided that the Monthly Deduction Amount for the first month after the
effective date of the increase is made. Each unscheduled increase in Face Amount
is subject to an increase fee. We deduct the fee each month for twelve months
after the increase. The Face Increase Fee rate is per $1,000 amount and varies
by the attained age of the insured.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Illustration of Death Benefits, Account Values
and Cash Surrender Values
The following tables illustrate the way in which the Policy operates. They show
how the Death Benefit, Account Values and Cash Surrender Values could vary over
an extended period of time, assuming hypothetical gross rates of return equal to
constant after tax annual rates of 0%, 6% and 12%. The illustrations assume a
male, preferred, non-nicotine, age 35, with $250,000 of Face Amount and a
premium of $1,875 paid in all years.
The Death Benefit, Account Value and Cash Surrender Value for a Policy would be
different from those shown if the rates of return averaged 0%, 6% and 12% over a
period of years, but also fluctuated above or below those averages for
individual Policy Years. They would also differ if any Policy loan was made
during the period of time illustrated.
The tables reflect the deductions of current Policy charges and guaranteed
Policy charges for a single gross interest rate. The Death Benefits, Account
Values and Cash Surrender Values would change if current Cost of Insurance
charges change.
The amounts shown for the Death Benefit, Account Value and Cash Surrender Value
as of the end of each Policy Year take into account an average daily charge
equal to an annual charge of 0.71% of the average daily net assets of the Funds
for investment advisory and administrative services fees. The gross annual
investment return rates of 0%, 6% and 12% on the Fund's assets are equal to net
annual investment return rates (net of the 0.71% average daily charge) of
- -0.71%, 5.29% and 11.29%, respectively.
In addition, the Death Benefit, Account Value and Cash Surrender Value as of the
end of each Policy Year take into account the front-end sales load, tax charge,
Cost of Insurance charge, monthly administrative fee, and mortality and expense
risk charge. For purpose of the illustrations in this Statement of Additional
Information, the tax charge is assumed to be an average of 1.75%.
The hypothetical returns shown in the illustrations are without any tax charges
that may be allocable to the Separate Account in the future. In order to produce
after-tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12%, respectively, to cover any tax
charges.
The "Premiums Accumulated at 5% Interest Per Year" column of each illustration
table shows the amount which would accumulate if the initial premium was
invested to earn interest, after taxes, of 5% per year, compounded annually.
Hartford will furnish, upon request, a comparable illustration reflecting the
proposed Insured's age and risk classification, a Policy's proposed Face Amount
or the initial premium requested, and reflecting guaranteed Cost of Insurance
rates. Hartford will also furnish an additional similar illustration reflecting
current Cost of Insurance rates, which may be less than, but never greater than,
the guaranteed Cost of Insurance rates.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION 9
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$250,000 FACE AMOUNT
ISSUE AGE 35 MALE PREFERRED NON-NICOTINE
$1,875 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.29% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
Premiums -------------------------------------------------------------
End of Accumulated Cash Cash
Policy at 5% Interest Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 1,969 1,153 0 250,000 1,121 0 250,000
2 4,036 2,493 523 250,000 2,299 329 250,000
3 6,206 3,972 2,097 250,000 3,598 1,723 250,000
4 8,486 5,602 4,477 250,000 5,029 3,904 250,000
5 10,879 7,403 6,465 250,000 6,608 5,671 250,000
6 13,391 9,387 8,637 250,000 8,347 7,597 250,000
7 16,030 11,574 11,011 250,000 10,261 9,699 250,000
8 18,800 13,982 13,607 250,000 12,366 11,991 250,000
9 21,709 16,639 16,452 250,000 14,688 14,500 250,000
10 24,763 19,554 19,554 250,000 17,225 17,225 250,000
11 27,970 23,323 23,323 250,000 20,467 20,467 250,000
12 31,337 27,481 27,481 250,000 24,019 24,019 250,000
13 34,872 32,066 32,066 250,000 27,907 27,907 250,000
14 38,585 37,125 37,125 250,000 32,165 32,165 250,000
15 42,483 42,709 42,709 250,000 36,834 36,834 250,000
16 46,576 48,873 48,873 250,000 41,951 41,951 250,000
17 50,873 55,688 55,688 250,000 47,571 47,571 250,000
18 55,386 63,222 63,222 250,000 53,745 53,745 250,000
19 60,124 71,556 71,556 250,000 60,531 60,531 250,000
20 65,099 80,784 80,784 250,000 68,001 68,001 250,000
25 93,963 144,365 144,365 250,000 118,857 118,857 250,000
30 130,801 252,223 252,223 307,711 203,679 203,679 250,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and Mortality and Expense Risk rates.
These values reflect Current Front-End Sales Loads of 8% in year 1 and 4%
thereafter, and Guaranteed Front-End Sales Loads of 8% in policy years 1 through
20 and 6% thereafter. The surrender charge effective in any year can be
determined by subtracting the cash surrender value from the account value.
The Death Benefit may, and the Account Values and Cash Surrender Values will
differ if premiums are paid in different amounts or frequencies.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$250,000 FACE AMOUNT
ISSUE AGE 35 MALE PREFERRED NON-NICOTINE
$1,875 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.29% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
Premiums -------------------------------------------------------------
End of Accumulated Cash Cash
Policy at 5% Interest Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 1,969 1,073 0 250,000 1,042 0 250,000
2 4,036 2,258 288 250,000 2,073 103 250,000
3 6,206 3,494 1,619 250,000 3,149 1,274 250,000
4 8,486 4,783 3,658 250,000 4,268 3,143 250,000
5 10,879 6,129 5,191 250,000 5,436 4,499 250,000
6 13,391 7,531 6,781 250,000 6,651 5,901 250,000
7 16,030 8,990 8,428 250,000 7,914 7,352 250,000
8 18,800 10,508 10,133 250,000 9,224 8,849 250,000
9 21,709 12,090 11,903 250,000 10,588 10,401 250,000
10 24,763 13,722 13,722 250,000 11,986 11,986 250,000
11 27,970 15,925 15,925 250,000 13,854 13,854 250,000
12 31,337 18,211 18,211 250,000 15,772 15,772 250,000
13 34,872 20,578 20,578 250,000 17,731 17,731 250,000
14 38,585 23,028 23,028 250,000 19,732 19,732 250,000
15 42,483 25,563 25,563 250,000 21,774 21,774 250,000
16 46,576 28,182 28,182 250,000 23,850 23,850 250,000
17 50,873 30,893 30,893 250,000 25,966 25,966 250,000
18 55,386 33,695 33,695 250,000 28,116 28,116 250,000
19 60,124 36,590 36,590 250,000 30,296 30,296 250,000
20 65,099 39,580 39,580 250,000 32,506 32,506 250,000
25 93,963 55,997 55,997 250,000 43,999 43,999 250,000
30 130,801 74,695 74,695 250,000 54,822 54,822 250,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and Mortality and Expense Risk rates.
These values reflect Current Front-End Sales Loads of 8% in year 1 and 4%
thereafter, and Guaranteed Front-End Sales Loads of 8% in policy years 1 through
20 and 6% thereafter. The surrender charge effective in any year can be
determined by subtracting the cash surrender value from the account value.
The Death Benefit may, and the Account Values and Cash Surrender Values will
differ if premiums are paid in different amounts or frequencies.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$250,000 FACE AMOUNT
ISSUE AGE 35 MALE PREFERRED NON-NICOTINE
$1,875 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-.71% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES*
GUARANTEED CHARGES**
Premiums -------------------------------------------------------------
End of Accumulated Cash Cash
Policy at 5% Interest Account Surrender Death Account Surrender Death
Year Per Year Value Value Benefit Value Value Benefit
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
1 1,969 994 0 250,000 964 0 250,000
2 4,036 2,033 63 250,000 1,858 0 250,000
3 6,206 3,055 1,180 250,000 2,737 862 250,000
4 8,486 4,059 2,934 250,000 3,598 2,473 250,000
5 10,879 5,047 4,110 250,000 4,445 3,508 250,000
6 13,391 6,016 5,266 250,000 5,274 4,524 250,000
7 16,030 6,965 6,403 250,000 6,084 5,521 250,000
8 18,800 7,893 7,518 250,000 6,871 6,496 250,000
9 21,709 8,803 8,615 250,000 7,643 7,455 250,000
10 24,763 9,678 9,678 250,000 8,375 8,375 250,000
11 27,970 10,999 10,999 250,000 9,479 9,479 250,000
12 31,337 12,279 12,279 250,000 10,530 10,530 250,000
13 34,872 13,511 13,511 250,000 11,517 11,517 250,000
14 38,585 14,693 14,693 250,000 12,439 12,439 250,000
15 42,483 15,824 15,824 250,000 13,293 13,293 250,000
16 46,576 16,898 16,898 250,000 14,069 14,069 250,000
17 50,873 17,918 17,918 250,000 14,773 14,773 250,000
18 55,386 18,876 18,876 250,000 15,396 15,396 250,000
19 60,124 19,771 19,771 250,000 15,930 15,930 250,000
20 65,099 20,599 20,599 250,000 16,375 16,375 250,000
25 93,963 23,532 23,532 250,000 17,122 17,122 250,000
30 130,801 23,511 23,511 250,000 13,687 13,687 250,000
- ------------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and Mortality and Expense Risk rates.
These values reflect Current Front-End Sales Loads of 8% in year 1 and 4%
thereafter, and Guaranteed Front-End Sales Loads of 8% in policy years 1 through
20 and 6% thereafter. The surrender charge effective in any year can be
determined by subtracting the cash surrender value from the account value.
The Death Benefit may, and the Account Values and Cash Surrender Values will
differ if premiums are paid in different amounts or frequencies.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-1
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
Index
Statement of Assets and Liabilities as of September 30, 1999
(unaudited)................................................ SA-2
Statement of Changes in Net Assets for the nine months ended
September 30, 1999 (unaudited)............................. SA-6
Statement of Operations for the nine months ended September
30, 1999 (unaudited)....................................... SA-10
</TABLE>
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Money
Bond Fund Stock Fund Market Fund
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
<S> <C> <C> <C>
Assets:
Investments:
Hartford Bond HLS Fund, Inc.
Shares 11,230,227
Cost $11,897,802
Market Value.......................................... $11,802,206 -- --
Hartford Stock HLS Fund, Inc.
Shares 6,291,821
Cost $38,567,594
Market Value.......................................... -- $40,052,805 --
Hartford Money Market HLS Fund, Inc.
Shares 26,224,948
Cost $26,224,948
Market Value.......................................... -- -- $26,224,948
Hartford Advisers HLS Fund, Inc.
Shares 7,513,104
Cost $21,280,928
Market Value.......................................... -- -- --
Hartford Capital Appreciation HLS Fund, Inc.
Shares 5,503,151
Cost $24,996,623
Market Value.......................................... -- -- --
Hartford Mortgage Securities HLS Fund, Inc.
Shares 1,032,670
Cost $1,132,305
Market Value.......................................... -- -- --
Hartford Index HLS Fund, Inc.
Shares 5,983,894
Cost $20,461,301
Market Value.......................................... -- -- --
Hartford International Opportunities HLS Fund, Inc.
Shares 4,699,706
Cost $6,296,698
Market Value.......................................... -- -- --
Hartford Dividend and Growth HLS Fund, Inc.
Shares 8,224,846
Cost $17,047,383
Market Value.......................................... -- -- --
Due from Hartford Life & Annuity Insurance Company...... 73,536 8,606 67,939
Receivable from fund shares sold........................ -- -- --
----------- ----------- -----------
Total Assets............................................ 11,875,742 40,061,411 26,292,887
----------- ----------- -----------
Liabilities:
Due to Hartford Life & Annuity Insurance Company........ -- -- --
Payable for fund shares purchased....................... 73,535 9,008 67,384
----------- ----------- -----------
Total Liabilities....................................... 73,535 9,008 67,384
----------- ----------- -----------
Net Assets (variable life contract liabilities)......... $11,802,207 $40,052,403 $26,225,503
=========== =========== ===========
Units Owned by Participants............................. 8,108,752 12,069,368 19,428,745
Unit Values............................................. $ 1.455490 $ 3.318517 $ 1.349830
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Mortgage International Dividend
Appreciation Securities Index Opportunities and Growth
Advisers Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
Hartford
Bond
HLS
Fund, Inc.
Shares 11,230,227
Cost $11,897,802
Market
Value... -- -- -- -- -- --
Hartford
Stock
HLS
Fund, Inc.
Shares 6,291,821
Cost $38,567,594
Market
Value... -- -- -- -- -- --
Hartford
Money
Market
HLS
Fund, Inc.
Shares 26,224,948
Cost $26,224,948
Market
Value... -- -- -- -- -- --
Hartford
Advisers
HLS
Fund, Inc.
Shares 7,513,104
Cost $21,280,928
Market
Value... $21,105,384 -- -- -- -- --
Hartford
Capital
Appreciation
HLS
Fund, Inc.
Shares 5,503,151
Cost $24,996,623
Market
Value... -- $27,102,132 -- -- -- --
Hartford
Mortgage
Securities
HLS
Fund, Inc.
Shares 1,032,670
Cost $1,132,305
Market
Value... -- -- $1,134,238 -- -- --
Hartford
Index
HLS
Fund, Inc.
Shares 5,983,894
Cost $20,461,301
Market
Value... -- -- -- $22,035,924 -- --
Hartford
International
Opportunities
HLS
Fund, Inc.
Shares 4,699,706
Cost $6,296,698
Market
Value... -- -- -- -- $7,282,956 --
Hartford
Dividend
and
Growth
HLS
Fund, Inc.
Shares 8,224,846
Cost $17,047,383
Market
Value... -- -- -- -- -- $16,852,059
Due
from
Hartford
Life &
Annuity
Insurance
Company... 91,735 45,738 -- 181,170 12,047 35,844
Receivable
from fund
shares
sold... -- -- -- -- -- --
----------- ----------- ---------- ----------- ---------- -----------
Total
Assets... 21,197,119 27,147,870 1,134,238 22,217,094 7,295,003 16,887,903
----------- ----------- ---------- ----------- ---------- -----------
Liabilities:
Due
to
Hartford
Life &
Annuity
Insurance
Company... -- -- 2 -- -- --
Payable
for
fund
shares
purchased... 91,819 45,967 -- 182,334 12,146 36,276
----------- ----------- ---------- ----------- ---------- -----------
Total
Liabilities... 91,819 45,967 2 182,334 12,146 36,276
----------- ----------- ---------- ----------- ---------- -----------
Net
Assets
(variable
life
contract
liabilities)... $21,105,300 $27,101,903 $1,134,236 $22,034,760 $7,282,857 $16,851,627
=========== =========== ========== =========== ========== ===========
Units
Owned
by
Participants... 8,472,852 9,938,213 777,732 7,054,503 3,743,905 7,346,454
Unit
Values... $ 2.490932 $ 2.727040 $ 1.458388 $ 3.123503 $ 1.945257 $ 2.293845
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Fidelity VIP Fidelity VIP
Equity-Income Overseas
Portfolio Portfolio
Sub-Account Sub-Account
------------- ------------
<S> <C> <C>
Assets:
Investments:
Fidelity VIP Equity-Income Portfolio
Shares 385,697
Cost $9,413,385
Market Value.......................................... $9,596,155 --
Fidelity VIP Overseas Portfolio
Shares 135,798
Cost $2,658,089
Market Value.......................................... -- $2,986,189
Fidelity VIP II Asset Manager Portfolio
Shares 94,640
Cost $1,620,066
Market Value.......................................... -- --
Hartford Growth and Income HLS Fund
Shares 1,137,371
Cost $1,439,231
Market Value.......................................... -- --
Hartford International Advisers HLS Fund, Inc.
Shares 113,125
Cost $134,775
Market Value.......................................... -- --
Hartford Small Company HLS Fund, Inc.
Shares 719,691
Cost $1,045,002
Market Value.......................................... -- --
Hartford MidCap HLS Fund, Inc.
Shares 956,283
Cost $1,523,848
Market Value.......................................... -- --
Due from Hartford Life & Annuity Insurance Company...... 31 87
Receivable from fund shares sold........................ -- --
---------- ----------
Total Assets............................................ 9,596,186 2,986,276
---------- ----------
Liabilities:
Due to Hartford Life & Annuity Insurance Company........ -- --
Payable for fund shares purchased....................... 315 167
---------- ----------
Total Liabilities....................................... 315 167
---------- ----------
Net Assets (variable life contract liabilities)......... $9,595,871 $2,986,109
========== ==========
Units Owned by Participants............................. 4,759,962 1,708,505
Unit Values............................................. $ 2.015955 $ 1.747790
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fidelity VIP II
Asset Manager Growth and International Small Company MidCap
Portfolio Income Fund Advisers Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
--------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
Fidelity
VIP
Equity-Income
Portfolio
Shares 385,697
Cost $9,413,385
Market
Value... -- -- -- -- --
Fidelity
VIP
Overseas
Portfolio
Shares 135,798
Cost $2,658,089
Market
Value... -- -- -- -- --
Fidelity
VIP II
Asset
Manager
Portfolio
Shares 94,640
Cost $1,620,066
Market
Value... $1,624,037 -- -- -- --
Hartford
Growth
and
Income
HLS
Fund
Shares 1,137,371
Cost $1,439,231
Market
Value... -- $1,420,881 -- -- --
Hartford
International
Advisers HLS
Fund, Inc.
Shares 113,125
Cost $134,775
Market
Value... -- -- $ 142,156 -- --
Hartford
Small
Company
HLS
Fund, Inc.
Shares 719,691
Cost $1,045,002
Market
Value... -- -- -- $1,159,944 --
Hartford
MidCap
HLS
Fund, Inc.
Shares 956,283
Cost $1,523,848
Market
Value... -- -- -- -- $1,564,179
Due
from
Hartford
Life &
Annuity
Insurance
Company... -- 1,349 238 2,641 --
Receivable
from fund
shares
sold... -- -- -- -- 34,456
---------- ---------- --------- ---------- ----------
Total
Assets... 1,624,037 1,422,230 142,394 1,162,585 1,598,635
---------- ---------- --------- ---------- ----------
Liabilities:
Due
to
Hartford
Life &
Annuity
Insurance
Company... 27 -- -- -- 34,456
Payable
for
fund
shares
purchased... -- 1,356 238 2,633 --
---------- ---------- --------- ---------- ----------
Total
Liabilities... 27 1,356 238 2,633 34,456
---------- ---------- --------- ---------- ----------
Net
Assets
(variable
life
contract
liabilities)... $1,624,010 $1,420,874 $ 142,156 $1,159,952 $1,564,179
========== ========== ========= ========== ==========
Units
Owned
by
Participants... 908,145 1,171,923 129,655 883,349 1,218,178
Unit
Values... $ 1.788272 $ 1.212428 $1.096415 $ 1.313131 $ 1.284032
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Bond Stock
Fund Fund
Sub-Account Sub-Account
----------- -----------
<S> <C> <C>
Operations:
Net investment income (loss).............................. $ 1,797 $ 5,020
Capital gains income...................................... 18,913 2,014,279
Net realized gain (loss) on security transactions......... (1,696) (22,977)
Net unrealized appreciation (depreciation) of investments
during the period........................................ (144,066) (1,128,685)
----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................... (125,052) 867,637
----------- -----------
Unit transactions:
Purchases................................................. 1,750,933 7,871,795
Net transfers............................................. 8,787,864 15,882,597
Surrenders................................................ (246,433) (757,297)
Net loan withdrawals...................................... (69,781) (170,457)
Cost of insurance......................................... (304,828) (1,699,105)
----------- -----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 9,917,755 21,127,533
----------- -----------
Total increase (decrease) in net assets................... 9,792,703 21,995,170
Net assets:
Beginning of period....................................... 2,009,504 18,057,233
----------- -----------
End of period............................................. $11,802,207 $40,052,403
=========== ===========
</TABLE>
Statement of Changes in Net Assets
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Bond Stock
Fund Fund
Sub-Account Sub-Account
----------- -----------
<S> <C> <C>
Operations:
Net investment income (loss).............................. $ 94,731 $ 133,161
Capital gains income...................................... -- 103,525
Net realized gain (loss) on security transactions......... 9,305 (98)
Net unrealized appreciation (depreciation) of investments
during the period........................................ 38,190 2,521,917
---------- -----------
Net increase (decrease) in net assets resulting from
operations............................................... 142,226 2,758,505
---------- -----------
Unit transactions:
Purchases................................................. 683,210 3,513,223
Net transfers............................................. 571,074 10,950,874
Surrenders................................................ (31,817) (207,585)
Net loan withdrawals...................................... (7,510) (178,910)
Cost of insurance......................................... (110,589) (599,935)
---------- -----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 1,104,368 13,477,667
---------- -----------
Total increase (decrease) in net assets................... 1,246,594 16,236,172
Net assets:
Beginning of period....................................... 762,910 1,821,061
---------- -----------
End of period............................................. $2,009,504 $18,057,233
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Mortgage International
Money Market Advisers Appreciation Securities Index Opportunities
Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 724,406 $ 7,248 $ 216 $ -- $ 25,636 $ 5,741
Capital
gains
income... -- 1,057,290 1,292,277 -- 208,905 --
Net
realized
gain
(loss)
on
security
transactions... -- (1,156) 17,757 (2,882) (2,400) 24,859
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... -- (929,210) 594,477 11,781 143,466 809,048
------------ ----------- ----------- ---------- ----------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 724,406 134,172 1,904,727 8,899 375,607 839,648
------------ ----------- ----------- ---------- ----------- ----------
Unit
transactions:
Purchases... 90,218,242 3,887,278 5,860,022 348,440 3,258,851 1,758,602
Net
transfers... (83,560,906) 9,519,610 4,084,799 174,468 8,813,830 (612,101)
Surrenders... (422,668) (415,348) (609,709) (2,833) (385,751) (256,110)
Net
loan
withdrawals... (4,244,844) (4,706) (154,330) (3,752) (100,200) (49,260)
Cost
of
insurance... (2,286,203) (788,862) (1,045,314) (50,647) (789,265) (272,942)
------------ ----------- ----------- ---------- ----------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... (296,379) 12,197,972 8,135,468 465,676 10,797,465 568,189
------------ ----------- ----------- ---------- ----------- ----------
Total
increase
(decrease)
in net
assets... 428,027 12,332,144 10,040,195 474,575 11,173,072 1,407,837
Net
assets:
Beginning
of
period... 25,797,476 8,773,156 17,061,708 659,661 10,861,688 5,875,020
------------ ----------- ----------- ---------- ----------- ----------
End
of
period... $ 26,225,503 $21,105,300 $27,101,903 $1,134,236 $22,034,760 $7,282,857
============ =========== =========== ========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Capital Mortgage International
Money Market Advisers Appreciation Securities Index Opportunities
Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 445,803 $ 169,656 $ 88,276 $ 37,142 $ 84,654 $ 74,346
Capital
gains
income... -- 63,605 250,090 -- 53,874 99,646
Net
realized
gain
(loss)
on
security
transactions... -- 4,573 39,470 (871) (922) (741)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... -- 731,402 1,421,650 (8,524) 1,330,595 214,444
------------ ---------- ----------- -------- ----------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 445,803 969,236 1,799,486 27,747 1,468,201 387,695
------------ ---------- ----------- -------- ----------- ----------
Unit
transactions:
Purchases... 95,425,381 1,751,574 3,507,330 37,276 2,118,676 1,309,658
Net
transfers... (72,076,036) 5,691,550 9,794,312 550,267 6,100,193 3,666,828
Surrenders... (411,072) (489,261) (187,213) (5,125) (112,773) (64,967)
Net
loan
withdrawals... (3,001,765) (71,056) (101,857) (7,079) (209,775) (30,352)
Cost
of
insurance... (1,609,252) (229,420) (489,408) (31,183) (280,128) (165,473)
------------ ---------- ----------- -------- ----------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 18,327,256 6,653,387 12,523,164 544,156 7,616,193 4,715,694
------------ ---------- ----------- -------- ----------- ----------
Total
increase
(decrease)
in net
assets... 18,773,059 7,622,623 14,322,650 571,903 9,084,394 5,103,389
Net
assets:
Beginning
of
period... 7,024,417 1,150,533 2,739,058 87,758 1,777,294 771,631
------------ ---------- ----------- -------- ----------- ----------
End
of
period... $ 25,797,476 $8,773,156 $17,061,708 $659,661 $10,861,688 $5,875,020
============ ========== =========== ======== =========== ==========
</TABLE>
<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Dividend Fidelity VIP
and Growth Equity-Income
Fund Portfolio
Sub-Account Sub-Account
----------- -------------
<S> <C> <C>
Operations:
Net investment income (loss).............................. $ 9,175 $ 105,625
Capital gains income...................................... 444,256 233,487
Net realized gain (loss) on security transactions......... (108) 1,799
Net unrealized appreciation (depreciation) of investments
during the period........................................ (822,218) (199,204)
----------- ----------
Net increase (decrease) in net assets resulting from
operations............................................... (368,895) 141,707
----------- ----------
Unit transactions:
Purchases................................................. 3,453,239 1,828,266
Net transfers............................................. 5,584,884 1,780,300
Surrenders................................................ (404,414) (174,370)
Net loan withdrawals...................................... (89,864) (43,830)
Cost of insurance......................................... (685,054) (360,697)
----------- ----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 7,858,791 3,029,669
----------- ----------
Total increase (decrease) in net assets................... 7,489,896 3,171,376
Net assets:
Beginning of period....................................... 9,361,731 6,424,495
----------- ----------
End of period............................................. $16,851,627 $9,595,871
=========== ==========
</TABLE>
Statement of Changes in Net Assets -- (continued)
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Dividend Fidelity VIP
and Growth Equity-Income
Fund Portfolio
Sub-Account Sub-Account
----------- -------------
<S> <C> <C>
Operations:
Net investment income (loss).............................. $ 137,525 $ 14,647
Capital gains income...................................... 62,013 52,127
Net realized gain (loss) on security transactions......... 1,074 690
Net unrealized appreciation (depreciation) of investments
during the period........................................ 561,829 333,233
---------- ----------
Net increase (decrease) in net assets resulting from
operations............................................... 762,441 400,697
---------- ----------
Unit transactions:
Purchases................................................. 2,087,615 1,026,458
Net transfers............................................. 5,745,039 4,607,992
Surrenders................................................ (95,097) (66,082)
Net loan withdrawals...................................... (128,288) (40,966)
Cost of insurance......................................... (288,431) (150,445)
---------- ----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 7,320,838 5,376,957
---------- ----------
Total increase (decrease) in net assets................... 8,083,279 5,777,654
Net assets:
Beginning of period....................................... 1,278,452 646,841
---------- ----------
End of period............................................. $9,361,731 $6,424,495
========== ==========
</TABLE>
<TABLE>
<C> <S>
* From inception, August 3, 1998, to December 31, 1998
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fidelity VIP Fidelity VIP II
Overseas Asset Manager Growth and International Small Company MidCap
Portfolio Portfolio Income Fund Advisers Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ --------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 58,254 $ 35,234 $ 2 $-- $ -- $ --
Capital
gains
income... 93,957 44,629 2 -- -- 4,339
Net
realized
gain
(loss)
on
security
transactions... 215,671 1,268 (5,880) 356 680 (14,118)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 164,902 (62,229) (24,347) 7,142 91,784 30,917
----------- ---------- ---------- -------- ---------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 532,784 18,902 (30,223) 7,498 92,464 21,138
----------- ---------- ---------- -------- ---------- ----------
Unit
transactions:
Purchases... 1,150,281 370,657 111,837 29,504 134,129 140,257
Net
transfers... (1,935,803) 341,037 1,340,810 122,657 856,572 1,388,849
Surrenders... (109,544) (36,884) (24,885) (18,276) (26,899) (15,086)
Net
loan
withdrawals... (3,458) (10,153) (7,638) -- (445) (3,461)
Cost
of
insurance... (151,558) (49,550) (39,762) (5,230) (32,235) (40,447)
----------- ---------- ---------- -------- ---------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... (1,050,082) 615,107 1,380,362 128,655 931,122 1,470,112
----------- ---------- ---------- -------- ---------- ----------
Total
increase
(decrease)
in net
assets... (517,298) 634,009 1,350,139 136,153 1,023,586 1,491,250
Net
assets:
Beginning
of
period... 3,503,407 990,001 70,735 6,003 136,366 72,929
----------- ---------- ---------- -------- ---------- ----------
End
of
period... $ 2,986,109 $1,624,010 $1,420,874 $142,156 $1,159,952 $1,564,179
=========== ========== ========== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Fidelity VIP Fidelity VIP II
Overseas Asset Manager Growth and International Small Company MidCap
Portfolio Portfolio Income Fund Advisers Fund Fund Fund
Sub-Account Sub-Account Sub-Account* Sub-Account* Sub-Account* Sub-Account*
------------ --------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 7,173 $ 6,411 $ 267 $-- $ -- $--
Capital
gains
income... 21,143 19,232 -- -- -- --
Net
realized
gain
(loss)
on
security
transactions... (6,944) 68 14 5 235 191
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 162,234 58,568 5,996 239 23,159 9,414
---------- -------- ------- ------ -------- -------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 183,606 84,279 6,277 244 23,394 9,605
---------- -------- ------- ------ -------- -------
Unit
transactions:
Purchases... 686,112 229,316 3,992 1,111 4,285 5,632
Net
transfers... 2,484,394 567,140 62,775 4,904 114,315 62,276
Surrenders... (24,102) (8,417) (315) (126) (1,068) (433)
Net
loan
withdrawals... (25,210) 5,364 -- -- (3,356) (3,343)
Cost
of
insurance... (74,993) (21,314) (1,994) (130) (1,204) (808)
---------- -------- ------- ------ -------- -------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 3,046,201 772,089 64,458 5,759 112,972 63,324
---------- -------- ------- ------ -------- -------
Total
increase
(decrease)
in net
assets... 3,229,807 856,368 70,735 6,003 136,366 72,929
Net
assets:
Beginning
of
period... 273,600 133,633 -- -- -- --
---------- -------- ------- ------ -------- -------
End
of
period... $3,503,407 $990,001 $70,735 $6,003 $136,366 $72,929
========== ======== ======= ====== ======== =======
</TABLE>
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Bond Stock
Fund Fund
Sub-Account Sub-Account
----------- -----------
<S> <C> <C>
Investment income:
Dividends................................................. $ 1,797 $ 5,020
--------- -----------
Capital gains income........................................ 18,913 2,014,279
--------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions......... (1,696) (22,977)
Net unrealized appreciation (depreciation) of investments
during the period........................................ (144,066) (1,128,685)
--------- -----------
Net gain (loss) on investments.......................... (145,762) (1,151,662)
--------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. ($143,965) $ 867,637
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Mortgage International Dividend
Money Market Advisers Appreciation Securities Index Opportunities and Growth
Fund Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------ ----------- ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Dividends... $724,406 $ 7,248 $ 216 $ 0 $ 25,636 $ 5,741 $ 9,175
-------- --------- ---------- ------- -------- -------- ---------
Capital
gains
income... -- 1,057,290 1,292,277 -- 208,905 -- 444,256
-------- --------- ---------- ------- -------- -------- ---------
Net
realized
and
unrealized
gain
(loss) on
investments:
Net
realized
gain
(loss)
on
security
transactions... (1,156) 17,757 (2,882) (2,400) 24,859 (108)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... (929,210) 594,477 11,781 143,466 809,048 (822,218)
-------- --------- ---------- ------- -------- -------- ---------
Net
gain
(loss)
on
investments... -- (930,366) 612,234 8,899 141,066 833,907 (822,326)
-------- --------- ---------- ------- -------- -------- ---------
Net
increase
(decrease)
in
net
assets
resulting
from
operations... $724,406 $ 134,172 $1,904,727 $ 8,899 $375,607 $839,648 ($368,895)
======== ========= ========== ======= ======== ======== =========
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Fidelity VIP Fidelity VIP
Equity-Income Overseas
Portfolio Portfolio
Sub-Account Sub-Account
------------- ------------
<S> <C> <C>
Investment income:
Dividends................................................. $ 105,625 $ 58,254
--------- -----------
Capital gains income........................................ 233,487 93,957
--------- -----------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions......... 1,799 215,671
Net unrealized appreciation (depreciation) of investments
during the period........................................ (199,204) 164,902
--------- -----------
Net gain (loss) on investments.......................... (197,405) 380,573
--------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. $ 141,707 $ 532,784
========= ===========
</TABLE>
*From inception, August 3, 1998, to December 31, 1998
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fidelity VIP II
Asset Manager Growth and International Small Company MidCap
Portfolio Income Fund Advisers Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
--------------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Investment
income:
Dividends... $ 35,234 $ 2 $ -- $-- $ --
-------- --------- ---------- ------- --------
Capital
gains
income... 44,629 2 -- -- 4,339
-------- --------- ---------- ------- --------
Net
realized
and
unrealized
gain
(loss) on
investments:
Net
realized
gain
(loss)
on
security
transactions... 1,268 (5,880) 356 680 (14,118)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... (62,229) (24,347) 7,142 91,784 30,917
-------- --------- ---------- ------- --------
Net
gain
(loss)
on
investments... (60,961) (30,227) 7,498 92,464 16,799
-------- --------- ---------- ------- --------
Net
increase
(decrease)
in
net
assets
resulting
from
operations... $ 18,902 ($ 30,225) $ 7,498 $92,464 $ 16,799
======== ========= ========== ======= ========
</TABLE>
*From inception, August 3, 1998, to December 31, 1998
<PAGE>
Hartford Life and Annuity Insurance Company SA-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life and Annuity Insurance Company
Separate Account Variable Life One 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 Separate Account Variable Life One
(Bond Fund, Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation
Fund, Mortgage Securities Fund, Index Fund, International Opportunities Fund,
Dividend and Growth Fund, Fidelity VIP Equity-Income Fund, Fidelity VIP Overseas
Fund, Fidelity VIP II Asset Manager Fund, Growth and Income Fund, International
Advisers Fund, Small Company Fund, and MidCap Fund) (collectively, the Account)
as of December 31, 1998, 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,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1999
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. -
Class IA
Shares 1,859,522
Cost $1,961,050
Market Value....... $2,009,520 -- --
Hartford Stock HLS
Fund, Inc. -
Class IA
Shares 2,751,972
Cost $15,443,622
Market Value....... -- $18,057,519 --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 25,796,373
Cost $25,796,373
Market Value....... -- -- $25,796,373
Hartford Advisers HLS
Fund, Inc. -
Class IA
Shares 2,938,878
Cost $8,019,628
Market Value....... -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc. -
Class IA
Shares 3,585,142
Cost $15,550,948
Market Value....... -- -- --
Hartford Mortgage
Securities HLS
Fund, Inc. -
Class IA
Shares 608,233
Cost $669,509
Market Value....... -- -- --
Hartford Index HLS
Fund, Inc. -
Class IA
Shares 3,042,284
Cost $9,431,173
Market Value....... -- -- --
Hartford
International
Opportunities HLS
Fund, Inc. -
Class IA
Shares 4,336,343
Cost $5,697,915
Market Value....... -- -- --
Hartford Dividend and
Growth HLS
Fund, Inc. -
Class IA
Shares 4,333,353
Cost $8,735,254
Market Value....... -- -- --
Due from Hartford
Life & Annuity
Insurance Company..... -- 36,742 2,586,454
Receivable from fund
shares sold........... 25 -- --
---------- ----------- -----------
Total Assets........... 2,009,545 18,094,261 28,382,827
---------- ----------- -----------
LIABILITIES:
Due to Hartford Life &
Annuity Insurance
Company............... 41 -- --
Payable for fund shares
purchased............. -- 37,028 2,585,351
---------- ----------- -----------
Total Liabilities...... 41 37,028 2,585,351
---------- ----------- -----------
Net Assets (variable
life contract
liabilities).......... $2,009,504 $18,057,233 $25,797,476
========== =========== ===========
Units Owned by
Participants.......... 1,352,909 5,754,715 19,784,827
Unit Values............ $ 1.485321 $ 3.137815 $ 1.303902
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND
APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH
ADVISERS FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- -------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. -
Class IA
Shares 1,859,522
Cost $1,961,050
Market Value....... -- -- -- -- -- --
Hartford Stock HLS
Fund, Inc. -
Class IA
Shares 2,751,972
Cost $15,443,622
Market Value....... -- -- -- -- -- --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 25,796,373
Cost $25,796,373
Market Value....... -- -- -- -- -- --
Hartford Advisers HLS
Fund, Inc. -
Class IA
Shares 2,938,878
Cost $8,019,628
Market Value....... $8,773,294 -- -- -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc. -
Class IA
Shares 3,585,142
Cost $15,550,948
Market Value....... -- $17,061,980 -- -- -- --
Hartford Mortgage
Securities HLS
Fund, Inc. -
Class IA
Shares 608,233
Cost $669,509
Market Value....... -- -- $ 659,660 -- -- --
Hartford Index HLS
Fund, Inc. -
Class IA
Shares 3,042,284
Cost $9,431,173
Market Value....... -- -- -- $10,862,331 -- --
Hartford
International
Opportunities HLS
Fund, Inc. -
Class IA
Shares 4,336,343
Cost $5,697,915
Market Value....... -- -- -- -- $5,875,125 --
Hartford Dividend and
Growth HLS
Fund, Inc. -
Class IA
Shares 4,333,353
Cost $8,735,254
Market Value....... -- -- -- -- -- $9,362,148
Due from Hartford
Life & Annuity
Insurance Company..... 56,120 71,090 1 -- 8,547 61,290
Receivable from fund
shares sold........... -- -- -- 59,331 -- --
---------- ----------- --------- ----------- ---------- ----------
Total Assets........... 8,829,414 17,133,070 659,661 10,921,662 5,883,672 9,423,438
---------- ----------- --------- ----------- ---------- ----------
LIABILITIES:
Due to Hartford Life &
Annuity Insurance
Company............... -- -- -- 59,974 -- --
Payable for fund shares
purchased............. 56,258 71,362 -- -- 8,652 61,707
---------- ----------- --------- ----------- ---------- ----------
Total Liabilities...... 56,258 71,362 -- 59,974 8,652 61,707
---------- ----------- --------- ----------- ---------- ----------
Net Assets (variable
life contract
liabilities).......... $8,773,156 $17,061,708 $ 659,661 $10,861,688 $5,875,020 $9,361,731
========== =========== ========= =========== ========== ==========
Units Owned by
Participants.......... 3,614,682 6,917,191 458,077 3,651,309 3,457,586 4,023,410
Unit Values............ $ 2.427089 $ 2.466566 $1.440067 $ 2.974738 $ 1.699168 $ 2.326815
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP
EQUITY-INCOME OVERSEAS
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
--------------- -------------
<S> <C> <C>
ASSETS:
Investments:
Fidelity VIP
Equity-Income
Portfolio
Shares 252,738
Cost $6,042,615
Market Value....... $6,424,588 --
Fidelity VIP Overseas
Portfolio
Shares 174,735
Cost $3,340,244
Market Value....... -- $3,503,442
Fidelity VIP II Asset
Manager Portfolio
Shares 54,516
Cost $923,808
Market Value....... -- --
Hartford Growth and
Income HLS Fund -
Class IA
Shares 59,644
Cost $64,739
Market Value....... -- --
Hartford
International
Advisers HLS
Fund, Inc. -
Class IA
Shares 5,199
Cost $5,764
Market Value....... -- --
Hartford Small
Company HLS
Fund, Inc. -
Class IA
Shares 103,221
Cost $113,208
Market Value....... -- --
Hartford MidCap HLS
Fund, Inc. -
Class IA
Shares 50,672
Cost $63,516
Market Value....... -- --
Due from Hartford
Life & Annuity
Insurance Company..... 103,278 2,774
Receivable from fund
shares sold........... -- --
---------- ----------
Total Assets........... 6,527,866 3,506,216
---------- ----------
LIABILITIES:
Due to Hartford Life &
Annuity Insurance
Company............... -- --
Payable for fund shares
purchased............. 103,371 2,809
---------- ----------
Total Liabilities...... 103,371 2,809
---------- ----------
Net Assets (variable
life contract
liabilities).......... $6,424,495 $3,503,407
========== ==========
Units Owned by
Participants.......... 3,279,115 2,291,066
Unit Values............ $ 1.959216 $ 1.529160
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY VIP II
ASSET MANAGER GROWTH AND INTERNATIONAL SMALL COMPANY MIDCAP
PORTFOLIO INCOME FUND ADVISERS FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Fidelity VIP
Equity-Income
Portfolio
Shares 252,738
Cost $6,042,615
Market Value....... -- -- -- -- --
Fidelity VIP Overseas
Portfolio
Shares 174,735
Cost $3,340,244
Market Value....... -- -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 54,516
Cost $923,808
Market Value....... $ 990,008 -- -- -- --
Hartford Growth and
Income HLS Fund -
Class IA
Shares 59,644
Cost $64,739
Market Value....... -- $ 70,735 -- -- --
Hartford
International
Advisers HLS
Fund, Inc. -
Class IA
Shares 5,199
Cost $5,764
Market Value....... -- -- $ 6,003 -- --
Hartford Small
Company HLS
Fund, Inc. -
Class IA
Shares 103,221
Cost $113,208
Market Value....... -- -- -- $ 136,367 --
Hartford MidCap HLS
Fund, Inc. -
Class IA
Shares 50,672
Cost $63,516
Market Value....... -- -- -- -- $ 72,930
Due from Hartford
Life & Annuity
Insurance Company..... 57 -- -- -- --
Receivable from fund
shares sold........... -- -- -- 3,353 3,343
--------- --------- --------- --------- ---------
Total Assets........... 990,065 70,735 6,003 139,720 76,273
--------- --------- --------- --------- ---------
LIABILITIES:
Due to Hartford Life &
Annuity Insurance
Company............... -- -- -- 3,354 3,344
Payable for fund shares
purchased............. 64 -- -- -- --
--------- --------- --------- --------- ---------
Total Liabilities...... 64 -- -- 3,354 3,344
--------- --------- --------- --------- ---------
Net Assets (variable
life contract
liabilities).......... $ 990,001 $ 70,735 $ 6,003 $ 136,366 $ 72,929
========= ========= ========= ========= =========
Units Owned by
Participants.......... 565,270 61,456 5,958 126,692 66,076
Unit Values............ $1.751379 $1.150984 $1.007480 $1.076363 $1.103726
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 94,731 $ 133,161
-------- ----------
CAPITAL GAINS INCOME..... -- 103,525
-------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 9,305 (98)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 38,190 2,521,917
-------- ----------
Net gain (loss) on
investments......... 47,495 2,521,819
-------- ----------
Net increase
(decrease) in net
assets resulting
from operations..... $142,226 $2,758,505
======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $445,803 $169,656 $ 88,276 $37,142 $ 84,654 $ 74,346
-------- -------- ---------- ------- ---------- --------
CAPITAL GAINS INCOME..... -- 63,605 250,090 -- 53,874 99,646
-------- -------- ---------- ------- ---------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 4,573 39,470 (871) (922) (741)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 731,402 1,421,650 (8,524) 1,330,595 214,444
-------- -------- ---------- ------- ---------- --------
Net gain (loss) on
investments......... -- 735,975 1,461,120 (9,395) 1,329,673 213,703
-------- -------- ---------- ------- ---------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $445,803 $969,236 $1,799,486 $27,747 $1,468,201 $387,695
======== ======== ========== ======= ========== ========
<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
-------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $137,525
--------
CAPITAL GAINS INCOME..... 62,013
--------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 1,074
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 561,829
--------
Net gain (loss) on
investments......... 562,903
--------
Net increase
(decrease) in net
assets resulting
from operations..... $762,441
========
</TABLE>
<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP
EQUITY-INCOME OVERSEAS
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ 14,647 $ 7,173
-------- --------
CAPITAL GAINS INCOME........................................ 52,127 21,143
-------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions......... 690 (6,944)
Net unrealized appreciation (depreciation) of investments
during the period........................................ 333,233 162,234
-------- --------
Net gain (loss) on investments.......................... 333,923 155,290
-------- --------
Net increase (decrease) in net assets resulting from
operations............................................. $400,697 $183,606
======== ========
</TABLE>
* From inception, August 3, 1998, to December 31, 1998
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY VIP II
ASSET MANAGER GROWTH AND INTERNATIONAL SMALL COMPANY MIDCAP
PORTFOLIO INCOME FUND ADVISERS FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
--------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT
INCOME:
Dividends... $ 6,411 $ 267 -$- $-- $--
------- ------ ----- ------- ------
CAPITAL
GAINS
INCOME... 19,232 -- -- -- --
------- ------ ----- ------- ------
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS) ON
INVESTMENTS:
Net
realized
gain
(loss)
on
security
transactions... 68 14 5 235 191
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 58,568 5,996 239 23,159 9,414
------- ------ ----- ------- ------
Net
gain
(loss)
on
investments... 58,636 6,010 244 23,394 9,605
------- ------ ----- ------- ------
Net
increase
(decrease)
in
net
assets
resulting
from
operations... $84,279 $6,277 $244 $23,394 $9,605
======= ====== ===== ======= ======
</TABLE>
* From inception, August 3, 1998, to December 31, 1998
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 94,731 $ 133,161
Capital gains income...................................... -- 103,525
Net realized gain (loss) on security transactions......... 9,305 (98)
Net unrealized appreciation (depreciation) of investments
during the period........................................ 38,190 2,521,917
---------- -----------
Net increase (decrease) in net assets resulting from
operations............................................... 142,226 2,758,505
---------- -----------
UNIT TRANSACTIONS:
Purchases................................................. 683,210 3,513,223
Net transfers............................................. 571,074 10,950,874
Surrenders for benefit payments and fees.................. (31,817) (207,585)
Net loan activity......................................... (7,510) (178,910)
Cost of insurance......................................... (110,589) (599,935)
---------- -----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 1,104,368 13,477,667
---------- -----------
Net increase (decrease) in net assets..................... 1,246,594 16,236,172
NET ASSETS:
Beginning of period....................................... 762,910 1,821,061
---------- -----------
End of period............................................. $2,009,504 $18,057,233
========== ===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 26,909 $ 11,815
Capital gains income...................................... -- 558
Net realized gain (loss) on security transactions......... 148 (109)
Net unrealized appreciation (depreciation) of investments
during the period........................................ 10,267 91,919
-------- ----------
Net increase (decrease) in net assets resulting from
operations............................................... 37,324 104,183
-------- ----------
UNIT TRANSACTIONS:
Purchases................................................. 58,303 110,273
Net transfers............................................. 674,390 1,673,468
Surrenders for benefit payments and fees.................. (6,137) (12,105)
Net loan activity......................................... 11,825 (221)
Cost of insurance......................................... (13,939) (55,771)
-------- ----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 724,442 1,715,644
-------- ----------
Net increase (decrease) in net assets..................... 761,766 1,819,827
NET ASSETS:
Beginning of period....................................... 1,144 1,234
-------- ----------
End of period............................................. $762,910 $1,821,061
======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ 445,803 $ 169,656 $ 88,276 $ 37,142 $ 84,654 $ 74,346
Capital
gains
income... -- 63,605 250,090 -- 53,874 99,646
Net
realized
gain
(loss)
on
security
transactions... -- 4,573 39,470 (871) (922) (741)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... -- 731,402 1,421,650 (8,524) 1,330,595 214,444
------------ ---------- ----------- -------- ----------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 445,803 969,236 1,799,486 27,747 1,468,201 387,695
------------ ---------- ----------- -------- ----------- ----------
UNIT
TRANSACTIONS:
Purchases... 95,425,381 1,751,574 3,507,330 37,276 2,118,676 1,309,658
Net
transfers... (72,076,036) 5,691,550 9,794,312 550,267 6,100,193 3,666,828
Surrenders
for
benefit
payments
and
fees... (411,072) (489,261) (187,213) (5,125) (112,773) (64,967)
Net
loan
activity... (3,001,765) (71,056) (101,857) (7,079) (209,775) (30,352)
Cost
of
insurance... (1,609,252) (229,420) (489,408) (31,183) (280,128) (165,473)
------------ ---------- ----------- -------- ----------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 18,327,256 6,653,387 12,523,164 544,156 7,616,193 4,715,694
------------ ---------- ----------- -------- ----------- ----------
Net
increase
(decrease)
in net
assets... 18,773,059 7,622,623 14,322,650 571,903 9,084,394 5,103,389
NET
ASSETS:
Beginning
of
period... 7,024,417 1,150,533 2,739,058 87,758 1,777,294 771,631
------------ ---------- ----------- -------- ----------- ----------
End
of
period... $ 25,797,476 $8,773,156 $17,061,708 $659,661 $10,861,688 $5,875,020
============ ========== =========== ======== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ 105,975 $ 16,534 $ 9,163 $ 3,444 $ 14,934 $ 6,510
Capital
gains
income... -- 584 10,410 -- 4,291 14,471
Net
realized
gain
(loss)
on
security
transactions... -- (232) 716 28 463 (828)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... -- 22,216 89,337 (1,336) 100,497 (37,302)
------------ ---------- ---------- ------- ---------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 105,975 39,102 109,626 2,136 120,185 (17,149)
------------ ---------- ---------- ------- ---------- ----------
UNIT
TRANSACTIONS:
Purchases... 26,348,230 17,300 308,974 1,853 68,957 176,177
Net
transfers... (17,219,898) 1,125,736 2,397,785 76,873 1,641,927 650,101
Surrenders
for
benefit
payments
and
fees... (76,531) (8,960) (23,361) (640) (13,070) (15,973)
Net
loan
activity... (2,085,251) (2,510) 6,968 7,850 (7,681) 88
Cost
of
insurance... (460,124) (21,190) (63,644) (1,339) (34,163) (25,871)
------------ ---------- ---------- ------- ---------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 6,506,426 1,110,376 2,626,722 84,597 1,655,970 784,522
------------ ---------- ---------- ------- ---------- ----------
Net
increase
(decrease)
in net
assets... 6,612,401 1,149,478 2,736,348 86,733 1,776,155 767,373
NET
ASSETS:
Beginning
of
period... 412,016 1,055 2,710 1,025 1,139 4,258
------------ ---------- ---------- ------- ---------- ----------
End
of
period... $ 7,024,417 $1,150,533 $2,739,058 $87,758 $1,777,294 $ 771,631
============ ========== ========== ======= ========== ==========
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
DIVIDEND FIDELITY VIP
AND GROWTH EQUITY-INCOME
FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 137,525 $ 14,647
Capital gains income...................................... 62,013 52,127
Net realized gain (loss) on security transactions......... 1,074 690
Net unrealized appreciation (depreciation) of investments
during the period........................................ 561,829 333,233
---------- ----------
Net increase (decrease) in net assets resulting from
operations............................................... 762,441 400,697
---------- ----------
UNIT TRANSACTIONS:
Purchases................................................. 2,087,615 1,026,458
Net transfers............................................. 5,745,039 4,607,992
Surrenders for benefit payments and fees.................. (95,097) (66,082)
Net loan activity......................................... (128,288) (40,966)
Cost of insurance......................................... (288,431) (150,445)
---------- ----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 7,320,838 5,376,957
---------- ----------
Net increase (decrease) in net assets..................... 8,083,279 5,777,654
NET ASSETS:
Beginning of period....................................... 1,278,452 646,841
---------- ----------
End of period............................................. $9,361,731 $6,424,495
========== ==========
</TABLE>
<TABLE>
<C> <S>
* From inception, August 3, 1998, to December 31, 1998
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
DIVIDEND FIDELITY VIP
AND GROWTH EQUITY-INCOME
FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 12,804 $ 374
Capital gains income...................................... 815 1,882
Net realized gain (loss) on security transactions......... 360 1,671
Net unrealized appreciation (depreciation) of investments
during the period........................................ 65,053 48,686
---------- --------
Net increase (decrease) in net assets resulting from
operations............................................... 79,032 52,613
---------- --------
UNIT TRANSACTIONS:
Purchases................................................. 62,971 43,181
Net transfers............................................. 1,157,823 579,483
Surrenders for benefit payments and fees.................. (7,195) (11,517)
Net loan activity......................................... 3,918 (3,459)
Cost of insurance......................................... (22,528) (15,244)
---------- --------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 1,194,989 592,444
---------- --------
Net increase (decrease) in net assets..................... 1,274,021 645,057
NET ASSETS:
Beginning of period....................................... 4,431 1,784
---------- --------
End of period............................................. $1,278,452 $646,841
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP II
OVERSEAS ASSET MANAGER GROWTH AND INTERNATIONAL SMALL COMPANY MIDCAP
PORTFOLIO PORTFOLIO INCOME FUND ADVISERS FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------ --------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ 7,173 $ 6,411 $ 267 $-- $ -- $--
Capital
gains
income... 21,143 19,232 -- -- -- --
Net
realized
gain
(loss)
on
security
transactions... (6,944) 68 14 5 235 191
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 162,234 58,568 5,996 239 23,159 9,414
---------- -------- ------- ------ -------- -------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 183,606 84,279 6,277 244 23,394 9,605
---------- -------- ------- ------ -------- -------
UNIT
TRANSACTIONS:
Purchases... 686,112 229,316 3,992 1,111 4,285 5,632
Net
transfers... 2,484,394 567,140 62,775 4,904 114,315 62,276
Surrenders
for
benefit
payments
and
fees... (24,102) (8,417) (315) (126) (1,068) (433)
Net
loan
activity... (25,210) 5,364 -- -- (3,356) (3,343)
Cost
of
insurance... (74,993) (21,314) (1,994) (130) (1,204) (808)
---------- -------- ------- ------ -------- -------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 3,046,201 772,089 64,458 5,759 112,972 63,324
---------- -------- ------- ------ -------- -------
Net
increase
(decrease)
in net
assets... 3,229,807 856,368 70,735 6,003 136,366 72,929
NET
ASSETS:
Beginning
of
period... 273,600 133,633 -- -- -- --
---------- -------- ------- ------ -------- -------
End
of
period... $3,503,407 $990,001 $70,735 $6,003 $136,366 $72,929
========== ======== ======= ====== ======== =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP II
OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ---------------
<S> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ 373 $ 66
Capital
gains
income... 1,481 165
Net
realized
gain
(loss)
on
security
transactions... (138) 28
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 919 7,582
-------- --------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 2,635 7,841
-------- --------
UNIT
TRANSACTIONS:
Purchases... 22,743 8,385
Net
transfers... 257,320 121,381
Surrenders
for
benefit
payments
and
fees... (3,860) (1,502)
Net
loan
activity... (12) --
Cost
of
insurance... (6,270) (3,522)
-------- --------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 269,921 124,742
-------- --------
Net
increase
(decrease)
in net
assets... 272,556 132,583
NET
ASSETS:
Beginning
of
period... 1,044 1,050
-------- --------
End
of
period... $273,600 $133,633
======== ========
</TABLE>
<PAGE>
SA-14 Hartford Life and Annuity Insurance Company
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION:
Separate Account VL I (the Account) is 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. Both the Company and the Account
are subject to supervision and regulation by the Department of Insurance of the
State of Connecticut and the SEC. The Account invests deposits by variable life
contractholders of the Company in various mutual funds (the Funds), as directed
by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains 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, 1998.
c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
d) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:
a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE -- On the policy date and
on each subsequent monthly activity date, the Company will deduct from the
Account an amount to cover mortality and expense risk charges, cost of
insurance, administrative charges and any other benefits provided by the rider.
These charges, which may vary from month to month in accordance with the terms
of the contracts, are deducted through termination of units of interest from
applicable contract owners' accounts.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-1
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
Index
Statement of Assets and Liabilities as of September 30, 1999
(unaudited)................................................ SA-2
Statement of Changes in Net Assets for the nine months ended
September 30, 1999 (unaudited)............................. SA-6
Statement of Operations for the nine months ended September
30, 1999 (unaudited)....................................... SA-10
</TABLE>
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Global Diversified
Voyager Growth Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
<S> <C> <C> <C>
Assets
Investments:
Putnam VT Voyager Fund
Shares 441,542
Cost $18,894,830
Market Value:......................................... $20,690,675 -- --
Putnam VT Global Growth Fund
Shares 549,663
Cost $10,242,996
Market Value:......................................... -- $11,323,065 --
Putnam VT Diversified Income Fund
Shares 100,620
Cost $1,042,105
Market Value:......................................... -- -- $977,023
Putnam VT Growth and Income Fund
Shares 549,019
Cost $15,326,634
Market Value:......................................... -- -- --
Putnam VT Global Asset Allocation Fund
Shares 92,620
Cost $1,689,038
Market Value:......................................... -- -- --
Putnam VT High Yield Fund
Shares 683,040
Cost $7,806,642
Market Value:......................................... -- -- --
Putnam VT Income Fund
Shares 221,265
Cost $2,904,267
Market Value:......................................... -- -- --
Putnam VT New Opportunities Fund
Shares 374,211
Cost $8,827,699
Market Value:......................................... -- -- --
Putnam VT Money Market Fund
Shares 727,189
Cost $727,188
Market Value:......................................... -- -- --
Putnam VT Utilities Growth & Income Fund
Shares 129,198
Cost $2,159,842
Market Value:......................................... -- -- --
Due from Hartford Life & Annuity Insurance Company...... 68,699 31,781 --
Receivable from fund shares sold........................ -- -- --
----------- ----------- --------
Total Assets............................................ 20,759,374 11,354,846 977,023
----------- ----------- --------
Liabilities
Due to Hartford Life & Annuity Insurance Company........ -- -- --
Payable for fund shares purchased....................... 68,160 32,050 --
----------- ----------- --------
Total Liabilities....................................... 68,160 32,050 --
----------- ----------- --------
Net Assets (variable life contract liabilities)......... $20,691,214 $11,322,796 $977,023
=========== =========== ========
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Utilities
Growth Global Asset New Money Growth
and Income Allocation High Yield Income Opportunities Market and Income
Fund Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ------------ ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Putnam
VT
Voyager
Fund
Shares 441,542
Cost $18,894,830
Market
Value:... -- -- -- -- -- -- --
Putnam
VT
Global
Growth
Fund
Shares 549,663
Cost $10,242,996
Market
Value:... -- -- -- -- -- -- --
Putnam
VT
Diversified
Income Fund
Shares 100,620
Cost $1,042,105
Market
Value:... -- -- -- -- -- -- --
Putnam
VT
Growth
and
Income
Fund
Shares 549,019
Cost $15,326,634
Market
Value:... $14,395,284 -- -- -- -- -- --
Putnam
VT
Global
Asset
Allocation
Fund
Shares 92,620
Cost $1,689,038
Market
Value:... -- $1,647,702 -- -- -- -- --
Putnam
VT
High
Yield
Fund
Shares 683,040
Cost $7,806,642
Market
Value:... -- -- $7,301,699 -- -- -- --
Putnam
VT
Income
Fund
Shares 221,265
Cost $2,904,267
Market
Value:... -- -- -- $2,776,874 -- -- --
Putnam
VT
New
Opportunities
Fund
Shares 374,211
Cost $8,827,699
Market
Value:... -- -- -- -- $10,900,753 -- --
Putnam
VT
Money
Market
Fund
Shares 727,189
Cost $727,188
Market
Value:... -- -- -- -- -- $727,188 --
Putnam
VT
Utilities
Growth &
Income
Fund
Shares 129,198
Cost $2,159,842
Market
Value:... -- -- -- -- -- -- $2,200,242
Due
from
Hartford
Life &
Annuity
Insurance
Company... -- 52 11,199 2 5,895 12,411 15
Receivable
from fund
shares
sold... 440,076 -- -- -- -- -- --
----------- ---------- ---------- ---------- ----------- -------- ----------
Total
Assets... 14,835,360 1,647,754 7,312,898 2,776,876 10,906,648 739,599 2,200,257
----------- ---------- ---------- ---------- ----------- -------- ----------
Liabilities
Due
to
Hartford
Life &
Annuity
Insurance
Company... 440,524 -- -- -- -- -- --
Payable
for
fund
shares
purchased... -- 13 11,243 -- 5,956 12,393 --
----------- ---------- ---------- ---------- ----------- -------- ----------
Total
Liabilities... 440,524 13 11,243 -- 5,956 12,393 --
----------- ---------- ---------- ---------- ----------- -------- ----------
Net
Assets
(variable
life
contract
liabilities)... $14,394,836 $1,647,741 $7,301,655 $2,776,876 $10,900,692 $727,206 $2,200,257
=========== ========== ========== ========== =========== ======== ==========
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
International
Asia Pacific International Growth
Growth Growth and Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
------------ ------------- -------------
<S> <C> <C> <C>
Assets
Investments:
Putnam VT Asia Pacific Growth Fund
Shares 35,401
Cost $409,833
Market Value:......................................... $431,893 -- --
Putnam VT International Growth Fund
Shares 64,638
Cost $928,652
Market Value:......................................... -- $1,033,559 --
Putnam VT International Growth and Income Fund
Shares 549,019
Cost $442,499
Market Value:......................................... -- -- $477,872
Putnam VT International New Opportunities Fund
Shares 374,211
Cost $217,618
Market Value:......................................... -- -- --
Putnam VT New Value Fund
Shares 61,366
Cost $764,005
Market Value:......................................... -- -- --
Putnam VT Vista Fund
Shares 34,176
Cost $532,842
Market Value:......................................... -- -- --
Putnam VT George Putnam Fund of Boston
Shares 40,722
Cost $426,658
Market Value:......................................... -- -- --
Putnam VT OTC & Emerging Growth Fund
Shares 27,391
Cost $299,010
Market Value:......................................... -- -- --
Putnam VT Investors Fund
Shares 186,715
Cost $2,268,142
Market Value:......................................... -- -- --
Putnam VT Health Sciences Fund
Shares 114,626
Cost $1,181,510
Market Value:......................................... -- -- --
Due from Hartford Life & Annuity Insurance Company...... -- -- 1,183
Receivable from fund shares sold........................ -- 38,695 --
-------- ---------- --------
Total Assets............................................ 431,893 1,072,254 479,055
-------- ---------- --------
Liabilities
Due to Hartford Life & Annuity Insurance Company........ 9 38,843 --
Payable for fund shares purchased....................... -- -- 1,207
-------- ---------- --------
Total Liabilities....................................... 9 38,843 1,207
-------- ---------- --------
Net Assets (variable life contract liabilities)......... $431,884 $1,033,411 $477,848
======== ========== ========
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International
New New The George OTC & Health
Opportunities Value Vista Putnam Fund Emerging Growth Investors Sciences
Fund Fund Fund of Boston Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ----------- ----------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Putnam
VT
Asia
Pacific
Growth
Fund
Shares 35,401
Cost $409,833
Market
Value:... -- -- -- -- -- -- --
Putnam
VT
International
Growth Fund
Shares 64,638
Cost $928,652
Market
Value:... -- -- -- -- -- -- --
Putnam
VT
International
Growth and
Income Fund
Shares 549,019
Cost $442,499
Market
Value:... -- -- -- -- -- -- --
Putnam
VT
International
New
Opportunities
Fund
Shares 374,211
Cost $217,618
Market
Value:... $241,588 -- -- -- -- -- --
Putnam
VT
New
Value
Fund
Shares 61,366
Cost $764,005
Market
Value:... -- $716,142 -- -- -- -- --
Putnam
VT
Vista
Fund
Shares 34,176
Cost $532,842
Market
Value:... -- -- $544,428 -- -- -- --
Putnam
VT
George
Putnam
Fund
of
Boston
Shares 40,722
Cost $426,658
Market
Value:... -- -- -- $412,925 -- -- --
Putnam
VT
OTC &
Emerging
Growth
Fund
Shares 27,391
Cost $299,010
Market
Value:... -- -- -- -- $355,259 -- --
Putnam
VT
Investors
Fund
Shares 186,715
Cost $2,268,142
Market
Value:... -- -- -- -- -- $2,270,460 --
Putnam
VT
Health
Sciences
Fund
Shares 114,626
Cost $1,181,510
Market
Value:... -- -- -- -- -- -- $1,102,704
Due
from
Hartford
Life &
Annuity
Insurance
Company... 3 146,176 24,630 3,005 1,249 146,310 100
Receivable
from fund
shares
sold... -- -- -- -- -- -- --
-------- -------- -------- -------- -------- ---------- ----------
Total
Assets... 241,591 862,318 569,058 415,930 356,508 2,416,770 1,102,804
-------- -------- -------- -------- -------- ---------- ----------
Liabilities
Due
to
Hartford
Life &
Annuity
Insurance
Company... -- -- -- -- -- -- --
Payable
for
fund
shares
purchased... -- 146,176 24,627 3,006 1,300 146,289 103
-------- -------- -------- -------- -------- ---------- ----------
Total
Liabilities... -- 146,176 24,627 3,006 1,300 146,289 103
-------- -------- -------- -------- -------- ---------- ----------
Net
Assets
(variable
life
contract
liabilities)... $241,591 $716,142 $544,431 $412,924 $355,208 $2,270,481 $1,102,701
======== ======== ======== ======== ======== ========== ==========
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Global Diversified
Voyager Growth Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
<S> <C> <C> <C>
Operations:
Net investment income (loss).............................. $ 15,233 $ 38,016 $ 53,173
Capital gains income...................................... 1,221,590 791,631 --
Net realized gain (loss) on security transactions......... (43,619) (3,512) 346
Net unrealized appreciation (depreciation) of investments
during the period........................................ 341,131 254,447 (57,486)
----------- ----------- --------
Net increase (decrease) in net assets resulting from
operations............................................... 1,534,335 1,080,582 (3,967)
----------- ----------- --------
Unit transactions:
Purchases................................................. 3,663,150 2,578,071 130,548
Net transfers............................................. 6,469,288 864,691 205,448
Surrenders................................................ (377,240) (321,188) (11,656)
Loan withdrawals.......................................... (116,705) (52,276) (60)
Cost of insurance......................................... (590,487) (344,174) (30,123)
----------- ----------- --------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 9,048,006 2,725,124 294,157
----------- ----------- --------
Total increase (decrease) in net assets................... 10,582,341 3,805,706 290,190
Net Assets:
Beginning of period....................................... 10,108,873 7,517,090 686,833
----------- ----------- --------
End of period............................................. $20,691,214 $11,322,796 $977,023
=========== =========== ========
</TABLE>
Statement of Changes in Net Assets
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Global Diversified
Voyager Growth Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
<S> <C> <C> <C>
Operations:
Net investment income (loss).............................. $ 5,550 $ 66,009 $ 2,718
Capital gains income...................................... 135,426 330,045 1,154
Net realized gain (loss) on security transactions......... 1,139 3,657 15
Net unrealized appreciation (depreciation) of investments
during the period........................................ 1,302,791 799,731 (9,453)
----------- ---------- --------
Net increase (decrease) in net assets resulting from
operations............................................... 1,444,906 1,199,442 (5,566)
----------- ---------- --------
Unit transactions:
Purchases................................................. 1,842,714 1,777,192 85,364
Net transfers............................................. 5,859,152 3,292,482 584,214
Surrenders................................................ (104,683) (99,324) (6,589)
Loan withdrawals.......................................... (122,704) (60,658) (2)
Cost of insurance......................................... (253,931) (227,264) (13,198)
----------- ---------- --------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 7,220,548 4,682,428 649,789
----------- ---------- --------
Total increase (decrease) in net assets................... 8,665,454 5,881,870 644,223
Net Assets:
Beginning of period....................................... 1,443,419 1,635,220 42,610
----------- ---------- --------
End of period............................................. $10,108,873 $7,517,090 $686,833
=========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Utilities
Growth Global Asset New Money Growth
and Income Allocation High Yield VT Income Opportunities Market and Income
Fund Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ------------ ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 155,610 $ 24,931 $ 292,292 $ 110,447 $ -- $ 21,902 $ 49,760
Capital
gains
income... 776,526 69,902 -- 32,951 106,172 -- 52,257
Net
realized
gain
(loss)
on
security
transactions... (35,365) (52) 76 264 (7,533) -- (108)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period.. (1,360,719) (82,523) (349,245) (194,625) 977,565 -- (87,883)
----------- ---------- ---------- ---------- ----------- -------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... (463,948) 12,258 (56,877) (50,963) 1,076,204 21,902 14,026
----------- ---------- ---------- ---------- ----------- -------- ----------
Unit
transactions:
Purchases... 2,968,613 269,548 992,246 578,079 2,017,487 144,847 353,512
Net
transfers... 4,973,315 432,943 4,890,043 906,203 1,927,894 112,931 743,701
Surrenders... (322,814) (33,012) (249,991) (29,855) (334,011) (8,026) (52,014)
Loan
withdrawals... (86,081) (9,814) (307,049) 8,320 (1,177) (48,024) (19,582)
Cost
of
insurance... (525,342) (47,826) (159,521) (127,987) (308,716) (24,387) (73,432)
----------- ---------- ---------- ---------- ----------- -------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 7,007,691 611,839 5,165,728 1,334,760 3,301,477 177,341 952,185
----------- ---------- ---------- ---------- ----------- -------- ----------
Total
increase
(decrease)
in net
assets... 6,543,743 624,097 5,108,851 1,283,797 4,377,681 199,243 966,211
Net
Assets:
Beginning
of
period... 7,851,093 1,023,644 2,192,804 1,493,079 6,523,011 527,963 1,234,046
----------- ---------- ---------- ---------- ----------- -------- ----------
End
of
period... $14,394,836 $1,647,741 $7,301,655 $2,776,876 $10,900,692 $727,206 $2,200,257
=========== ========== ========== ========== =========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
U.S. Government Utilities
Growth Global Asset and High New Money Growth
and Income Allocation High Yield Quality Bond Opportunities Market and Income
Fund Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ------------ ----------- --------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 36,061 $ 9,598 $ 34,276 $ 61,358 $ -- $ 10,171 $ 10,596
Capital
gains
income... 235,404 41,227 5,378 1,597 25,739 -- 18,263
Net
realized
gain
(loss)
on
security
transactions... 4,991 511 8,112 2,773 (50,616) -- (609)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period.. 369,952 31,846 (176,046) 25,703 967,053 -- 84,719
---------- ---------- ---------- ---------- ---------- -------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 646,408 83,182 (128,280) 91,431 942,176 10,171 112,969
---------- ---------- ---------- ---------- ---------- -------- ----------
Unit
transactions:
Purchases... 1,520,697 197,777 465,319 518,167 1,695,165 111,154 269,787
Net
transfers... 4,737,360 474,639 1,652,869 (216,141) 2,990,857 294,105 641,807
Surrenders... (94,734) (12,784) (17,686) (23,212) (78,215) (4,383) (7,600)
Loan
withdrawals... (99,490) (591) (12,272) (153) (10,265) (1,053) (8,087)
Cost
of
insurance... (257,615) (29,489) (51,815) (70,077) (162,662) (9,256) (34,433)
---------- ---------- ---------- ---------- ---------- -------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 5,806,218 629,552 2,036,415 208,584 4,434,880 390,567 861,474
---------- ---------- ---------- ---------- ---------- -------- ----------
Total
increase
(decrease)
in net
assets... 6,452,626 712,734 1,908,135 300,015 5,377,056 400,738 974,443
Net
Assets:
Beginning
of
period... 1,398,467 310,910 284,669 1,193,064 1,145,955 127,225 259,603
---------- ---------- ---------- ---------- ---------- -------- ----------
End
of
period... $7,851,093 $1,023,644 $2,192,804 $1,493,079 $6,523,011 $527,963 $1,234,046
========== ========== ========== ========== ========== ======== ==========
</TABLE>
<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF CHANGES IN NET ASSETS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
International
Asia Pacific International Growth
Growth Growth and Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
------------ ------------- -------------
<S> <C> <C> <C>
Operations:
Net investment income (loss).............................. $ -- $ -- $ --
Capital gains income...................................... -- -- --
Net realized gain (loss) on security transactions......... 17,718 3,557 (292)
Net unrealized appreciation (depreciation) of investments
during the period........................................ 21,950 92,726 34,057
-------- ---------- --------
Net increase (decrease) in net assets resulting from
operations............................................... 39,668 96,283 33,765
-------- ---------- --------
Unit transactions:
Purchases................................................. 15,991 172,813 55,770
Net transfers............................................. 386,297 582,550 226,729
Surrenders................................................ (4,617) (10,089) (7,229)
Loan withdrawals.......................................... (108) (10,227) (1,257)
Cost of insurance......................................... (7,729) (35,565) (13,786)
-------- ---------- --------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 389,834 699,482 260,227
-------- ---------- --------
Total increase (decrease) in net assets................... 429,502 795,765 293,992
Net Assets:
Beginning of period....................................... 2,382 237,646 183,856
-------- ---------- --------
End of period............................................. $431,884 $1,033,411 $477,848
======== ========== ========
</TABLE>
Statement of Changes in Net Assets
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
International
Asia Pacific International Growth
Growth Growth and Income
Fund Fund Fund
Sub-Account* Sub-Account* Sub-Account*
------------ ------------- -------------
<S> <C> <C> <C>
Operations:
Net investment income (loss).............................. $-- $ 631 $ 2,027
Capital gains income...................................... -- -- 4,882
Net realized gain (loss) on security transactions......... -- (2) (4)
Net unrealized appreciation (depreciation) of investments
during the period........................................ 110 12,182 1,315
------ -------- --------
Net increase (decrease) in net assets resulting from
operations............................................... 110 12,811 8,220
------ -------- --------
Unit transactions:
Purchases................................................. 1,025 9,271 17,634
Net transfers............................................. 1,266 217,210 159,730
Surrenders................................................ (8) (739) (640)
Loan withdrawals.......................................... -- -- (1)
Cost of insurance......................................... (11) (907) (1,087)
------ -------- --------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 2,272 224,835 175,636
------ -------- --------
Total increase (decrease) in net assets................... 2,382 237,646 183,856
Net Assets:
Beginning of period....................................... -- -- --
------ -------- --------
End of period............................................. $2,382 $237,646 $183,856
====== ======== ========
</TABLE>
<TABLE>
<C> <S>
* From inception, August 3, 1998, to December 31, 1998
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International The
New New George OTC & Health
Opportunities Value Vista Putnam Emerging Growth Investors Sciences
Fund Fund Fund of Boston Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ----------- ----------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $ 19 $ 3 $ -- $ -- $-- $ -- $ --
Capital
gains
income... -- 690 -- 287 -- -- --
Net
realized
gain
(loss)
on
security
transactions... (644) (51) 58 932 (27,049) 246 (468)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 21,802 (48,303) 4,149 (15,754) 52,705 (11,236) (93,975)
-------- -------- -------- -------- -------- ---------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 21,177 (47,661) 4,207 (14,535) 25,656 (10,990) (94,443)
-------- -------- -------- -------- -------- ---------- ----------
Unit
transactions:
Purchases... 21,630 24,896 90,321 63,679 94,527 413,878 244,314
Net
transfers... 207,333 737,977 425,727 311,653 244,050 1,792,066 864,910
Surrenders... (19,663) (2,820) (5,269) (10,965) (25,662) (22,068) (16,607)
Loan
withdrawals... (270) (114) (133) (16,250) (2) (293) (151)
Cost
of
insurance... (5,802) (12,786) (17,507) (17,048) (13,546) (62,872) (47,515)
-------- -------- -------- -------- -------- ---------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 203,228 747,153 493,139 331,069 299,367 2,120,711 1,044,951
-------- -------- -------- -------- -------- ---------- ----------
Total
increase
(decrease)
in net
assets... 224,405 699,492 497,346 316,534 325,023 2,109,721 950,508
Net
Assets:
Beginning
of
period... 17,186 16,650 47,085 96,390 30,185 160,760 152,193
-------- -------- -------- -------- -------- ---------- ----------
End
of
period... $241,591 $716,142 $544,431 $412,924 $355,208 $2,270,481 $1,102,701
======== ======== ======== ======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
International The
New New George OTC & Health
Opportunities Value Vista Putnam Emerging Growth Investors Sciences
Fund Fund Fund of Boston Fund Fund Fund
Sub-Account* Sub-Account* Sub-Account* Sub-Account* Sub-Account* Sub-Account* Sub-Account*
------------- ------------ ------------ ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net
investment
income
(loss)... $-- $ 131 $-- $ 532 $ 10 $ 111 $ 126
Capital
gains
income... -- 25 -- -- -- -- --
Net
realized
gain
(loss)
on
security
transactions... 5 255 4 7 769 (1) 2
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 2,169 439 7,437 2,022 3,544 13,554 15,169
------- ------- ------- ------- ------- -------- --------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 2,174 850 7,441 2,561 4,323 13,664 15,297
------- ------- ------- ------- ------- -------- --------
Unit
transactions:
Purchases... 1,092 4,212 1,667 26,333 5,337 18,749 43,812
Net
transfers... 14,115 12,066 38,890 68,878 21,258 131,102 95,215
Surrenders... (71) (154) (259) (507) (231) (525) (539)
Loan
withdrawals... -- -- -- (39) (1) (2) --
Cost
of
insurance... (124) (324) (654) (836) (501) (2,228) (1,592)
------- ------- ------- ------- ------- -------- --------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 15,012 15,800 39,644 93,829 25,862 147,096 136,896
------- ------- ------- ------- ------- -------- --------
Total
increase
(decrease)
in net
assets... 17,186 16,650 47,085 96,390 30,185 160,760 152,193
Net
Assets:
Beginning
of
period... -- -- -- -- -- -- --
------- ------- ------- ------- ------- -------- --------
End
of
period... $17,186 $16,650 $47,085 $96,390 $30,185 $160,760 $152,193
======= ======= ======= ======= ======= ======== ========
</TABLE>
<TABLE>
<C> <S>
* From inception, August 3, 1998, to December 31, 1998
</TABLE>
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Global Diversified
Voyager Growth Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividends................................................. $ 15,233 $ 38,016 $ 53,173
---------- ---------- --------
Capital gains income........................................ 1,221,590 791,631 --
---------- ---------- --------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions......... (43,619) (3,512) 346
Net unrealized appreciation (depreciation) of investments
during the period........................................ 341,131 254,447 (57,486)
---------- ---------- --------
Net gain (losses) on investments........................ 297,512 250,935 (57,140)
---------- ---------- --------
Net increase (decrease) in net assets resulting from
operations:............................................ $1,534,335 $1,080,582 $ (3,967)
========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Utilities
Growth Global Asset New Money Growth
and Income Allocation High Yield VT Income Opportunities Market and Income
Fund Fund Fund Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ------------ ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Dividends... $ 155,610 $ 24,931 $ 292,292 $ 110,447 $ -- $21,902 $ 49,760
----------- -------- --------- --------- ---------- ------- --------
Capital
gains
income... 776,526 69,902 -- 32,951 106,172 -- 52,257
----------- -------- --------- --------- ---------- ------- --------
Net
realized
and
unrealized
gain
(loss) on
investments:
Net
realized
gain
(loss)
on
security
transactions... (35,365) (52) 76 264 (7,533) -- (108)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... (1,360,719) (82,523) (349,245) (194,625) 977,565 -- (87,883)
----------- -------- --------- --------- ---------- ------- --------
Net
gain
(losses)
on
investments... (1,396,084) (82,575) (349,169) (194,361) 970,032 -- (87,991)
----------- -------- --------- --------- ---------- ------- --------
Net
increase
(decrease)
in
net
assets
resulting
from
operations:... $ (463,948) $ 12,258 $ (56,877) $ (50,963) $1,076,204 $21,902 $ 14,026
=========== ======== ========= ========= ========== ======= ========
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
International
Asia Pacific International Growth
Growth Growth and Income
Fund Fund Fund
Sub-Account Sub-Account Sub-Account
------------ ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividends................................................. $-- $-- $--
------- ------- -------
Capital gains income...................................... -- -- --
------- ------- -------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions....... 17,718 3,557 (292)
Net unrealized appreciation (depreciation) of
investments during the period.......................... 21,950 92,726 34,057
------- ------- -------
Net gain (losses) on investments...................... 39,668 96,283 33,765
------- ------- -------
Net increase (decrease) in net assets resulting from
operations:.......................................... $39,668 $96,283 $33,765
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International
New New The George OTC & Health
Opportunities Value Vista Putnam Fund Emerging Growth Investors Sciences
Fund Fund Fund of Boston Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
------------- ----------- ----------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment
income:
Dividends... $ 19 $ 3 $-- $ -- $-- $ -- $ --
------- -------- ------ -------- ------- -------- --------
Capital
gains
income... -- 690 -- 287 -- -- --
------- -------- ------ -------- ------- -------- --------
Net
realized
and
unrealized
gain
(loss) on
investments:
Net
realized
gain
(loss)
on
security
transactions... (644) (51) 58 932 (27,049) 246 (468)
Net
unrealized
appreciation
(depreciation)
of
investments
during
the
period.. 21,802 (48,303) 4,149 (15,754) 52,705 (11,236) (93,975)
------- -------- ------ -------- ------- -------- --------
Net
gain
(losses)
on
investments... 21,158 (48,354) 4,207 (14,822) 25,656 (10,990) (94,443)
------- -------- ------ -------- ------- -------- --------
Net
increase
(decrease)
in
net
assets
resulting
from
operations:... $21,177 $(47,661) $4,207 $(14,535) $25,656 $(10,990) $(94,443)
======= ======== ====== ======== ======= ======== ========
</TABLE>
<PAGE>
SA-14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Units
Owned by Unit Contract
Participants Price Liability
------------ ---------- -----------
<S> <C> <C> <C>
Variable life contracts:
Individual Sub-Accounts:
Voyager Fund.............................................. 641,162 $32.271497 $20,691,214
Global Growth Fund........................................ 430,815 26.282278 11,322,796
Asia Pacific Growth Fund.................................. 27,577 15.661144 431,884
Growth and Income Fund.................................... 567,581 25.361714 14,394,836
Global Asset Allocation Fund.............................. 78,112 21.094614 1,647,741
High Yield Fund........................................... 459,117 15.903683 7,301,655
VT Income Fund............................................ 192,357 14.436052 2,776,876
New Opportunities Fund.................................... 423,036 25.767751 10,900,692
Money Market Fund......................................... 542,333 1.340884 727,206
Utilities Growth & Income Fund............................ 102,007 21.569619 2,200,257
Diversified Income Fund................................... 76,844 12.714294 977,023
International Growth Fund................................. 89,294 11.573084 1,033,411
International Growth and Income Fund...................... 41,992 11.379614 477,848
International New Opportunities Fund...................... 19,182 12.594233 241,591
New Value Fund............................................ 68,405 10.469069 716,142
Vista Fund................................................ 47,405 11.484699 544,431
The George Putnam Fund of Boston.......................... 39,422 10.474387 412,924
OTC & Emerging Growth..................................... 25,652 13.847446 355,208
Investors................................................. 194,481 11.674568 2,270,481
Health Sciences........................................... 111,539 9.886249 1,102,701
------- ---------- -----------
Grand Total:................................................ $80,526,916
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SA-1 Hartford Life and Annuity Insurance Company
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life and Annuity Insurance Company Putnam Capital Manager Trust
Separate Account
Variable Life One 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 Putnam Capital Manager Trust
Separate Account Variable Life One (Asia Pacific Growth, Diversified Income, The
George Putnam Fund of Boston, Global Asset Allocation, Global Growth, Growth and
Income, Health Sciences, High Yield, International Growth, International Growth
and Income, International New Opportunities, Investors, Money Market, New
Opportunities, New Value, OTC & Emerging Growth, U.S. Government and High
Quality Bond, Utilities Growth and Income, Vista, and Voyager), (collectively,
the Account) as of December 31, 1998, 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1999
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
THE GEORGE
ASIA PACIFIC DIVERSIFIED PUTNAM FUND
GROWTH INCOME OF BOSTON
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 286
Cost $ 2,272
Market Value......... $2,382 $ -- $--
Putnam VT Diversified
Income Fund
Shares 65,475
Cost $ 694,428
Market Value......... -- 686,832 --
Putnam VT The George
Putnam Fund of Boston
Shares 9,375
Cost $ 94,351
Market Value......... -- -- 96,373
Putnam VT Global Asset
Allocation Fund
Shares 54,016
Cost $ 982,423
Market Value......... -- -- --
Putnam VT Global Growth
Fund
Shares 370,679
Cost $6,691,738
Market Value......... -- -- --
Putnam VT Growth and
Income Fund
Shares 272,903
Cost $7,422,063
Market Value......... -- -- --
Putnam VT Health
Sciences Fund
Shares 13,911
Cost $ 137,023
Market Value......... -- -- --
Putnam VT High Yield
Fund
Shares 187,419
Cost $2,348,503
Market Value......... -- -- --
Putnam VT International
Growth Fund
Shares 17,578
Cost $ 225,468
Market Value......... -- -- --
Putnam VT International
Growth and Income Fund
Shares 15,021
Cost $ 182,548
Market Value......... -- -- --
Due from Hartford Life
Insurance Company..... -- 3,229 4,564
Receivable from fund
shares sold........... -- -- --
------ -------- -------
Total Assets........... 2,382 690,061 100,937
------ -------- -------
LIABILITIES:
Due to Hartford Life
Insurance Company -- -- --
Payable for fund shares
purchased -- 3,228 4,547
------ -------- -------
Total Liabilities...... -- 3,228 4,547
------ -------- -------
Net Assets (variable
life contract
liabilities).......... $2,382 $686,833 $96,390
====== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET GLOBAL
ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT
------------ -----------
<S> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 286
Cost $ 2,272
Market Value......... $ -- $ --
Putnam VT Diversified
Income Fund
Shares 65,475
Cost $ 694,428
Market Value......... -- --
Putnam VT The George
Putnam Fund of Boston
Shares 9,375
Cost $ 94,351
Market Value......... -- --
Putnam VT Global Asset
Allocation Fund
Shares 54,016
Cost $ 982,423
Market Value......... 1,023,610 --
Putnam VT Global Growth
Fund
Shares 370,679
Cost $6,691,738
Market Value......... -- 7,517,360
Putnam VT Growth and
Income Fund
Shares 272,903
Cost $7,422,063
Market Value......... -- --
Putnam VT Health
Sciences Fund
Shares 13,911
Cost $ 137,023
Market Value......... -- --
Putnam VT High Yield
Fund
Shares 187,419
Cost $2,348,503
Market Value......... -- --
Putnam VT International
Growth Fund
Shares 17,578
Cost $ 225,468
Market Value......... -- --
Putnam VT International
Growth and Income Fund
Shares 15,021
Cost $ 182,548
Market Value......... -- --
Due from Hartford Life
Insurance Company..... 34 19,420
Receivable from fund
shares sold........... -- --
---------- ----------
Total Assets........... 1,023,644 7,536,780
---------- ----------
LIABILITIES:
Due to Hartford Life
Insurance Company -- --
Payable for fund shares
purchased -- 19,690
---------- ----------
Total Liabilities...... -- 19,690
---------- ----------
Net Assets (variable
life contract
liabilities).......... $1,023,644 $7,517,090
========== ==========
<CAPTION>
INTERNATIONAL
GROWTH HEALTH INTERNATIONAL GROWTH AND
AND INCOME SCIENCES HIGH YIELD GROWTH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT Asia Pacific
Growth Fund
Shares 286
Cost $ 2,272
Market Value......... $ -- $ -- $ -- $ -- $ --
Putnam VT Diversified
Income Fund
Shares 65,475
Cost $ 694,428
Market Value......... -- -- -- -- --
Putnam VT The George
Putnam Fund of Boston
Shares 9,375
Cost $ 94,351
Market Value......... -- -- -- -- --
Putnam VT Global Asset
Allocation Fund
Shares 54,016
Cost $ 982,423
Market Value......... -- -- -- -- --
Putnam VT Global Growth
Fund
Shares 370,679
Cost $6,691,738
Market Value......... -- -- -- -- --
Putnam VT Growth and
Income Fund
Shares 272,903
Cost $7,422,063
Market Value......... 7,851,431 -- -- -- --
Putnam VT Health
Sciences Fund
Shares 13,911
Cost $ 137,023
Market Value......... -- 152,192 -- -- --
Putnam VT High Yield
Fund
Shares 187,419
Cost $2,348,503
Market Value......... -- -- 2,192,806 -- --
Putnam VT International
Growth Fund
Shares 17,578
Cost $ 225,468
Market Value......... -- -- -- 237,650 --
Putnam VT International
Growth and Income Fund
Shares 15,021
Cost $ 182,548
Market Value......... -- -- -- -- 183,863
Due from Hartford Life
Insurance Company..... 13,931 285 115 1,206 31
Receivable from fund
shares sold........... -- -- -- -- --
---------- -------- ---------- -------- --------
Total Assets........... 7,865,362 152,477 2,192,921 238,856 183,894
---------- -------- ---------- -------- --------
LIABILITIES:
Due to Hartford Life
Insurance Company -- -- -- -- --
Payable for fund shares
purchased 14,269 284 117 1,210 38
---------- -------- ---------- -------- --------
Total Liabilities...... 14,269 284 117 1,210 38
---------- -------- ---------- -------- --------
Net Assets (variable
life contract
liabilities).......... $7,851,093 $152,193 $2,192,804 $237,646 $183,856
========== ======== ========== ======== ========
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL
NEW MONEY
OPPORTUNITIES INVESTORS MARKET
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments:
Putnam VT International
New Opportunities Fund
Shares 1,496
Cost $ 15,017
Market Value......... $17,186 $ -- $ --
Putnam VT Investors
Fund
Shares 13,799
Cost $ 147,202
Market Value......... -- 160,756 --
Putnam VT Money Market
Fund
Shares 527,966
Cost $ 527,966
Market Value......... -- -- 527,966
Putnam VT New
Opportunities Fund
Shares 250,312
Cost $5,427,645
Market Value......... -- -- --
Putnam VT New Value
Fund
Shares 1,384
Cost $ 16,210
Market Value......... -- -- --
Putnam VT OTC &
Emerging Growth Fund
Shares 2,991
Cost $ 26,639
Market Value......... -- -- --
Putnam VT U.S.
Government and High
Quality Bond Fund
Shares 107,804
Cost $1,425,849
Market Value......... -- -- --
Putnam VT Utilities
Growth & Income Fund
Shares 67,841
Cost $1,105,371
Market Value......... -- -- --
Putnam VT Vista Fund
Shares 3,199
Cost $ 39,649
Market Value......... -- -- --
Putnam VT Voyager Fund
Shares 220,466
Cost $8,653,660
Market Value......... -- -- --
Due from Hartford Life
Insurance Company..... -- 613 --
Receivable from fund
shares sold........... -- -- --
------- -------- --------
Total Assets........... 17,186 161,369 527,966
------- -------- --------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- 3
Payable for fund shares
purchased............. -- 609 --
------- -------- --------
Total Liabilities...... -- 609 3
------- -------- --------
Net Assets (variable
life contract
liabilities).......... $17,186 $160,760 $527,963
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW NEW
OPPORTUNITIES VALUE
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
ASSETS:
Investments:
Putnam VT International
New Opportunities Fund
Shares 1,496
Cost $ 15,017
Market Value......... $ -- $--
Putnam VT Investors
Fund
Shares 13,799
Cost $ 147,202
Market Value......... -- --
Putnam VT Money Market
Fund
Shares 527,966
Cost $ 527,966
Market Value......... -- --
Putnam VT New
Opportunities Fund
Shares 250,312
Cost $5,427,645
Market Value......... 6,523,133 --
Putnam VT New Value
Fund
Shares 1,384
Cost $ 16,210
Market Value......... -- 16,649
Putnam VT OTC &
Emerging Growth Fund
Shares 2,991
Cost $ 26,639
Market Value......... -- --
Putnam VT U.S.
Government and High
Quality Bond Fund
Shares 107,804
Cost $1,425,849
Market Value......... -- --
Putnam VT Utilities
Growth & Income Fund
Shares 67,841
Cost $1,105,371
Market Value......... -- --
Putnam VT Vista Fund
Shares 3,199
Cost $ 39,649
Market Value......... -- --
Putnam VT Voyager Fund
Shares 220,466
Cost $8,653,660
Market Value......... -- --
Due from Hartford Life
Insurance Company..... 31,990 1
Receivable from fund
shares sold........... -- --
---------- -------
Total Assets........... 6,555,123 16,650
---------- -------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. 32,112 --
---------- -------
Total Liabilities...... 32,112 --
---------- -------
Net Assets (variable
life contract
liabilities).......... $6,523,011 $16,650
========== =======
<CAPTION>
OTC & U.S. GOVERNMENT UTILITIES
EMERGING AND HIGH GROWTH
GROWTH QUALITY BOND AND INCOME VISTA VOYAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Putnam VT International
New Opportunities Fund
Shares 1,496
Cost $ 15,017
Market Value......... $-- $ -- $ -- $-- $ --
Putnam VT Investors
Fund
Shares 13,799
Cost $ 147,202
Market Value......... -- -- -- -- --
Putnam VT Money Market
Fund
Shares 527,966
Cost $ 527,966
Market Value......... -- -- -- -- --
Putnam VT New
Opportunities Fund
Shares 250,312
Cost $5,427,645
Market Value......... -- -- -- -- --
Putnam VT New Value
Fund
Shares 1,384
Cost $ 16,210
Market Value......... -- -- -- -- --
Putnam VT OTC &
Emerging Growth Fund
Shares 2,991
Cost $ 26,639
Market Value......... 30,183 -- -- -- --
Putnam VT U.S.
Government and High
Quality Bond Fund
Shares 107,804
Cost $1,425,849
Market Value......... -- 1,480,144 -- -- --
Putnam VT Utilities
Growth & Income Fund
Shares 67,841
Cost $1,105,371
Market Value......... -- -- 1,234,030 -- --
Putnam VT Vista Fund
Shares 3,199
Cost $ 39,649
Market Value......... -- -- -- 47,086 --
Putnam VT Voyager Fund
Shares 220,466
Cost $8,653,660
Market Value......... -- -- -- -- 10,108,374
Due from Hartford Life
Insurance Company..... 2 1,014 28 -- --
Receivable from fund
shares sold........... -- -- -- -- 22,235
------- ---------- ---------- ------- -----------
Total Assets........... 30,185 1,481,158 1,234,058 47,086 10,130,609
------- ---------- ---------- ------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- 1 21,736
Payable for fund shares
purchased............. -- 1,015 12 -- --
------- ---------- ---------- ------- -----------
Total Liabilities...... -- 1,015 12 1 21,736
------- ---------- ---------- ------- -----------
Net Assets (variable
life contract
liabilities).......... $30,185 $1,480,143 $1,234,046 $47,085 $10,108,873
======= ========== ========== ======= ===========
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- -----------
<S> <C> <C> <C>
Variable life contracts:
Asia Pacific Growth Fund.................................. 223 $10.693257 $ 2,382
Diversified Income Fund................................... 53,755 12.777025 686,833
George Putnam Fund of Boston.............................. 9,091 10.602638 96,390
Global Asset Allocation Fund.............................. 49,232 20.792218 1,023,643
Global Growth Fund........................................ 318,846 23.575913 7,517,090
Growth and Income Fund.................................... 307,670 25.517876 7,851,093
Health Sciences Fund...................................... 13,537 11.242853 152,193
High Yield Fund........................................... 140,779 15.576208 2,192,804
International Growth Fund................................. 24,286 9.785387 237,646
International Growth and Income Fund...................... 18,822 9.768197 183,856
International New Opportunities Fund...................... 2,137 8.042115 17,186
Investors Fund............................................ 14,373 11.185169 160,760
Money Market Fund......................................... 407,558 1.295432 527,963
New Opportunities Fund.................................... 286,823 22.742256 6,523,011
New Value Fund............................................ 1,569 10.611164 16,650
OTC & Emerging Growth Fund................................ 2,802 10.773294 30,185
U.S. Government and High Quality Bond Fund................ 100,651 14.705728 1,480,143
Utilities Growth & Income Fund............................ 57,036 21.636249 1,234,046
Vista Fund................................................ 4,437 10.611675 47,085
Voyager Fund.............................................. 350,559 28.836430 10,108,873
-----------
Grand Total: $40,089,832
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
This page intentionally left blank.
<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
THE GEORGE
ASIA PACIFIC DIVERSIFIED PUTNAM FUND
GROWTH INCOME OF BOSTON
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT*
------------ ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. -$- $ 2,718 $ 532
---- ------- ------
CAPITAL GAINS INCOME........................................ -- 1,154 --
---- ------- ------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions......... -- 15 7
Net unrealized appreciation (depreciation) of investments
during the period........................................ 110 (9,453) 2,022
---- ------- ------
Net gain (loss) on investments............................ 110 (9,438) 2,029
---- ------- ------
Net increase (decrease) in net assets resulting from
operations............................................... $110 $(5,566) $2,561
==== ======= ======
</TABLE>
* From inception, August 3, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL
ASSET GROWTH HEALTH INTERNATIONAL GROWTH AND
ALLOCATION GLOBAL GROWTH AND INCOME SCIENCES HIGH YIELD GROWTH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
----------- ------------- ----------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT
INCOME:
Dividends... $ 9,598 $ 66,009 $ 36,061 $ 126 $ 34,276 $ 631 $2,027
------- ---------- -------- ------- --------- ------- ------
CAPITAL
GAINS
INCOME... 41,227 330,045 235,404 -- 5,378 -- 4,882
------- ---------- -------- ------- --------- ------- ------
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS) ON
INVESTMENTS:
Net
realized
gain
(loss)
on
security
transactions... 511 3,657 4,991 2 8,112 (2) (4)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period.. 31,846 799,731 369,952 15,169 (176,046) 12,182 1,315
------- ---------- -------- ------- --------- ------- ------
Net
gain
(loss)
on
investments... 32,357 803,388 374,943 15,171 (167,934) 12,180 1,311
------- ---------- -------- ------- --------- ------- ------
Net
increase
(decrease)
in net
assets
resulting
from
operations... $83,182 $1,199,442 $646,408 $15,297 $(128,280) $12,811 $8,220
======= ========== ======== ======= ========= ======= ======
</TABLE>
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL
NEW MONEY
OPPORTUNITIES INVESTORS MARKET
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT
------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $-- $ 111 $10,171
------ ------- -------
Capital gains income...................................... -- -- --
------ ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions......... 5 (1) --
Net unrealized appreciation (depreciation) of investments
during the period........................................ 2,169 13,554 --
------ ------- -------
Net gain (loss) on investments............................ 2,174 13,553 --
------ ------- -------
Net increase (decrease) in net assets resulting from
operations............................................... $2,174 $13,664 $10,171
====== ======= =======
</TABLE>
* From inception, August 3, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OTC & U.S. GOVERNMENT UTILITIES
NEW EMERGING AND HIGH GROWTH
OPPORTUNITIES NEW VALUE GROWTH QUALITY BOND AND INCOME VISTA VOYAGER
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------- ------------ ------------ --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT
INCOME:
Dividends... $ -- $131 $ 10 $61,358 $ 10,596 $-- $ 5,550
-------- ---- ------ ------- -------- ------ ----------
Capital
gains
income... 25,739 25 -- 1,597 18,263 -- 135,426
-------- ---- ------ ------- -------- ------ ----------
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS) ON
INVESTMENTS:
Net
realized
gain
(loss)
on
security
transactions... (50,616) 255 769 2,773 (609) 4 1,139
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period.. 967,053 439 3,544 12,767 84,719 7,437 1,302,791
-------- ---- ------ ------- -------- ------ ----------
Net
gain
(loss)
on
investments... 916,437 694 4,313 15,540 84,110 7,441 1,303,930
-------- ---- ------ ------- -------- ------ ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... $942,176 $850 $4,323 $78,495 $112,969 $7,441 $1,444,906
======== ==== ====== ======= ======== ====== ==========
</TABLE>
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
THE GEORGE
ASIA PACIFIC DIVERSIFIED PUTNAM FUND
GROWTH INCOME OF BOSTON
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT*
------------ ----------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $-- $ 2,718 $ 532
------ -------- -------
CAPITAL GAINS INCOME........................................ -- 1,154 --
Net realized gain (loss) on security transactions......... -- 15 7
Net unrealized appreciation (depreciation) of investments
during the period........................................ 110 (9,453) 2,022
------ -------- -------
Net increase (decrease) in net assets resulting from
operations............................................... 110 (5,566) 2,561
------ -------- -------
UNIT TRANSACTIONS:
Purchases................................................. 1,025 85,364 26,333
Net transfers............................................. 1,266 584,214 68,878
Surrenders................................................ (8) (6,589) (507)
Net loan activity......................................... -- (2) (39)
Cost of insurance......................................... (11) (13,198) (836)
------ -------- -------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 2,272 649,789 93,829
------ -------- -------
Total increase (decrease) in net assets................... 2,382 644,223 96,390
NET ASSETS:
Beginning of period....................................... -- 42,610 --
------ -------- -------
End of period............................................. $2,382 $686,833 $96,390
====== ======== =======
</TABLE>
* From inception, August 3, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
GLOBAL ASSET GLOBAL GROWTH HEALTH INTERNATIONAL GROWTH AND
ALLOCATION GROWTH AND INCOME SCIENCES HIGH YIELD GROWTH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
------------ ----------- ----------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ 9,598 $ 66,009 $ 36,061 $ 126 $ 34,276 $ 631 $ 2,027
---------- ---------- ---------- -------- ---------- -------- --------
CAPITAL
GAINS
INCOME... 41,227 330,045 235,404 -- 5,378 -- 4,882
Net
realized
gain
(loss)
on
security
transactions... 511 3,657 4,991 2 8,112 (2) (4)
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period.. 31,846 799,731 369,952 15,169 (176,046) 12,182 1,315
---------- ---------- ---------- -------- ---------- -------- --------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 83,182 1,199,442 646,408 15,297 (128,280) 12,811 8,220
---------- ---------- ---------- -------- ---------- -------- --------
UNIT
TRANSACTIONS:
Purchases... 197,777 1,777,192 1,520,697 43,812 465,319 9,271 17,634
Net
transfers... 474,639 3,292,482 4,737,360 95,215 1,652,869 217,210 159,730
Surrenders... (12,784) (99,324) (94,734) (539) (17,686) (739) (640)
Net
loan
activity... (591) (60,658) (99,490) -- (12,272) -- (1)
Cost
of
insurance... (29,489) (227,264) (257,615) (1,592) (51,815) (907) (1,087)
---------- ---------- ---------- -------- ---------- -------- --------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 629,552 4,682,428 5,806,218 136,896 2,036,415 224,835 175,636
---------- ---------- ---------- -------- ---------- -------- --------
Total
increase
(decrease)
in net
assets... 712,734 5,881,870 6,452,626 152,193 1,908,135 237,646 183,856
NET
ASSETS:
Beginning
of
period... 310,910 1,635,220 1,398,467 -- 284,669 -- --
---------- ---------- ---------- -------- ---------- -------- --------
End
of
period... $1,023,644 $7,517,090 $7,851,093 $152,193 $2,192,804 $237,646 $183,856
========== ========== ========== ======== ========== ======== ========
</TABLE>
<PAGE>
SA-14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL
NEW MONEY
OPPORTUNITIES INVESTORS MARKET
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT
------------- ------------ -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $-- $ 111 $ 10,171
CAPITAL GAINS INCOME........................................ -- -- --
Net realized gain (loss) on security transactions......... 5 (1) --
Net unrealized appreciation (depreciation) of investments
during the period........................................ 2,169 13,554 --
------- -------- --------
Net increase (decrease) in net assets resulting from
operations............................................... 2,174 13,664 10,171
------- -------- --------
UNIT TRANSACTIONS:
Purchases................................................. 1,092 18,749 111,154
Net transfers............................................. 14,115 131,102 294,105
Surrenders................................................ (71) (525) (4,383)
Net loan activity......................................... -- (2) (1,053)
Cost of insurance......................................... (124) (2,228) (9,256)
------- -------- --------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 15,012 147,096 390,567
------- -------- --------
Total increase (decrease) in net assets................... 17,186 160,760 400,738
NET ASSETS:
Beginning of period....................................... -- -- 127,225
------- -------- --------
End of period............................................. $17,186 $160,760 $527,963
======= ======== ========
</TABLE>
* From inception, August 3, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OTC & U.S. GOVERNMENT UTILITIES
NEW NEW EMERGING AND HIGH GROWTH
OPPORTUNITIES VALUE GROWTH QUALITY BOND AND INCOME VISTA VOYAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------- ----------- ------------ --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ -- $ 131 $ 10 $ 61,358 $ 10,596 $-- $ 5,550
CAPITAL
GAINS
INCOME... 25,739 25 -- 1,597 18,263 -- 135,426
Net
realized
gain
(loss)
on
security
transactions... (50,616) 255 769 2,773 (609) 4 1,139
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period.. 967,053 439 3,544 12,767 84,719 7,437 1,302,791
---------- ------- ------- ---------- ---------- ------- -----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 942,176 850 4,323 78,495 112,969 7,441 1,444,906
---------- ------- ------- ---------- ---------- ------- -----------
UNIT
TRANSACTIONS:
Purchases... 1,695,165 4,212 5,337 518,167 269,787 1,667 1,842,714
Net
transfers... 2,990,857 12,066 21,258 (216,141) 641,807 38,890 5,859,152
Surrenders... (78,215) (154) (231) (23,212) (7,600) (259) (104,683)
Net
loan
activity... (10,265) -- (1) (153) (8,087) -- (122,704)
Cost
of
insurance... (162,662) (324) (501) (70,077) (34,433) (654) (253,931)
---------- ------- ------- ---------- ---------- ------- -----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 4,434,880 15,800 25,862 208,584 861,474 39,644 7,220,548
---------- ------- ------- ---------- ---------- ------- -----------
Total
increase
(decrease)
in net
assets... 5,377,056 16,650 30,185 287,079 974,443 47,085 8,665,454
NET
ASSETS:
Beginning
of
period... 1,145,955 -- -- 1,193,064 259,603 -- 1,443,419
---------- ------- ------- ---------- ---------- ------- -----------
End
of
period... $6,523,011 $16,650 $30,185 $1,480,143 $1,234,046 $47,085 $10,108,873
========== ======= ======= ========== ========== ======= ===========
</TABLE>
<PAGE>
SA-16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GLOBAL
DIVERSIFIED ASSET GLOBAL
INCOME ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 99 $ 780 $ 7,355
CAPITAL GAINS INCOME........................................ 16 1,333 7,911
Net realized gain (loss) on security transactions......... 273 46 727
Net unrealized appreciation (depreciation) of investments
during the period........................................ 1,827 9,293 25,838
------- -------- ----------
Net increase (decrease) in net assets resulting from
operations............................................... 2,215 11,452 41,831
------- -------- ----------
UNIT TRANSACTIONS:
Purchases................................................. 1,122 21,636 197,403
Net transfers............................................. 39,712 284,558 1,455,386
Surrenders................................................ (348) (2,233) (24,833)
Net loan activity......................................... -- (16) 7,540
Cost of insurance......................................... (1,121) (5,581) (43,722)
------- -------- ----------
Net increase (decrease) in net assets resulting from unit
transactions............................................. 39,365 298,364 1,591,774
------- -------- ----------
Total increase (decrease) in net assets................... 41,580 309,816 1,633,605
NET ASSETS:
Beginning of period....................................... 1,030 1,094 1,615
------- -------- ----------
End of period............................................. $42,610 $310,910 $1,635,220
======= ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT UTILITIES
GROWTH MONEY NEW AND HIGH GROWTH
AND INCOME HIGH YIELD MARKET OPPORTUNITIES QUALITY BOND AND INCOME VOYAGER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net
investment
income
(loss)... $ 2,061 $ 1,448 $ 1,772 $ -- $ 16,959 $ 165 $ 405
CAPITAL
GAINS
INCOME... 5,017 168 -- -- -- 225 8,720
Net
realized
gain
(loss)
on
security
transactions... 47 208 -- (11,593) 549 65 8,423
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period... 59,382 20,324 -- 128,498 41,518 43,867 151,950
---------- -------- -------- ---------- ---------- -------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
operations... 66,507 22,148 1,772 116,905 59,026 44,322 169,498
---------- -------- -------- ---------- ---------- -------- ----------
UNIT
TRANSACTIONS:
Purchases... 58,290 9,010 -- 90,292 188,414 18,312 111,483
Net
transfers... 1,311,232 261,651 127,202 989,240 981,563 206,398 1,206,671
Surrenders... (8,041) (2,778) (810) (15,731) (15,612) (1,613) 2,463
Net
loan
activity... (2,944) (27) -- (4,120) 7,877 (43) (4,450)
Cost
of
insurance... (31,097) (6,360) (1,951) (31,626) (32,535) (8,846) (44,593)
---------- -------- -------- ---------- ---------- -------- ----------
Net
increase
(decrease)
in net
assets
resulting
from
unit
transactions... 1,327,440 261,496 124,441 1,028,055 1,129,707 214,208 1,271,574
---------- -------- -------- ---------- ---------- -------- ----------
Total
increase
(decrease)
in net
assets... 1,393,947 283,644 126,213 1,144,960 1,188,733 258,530 1,441,072
NET
ASSETS:
Beginning
of
period... 4,520 1,025 1,012 995 4,331 1,073 2,347
---------- -------- -------- ---------- ---------- -------- ----------
End
of
period... $1,398,467 $284,669 $127,225 $1,145,955 $1,193,064 $259,603 $1,443,419
========== ======== ======== ========== ========== ======== ==========
</TABLE>
<PAGE>
SA-18 Hartford Life and Annuity Insurance Company
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VL I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION:
Separate Account VL I (the Account) is 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. Both the Company and the Account
are subject to supervision and regulation by the Department of Insurance of the
State of Connecticut and the SEC. The Account invests deposits by variable life
contractholders of the Company in the various mutual funds (the Funds) as
directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents 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, 1998.
c) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
d) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:
a) COST OF INSURANCE -- In accordance with terms of the contracts, the
Company makes deductions for costs of insurance 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.
b) MORTALITY AND EXPENSE RISK CHARGE -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 1.40% of the Account's
average daily net assets. These expenses are reflected in surrenders on the
accompanying statements of changes in net assets.
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 expenses at a maximum of $12 per month. Additionally, the Company assesses
a monthly charge in the first policy year for up-front costs of underwriting and
issuing a policy at a monthly maximum amount of $62.50. These expenses are
reflected in surrenders on the accompanying statements of changes in net assets.
d) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are
deducted through termination of units of interest from applicable contract
owners' accounts, in accordance with the terms of the contracts. These expenses
are reflected in surrenders on the accompanying statements of changes in net
assets.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-1
- --------------------------------------------------------------------------------
Consolidated Statements of Income
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Second
Quarter Six Months
Ended Ended
June, 30 June, 30
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
Premiums and other considerations......................... $517 $383 $1,004 $ 946
Net investment income..................................... 334 344 686 696
Net realized capital gains (losses)....................... 2 (6) 1 (6)
---- ---- ------ ------
Total revenues.......................................... 853 721 1,691 1,636
---- ---- ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment expenses............ 423 349 816 747
Amortization of deferred policy acquisition costs......... 136 115 255 209
Dividends to policyholders................................ 10 9 27 116
Other expenses............................................ 153 118 327 306
---- ---- ------ ------
Total benefits, claims and expenses..................... 722 591 1,425 1,378
---- ---- ------ ------
Income before income tax expense............................ 131 130 266 258
Income tax expense........................................ 46 45 93 90
---- ---- ------ ------
Net income.................................................. $ 85 $ 85 $ 173 $ 168
==== ==== ====== ======
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
F-2 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Consolidated Balance Sheets
(Unaudited)
(In millions, except for share data)
<TABLE>
<CAPTION>
As of As of
June 30, December 31,
1999 1998
--------- -------------
<S> <C> <C>
Assets
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $14,208 and $14,505).................. $ 14,059 $ 14,818
Equity securities, at fair value.......................... 51 31
Policy loans, at outstanding balance...................... 4,526 6,684
Other investments......................................... 295 264
-------- --------
Total investments....................................... 18,931 21,797
Cash...................................................... 74 17
Premiums receivable and agents' balances.................. 27 17
Reinsurance recoverables.................................. 1,060 1,257
Deferred policy acquisition costs......................... 3,927 3,754
Deferred income tax....................................... 495 464
Other assets.............................................. 672 695
Separate account assets................................... 99,967 90,262
-------- --------
Total assets............................................ $125,153 $118,263
======== ========
Liabilities
Future policy benefits.................................... $ 3,721 $ 3,595
Other policyholder funds.................................. 16,851 19,615
Other liabilities......................................... 2,022 2,094
Separate account liabilities.............................. 99,967 90,262
-------- --------
Total liabilities....................................... 122,561 115,566
======== ========
Stockholder's Equity
Common stock - 1,000 shares authorized, issued and
outstanding, par value $5,690............................ 6 6
Capital surplus........................................... 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital (losses) gains on securities,
net of tax............................................ (94) 184
-------- --------
Total accumulated other comprehensive income............ (94) 184
-------- --------
Retained earnings......................................... 1,635 1,462
-------- --------
Total stockholder's equity.............................. 2,592 2,697
-------- --------
Total liabilities and stockholder's equity............ $125,153 $118,263
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-3
- --------------------------------------------------------------------------------
Consolidated Statements of Changes in Stockholder's Equity (Unaudited)
(In millions)
Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income
----------------------
Net Unrealized
Capital Gains (Losses) Total
Common Capital on Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
-------- -------- ---------------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998.......................... $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income
Net income.......................................... 173 173
------
Other comprehensive income, net of tax (1)
Net unrealized capital losses on securities (2)..... (278) (278)
------
Total other comprehensive income.................... (278)
------
Total comprehensive income.......................... (105)
-- ------ ----- ------ ------
Balance, June 30, 1999.......................... $6 $1,045 $ (94) $1,635 $2,592
== ====== ===== ====== ======
</TABLE>
Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income
----------------------
Net Unrealized
Capital Gains (Losses) Total
Common Capital on Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
-------- -------- ---------------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997.......................... $6 $1,045 $ 179 $1,113 $2,343
Comprehensive income
Net income.......................................... 168 168
------
Other comprehensive income, net of tax (1)
Net unrealized capital gains on securities (2)...... 70 70
------
Total other comprehensive income.................... 70
------
Total comprehensive income.......................... 238
-- ------ ----- ------ ------
Balance, June 30, 1998.......................... $6 $1,045 $ 249 $1,281 $2,581
== ====== ===== ====== ======
</TABLE>
(1) Net unrealized capital gains (losses) on securities is reflected net of tax
(benefit) provision of $(150) and $38 for the six months ended June 30, 1999
and 1998, respectively.
(2) There were reclassification adjustments for after-tax gains (losses)
realized in net income of $1 and $(4) for the six months ended June 30, 1999
and 1998, respectively.
See Notes to Consolidated Financial Statements.
<PAGE>
F-4 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Operating Activities
Net income................................................ $ 173 $ 168
Adjustments to reconcile net income to net cash used for
operating activities
Depreciation and amortization............................. (4) (12)
Net realized capital (gains) losses....................... (1) 6
Increase in premiums receivable and agents' balances...... (10) (4)
Decrease in other liabilities............................. (57) (117)
Change in receivables, payables and accruals.............. 70 (17)
Decrease in accrued tax................................... (200) (20)
Decrease (increase) in deferred income tax................ 119 (83)
Increase in deferred policy acquisition costs............. (173) (258)
Increase in future policy benefits........................ 126 181
(Increase) decrease in reinsurance recoverables and other
assets................................................... (83) 148
------- -------
Net cash used for operating activities.................. (40) (8)
======= =======
Investing Activities
Purchases of investments.................................. (4,010) (3,373)
Sales of investments...................................... 5,545 2,326
Maturities and principal paydowns of fixed maturity
investments.............................................. 979 979
------- -------
Net cash provided by (used for) investing activities.... 2,514 (68)
======= =======
Financing Activities
Net (disbursements for) receipts from investment and
universal life-type contracts (charged against) credited
to policyholder accounts................................. (2,417) 84
------- -------
Net cash (used for) provided by financing activities.... (2,417) 84
======= =======
Net increase in cash...................................... 57 8
Cash -- beginning of period............................... 17 54
------- -------
Cash -- end of period................................... $ 74 $ 62
======= =======
Supplemental Disclosure of Cash Flow Information
Net Cash paid during the period for
Income taxes.............................................. $ 111 $ 120
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-5
- --------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
(Dollar amounts in millions except for share data unless otherwise stated)
(Unaudited)
Note 1. Significant Accounting Policies
(a) Basis of Presentation
The accompanying unaudited consolidated financial statements of Hartford
Life Insurance Company and subsidiaries ("Hartford Life Insurance Company" or
the "Company") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
which are normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to those rules and regulations, although the Company believes that the
disclosures made are adequate to make the information presented not misleading.
In the opinion of management, these statements include all adjustments which
were normal recurring adjustments necessary to present fairly the financial
position, results of operations and cash flows for the periods presented. For a
description of significant accounting policies, see Note 2 of Notes to
Consolidated Financial Statements in Hartford Life Insurance Company's 1998 Form
10-K Annual Report.
Certain reclassifications have been made to prior year financial information
to conform to the current year classification of transactions and accounts.
(b) Changes in Accounting Principles
In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement No. 133". This statement amends SFAS No. 133 to defer its
effective date for one year, to fiscal years beginning after June 15, 2000.
Initial application for Hartford Life Insurance Company will begin for the first
quarter 2001.
Effective January 1, 1999, Hartford Life Insurance Company adopted Statement
of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". This SOP provides guidance on
accounting for costs of internal use software and in determining whether
software is for internal use. The SOP defines internal use software as software
that is acquired, internally developed, or modified solely to meet internal
needs and identifies stages of software development and accounting for the
related costs incurred during the stages. Adoption of this SOP did not have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1999, Hartford Life Insurance Company adopted SOP No.
97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". This SOP addresses accounting by insurance and other enterprises
for assessments related to insurance activities, including recognition,
measurement and disclosure of guaranty fund or other assessments. Adoption of
this SOP did not have a material impact on the Company's financial condition or
results of operations.
2. Segment Information
Hartford Life Insurance Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", during the fourth quarter of
1998. This statement replaces SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", and establishes new standards for reporting information
about operating segments in annual financial statements and in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
This statement requires that the reportable operating segments be based on the
Company's internal operations. On this basis, Hartford Life Insurance Company's
segments represent strategic operations which offer different products and
services as well as serve different markets.
Hartford Life Insurance Company is organized into three reportable operating
segments: Investment Products, Individual Life and Corporate Owned Life
Insurance (COLI). Investment Products offers individual variable annuities,
fixed market value adjusted (MVA) annuities and fixed and variable immediate
annuities, deferred compensation and retirement plan services, structured
settlement contracts and other special purpose annuity contracts. Individual
Life sells a variety of life insurance products, including variable life,
universal life, interest-sensitive whole life and term life insurance. COLI
primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, Hartford Life and Accident
Insurance Company.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2 of
Notes to Consolidated Financial Statements in Hartford Life Insurance
<PAGE>
F-6 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Company's 1998 Form 10-K Annual Report. Hartford Life Insurance Company
evaluates performance of its segments based on revenues, net income and the
segment's return on allocated capital. The Company charges direct operating
expenses to the appropriate segment and allocates the majority of indirect
expenses to the segments based on an intercompany expense arrangement.
Intersegment revenues are not significant and primarily occur between corporate
and the operating segments. These amounts include interest income on allocated
surplus and the allocation of net realized capital gains and losses through net
investment income utilizing the duration of the segment's investment portfolios.
The following tables present summarized financial information concerning the
Company's segments.
<TABLE>
<CAPTION>
Investment Individual
June 30, 1999 Products Life COLI Other Total
- ------------------------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Second Quarter Ended
Total revenues........... $474 $140 $215 $ 24 $ 853
Net income (loss)........ 81 17 7 (20) 85
---- ---- ---- ---- ------
Six Months Ended
Total revenues........... $935 $273 $439 $ 44 $1,691
Net income (loss)........ 159 32 13 (31) 173
---- ---- ---- ---- ------
<CAPTION>
Investment Individual
June 30, 1998 Products Life COLI Other Total
- ------------------------- ---------- ---------- -------- -------- --------
Second Quarter Ended
<S> <C> <C> <C> <C> <C>
Total revenues........... $455 $136 $132 $ (2) $ 721
Net income (loss)........ 67 15 6 (3) 85
---- ---- ---- ---- ------
Six Months Ended
Total revenues........... $888 $264 $473 $ 11 $1,636
Net income (loss)........ 130 28 12 (2) 168
---- ---- ---- ---- ------
</TABLE>
3. Commitments and Contingent Liabilities
(a) Litigation
Hartford Life Insurance Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary and
punitive damages have been asserted. 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, after consideration of provisions
made for potential losses and costs of defense, will have a material adverse
effect on the financial condition or operating results of the Company.
(b) Investments
In October 1998, the Company became aware of allegations of improper
activities at Commercial Financial Services Inc. (CFS), a securitizer and
servicer of asset backed securities, and on December 11, 1998, CFS filed for
protection under Chapter 11 of the Bankruptcy Code. As a result, the Company
recognized a $25, after-tax, writedown on its asset backed securities
securitized and serviced by CFS, during the fourth quarter of 1998. (For a
further discussion of CFS, see Note 12 (e) of Notes to Consolidated Financial
Statements included in Hartford Life Insurance Company's Form 10-K Annual
Report.)
In June 1999, CFS ceased operations and bankruptcy trustees began the
process of transitioning servicing accounts over to back up servicers. As a
result, the Company recognized a $28, after-tax, writedown related to the asset
backed securities, during the second quarter of 1999. As of June 30, 1999,
Hartford Life Insurance Company's amortized cost and estimated fair value of
these securities was $23.
(c) Tax Matters
Hartford Life Insurance Company's federal income tax returns are routinely
audited by the Internal Revenue Service. Management believes that adequate
provision has been made in the financial statements for items that may result
from tax examinations and other tax related matters.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-1
- --------------------------------------------------------------------------------
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, 1998 and
1997, 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, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these statutory
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because 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 generally accepted accounting principles, the
financial position of the Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 26, 1999
<PAGE>
F-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Assets
Bonds........................................... $ 1,453,792 $ 1,501,311
Common stocks................................... 40,650 64,408
Mortgage loans.................................. 59,548 85,103
Policy loans.................................... 47,212 36,533
Cash and short-term investments................. 469,955 309,432
Other invested assets........................... 2,188 20,942
----------- -----------
Total cash and invested assets................ 2,073,345 2,017,729
Investment income due and accrued............... 20,126 15,878
Premium balances receivable..................... 333 389
Receivables from affiliates..................... -- 1,269
Other assets.................................... 45,358 22,788
Separate account assets......................... 32,876,278 23,208,728
----------- -----------
Total Assets.................................. $35,015,440 $25,266,781
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 579,140 $ 605,183
Policy and contract claims...................... 5,667 5,672
Liability for premium and other deposit funds... 2,011,672 1,795,149
Asset valuation reserve......................... 21,782 13,670
Payable to affiliates........................... 19,271 20,972
Other liabilities............................... (974,882) (754,393)
Separate account liabilities.................... 32,876,278 23,208,728
----------- -----------
Total liabilities............................. 34,538,928 24,894,981
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 247,969 143,257
----------- -----------
Total capital and surplus..................... 476,512 371,800
----------- -----------
Total liabilities, capital and surplus............ $35,015,440 $25,266,781
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-3
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 469,343 $ 296,645 $ 250,244
Annuity and other fund deposits................. 2,051,251 1,981,246 1,897,347
Net investment income........................... 129,982 102,285 98,441
Commissions and expense allowances on
reinsurance ceded.............................. 444,241 396,921 370,637
Reserve adjustment on reinsurance ceded......... 3,185,590 3,672,076 3,864,395
Other revenues.................................. 458,190 288,632 161,906
----------- ----------- -----------
Total revenues................................ 6,738,597 6,737,805 6,642,970
----------- ----------- -----------
Benefits and expenses
Death and annuity benefits...................... 43,390 66,176 60,194
Disability and other benefit payments........... 6,114 7,316 6,555
Surrenders...................................... 739,663 454,417 270,165
Commissions and other expenses.................. 666,515 564,077 491,637
Increase (Decrease) in aggregate reserves for
future benefits................................ (26,043) 33,213 27,351
Increase in liability for premium and other
deposit funds.................................. 216,523 640,006 207,156
Net transfers to separate accounts.............. 4,956,007 4,914,980 5,492,964
----------- ----------- -----------
Total benefits and expenses................... 6,602,169 6,680,185 6,556,022
----------- ----------- -----------
Net gain from operations
Before federal income tax (benefit) expense..... 136,428 57,620 86,948
Federal income tax (benefit) expense............ 35,887 (14,878) 19,360
----------- ----------- -----------
Net gain from operations.......................... 100,541 72,498 67,588
Net realized capital gains, after tax........... 2,085 1,544 407
----------- ----------- -----------
Net income........................................ $ 102,626 $ 74,042 $ 67,995
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<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...................... $ 143,257 $ 74,570 $ 9,791
Net income...................................... 102,626 74,042 67,995
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 1,688 2,186 (5,171)
Change in asset valuation reserve............... (8,112) (6,228) 568
Change in non-admitted assets................... (1,277) (1,313) 1,387
Credit on reinsurance ceded..................... 9,787 -- --
----------- ----------- -----------
Balance, end of year............................ $ 247,969 $ 143,257 $ 74,570
----------- ----------- -----------
Capital and surplus,
End of year..................................... $ 476,512 $ 371,800 $ 303,113
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-5
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operations
Premiums and annuity considerations............. $ 2,520,655 $ 2,277,874 $ 2,147,627
Investment income............................... 127,425 101,991 106,178
Other income.................................... 4,092,964 4,381,718 4,396,892
----------- ----------- -----------
Total income.................................. 6,741,044 6,761,583 6,650,697
----------- ----------- -----------
Benefits paid................................... 790,051 529,733 338,998
Federal income taxes (received) paid on
operations..................................... 25,780 (14,499) 28,857
Other expenses.................................. 5,859,063 5,754,725 6,254,139
----------- ----------- -----------
Total benefits and expenses................... 6,674,894 6,269,959 6,621,994
----------- ----------- -----------
Net cash from operations...................... 66,150 491,624 28,703
----------- ----------- -----------
Proceeds from investments
Bonds........................................... 633,926 614,413 871,019
Common stocks................................... 34,010 11,481 72,100
Mortgage loans.................................. 85,275 -- --
Other........................................... 127 152 10
----------- ----------- -----------
Net investment proceeds....................... 753,338 626,046 943,129
----------- ----------- -----------
Taxes paid on capital gains..................... -- -- 936
Other cash provided............................. 1,269 -- 41,998
----------- ----------- -----------
Total proceeds................................ 820,757 1,117,670 1,012,894
----------- ----------- -----------
Cost of investments acquired
Bonds........................................... 586,913 848,267 914,523
Common stocks................................... 7,012 28,302 82,495
Mortgage loans.................................. 59,702 85,103 --
Other........................................... 1,168 18,548 130
----------- ----------- -----------
Total investments acquired.................... 654,795 980,220 997,148
----------- ----------- -----------
Other cash applied
Other........................................... 5,439 4,848 12,220
----------- ----------- -----------
Total other cash applied...................... 5,439 4,848 12,220
----------- ----------- -----------
Total applications............................ 660,234 985,068 1,009,368
----------- ----------- -----------
Net change in cash and short-term investments..... 160,523 132,602 3,526
Cash and short-term investments, beginning of
year............................................. 309,432 176,830 173,304
----------- ----------- -----------
Cash and short-term investments, end of year...... $ 469,955 $ 309,432 $ 176,830
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Hartford Life and Annuity Insurance Company, is a wholly
owned subsidiary of Hartford Life Insurance Company ("HLIC"), which is an
indirect subsidiary of Hartford Life, Inc. ("HLI"), which is majority owned by
The Hartford Financial Services Group, Inc. ("The Hartford"), formerly a wholly
owned subsidiary of ITT Corporation ("ITT"). On February 10, 1997, HLI filed a
registration statement, as amended, with the Securities and Exchange Commission
relating to the initial public offering of HLI Class A Common Stock (the
"Offering"). Pursuant to the Offering on May 22, 1997, HLI sold to the public 26
million shares, representing 18.6% of the equity ownership of HLI. On December
19, 1995, ITT Corporation distributed all the outstanding shares of The Hartford
to ITT shareholders of record in an action known herein as the "Distribution".
As a result of the Distribution, The Hartford became an independent, publicly
traded company. During 1996, ILA re-domesticated from the State of Wisconsin to
the State of Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC"), the State of
Connecticut Department of Insurance and the State of Wisconsin for the 1996
period, as applicable. Certain prior year amounts and balances have been
reclassified to conform with current year presentation.
Current prescribed statutory accounting practices include accounting
publications of the National Association of Insurance Commissioners ("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.
Final approval of the NAIC's proposed "Comprehensive Guide" on statutory
accounting principles was distributed in 1998. The requirements are effective
January 1, 2001, and are not expected to have a material impact on statutory
surplus of the Company.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The most significant estimates
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 and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, premium taxes, etc.) which are charged to expense when incurred
for statutory purposes rather than on a pro-rata basis over the expected
life of the policy 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, are only recorded for policy charges for the
cost of insurance, policy administration and surrender charges assessed to
policy account balances. Also, for GAAP purposes, premiums for traditional
life insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment
margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-7
- --------------------------------------------------------------------------------
(4) providing for income taxes based on current taxable income (tax return) only
for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
negative Interest Maintenance Reserve, past due agents' balances and
furniture and equipment) from the balance sheet for statutory purposes by
directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health care
benefits currently, or using a twenty year phase-in approach, whereas GAAP
liabilities are recorded upon adoption of the applicable standard;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place, whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
as well as, the accounting for retroactive reinsurance which is immediately
charged to surplus for statutory accounting purposes whereas GAAP precludes
immediate gain recognition unless the ceding enterprise's liability to its
policyholders is extinguished; as well as reinsurance ceded that fails to
meet GAAP risk transfer guidelines would result in deposit accounting for
GAAP where as for statutory, reserves ceded and assumed would be reflected
in the statutory basis statements of operations;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) on common
stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, the significant differences
between Statutory and GAAP basis net income and capital and surplus for the
Company are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
GAAP Net Income.................... $ 74,525 $ 58,050 $ 41,202
Amortization and deferral of policy
acquisition costs, net............ (331,882) (345,657) (341,571)
Change in unearned revenue
reserve........................... 22,131 4,641 55,504
Deferred taxes..................... 2,476 47,092 2,090
Separate accounts.................. 259,287 282,818 306,978
Asset impairments and
write-downs....................... 17,250 -- --
Benefit reserve adjustment......... 32,759 24,666 (1,013)
Deposit accounting for Lyndon
reinsurance (Note 3).............. 24,627 -- --
Other, net......................... 1,453 2,432 4,805
------------ ------------ ------------
Statutory Net Income............... $ 102,626 $ 74,042 $ 67,995
------------ ------------ ------------
------------ ------------ ------------
GAAP Capital and Surplus........... $ 648,097 $ 570,469 $ 503,887
Deferred policy acquisition
costs............................. (1,615,653) (1,283,771) (938,114)
Unearned revenue reserve........... 156,920 134,789 130,148
Deferred taxes..................... 68,936 64,522 12,823
Separate accounts.................. 1,183,642 924,355 640,101
Asset impairments and
write-downs....................... 17,250 -- --
Unrealized gains on bonds.......... (26,119) (21,451) (7,978)
Benefit reserve adjustment......... 65,029 16,378 7,035
Asset valuation reserve............ (21,782) (13,670) (7,442)
Adjustment relating to Lyndon
contribution (Note 3)............. -- (23,671) (36,126)
Other, net......................... 192 3,850 (1,221)
------------ ------------ ------------
Statutory Capital and Surplus...... $ 476,512 $ 371,800 $ 303,113
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
As more fully described in Note 3, Lyndon Insurance Company (Lyndon) was
contributed to the Company on June 30, 1995. The GAAP net assets contributed
exceeded the statutory basis net assets by $41,277 as of December 31, 1995,
relating primarily to statutory reserves for future
<PAGE>
F-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
benefits, GAAP deposit accounting receivables and deferred tax liabilities. In
1998, the majority of the former Lyndon's assumed business was recaptured by the
unaffiliated direct writer.
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the statutory basis statements
of operations.
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 permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
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. Other
invested assets are generally recorded at fair value.
The Company uses a variety of derivative financial instruments as part of an
overall risk management strategy. These instruments, including interest rate and
foreign currency swaps, caps, and floors are used as a means of hedging exposure
to price, foreign currency and/or interest rate risk on planned investment
purchases or existing assets and liabilities. The Company does not hold or issue
derivative financial instruments for trading purposes. Derivatives must be
designated at inception as a hedge measured for effectiveness both at inception
and on an ongoing basis. The Company's correlation threshold for hedge
designation is 80% to 120%. If correlation, which is assessed monthly and
measured based on a rolling three month average, falls outside the 80% to 120%
range, hedge accounting will be terminated.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to net investment income. Should the swap be terminated the gains or losses are
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the statutory basis statements of operations while
the change in market value is recognized as an unrealized gain or loss. Foreign
currency swaps are similar to interest rate swaps except there is an initial
exchange of principal in two currencies and an agreement to re-exchange the
currencies at a future date, at an agreed upon exchange rate.
Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Derivatives used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivatives which fail to meet risk management
criteria subsequent to acquisition, are accounted for at fair market value with
the impact reflected in the statutory basis statements of operations.
Open forward commitment contracts are marked to market through surplus. Such
contracts are accounted for at settlement by recording the purchase of specified
securities at the previously committed price. Gains or losses resulting from
termination of the forward commitment contracts before the delivery of the
securities are recognized immediately in the statutory basis statements of
operations as a component of Net Realized Capital Gains, after tax.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The reserve increased $8,112 and $6,228
in 1998 and 1997, respectively and decreased $(568) in 1996. Additionally, the
Interest Maintenance Reserve ("IMR") captures net realized capital gains and
losses, net
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-9
- --------------------------------------------------------------------------------
of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the life of the mortgage loan
or bond sold. The IMR balance as of December 31, 1998 and December 31, 1997 was
$452 and $(193), respectively and is reflected in Other Liabilities and as a
component of non-admitted assets in Unassigned Funds for each of the years then
ended. For the years ended December 31, 1998, 1997 and 1996, amortization of IMR
is included in Other Revenues and was $(207), $(85) and $(392), respectively.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the statutory basis statements of operations. Realized investment gains and
losses are determined on a specific identification basis.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $1,187 million and $923 million as of December 31, 1998 and
1997, respectively. The balances are classified in accordance with NAIC
prescribed practices.
MORTGAGE LOANS
Mortgage loans, which are carried at cost and approximate fair value,
include investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments.......... $ 123,370 $ 100,475 $ 89,940
Interest income from policy
loans........................... 3,133 1,958 1,846
Interest and dividends from other
investments..................... 4,482 1,005 7,864
---------- ---------- ---------
Gross investment income.......... 130,985 103,438 99,650
Less: investment expenses........ 1,003 1,153 1,209
---------- ---------- ---------
Net investment income............ $ 129,982 $ 102,285 $ 98,441
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.. $ 2,204 $ 537 $ 713
Gross unrealized capital
losses......................... (1,871) (1,820) (4,160)
--------- --------- ---------
Net unrealized capital
(losses)/gains................. 333 (1,283) (3,447)
Balance, beginning of year...... (1,283) (3,447) 1,724
--------- --------- ---------
Change in net unrealized capital
gains (losses) on Common
stocks......................... $ 1,616 $ 2,164 $ (5,171)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(c) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ----------
<S> <C> <C> <C>
Gross unrealized capital
gains........................ $ 10,905 $ 23,357 $ 11,821
Gross unrealized capital
losses....................... (833) (1,906) (3,842)
---------- --------- ----------
Net unrealized capital
gains........................ 10,072 21,451 7,979
Balance, beginning of year.... 21,451 7,979 20,877
---------- --------- ----------
Change in net unrealized
capital gains on bonds and
short-term investments....... $ (11,379) $ 13,472 $ (12,898)
---------- --------- ----------
---------- --------- ----------
</TABLE>
(d) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term investments.... $ 1,314 $ (120) $ 2,756
Common stocks....................... 1,624 -- --
Real estate and other............... (1) 114 --
--------- --------- ---------
Realized capital (losses) gains..... 2,937 (6) 2,756
Capital gains (benefit) tax......... -- (831) 936
--------- --------- ---------
Net realized capital gains.......... 2,937 825 1,820
Amounts transferred to IMR.......... 852 (719) 1,413
--------- --------- ---------
Net realized capital gains.......... $ 2,085 $ 1,544 $ 407
--------- --------- ---------
--------- --------- ---------
</TABLE>
(e) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1998.
(f) CONCENTRATION OF CREDIT RISK
The Company has invested in securities of a single issuer, Bankers Trust
Corporation, in an amount greater than 10% of the Company's statutory capital
and surplus. The statement value of this investment was $105,221 as of December
31, 1998. The NAIC ratings on these holdings were 1z and 2. Excluding this and
U.S. government and government agency investments, the Company had no other
significant concentrations of credit risk as of December 31, 1998.
<PAGE>
F-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(g) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1998
------------------------------------------------
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.............................................. 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>
<TABLE>
<CAPTION>
1997
------------------------------------------------
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.................................... $ 11,114 $ 55 $ (51) $ 11,118
-- Guaranteed and sponsored -- asset-backed.................... 55,506 1,056 (269) 56,293
States, municipalities and political subdivisions................ 26,404 329 -- 26,733
International governments........................................ 7,609 500 -- 8,109
Public utilities................................................. 73,024 754 (132) 73,646
All other corporate.............................................. 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.............................. 630,069 5,005 (739) 634,335
Short-term investments........................................... 277,330 33 (8) 277,355
Certificates of deposit.......................................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates............................. 86,100 -- -- 86,100
---------- ---------- ---------- ----------
Total bonds and short-term investments........................... $1,778,641 $23,357 $(1,906) $1,800,092
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $30,307 $537 $ -- $30,844
Common stock -- affiliated................................... 35,384 -- (1,820) 33,564
--------- ----- ---------- ----------
Total common stocks.......................................... $65,691 $537 $(1,820) $64,408
--------- ----- ---------- ----------
--------- ----- ---------- ----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments as of December 31, 1998 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
ILA's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. Expected maturities differ from contractual
maturities due to call or repayment provisions.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ----------------------------------- ------------ ------------
<S> <C> <C>
One year or less................... $ 788,845 $ 792,826
Over one year through five years... 689,025 692,811
Over five years through ten
years............................. 308,661 310,357
Over ten years..................... 111,044 111,653
------------ ------------
Total.............................. $ 1,897,575 $ 1,907,647
------------ ------------
------------ ------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-11
- --------------------------------------------------------------------------------
Proceeds from sales and maturities of investments in bonds and short-term
investments during 1998, 1997 and 1996 were $1,354,563, $1,435,820 and
$1,139,073, respectively, resulting in gross realized gains of $1,705, $964 and
$3,675, respectively, and gross realized losses of $391, $1,084 and $919,
respectively, before transfers to IMR.
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term
investments..................... $ 1,898 $ 1,908 $ 1,779 $ 1,800
Common stocks.................... 41 41 64 64
Policy loans..................... 47 47 37 37
Mortgage loans................... 60 60 85 85
Other invested assets............ 2 2 21 21
LIABILITIES
Liabilities on investment
contracts....................... $ 2,053 $ 2,129 $ 1,911 $ 1,835
</TABLE>
The estimated fair value of bonds and short-term investments was determined
by the Company primarily using NAIC market values. The carrying amounts for
policy loans approximates fair value. The fair value of mortgage loans was
determined by discounting future expected cash flows using interest rates
currently being offered for similar loans. The fair value of liabilities on
investment contracts is determined by forecasting future cash flows and
discounting the forecasted cash flows at current market interest rates.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS
The Company's existing reserves consist of life, health, annuity and
supplementary contracts. The Company cedes and assumes insurance to and from
non-affiliated insurers in order to limit its maximum loss. Such transfers do
not relieve the Company or the unaffiliated reinsured of their primary
liabilities. The Company cedes to RGA Reinsurance Company and its affiliate
Employers Reassurance Corporation, on a modified coinsurance basis, 80% of the
variable annuity business written since 1994 and 100% of the variable life and
variable universal life excess sales load refund obligation effective 1998.
There were no material reinsurance recoverables from reinsurers outstanding as
of, and for the years ended, December 31, 1998 and 1997.
A summary of reinsurance information as of and for the years ended December
31, follows:
<TABLE>
<CAPTION>
1998 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 483,328 $ 24,954 $ (38,939) $ 469,343
Death, Annuity, Disability and
Other Benefits.................... $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders......................... $ 739,663 $ -- $ -- $ 739,663
Aggregate Reserves for Future
Benefits.......................... $ 713,425 $ -- $ (134,285) $ 579,140
Policy and Contract Claims......... $ 5,895 $ 85 $ (313) $ 5,667
<CAPTION>
1997 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 266,427 $ 51,630 $ (21,412) $ 296,645
Death, Annuity, Disability and
Other Benefits.................... $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders......................... $ 454,417 $ -- $ -- $ 454,417
Aggregate Reserves for Future
Benefits.......................... $ 651,820 $ -- $ (46,637) $ 605,183
Policy and Contract Claims......... $ 5,861 $ 157 $ (346) $ 5,672
<CAPTION>
1996 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 226,612 $ 33,817 $ (10,185) $ 250,244
Death, Annuity, Disability and
Other Benefits.................... $ 34,950 $ 35,138 $ (3,339) $ 66,749
Surrenders......................... $ 270,165 $ -- $ -- $ 270,165
</TABLE>
In connection with the distribution described in Note 1, on June 30, 1995,
the assets of Lyndon were contributed to the Company. The statutory basis assets
in excess of statutory basis liabilities was approximately $112 million and was
reflected as an increase in Gross Paid-In and Contributed Surplus at December
31, 1995. In 1998, the majority of former Lyndon's assumed business was
recaptured by the unaffiliated direct writer. A ceding commission of $25,622 and
change in reserve of $26,404 for the year ended December 31, 1998, is reflected
in Other Revenue and Increase/(Decrease) in Aggregate Reserves for Future
Benefits in the statutory basis statements of operations, respectively.
<PAGE>
F-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1998 (including general and separate account
liabilities) are as follows:
<TABLE>
<CAPTION>
% OF
SUBJECT TO DISCRETIONARY WITHDRAWAL: AMOUNT TOTAL
- --------------------------------------- ------------- ---------
<S> <C> <C>
With market value adjustment........... $ 4,563 0.0%
At book value less current surrender
charge of 5% or more.................. 1,378,056 4.1%
At market value........................ 31,087,511 93.8%
------------- ---------
Total with adjustment or at market
value................................. 32,470,130 97.9%
At book value without adjustment
(minimal or no charge or
adjustment)........................... 665,159 2.0%
Not subject to discretionary
withdrawal............................ 19,739 0.1%
------------- ---------
Reinsurance ceded...................... 33,155,028
Total, net......................... $ 33,155,028
-------------
-------------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, rental and service fees,
capital contributions and payments of dividends. 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, ITT Hartford
Life, LTD.
5. 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 consolidated group of
which The Hartford is the common parent. It is the intention of The Hartford and
its non-life subsidiaries to file a single consolidated Federal income tax
return. The life insurance companies will file a separate consolidated Federal
income tax return. Federal income taxes (received) paid by the Company for
operations and capital gains were $25,780, $(14,499) and $29,793 in 1998, 1997
and 1996, respectively. The effective tax rate was 26%, (26)% and 22% in 1998,
1997 and 1996, respectively.
The Company is currently under audit by the Internal Revenue Service (IRS)
for the three year tax period ending 1995. The audit is not yet complete. As of
December 31, 1998, the Company does not currently expect any material
adjustments to arise from this audit.
The following schedule provides a reconciliation of the tax provision at the
U.S. Federal Statutory rate to Federal income tax (benefit) expense (in
millions):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate..................................... $ 48 $ 20 $ 30
Tax deferred acquisition costs............ 25 25 27
Statutory to tax reserve differences...... 8 1 --
Unrealized gain on separate accounts...... (41) (44) (21)
Investments and other..................... (4) (17) (17)
--------- --------- ---------
Federal income tax (benefit) expense...... $ 36 $ (15) $ 19
--------- --------- ---------
--------- --------- ---------
</TABLE>
6.CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is 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 1998, 1997 and 1996. The amount available for dividend in 1999 is
$100,541.
7. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI's employees are included in The Hartford's non-contributory defined
benefit pension plans. These plans provide pension benefits that are based on
years of service and the employee's compensation during the last ten years of
employment. HLI'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 affiliated group pension contracts. The cost to HLI was
approximately $9,000 in 1998 and $7,000 in both 1997 and 1996.
HLI also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial portion of
HLI's employees may become eligible for these benefits upon retirement. HLI's
contribution for health care benefits will depend on the retiree's date of
retirement and years of service. In addition, the plan has a defined dollar cap
which limits average company contributions. HLI 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-13
- --------------------------------------------------------------------------------
benefits expense, allocated by The Hartford, was immaterial to the results of
operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, 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.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $32.9
billion and $23.2 billion as of December 31, 1998 and 1997, respectively.
Separate account assets are reported at fair value and separate account
liabilities are determined in accordance with CARVM, which approximates the
market value less applicable surrender charges. Separate account assets are
segregated from other investments, the policyholder assumes the investment risk,
and the investment income and gains and losses accrue directly to the
policyholder. Separate account management fees, net of minimum guarantees, were
$360 million, $252 million and $144 million in 1998, 1997 and 1996,
respectively, and are recorded as a component of other revenues on the statutory
basis statements of operations.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, the Company had no material contingent liabilities,
nor had the Company committed any surplus funds for any contingent liabilities
or arrangements. The Company is involved in pending and threatened litigation in
the normal course of its business in which claims for monetary and punitive
damages have been asserted. 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, after consideration of provisions made
for potential losses and costs of defense, will have a material adverse effect
on the statutory capital and surplus of the Company.
As discussed in Note 5, issues may potentially be raised by the IRS in
future audits of open years. Management does not believe that possible audit
adjustments will have a material effect on the statutory capital and surplus of
the Company.
Under insurance guaranty fund laws in each state, insurers licensed to do
business can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. The amount of any future assessments on ILA
under these laws cannot be reasonably estimated. Most of the laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's own financial strength. Additionally, guaranty fund assessments are
used to reduce state premium taxes paid by the Company in certain states. ILA
paid guaranty fund assessments of $1,043, $1,544 and $1,262 in 1998, 1997 and
1996, respectively. ILA incurred guaranteed fund expense of $548 in 1998, 1997
and 1996.
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 27. Exhibits
(a) Resolution of the Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account.
(b) Not Applicable.
(c) Principal Underwriting Agreement.(2)
(d) Form of Flexible Premium Variable Life Insurance Policy.(3)
(e) Form of Application for Flexible Premium Variable Life Insurance
Policies.(3)
(f) Certificate of Incorporation of Hartford(2) and Bylaws of
Hartford.(2)
(g) Contracts of Reinsurance.(3)
(h) Form of Participation Agreement.(3)
(i) Not Applicable.
(j) Not Applicable.
(k) Opinion and consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(l) Opinion and Consent of Kenneth A. McCullum, FSA., MAAA.(3)
(m) Not Applicable.
(n) Consent of Arthur Andersen LLP, Independent Public Accountants.
(o) No financial statement will be omitted.
(p) Not Applicable.
(q) Memorandum describing transfer and redemption procedures.(1)
(r) Power of Attorney.
(s) Organizational Chart
___________________________
(1) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-6, File No. 33-61267, of Hartford Life and
Annuity Insurance Company filed with the Securities and Exchange Commission
on January 23, 1996.
(2) Incorporated by reference to Pre-Effective Amendment No. 3 to the
Registration Statement on Form S-6, File No. 33-61267, of Hartford Life and
Annuity Insurance Company filed with the Securities and Exchange Commission
on August 28, 1996.
(3) Incorporated by reference to the Initial filing of the Registration
Statement on Form S-6, File No. 333-83057, on July 16, 1999.
<PAGE>
Item 28. Officers and Directors.
- --------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
- --------------------------------------------------------------------------
Wendell J. Bossen Vice President
- --------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Director*
- --------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- --------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
- --------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- --------------------------------------------------------------------------
David T. Foy Senior Vice President & Treasurer
- --------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and
Corporate Secretary, Director*
- --------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- --------------------------------------------------------------------------
Stephen T. Joyce Vice President
- --------------------------------------------------------------------------
Michael D. Keeler Vice President
- --------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- --------------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director*
- --------------------------------------------------------------------------
Steven L. Matthiesen Vice President
- --------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- --------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer, Director*
- --------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- --------------------------------------------------------------------------
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
_______________________________________________
* Denotes Board of Directors of Hartford.
Item 29. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit (s).
Item 30: Indemnification
Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the
proceeding.
<PAGE>
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Registrant, and, with respect to any criminal
proceeding, had no reason to believe his conduct was unlawful.
Conn. Gen. Stat. Section 33-771(a). Additionally, pursuant to Conn.
Gen. Stat. Section 33-776, the Registrant may indemnify officers
and employees or agents for liability incurred and for any expenses
to which they becomes subject by reason of being or having been an
employees or officers of the Registrant. Connecticut law does not
prescribe standards for the indemnification of officers, employees
and agents and expressly states that their indemnification may be
broader than the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the
detailed provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify only a director that was successful on the
merits in a suit, under Article VIII, Section 2 of the Registrant's
bylaws, the Registrant must indemnify both directors and officers
of the Registrant who are parties or threatened to be parties to a
legal proceeding by reason of his being or having been a director
or officer of the Registrant for any expenses if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the company, and with respect to
criminal proceedings, had no reason to believe his conduct was
unlawful. Unless otherwise mandated by a court, no indemnification
shall be made if such officer or director is adjudged to be liable
for negligence or misconduct in the performance of his duty to the
Registrant.
Additionally, the directors and officers of Hartford and Hartford
Equity Sales Company, Inc. ("HESCO") are covered under a directors
and officers liability insurance policy issued to The Hartford
Financial Services Group, Inc. and its subsidiaries. Such policy
will reimburse the Registrant for any payments that it shall make
to directors and officers pursuant to law and will, subject to
certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising
from any proceeding involving any director or officer of the
Registrant in his past or present capacity as such, and for which
he may be liable, except as to any liabilities arising from acts
that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, the Registrant has been
<PAGE>
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Item 31. Principal Underwriters
(a) HESCO acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account VL I
Hartford Life Insurance Company - Separate Account VL II
Hartford Life Insurance Company - ICMG Secular Trust Separate
Account
Hartford Life Insurance Company -- ICMG Registered Variable Life
Separate Account A
Hartford Life and Annuity Insurance Company -- Separate
Account VL I
Hartford Life and Annuity Insurance Company -- Separate
Account VL II
Hartford Life and Annuity Insurance Company -- ICMG Registered
Variable Life Separate Account A
(b) Directors and Officers of HESCO
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
Lowndes A. Smith President and Chief Executive
Officer, Director
Thomas M. Marra Executive Vice President,
Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary
Richard J. Garrett Vice President
Donald A. Salama Vice President
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
Item 32. Location of Accounts and Records
All of the accounts, books, records or other documents required to
be kept by Section 31(a) of the Investment Company Act of 1940 and
rules thereunder, are maintained by Hartford at 200 Hopmeadow
Street, Simsbury, Connecticut 06089.
Item 33. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 34. Representation of Reasonableness of Fees
Hartford hereby represents that the aggregate fees and charges under the
Policy are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Hartford.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Registrant certifies that it duly caused this registration statement
to be signed on its behalf by the undersigned, duly authorized, in the Town
of Simsbury, and State of Connecticut on the 22 day of October, 1999.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY SEPARATE ACCOUNT VL I
(Registrant)
*By: David T. Foy *By: /s/ Marianne O'Doherty
----------------------------------- ----------------
David T. Foy, Senior Vice President Marianne O'Doherty
and Treasurer Attorney-In-Fact
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
(Depositor)
*By: David T. Foy
-------------------------------------------------
David T. Foy, Senior Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Gregory A. Boyko, Senior Vice President
and Director*
Lynda Godkin, Senior Vice President, General *By: /s/ Marianne O'Doherty
Counsel, & Corporate Secretary, Director* ---------------------
Thomas M. Marra, Executive Vice Marianne O'Doherty
President, Director* Attorney-In-Fact
Lowndes A. Smith, President,
Chief Executive Officer, Director*
David M. Znamierowski, Senior Vice President, Dated: October 22, 1999
Director*
<PAGE>
EXHIBIT INDEX
1.5 Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
1.6 Consent of Arthur Andersen LLP, Independent Public Accountants.
1.7 Power of Attorney.
1.8 Organizational Chart.
<PAGE>
EXHIBIT 1.5
November 1, 1999
LYNDA GODKIN, SENIOR VICE PRESIDENT,
GENERAL COUNSEL & CORPORATE SECRETARY
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: Separate Account VL I
Hartford Life and Annuity Insurance Company
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance
Company (the "Company"), a Connecticut insurance company, and Hartford Life
and Annuity Insurance Company Separate Account VL I (the "Account") in
connection with the registration of an indefinite amount of securities in the
form of flexible premium variable life insurance policies (the "Policies")
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended. I have examined such documents (including the Form S-6
Registration Statement) and reviewed such questions of law as I considered
necessary and appropriate, and on the basis of such examination and review,
it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a
stock life insurance company under the laws of the State of Connecticut
and is duly authorized by the Insurance Department of the State of
Connecticut to issue the Policies.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Policies, that portion of the
assets of the Account equal to the reserves and other contract
liabilities with respect to the Account will not be chargeable with
liabilities arising out of any other business that the Company may
conduct.
4. The Policies, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Policies and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-83057 for Hartford Life and Annuity
Insurance Company Separate Account VL I on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
October 27, 1999
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
David T. Foy
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord to sign as their agent,
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Hartford Life and Annuity
Insurance Company under the Securities Act of 1933 and/or the Investment
Company Act of 1940, and do hereby ratify any such signatures heretofore made
by such persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ David T. Foy Dated as of January 15, 1999
- ------------------------------
David T. Foy
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of January 15, 1999
- ------------------------------
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE & ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
ITT HARTFORD LIFE | | | | | | HLIC PLANCO
INTERNATIONAL LTD. | | | | | | CANADA FINANCIAL
(CONNECTICUT) | | | | | | HOLDINGS, INC. SERVICES,
| | | | | | | (CANADA) INCORPORATED
| | | | | | | | (PENNSYLVANIA)
| | | | | | | | |
| | ALPINE LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN | |
| | INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE | |
| | COMPANY INSURANCE CO. (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY | |
| | (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT) | PLANCO, INC.
| | | | | | (PENNSYLVANIA)
| | ------------------------------------- | AML FINANCIAL, INC. |
HARTFORD CALMA | | | | | (CONNECTICUT) |
COMPANY | ROYAL LIFE HARTFORD HARTFORD | HARTFORD
(FLORIDA) | INSURANCE INTERNATIONAL LIFE AND | LIFE INSURANCE
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE | COMPANY
| OF AMERICA CORP. COMPANY | OF CANADA
|(CONNECTICUT) (CONNECTICUT) (CONNECTICUT) | (CANADA)
| | |
| | |
| ITT HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| ---------------------------------------------------------------------------------------------
| | | | | |
INTERNATIONAL MS FUND HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD COMP. EMP.
CORPORATE AMERICA 1993-K ADVISORS, LLC EQUITY SALES DISTRIBUTION BENEFITS SERVICE
MARKETING GROUP, INC. SPE, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. COMPANY
(CONNECTICUT) (DELAWARE) | (CONNECTICUT) (CONNECTICUT) (CONNECTICUT)
| |
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | ITT HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |--------DE VIDA DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | ITT HARTFORD
| | HARTFORD | |-----SEGUROS DE VIDA
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) | |
| | | | |
| | | | | ITT HARTFORD
| | -- ----------| | |------SEGUROS DE
| | | | | | RETIRO S.A.
| | | | | | (ARGENTINA)
|-----------|----------------|---------------|---|--------------------------------------------------------------------------
| | | | | |
| | | ICATU HARTFORD | | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) | |----DE FONDOS COMUNES
| | | | | | DE ENVERSION
| | | | | | (ARGENTINA)
| | | ICATU HARTFORD | |
| | | CAPITALIZACAO S.A. | | CLARIDAD
| | | (BRAZIL) | | ADMINISTRADORA DE
| | | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | | (ARGENTINA)
| | | (BRAZIL) | |
| | | | |
| | -------------------------- | |
| |--------------- | | |
| | | | |
HARTFORD FIRE HARTFORD FIRE | | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | | |
(WEST GERMANY) | | |
| | |
ICATU HARTFORD | | | THESIS S.A.
ADMINISTRACAO | | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | | |
(BRAZIL) | |
| |
----------------- |
| |
CAB |--------- U.O.R., S.A.
CORPORATION (ARGENTINA)
(BRITISH VIRGIN ISLANDS)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND --ITT ERCOS |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH DE SEGUROS Y |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. REASEGUROS S.A.|
|----SCHADEVERZEKERING | | (U.K.) (SPAIN) |
--------| N.V.----------------------------------- | | | |
| | (NETHERLANDS) | | | | |
Z.A. | | | | EXCESS INSURANCE |
- --VERZEKERINGEN | | | | COMPANY LTD. |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
