<PAGE>
As filed with the Securities and Exchange Commission on May 8, 2000.
File No. 333-88787
811-07329
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO THE 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
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
----
on _________, 2000 pursuant to paragraph (b) of Rule 485
----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
----
on __________, 2000 pursuant to paragraph (a)(1) of Rule 485
----
this post-effective amendment designates a new effective date for a
---- previously filed post-effective amendment.
Approximate date of proposed public offering: As soon as practicable after the
effective date of this registration statement.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
Item No. of Form N-8B-2 Caption in Prospectus
- ----------------------- ---------------------
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
<PAGE>
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
<PAGE>
<TABLE>
<S> <C>
"STAG PROTECTOR EZ 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 EZ Variable Universal Life insurance policy. Please read it
carefully.
Stag Protector EZ 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>
Hartford Advisers Fund Sub-Account Class IA of Hartford Advisers HLS Fund, Inc.
<S> <C>
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 Money Market Fund Sub-Account Class IA of Hartford Money Market HLS Fund, Inc.
Hartford Mortgage Securities Fund Sub-Account Class IA of Hartford Mortgage Securities 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
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 Fund Sub- Class IA of Putnam VT The George Putnam Fund of
Account 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 II Asset Manager Portfolio Sub-Account Initial Class of Fidelity VIP II Asset Manager
Portfolio
Fidelity VIP Equity-Income Portfolio Sub-Account Initial Class of Fidelity VIP Equity-Income Portfolio
Fidelity VIP Overseas Portfolio Sub-Account Initial Class of Fidelity VIP Overseas Portfolio
</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; or
- endorsed by any bank or governmental agency.
- --------------------------------------------------------------------------------
PROSPECTUS DATED: MAY 22, 2000
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 22, 2000
<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 9
- ----------------------------------------------------------------------
Hartford Life and Annuity Insurance Company 9
- ----------------------------------------------------------------------
Separate Account VL I 9
- ----------------------------------------------------------------------
The Funds 9
- ----------------------------------------------------------------------
The Fixed Account 11
- ----------------------------------------------------------------------
CHARGES AND DEDUCTIONS 12
- ----------------------------------------------------------------------
Deductions from Premium 12
- ----------------------------------------------------------------------
Deductions from Account Value 12
- ----------------------------------------------------------------------
Charges for the Funds 13
- ----------------------------------------------------------------------
YOUR POLICY 13
- ----------------------------------------------------------------------
Contract Rights 13
- ----------------------------------------------------------------------
Contract Limitations 13
- ----------------------------------------------------------------------
Changes to Contract or Separate Account 14
- ----------------------------------------------------------------------
Other Benefits 14
- ----------------------------------------------------------------------
Class of Purchasers 15
- ----------------------------------------------------------------------
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 21
- ----------------------------------------------------------------------
Federal Income Tax Withholding 22
- ----------------------------------------------------------------------
Non-Individual Ownership of Policies 22
- ----------------------------------------------------------------------
Other 22
- ----------------------------------------------------------------------
Life Insurance Purchases by Non-resident Aliens and
Foreign Corporations 22
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
- ----------------------------------------------------------------------
LEGAL PROCEEDINGS 22
- ----------------------------------------------------------------------
GLOSSARY OF SPECIAL TERMS 23
- ----------------------------------------------------------------------
WHERE YOU CAN FIND MORE INFORMATION 24
- ----------------------------------------------------------------------
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 in force 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.
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 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 "Making Withdrawals From Your Policy --
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.
WHAT DOES YOUR PREMIUM PAY FOR?
Your premium pays for three things. It pays for life 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 10%
Policy Years 20 + 6.5%
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.
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
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.
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,
flat extra rating, and age of
policy. The maximum monthly COI
rate ranges from a minimum of
$.0709 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 Face Amount during the
first 10 policy years:
- individualized based on insured's
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
<S> <C>
POLICIES FROM WHICH CHARGE IS
CHARGE DEDUCTED
Cost of Insurance All
Charges
Mortality and Expense All
Risk Charge
Administrative Charge All
</TABLE>
The next table describes the Fund fees and expenses that you will pay
periodically during the time that you own the policy. The table shows the actual
fees and expenses charged by the Funds for the year ended December 31, 1999.
More detail concerning each Fund's fees and expenses is contained in the
prospectus for each Fund.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
OTHER EXPENSES
MANAGEMENT FEES EXPENSES (INCLUDING ANY
(INCLUDING ANY (INCLUDING ANY WAIVERS AND ANY
WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.63% 0.02% 0.65%
- -----------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.49% 0.03% 0.52%
- -----------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 0.64% 0.02% 0.66%
- -----------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund 0.65% 0.03% 0.68%
- -----------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 0.78% 0.04% 0.82%
- -----------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.40% 0.03% 0.43%
- -----------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 0.76% 0.09% 0.85%
- -----------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS Fund 0.69% 0.09% 0.78%
- -----------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% 0.03% 0.79%
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
OTHER EXPENSES
MANAGEMENT FEES EXPENSES (INCLUDING ANY
(INCLUDING ANY (INCLUDING ANY WAIVERS AND ANY
WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.45% 0.02% 0.47%
- -----------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 0.45% 0.03% 0.48%
- -----------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% 0.03% 0.78%
- -----------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.46% 0.02% 0.48%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Asia Pacific Growth Fund 0.80% 0.33% 1.13%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund 0.68% 0.10% 0.78%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund 0.65% 0.12% 0.77%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Global Growth Fund 0.61% 0.12% 0.73%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund 0.46% 0.04% 0.50%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 0.70% 0.13% 0.83%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT High Yield Fund 0.65% 0.07% 0.72%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Income Fund 0.60% 0.07% 0.67%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Fund 0.80% 0.22% 1.02%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund 0.80% 0.18% 0.98%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund 1.08% 0.33% 1.41%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 0.63% 0.08% 0.71%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Money Market Fund 0.41% 0.08% 0.49%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund 0.54% 0.05% 0.59%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT New Value Fund 0.70% 0.10% 0.80%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund (1) 0.53% 0.37% 0.90%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT The George Putnam Fund of Boston 0.65% 0.18% 0.83%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Utilities Growth and Income Fund 0.65% 0.06% 0.71%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Vista Fund 0.65% 0.10% 0.75%
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Fund 0.53% 0.04% 0.57%
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio (2) 0.53% 0.09% 0.62%
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio (2) 0.48% 0.08% 0.56%
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio (2) 0.73% 0.14% 0.87%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total Annual Fund Operating Expenses for Putnam VT OTC & Emerging Growth
Fund reflect voluntary reductions and reimbursements through at least
December 31, 2000. Absent voluntary reductions and reimbursements, Total
Annual Fund Operating Expenses would have been as follows:
<TABLE>
<CAPTION>
TOTAL ANNUAL FUND
OTHER OPERATING
MANAGEMENT FEES EXPENSES EXPENSES
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 0.70% 0.37% 1.07%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(2) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain funds
or FMR on behalf of certain funds' custodian, credits realized as a result
of uninvested cash balances were used to reduce a portion of each applicable
fund's expenses. These reductions will continue through at least
December 31, 2000 pursuant to an agreement between the advisor and the
funds. Without these reductions, Total Operating Fund Expenses would have
been:
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
MANAGEMENT FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 0.53% 0.10% 0.63%
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 0.48% 0.09% 0.57%
- ----------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 0.73% 0.18% 0.91%
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
ABOUT US
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company is a stock life insurance company
engaged in the business of writing life insurance and annuities, both individual
and group, in all states of the United States, the District of Columbia and
Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from
ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity
Insurance Company. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
- --------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
- --------------------------------------------------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
- --------------------------------------------------------------------------------
</TABLE>
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 our
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 more fully described in
the accompanying prospectuses for the Funds, and the Funds' Statements of
Additional Information, which may be ordered from us. The Funds' prospectuses
should be read in conjunction with this Prospectus before investing.
The 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."
The investment goals of each of the Funds are as follows:
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 that 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," "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. THE
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>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the 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 by investing primarily in
equity securities. Sub-advised by Wellington Management.
PUTNAM VT ASIA PACIFIC GROWTH FUND -- Seeks capital appreciation.
PUTNAM VT DIVERSIFIED INCOME FUND -- Seeks as high a level of current income as
Putnam Management believes is consistent with capital preservation. The Fund
invests in higher-yielding, lower-rated securities commonly referred to as "junk
bonds." See the special considerations for, and risks associated with,
investments in these securities described in the Fund prospectus.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND -- Seeks a high level of long-term total
return consistent with preservation of capital.
PUTNAM VT GLOBAL GROWTH FUND -- Seeks capital appreciation.
PUTNAM VT GROWTH AND INCOME FUND -- Seeks capital growth and current income.
PUTNAM VT HEALTH SCIENCES FUND -- Seeks capital appreciation.
PUTNAM VT HIGH YIELD FUND -- Seeks high current income. Capital growth is a
secondary goal when consistent with achieving high current income. The Fund
invests in higher-yielding, lower-rated securities commonly referred to as "junk
bonds." See the special considerations for, and risks associated with,
investments in these securities described in the Fund prospectus.
PUTNAM VT INCOME FUND -- Seeks high current income consistent with what Putnam
Management believes to be prudent risk.
PUTNAM VT INTERNATIONAL GROWTH FUND -- Seeks capital appreciation.
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND -- Seeks capital growth. Current
income is a secondary objective.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND -- Seeks long-term capital
appreciation.
PUTNAM VT INVESTORS FUND -- Seeks long-term growth of capital and any increased
income that results from this growth.
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.
PUTNAM VT NEW OPPORTUNITIES FUND -- Seeks long-term capital appreciation.
PUTNAM VT NEW VALUE FUND -- Seeks long-term capital appreciation.
PUTNAM VT OTC & EMERGING GROWTH FUND -- Seeks capital appreciation.
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
produce both capital growth and current income.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND -- Seeks capital growth and current
income.
PUTNAM VT VISTA FUND -- Seeks capital appreciation.
PUTNAM VT VOYAGER FUND -- Seeks capital appreciation.
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 fund may invest in all varieties of fixed income securities
including, lower-quality debt securities maturing in more than one year. For a
further discussion of lower-rated securities, see "Risks of Lower-Rated Debt
Securities" in the Fidelity prospectus for this Portfolio.
FIDELITY VIP EQUITY-INCOME PORTFOLIO -- Seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these securities,
the fund 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.
FMR normally invests at least 65% of the fund's total assets in income-producing
securities. FMR may also invest the fund's assets in other types of equity
securities and debt securities, including lower quality debt securities.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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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.
INVESTMENT ADVISERS -- Hartford HLS Funds are sponsored and administered by
Hartford Life Insurance Company. HL Investment Advisors, LLC ("HL Advisors")
serves as the investment adviser to each of the Hartford HLS Funds. Wellington
Management Company, LLP ("Wellington Management") and Hartford Investment
Management Company ("HIMCO") serve as sub-investment advisors and provide day to
day investment services.
Each Hartford HLS Fund, except for 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. 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 Variable Trust. 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.
The Funds of the Putnam Variable Trust are generally managed in styles similar
to other open-end investment companies which are managed by Putnam Management
and whose shares are generally offered to the public. These other Putnam funds
may, however, employ different investment practices and may invest in securities
different from those in which their counterpart Funds invest, and consequently
will not have identical portfolios or experience identical investment results.
Subject to the general oversight of the Trustees of Putnam Variable Trust,
Putnam Management manages the Funds' portfolios in accordance with their stated
investment objectives and policies, makes investment decisions for the Funds,
places orders to purchase and sell securities on behalf of the Funds, and
administers the affairs of the Funds. For its services, the Funds pay Putnam
Management a quarterly fee. See the accompanying Funds prospectus for a more
complete description of Putnam Management and the respective fees of the Funds.
Fidelity Management & Research Company is the 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
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.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These agreements may be different for each Fund
or each Fund family.
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%.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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CHARGES AND DEDUCTIONS
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. The amount allocated
after the deduction 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 10%. The current
sales load after policy year 1 is 6.5%. The maximum sales load is 10% in policy
years 2 through 20 and 6.5% thereafter.
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:
- - the charge for the cost of insurance;
- - the monthly administrative charge;
- - the mortality and expense risk charge.
COST OF INSURANCE CHARGE -- The charge for the cost of insurance equals:
- - the cost of insurance rate per $1,000, multiplied by
- - the amount at risk, divided by
- - $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 125% of 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.
For non-standard risks, the maximum cost of insurance rates will be increased by
any flat extra amount assessed.
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, 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. This charge is $10 per month.
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 Account Value attributable to the Sub-Accounts, and the other part is
assessed based on the 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:
- - the monthly accumulated value mortality and expense risk rate; multiplied by
- - 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:
- - the monthly mortality and expense risk rate per $1,000; multiplied by
- - the Face Amount; divided by
- - $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 Face Amount is individualized based on the Insured's issue age, sex,
and insurance class. 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 the cost it incurs and the charges it
collects.
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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- - 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 charge compensates us for
expenses incurred in issuing the policy and the recovery of acquisition costs.
Hartford may keep any difference between the cost it incurs and the charges it
collects. For partial surrender charges applicable to a decrease in the Face
Amount or withdrawal, see "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
- --------------------------------------------------------------------------------
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; otherwise, it will be paid 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;
- - 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: 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, 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 also 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.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 Sub-Account or the Fixed Account.
Amounts will be transferred monthly to the other investment choices in
accordance with your premium allocation instructions. The dollar amount will be
allocated to the investment choices 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 choices 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.
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.
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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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; and
- - no further premium payments will be accepted.
Otherwise, the policy will terminate on the scheduled maturity date.
CLASS OF PURCHASERS
REDUCED CHARGES FOR ELIGIBLE GROUPS -- Certain 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, i.e., 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 the
Separate Account.
PREMIUMS
- --------------------------------------------------------------------------------
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 65 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.
The policy will not lapse as long as the Cash Surrender Value is sufficient to
cover the Monthly Deduction Amounts or the No-Lapse Guarantee is available.
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.
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 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 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.
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 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-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, (i.e., 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.
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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
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.
EXAMPLES OF MINIMUM DEATH BENEFIT
<TABLE>
<CAPTION>
A B
<S> <C> <C>
- ------------------------------------------------------
Face Amount $50,000 $50,000
- ------------------------------------------------------
Account Value 23,000 17,000
- ------------------------------------------------------
Specified Percentage 250% 250%
- ------------------------------------------------------
Death Benefit Option Level Level
- ------------------------------------------------------
</TABLE>
In Example A, the death benefit equals $57,500, i.e., the greater of $50,000
(the Face Amount) or $57,500 (the Account Value at the date of death of $23,000,
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 $50,000, i.e., the greater of $50,000 (the
Face Amount) or $42,500 (the Account Value of $17,000, multiplied by the
specified percentage of 250%).
DECREASES IN FACE AMOUNT -- At any time after the first policy year, you may
request in writing to decrease the Face Amount. The minimum amount by which the
Face Amount can be decreased is based on our rules then in effect.
We reserve the right to limit the number of decreases made under a policy to no
more than one in any 12 month period.
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:
- - the surrender charge applicable to the then current policy year, if any;
multiplied by
- - the percentage described below.
The percentage will be determined by:
- - subtracting the new Face Amount from the lowest previous Face Amount; and
- - 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 POLICY VALUES -- Your policy values decrease due to the deduction of
policy charges. Policy 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 policy lapses, the policy 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 $1000. 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. 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 as long as:
- - the policy is in the No-Lapse Guarantee Period; and
- - on each Monthly Activity Date during that period, the cumulative premiums paid
into the policy, less Indebtedness and less withdrawals from the policy, equal
or exceed an amount known as the Cumulative No-Lapse Guarantee Premium.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
The length of the No-Lapse Guarantee Period is 10 years. Some states may limit
the maximum length of the No-Lapse Guarantee Period. In Massachusetts and
Florida, the maximum length of the No-Lapse Guarantee Period is five (5) years.
No-Lapse Guarantee is not available in New Jersey and Maryland. In Illinois,
this provision is referred to as the "Policy Lapse 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:
- - the Death Benefit Option becomes Level; and
- - the Death Benefit will equal the current Face Amount.
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 decreased, 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:
- - You request reinstatement in writing within five years after termination;
- - You submit satisfactory evidence of insurability to us;
- - any Indebtedness existing at the time the policy was terminated is repaid or
carried over to the reinstated policy; and
- - 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:
- - the Cash Value at the time of policy termination; plus
- - net Premiums derived from premiums paid at the time of policy reinstatement;
minus
- - the Monthly Deduction Amounts that were due and unpaid during the Grace
Period; plus
- - 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 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 Policy Value until the policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 policy 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 $675,000 (for 2000) from
the estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the
credit over the next six 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 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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
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 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
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 NON-RESIDENT 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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
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.
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.
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: a subdivision 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>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
WHERE YOU CAN FIND MORE INFORMATION
You can call us at 1-800-231-5453 to ask us questions. 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
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
SEPARATE ACCOUNT VL I
This Statement of Additional Information is not a prospectus. To obtain a
prospectus write to us at P.O. Box 2999, Hartford, CT 06104-2999, or call us at
1-800-231-5453.
DATE OF PROSPECTUS: MAY 22, 2000
DATE OF STATEMENT OF ADDITIONAL INFORMATION: MAY 22, 2000
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION AND HISTORY 3
- ----------------------------------------------------------------------
SERVICES 5
- ----------------------------------------------------------------------
EXPERTS 5
- ----------------------------------------------------------------------
DISTRIBUTION OF THE POLICIES 5
- ----------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT CHARGES 6
- ----------------------------------------------------------------------
ILLUSTRATION OF DEATH BENEFITS, ACCOUNT VALUES AND CASH
SURRENDER VALUES 8
- ----------------------------------------------------------------------
FINANCIAL STATEMENTS SA-1
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 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>
- -----------------------------------------------------------------------------------------------------------------
David A. Carlson Vice President, 1999 Assistant Vice President and Director of Taxes
(1998-1999), Hartford; CIGNA Corporation (1975-1998)
Peter W. Cummins Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President (1989-1997),
Hartford Life and Accident Insurance Company; Senior Vice
President (1997-Present); Vice President (1989-1997),
Hartford Life Insurance Company.
Timothy M. Fitch Vice President, 1995 Vice President (1995-Present); Actuary (1994-Present);
Actuary, 1997 Assistant Vice President (1992-1995), Hartford Life and
Accident Insurance Company; Vice President (1995-Present);
Actuary (1994-Present); Assistant Vice President
(1992-1995), Hartford Life Insurance Company.
Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Office (1998-Present),
Accounting Officer, 1998 Hartford Life Insurance Company; Vice President & Chief
Accounting Officer, (1998-Present), Royal Life Insurance
Company of America; Vice President & Chief Accounting
Officer (1998-Present) Alpine Life Insurance Company;
Chief Accounting Officer (1997-Present), Hartford
Life, Inc.; Director, Finance (1995-1997), Value
Health, Inc.; Senior Manager (1993-1995), Coopers and
Lybrand; Audit Manager (1993-1996), Arthur Andersen & Co.
David T. Foy Senior Vice President, Chief Senior Vice President (1998-present), Vice President
Financial Officer & (1998), Assistant Vice President (1995-1998), Hartford;
Treasurer, 1998 Senior Vice President (1998-Present), Hartford Life and
Director, 1999 * Accident Insurance Company; Director, Strategic Planning
Corporate Finance (1995-1996), IA Product Development
(1994-1995), Hartford; Various Actuarial Roles
(1989-1993), Milliman & Robertson.
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, 1997 Associate General Counsel (1995-1996), Assistant General
General Counsel, 1996 Counsel and Secretary (1994-1995), Hartford; Director
Corporate Secretary, 1996 (1997-Present); Senior Vice President (1997-Present);
Director, 1997 * General Counsel (1996-Present); Corporate Secretary
(1995-Present); Associate General Counsel (1995-1996);
Assistant General Counsel and Secretary (1994-1995);
Counsel (1990-1994), Hartford Life and Accident Insurance
Company; Senior Vice President (1997-Present); General
Counsel (1996-Present); Corporate Secretary
(1995-Present); Director (1997-Present); Associate General
Counsel (1995-1996); Assistant General Counsel and
Secretary (1994-1995); Counsel (1990-1994), Hartford Life
Insurance Company; Vice President and General Counsel
(1997-Present), Hartford Life, Inc.
Lois W. Grady Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice
Vice President, 1994 President (1998-Present); Vice President (1993-1997);
Assistant Vice President (1987-1993), Hartford Life and
Accident Insurance Company; Senior Vice President
(1998-Present); Vice President (1994-1997); Assistant Vice
President (1987-1994), Hartford Life Insurance Company.
Stephen T. Joyce Senior Vice President, 1999 Vice President (1997-1999), Assistant Vice President
(1995-1997), Hartford; Assistant Vice President
(1994-1997), Hartford Life and Accident Insurance Company;
Vice President (1997-Present); Vice President (1997-1999),
Assistant Vice President (1994-1997), Hartford Life
Insurance Company.
Michael D. Keeler Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company; Vice President (1995-1997), Providian
Insurance; Supervisor/Manager (1985-1995), U.S. West
Communications.
Robert A. Kerzner Senior Vice President, 1998 Director of Individual Life (1998-Present); Vice President
(1994-1998), Hartford; Senior Vice President
(1998-Present); Vice President (1994-1997); Regional Vice
President (1991-1994), Hartford Life Insurance Company.
Thomas M. Marra President, 2000 Executive Vice President (1996-2000), Senior Vice
Director, 1994* President (1993-1996); Hartford; Director (1994-Present);
Executive Vice President (1995-Present); Senior Vice
President (1994-1995); Vice President (1989-1994); Actuary
(1987-1997), Hartford Life and Accident Insurance Company;
Director (1994-Present); Executive Vice President
(1995-Present); Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1995), Hartford Life
Insurance Company; Chief Operating Officer (2000-present),
Executive Vice President, Individual Life and Annuities
(1997-2000), Hartford Life, Inc.
Craig R. Raymond Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice President
Chief Actuary, 1994 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
President (1997-Present); Chief Actuary (1995-Present);
Vice President (1993-1997); Actuary (1990-1995), Hartford
Life and Accident Insurance Company; Senior Vice President
(1997-Present); Chief Actuary (1994-Present); Vice
President (1993-1997); Assistant Vice President
(1992-1993); Actuary (1989-1994), Hartford Life Insurance
Company; Vice President and Chief Actuary (1997-Present),
Hartford Life, Inc.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Lowndes A. Smith Chief Executive Officer, 1997 President (1989-2000), Chief Operating Officer
Director, 1985 * (1989-1997), Hartford; Director (1981-Present); President
(1989-Present); Chief Executive Officer (1997-Present);
Chief Operating Officer (1989-1997), Hartford Life and
Accident Insurance Company; Director (1985-Present);
President (1989-Present), Chief Executive Officer
(1997-Present); Chief Operating Officer (1989-1997),
Hartford Life Insurance Company; Chief Executive Officer
and President and Director (1997-Present), Hartford
Life, Inc.
David M. Znamierowski Senior Vice President & Chief Vice President (1997); Senior Vice President (1997);
Investment Officer, 1997 Director, Risk Management Strategy (1996); Director
Director, 1998 (1998), Hartford; Director (1998-Present); Senior Vice
President (1997-Present), Hartford Life and Accident
Insurance Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice President,
Investment Strategy & Policy (1991-1996), Aetna Life and
Casualty.
</TABLE>
- ---------
* Denotes date of election to Board of Directors of Hartford.
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS -- The audited financial statements included in
this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Reference is made to the report on the statutory
financial statements of Hartford Life and Annuity Insurance Company which states
the statutory financial statements are presented in accordance with statutory
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners and the State of Connecticut Insurance Department, and
are not presented in accordance with generally accepted accounting principles.
The principal business address of Arthur Andersen LLP is One Financial Plaza,
Hartford, Connecticut 06103.
ACTUARIAL EXPERT -- The hypothetical Policy illustrations included in this
Statement of Additional Information and the registration statement with respect
to the Separate Account have been approved by Thomas P. Kalmbach, FSA, MAAA,
Actuary for Hartford, and are included in reliance upon his opinion as to their
reasonableness.
DISTRIBUTION OF THE POLICIES
- --------------------------------------------------------------------------------
Hartford Equity Sales Company, Inc. ("HESCO") serves as principal underwriter
for the 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
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
sales commissions where the Target Premium amounts vary by: (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 POSITIONS AND OFFICES
<S> <C>
- ------------------------------------------------------------------
David A. Carlson Vice President
- ------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------
David T. Foy Treasurer
- ------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
- ------------------------------------------------------------------
George R. Jay Controller
- ------------------------------------------------------------------
Robert A. Kerzner Executive Vice President, Director
- ------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director
- ------------------------------------------------------------------
Donald R. Salama Vice President
- ------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer,
Director
- ------------------------------------------------------------------
</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 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, i.e., 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 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 12 months after
the increase. The Face Increase Fee rate is per $1,000 amount and varies by the
attained age of the insured.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
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 0.73% 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 0.73% average daily charge) of
- -0.73%, 5.27% and 11.27%, 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>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$75,000 FACE AMOUNT
ISSUE AGE 45 SIMPLIFIED ISSUE/NON-NICOTINE
$1,500 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.27% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 1,575 968 -- 75,000 968 -- 75,000
2 3,229 2,057 955 75,000 1,872 769 75,000
3 4,965 3,227 2,177 75,000 2,850 1,800 75,000
4 6,788 4,497 3,815 75,000 3,911 3,228 75,000
5 8,703 5,886 5,318 75,000 5,061 4,492 75,000
6 10,713 7,420 6,965 75,000 6,306 5,851 75,000
7 12,824 9,115 8,774 75,000 7,656 7,315 75,000
8 15,040 10,988 10,760 75,000 9,117 8,890 75,000
9 17,367 13,062 12,948 75,000 10,698 10,584 75,000
10 19,810 15,356 15,356 75,000 12,410 12,410 75,000
11 22,376 18,241 18,241 75,000 14,578 14,578 75,000
12 25,069 21,429 21,429 75,000 16,946 16,946 75,000
13 27,898 24,955 24,955 75,000 19,539 19,539 75,000
14 30,868 28,860 28,860 75,000 22,381 22,381 75,000
15 33,986 33,187 33,187 75,000 25,504 25,504 75,000
16 37,261 37,994 37,994 75,000 28,940 28,940 75,000
17 40,699 43,341 43,341 75,000 32,732 32,732 75,000
18 44,309 49,297 49,297 75,000 36,925 36,925 75,000
19 48,099 55,943 55,943 75,000 41,575 41,575 75,000
20 52,079 63,368 63,368 77,310 46,752 46,752 75,000
25 56,258 114,391 114,391 132,694 83,754 83,754 97,155
30 60,646 199,528 199,528 213,495 144,707 144,707 154,837
- ------------------------------------------------------------------------------------------------------------
</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 10% in year 1 and 6.5%
thereafter, and Guaranteed Front-End Sales Loads of 10% in policy years 1
through 20 and 6.5% 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 RETURNS
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>
STATEMENT OF ADDITIONAL INFORMATION 9
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$75,000 FACE AMOUNT
ISSUE AGE 45 SIMPLIFIED ISSUE/NON-NICOTINE
$1,500 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.27% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 1,575 903 -- 75,000 903 -- 75,000
2 3,229 1,865 287 75,000 1,686 584 75,000
3 4,965 2,837 1,618 75,000 2,485 1,435 75,000
4 6,788 3,831 3,655 75,000 3,298 2,616 75,000
5 8,703 4,855 5,188 75,000 4,126 3,557 75,000
6 10,713 5,923 6,775 75,000 4,965 4,510 75,000
7 12,824 7,039 8,420 75,000 5,814 5,472 75,000
8 15,040 8,202 10,123 75,000 6,667 6,440 75,000
9 17,367 9,422 11,890 75,000 7,522 7,408 75,000
10 19,810 10,695 13,706 75,000 8,374 8,374 75,000
11 22,376 12,335 15,905 75,000 9,511 9,511 75,000
12 25,069 14,034 18,187 75,000 10,656 10,656 75,000
13 27,898 15,794 20,549 75,000 11,808 11,808 75,000
14 30,868 17,619 22,992 75,000 12,964 12,964 75,000
15 33,986 19,508 25,521 75,000 14,119 14,119 75,000
16 37,261 21,472 28,133 75,000 15,267 15,267 75,000
17 40,699 23,512 30,836 75,000 16,402 16,402 75,000
18 44,309 25,633 33,628 75,000 17,514 17,514 75,000
19 48,099 27,840 36,512 75,000 18,594 18,594 75,000
20 52,079 30,140 39,491 75,000 19,631 19,631 75,000
25 56,258 43,274 43,274 75,000 24,171 24,171 75,000
30 60,646 60,185 60,185 75,000 25,418 25,418 75,000
- ------------------------------------------------------------------------------------------------------------
</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 10% in year 1 and 6.5%
thereafter, and Guaranteed Front-End Sales Loads of 10% in policy years 1
through 20 and 6.5% 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 RETURNS
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>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$75,000 FACE AMOUNT
ISSUE AGE 45 SIMPLIFIED ISSUE/NON-NICOTINE
$1,500 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.73% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT 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 1,575 844 -- 75,000 844 -- 75,000
2 3,229 1,694 592 75,000 1,522 420 75,000
3 4,965 2,505 1,455 75,000 2,174 1,124 75,000
4 6,788 3,285 2,603 75,000 2,799 2,116 75,000
5 8,703 4,043 3,474 75,000 3,394 2,826 75,000
6 10,713 4,790 4,334 75,000 3,958 3,502 75,000
7 12,824 5,527 5,186 75,000 4,485 4,144 75,000
8 15,040 6,255 6,027 75,000 4,973 4,745 75,000
9 17,367 6,977 6,863 75,000 5,416 5,302 75,000
10 19,810 7,688 7,688 75,000 5,810 5,810 75,000
11 22,376 8,672 8,672 75,000 6,427 6,427 75,000
12 25,069 9,626 9,626 75,000 6,988 6,988 75,000
13 27,898 10,544 10,544 75,000 7,489 7,489 75,000
14 30,868 11,430 11,430 75,000 7,926 7,926 75,000
15 33,986 12,273 12,273 75,000 8,291 8,291 75,000
16 37,261 13,082 13,082 75,000 8,576 8,576 75,000
17 40,699 13,852 13,852 75,000 8,771 8,771 75,000
18 44,309 14,580 14,580 75,000 8,863 8,863 75,000
19 48,099 15,265 15,265 75,000 8,839 8,839 75,000
20 52,079 15,903 15,903 75,000 8,682 8,682 75,000
25 56,258 18,272 18,272 75,000 5,630 5,630 75,000
30 60,646 18,732 18,732 75,000 -- -- --
- ------------------------------------------------------------------------------------------------------------
</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 10% in year 1 and 6.5%
thereafter, and Guaranteed Front-End Sales Loads of 10% in policy years 1
through 20 and 6.5% 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 RETURNS
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>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life and Annuity Insurance Company
Separate Account VL I 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 VL I (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, Growth and Income Fund, International Advisers Fund, Small
Company Fund, MidCap Fund, Fidelity VIP Equity-Income Portfolio, Fidelity VIP
Overseas Portfolio and Fidelity VIP II Asset Manager Portfolio) (collectively,
the Account) as of December 31, 1999, and the related statements of operations
and the statements of changes in net assets for the periods presented. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
SA-1
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
Sub-Account Sub-Account Market Fund Fund Appreciation Securities Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
---------------------------------------------------------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. -
CLASS IA
Shares 13,036,853
Cost $13,751,074
..........................................................................................................................
Market Value $12,956,833 $ -- $ -- $ -- $ -- $ -- $ --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND, INC. -
CLASS IA
Shares 7,774,248
Cost $48,538,058
..........................................................................................................................
Market Value -- 55,565,565 -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS
FUND, INC. - CLASS IA
Shares 37,911,835
Cost $37,911,835
..........................................................................................................................
Market Value -- -- 37,911,835 -- -- -- --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND, INC.
-CLASS IA
Shares 9,140,726
Cost $26,035,509
..........................................................................................................................
Market Value -- -- -- 27,100,188 -- -- --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS
FUND, INC. - CLASS IA
Shares 6,532,743
Cost $30,616,570
..........................................................................................................................
Market Value -- -- -- -- 39,819,603 -- --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS
FUND, INC. - CLASS IA
Shares 899,159
Cost $983,616
..........................................................................................................................
Market Value -- -- -- -- -- 934,668 --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND, INC. -
CLASS IA
Shares 7,223,298
Cost $25,320,046
..........................................................................................................................
Market Value -- -- -- -- -- -- 30,256,807
---------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND, INC. -
CLASS IA
Shares 5,137,704
Cost $7,043,176
..........................................................................................................................
Market Value -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life and
Annuity Insurance Company 10,232 216,368 8,988,784 41,538 160,115 4,896 236,972
..........................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
..........................................................................................................................
Total Assets 12,967,065 55,781,933 46,900,619 27,141,726 39,979,718 939,564 30,493,779
..........................................................................................................................
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company -- -- -- -- -- -- --
..........................................................................................................................
PAYABLE FOR FUND SHARES PURCHASED 10,267 216,831 8,987,649 41,631 160,427 4,899 238,322
..........................................................................................................................
TOTAL LIABILITIES 10,267 216,831 8,987,649 41,631 160,427 4,899 238,322
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $12,956,798 $55,565,102 $37,912,970 $27,100,095 $39,819,291 $ 934,665 $30,255,457
---------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 8,902,703 14,783,748 27,719,873 10,096,804 11,744,489 639,331 8,441,509
Unit Values $ 1.455378 $ 3.758526 $ 1.367718 $ 2.684027 $ 3.390466 $ 1.461942 $ 3.584129
---------------------------------------------------------------------------------------------------------------------------
<S> <C>
December 31, 1999 International
Opportunities
Fund
Sub-Account
------------------------------------------------------------
ASSETS:
Investments:
------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. -
CLASS IA
Shares 13,036,853
Cost $13,751,074
................................
Market Value $ --
------------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND, INC. -
CLASS IA
Shares 7,774,248
Cost $48,538,058
................................
Market Value --
------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS
FUND, INC. - CLASS IA
Shares 37,911,835
Cost $37,911,835
................................
Market Value --
------------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND, INC.
-CLASS IA
Shares 9,140,726
Cost $26,035,509
................................
Market Value --
------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS
FUND, INC. - CLASS IA
Shares 6,532,743
Cost $30,616,570
................................
Market Value --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS
FUND, INC. - CLASS IA
Shares 899,159
Cost $983,616
................................
Market Value --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND, INC. -
CLASS IA
Shares 7,223,298
Cost $25,320,046
................................
Market Value --
---------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND, INC. -
CLASS IA
Shares 5,137,704
Cost $7,043,176
................................
Market Value 9,637,998
---------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life and
Annuity Insurance Company 9,830
................................
Receivable from fund shares sold --
................................
Total Assets 9,647,828
................................
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company --
................................
PAYABLE FOR FUND SHARES PURCHASED 9,969
................................
TOTAL LIABILITIES 9,969
---------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $9,637,859
---------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 4,055,729
Unit Values $ 2.376357
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Dividend Growth and International Small MidCap Fund Fidelity Fidelity
and Growth Income Fund Advisers Company Sub-Account VIP Equity- VIP
Fund Sub-Account Fund Fund Income Overseas
Sub-Account Sub-Account Sub-Account Portfolio Portfolio
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
--------------------------------------------------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS
FUND, INC. - CLASS IA
Shares 9,320,261
Cost $19,378,338
.........................................................................................................................
Market Value $20,027,637 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS
FUND, INC. - CLASS IA
Shares 2,064,778
Cost $2,667,080
.........................................................................................................................
Market Value -- 2,956,020 -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS
HLS FUND, INC. - CLASS IA
Shares 152,987
Cost $188,594
.........................................................................................................................
Market Value -- -- 213,675 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS
FUND, INC. - CLASS IA
Shares 1,397,014
Cost $2,316,312
.........................................................................................................................
Market Value -- -- -- 3,056,355 -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND, INC. -
CLASS IA
Shares 1,972,567
Cost $3,402,425
.........................................................................................................................
Market Value -- -- -- -- 4,050,665 -- --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Shares 436,302
Cost $10,702,619
.........................................................................................................................
Market Value -- -- -- -- -- 11,217,330 --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS PORTFOLIO
Shares 140,975
Cost $2,808,265
.........................................................................................................................
Market Value -- -- -- -- -- -- 3,868,358
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Shares 106,942
Cost $1,840,697
.........................................................................................................................
Market Value -- -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 17,725 109,761 5,155 12,928 11,087 11,324 14,038
.........................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.........................................................................................................................
Total Assets 20,045,362 3,065,781 218,830 3,069,283 4,061,752 11,228,654 3,882,396
.........................................................................................................................
LIABILITIES:
Due to Hartford Life & Annuity
Insurance Company -- -- -- -- -- -- --
.........................................................................................................................
Payable for fund shares purchased 18,148 109,761 5,155 12,917 11,092 11,560 14,004
.........................................................................................................................
TOTAL LIABILITIES 18,148 109,761 5,155 12,917 11,092 11,560 14,004
.........................................................................................................................
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $20,027,214 $2,956,020 $ 213,675 $3,056,366 $4,050,660 $11,217,094 $3,868,392
--------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 8,172,965 2,108,166 172,203 1,712,309 2,417,559 5,384,516 1,773,710
Unit Values $ 2.450422 $ 1.402176 $1.240838 $1.784939 $ 1.675516 $ 2.083213 $ 2.180961
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
December 31, 1999 Fidelity
VIP II
Asset
Manager
Portfolio
Sub-Account
----------------------------------------------------------
ASSETS:
Investments:
----------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS
FUND, INC. - CLASS IA
Shares 9,320,261
Cost $19,378,338
................................
Market Value --
----------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS
FUND, INC. - CLASS IA
Shares 2,064,778
Cost $2,667,080
................................
Market Value --
----------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS
HLS FUND, INC. - CLASS IA
Shares 152,987
Cost $188,594
................................
Market Value --
----------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS
FUND, INC. - CLASS IA
Shares 1,397,014
Cost $2,316,312
................................
Market Value --
----------------------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND, INC. -
CLASS IA
Shares 1,972,567
Cost $3,402,425
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Shares 436,302
Cost $10,702,619
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS PORTFOLIO
Shares 140,975
Cost $2,808,265
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Shares 106,942
Cost $1,840,697
................................
Market Value 1,996,605
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 885
................................
Receivable from fund shares sold --
................................
Total Assets 1,997,490
................................
LIABILITIES:
Due to Hartford Life & Annuity
Insurance Company --
................................
Payable for fund shares purchased 913
................................
TOTAL LIABILITIES 913
................................
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $1,996,577
--------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 1,026,184
Unit Values $ 1.945633
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
December 31, 1999 Sub-Account Sub-Account Market Fund Appreciation Securities Sub-Account
Fund Sub-Account Fund Fund
Sub-Account Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 699,011 $ 372,982 $1,047,023 $ 551,404 $ 119,226 $ 52,036 $ 260,644
........................................................................................................................
Capital gains income 18,913 2,119,332 562 1,057,290 1,346,774 -- 232,059
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized (loss) gain on
security transactions (2,719) (22,268) -- (966) 18,563 (1,722) 1,101
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (842,711) 4,413,611 -- 311,013 7,692,001 (39,099) 3,505,603
........................................................................................................................
Net (loss) gain on investments (845,430) 4,391,343 -- 310,047 7,710,564 (40,821) 3,506,704
-------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $(127,506) $6,883,657 $1,047,585 $1,918,741 $9,176,564 $ 11,215 $3,999,407
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended International
December 31, 1999 Opportunities
Fund
Sub-Account
------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 91,142
................................
Capital gains income --
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized (loss) gain on
security transactions 25,426
................................
Net unrealized (depreciation)
appreciation of investments
during the period 2,417,612
................................
Net (loss) gain on investments 2,443,038
------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $2,534,180
------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Dividend Growth and International Small MidCap Fund Fidelity Fidelity
December 31, 1999 and Growth Income Fund Advisers Company Sub-Account VIP VIP
Fund Sub-Account Fund Fund Equity- Overseas
Sub-Account Sub-Account Sub-Account Income Portfolio
Portfolio Sub-Account
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $314,327 $ 7,483 $ 3,715 $ -- $ -- $ 105,625 $ 58,254
........................................................................................................................
Capital gains income 499,713 17,234 -- 3,946 148,450 233,487 93,957
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized (loss) gain on
security transactions (2,211) (4,508) 368 867 (12,844) 1,860 221,841
........................................................................................................................
Net unrealized appreciation of
investments during the period 22,405 282,943 24,842 716,883 638,826 132,738 896,895
........................................................................................................................
Net gain on investments 20,194 278,435 25,210 717,750 625,982 134,598 1,118,736
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $834,234 $303,152 $ 28,925 $721,696 $ 774,432 $ 473,710 $1,270,947
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Fidelity
December 31, 1999 VIP II
Asset
Manager
Portfolio
Sub-Account
------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 35,234
................................
Capital gains income 44,630
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized (loss) gain on
security transactions 1,464
................................
Net unrealized appreciation of
investments during the period 89,708
................................
Net gain on investments 91,172
------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $171,036
------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Bond Fund Stock Fund Money Market Advisers Capital Mortgage Index Fund
December 31, 1999 Sub-Account Sub-Account Fund Fund Appreciation Securities Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 699,011 $ 372,982 $ 1,047,023 $ 551,404 $ 119,226 $ 52,036 $ 260,644
..............................................................................................................................
Capital gains income 18,913 2,119,332 562 1,057,290 1,346,774 -- 232,059
..............................................................................................................................
Net realized (loss) gain on
security transactions (2,719) (22,268) -- (966) 18,563 (1,722) 1,101
..............................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (842,711) 4,413,611 -- 311,013 7,692,001 (39,099) 3,505,603
..............................................................................................................................
Net (decrease) increase in net
assets resulting from
operations (127,506) 6,883,657 1,047,585 1,918,741 9,176,564 11,215 3,999,407
..............................................................................................................................
UNIT TRANSACTIONS:
Purchases 2,698,950 12,119,056 140,220,886 5,793,490 8,084,428 412,204 5,041,446
..............................................................................................................................
Net transfers 9,691,325 23,050,670 (119,807,605) 12,348,443 8,095,535 244,979 12,746,107
..............................................................................................................................
Surrenders for benefit payments
and fees (718,711) (1,780,707) (491,397) (500,173) (913,711) (315,043) (1,035,217)
..............................................................................................................................
Net loan activity (99,513) (238,423) (5,409,347) (44,850) (166,948) (6,721) (149,959)
..............................................................................................................................
Cost of insurance (497,251) (2,526,384) (3,444,628) (1,188,712) (1,518,285) (71,630) (1,208,015)
..............................................................................................................................
Net increase in net assets
resulting from unit
transactions 11,074,800 30,624,212 11,067,909 16,408,198 13,581,019 263,789 15,394,362
..............................................................................................................................
Net increase in net assets 10,947,294 37,507,869 12,115,494 18,326,939 22,757,583 275,004 19,393,769
..............................................................................................................................
NET ASSETS:
Beginning of period 2,009,504 18,057,233 25,797,476 8,773,156 17,061,708 659,661 10,861,688
-------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $12,956,798 $55,565,102 $ 37,912,970 $27,100,095 $39,819,291 $ 934,665 $30,255,457
-------------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended International
December 31, 1999 Opportunities
Fund
Sub-Account
------------------------------------------------------------
OPERATIONS:
Net investment income $ 91,142
................................
Capital gains income --
................................
Net realized (loss) gain on
security transactions 25,426
................................
Net unrealized (depreciation)
appreciation of investments
during the period 2,417,612
................................
Net (decrease) increase in net
assets resulting from
operations 2,534,180
................................
UNIT TRANSACTIONS:
Purchases 2,369,344
................................
Net transfers (345,670)
................................
Surrenders for benefit payments
and fees (342,765)
................................
Net loan activity (69,327)
................................
Cost of insurance (382,923)
................................
Net increase in net assets
resulting from unit
transactions 1,228,659
................................
Net increase in net assets 3,762,839
................................
NET ASSETS:
Beginning of period 5,875,020
------------------------------------------------------------------------
END OF PERIOD $9,637,859
------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Dividend Growth and International Small MidCap Fidelity Fidelity
December 31, 1999 and Growth Income Fund Advisers Company Fund Fund VIP Equity- VIP
Fund Sub-Account Fund Sub-Account Sub-Account Income Overseas
Sub-Account Sub-Account Portfolio Portfolio
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 314,327 $ 7,483 $ 3,715 $ -- $ -- $ 105,625 $ 58,254
...........................................................................................................................
Capital gains income 499,713 17,234 -- 3,946 148,450 233,487 93,957
...........................................................................................................................
Net realized (loss) gain on
security transactions (2,211) (4,508) 368 867 (12,844) 1,860 221,841
...........................................................................................................................
Net unrealized appreciation of
investments during the period 22,405 282,943 24,842 716,883 638,826 132,738 896,895
...........................................................................................................................
Net increase in net assets
resulting from operations 834,234 303,152 28,925 721,696 774,432 473,710 1,270,947
...........................................................................................................................
UNIT TRANSACTIONS:
Purchases 4,867,866 366,470 38,551 492,570 518,046 2,649,542 1,343,347
...........................................................................................................................
Net transfers 6,916,438 2,340,975 169,407 1,813,451 2,801,192 2,562,251 (1,869,595)
...........................................................................................................................
Surrenders for benefit payments
and fees (840,062) (31,360) (20,325) (33,140) (25,676) (361,687) (176,455)
...........................................................................................................................
Net loan activity (140,021) (13,510) -- (7,461) (3,502) (14,647) (14,296)
...........................................................................................................................
Cost of insurance (972,972) (80,442) (8,886) (67,116) (86,761) (516,570) (188,963)
...........................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 9,831,249 2,582,133 178,747 2,198,304 3,203,299 4,318,889 (905,962)
...........................................................................................................................
Net increase in net assets 10,665,483 2,885,285 207,672 2,920,000 3,977,731 4,792,599 364,985
...........................................................................................................................
NET ASSETS:
Beginning of period 9,361,731 70,735 6,003 136,366 72,929 6,424,495 3,503,407
----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $20,027,214 $2,956,020 $213,675 $3,056,366 $4,050,660 $11,217,094 $3,868,392
----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Fidelity
December 31, 1999 VIP II
Asset
Manager
Portfolio
Sub-Account
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 35,234
................................
Capital gains income 44,630
................................
Net realized (loss) gain on
security transactions 1,464
................................
Net unrealized appreciation of
investments during the period 89,708
................................
Net increase in net assets
resulting from operations 171,036
................................
UNIT TRANSACTIONS:
Purchases 511,702
................................
Net transfers 455,197
................................
Surrenders for benefit payments
and fees (42,732)
................................
Net loan activity (16,010)
................................
Cost of insurance (72,617)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 835,540
................................
Net increase in net assets 1,006,576
................................
NET ASSETS:
Beginning of period 990,001
------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,996,577
------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
December 31, 1998 Sub-Account Sub-Account Market Fund Fund Appreciation Securities Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 94,731 $ 133,161 $ 445,803 $ 169,656 $ 88,276 $ 37,142 $ 84,654
............................................................................................................................
Capital gains income -- 103,525 -- 63,605 250,090 -- 53,874
............................................................................................................................
Net realized gain (loss) on
security transactions 9,305 (98) -- 4,573 39,470 (871) (922)
............................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 38,190 2,521,917 -- 731,402 1,421,650 (8,524) 1,330,595
............................................................................................................................
Net increase in net assets
resulting from operations 142,226 2,758,505 445,803 969,236 1,799,486 27,747 1,468,201
............................................................................................................................
UNIT TRANSACTIONS:
Purchases 683,210 3,513,223 95,425,381 1,751,574 3,507,330 37,276 2,118,676
............................................................................................................................
Net transfers 571,074 10,950,874 (72,076,036) 5,691,550 9,794,312 550,267 6,100,193
............................................................................................................................
Surrenders for benefit payments
and fees (31,817) (207,585) (411,072) (489,261) (187,213) (5,125) (112,773)
............................................................................................................................
Net loan activity (7,510) (178,910) (3,001,765) (71,056) (101,857) (7,079) (209,775)
............................................................................................................................
Cost of insurance (110,589) (599,935) (1,609,252) (229,420) (489,408) (31,183) (280,128)
............................................................................................................................
Net increase in net assets
resulting from unit
transactions 1,104,368 13,477,667 18,327,256 6,653,387 12,523,164 544,156 7,616,193
............................................................................................................................
Net increase in net assets 1,246,594 16,236,172 18,773,059 7,622,623 14,322,650 571,903 9,084,394
............................................................................................................................
NET ASSETS:
Beginning of period 762,910 1,821,061 7,024,417 1,150,533 2,739,058 87,758 1,777,294
-----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $2,009,504 $18,057,233 $25,797,476 $8,773,156 $17,061,708 $ 659,661 $10,861,688
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended International
December 31, 1998 Opportunities
Fund
Sub-Account
------------------------------------------------------------
OPERATIONS:
Net investment income $ 74,346
................................
Capital gains income 99,646
................................
Net realized gain (loss) on
security transactions (741)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 214,444
................................
Net increase in net assets
resulting from operations 387,695
................................
UNIT TRANSACTIONS:
Purchases 1,309,658
................................
Net transfers 3,666,828
................................
Surrenders for benefit payments
and fees (64,967)
................................
Net loan activity (30,352)
................................
Cost of insurance (165,473)
................................
Net increase in net assets
resulting from unit
transactions 4,715,694
................................
Net increase in net assets 5,103,389
................................
NET ASSETS:
Beginning of period 771,631
------------------------------------------------------------------------
END OF PERIOD $5,875,020
------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Dividend Growth and International Small MidCap Fidelity Fidelity
December 31, 1998 and Growth Income Fund Advisers Company Fund Fund VIP Equity- VIP
Fund Sub-Account* Fund Sub-Account* Sub-Account* Income Overseas
Sub-Account Sub-Account* Portfolio Portfolio
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
...........................................................................................................................
Net investment income $ 137,525 $ 267 $ -- $ -- $ -- $ 14,647 $ 7,173
...........................................................................................................................
Capital gains income 62,013 -- -- -- -- 52,127 21,143
...........................................................................................................................
Net realized gain (loss) on
security transactions 1,074 14 5 235 191 690 (6,944)
...........................................................................................................................
Net unrealized appreciation of
investments during the period 561,829 5,996 239 23,159 9,414 333,233 162,234
...........................................................................................................................
Net increase in net assets
resulting from operations 762,441 6,277 244 23,394 9,605 400,697 183,606
...........................................................................................................................
UNIT TRANSACTIONS:
Purchases 2,087,615 3,992 1,111 4,285 5,632 1,026,458 686,112
...........................................................................................................................
Net transfers 5,745,039 62,775 4,904 114,315 62,276 4,607,992 2,484,394
...........................................................................................................................
Surrenders for benefit payments
and fees (95,097) (315) (126) (1,068) (433) (66,082) (24,102)
...........................................................................................................................
Net loan activity (128,288) -- -- (3,356) (3,343) (40,966) (25,210)
...........................................................................................................................
Cost of insurance (288,431) (1,994) (130) (1,204) (808) (150,445) (74,993)
...........................................................................................................................
Net increase in net assets
resulting from unit
transactions 7,320,838 64,458 5,759 112,972 63,324 5,376,957 3,046,201
...........................................................................................................................
Net increase in net assets 8,083,279 70,735 6,003 136,366 72,929 5,777,654 3,229,807
...........................................................................................................................
NET ASSETS:
Beginning of period 1,278,452 -- -- -- -- 646,841 273,600
----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $9,361,731 $ 70,735 $ 6,003 $ 136,366 $ 72,929 $6,424,495 $3,503,407
----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Fidelity
December 31, 1998 VIP II
Asset
Manager
Portfolio
Sub-Account
------------------------------------------------------------------------------------------------
OPERATIONS:
................................
Net investment income $ 6,411
................................
Capital gains income 19,232
................................
Net realized gain (loss) on
security transactions 68
................................
Net unrealized appreciation of
investments during the period 58,568
................................
Net increase in net assets
resulting from operations 84,279
................................
UNIT TRANSACTIONS:
Purchases 229,316
................................
Net transfers 567,140
................................
Surrenders for benefit payments
and fees (8,417)
................................
Net loan activity 5,364
................................
Cost of insurance (21,314)
................................
Net increase in net assets
resulting from unit
transactions 772,089
................................
Net increase in net assets 856,368
................................
NET ASSETS:
Beginning of period 133,633
------------------------------------------------------------------------------------------------------------
END OF PERIOD $990,001
------------------------------------------------------------------------------------------------------------------------
</TABLE>
* From inception, August 3, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Notes to Financial Statements
December 31, 1999
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). Realized gains and losses on
the sales of securities are computed on the basis of identified cost of the fund
shares sold. 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, 1999.
C) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values
calculated at the close of the business day.
D) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
E) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) 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 which the terms of the
contracts, are deducted through termination of units of interest from the
applicable contractholders' accounts.
SA-10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life and Annuity Insurance Company Separate Account VL I
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 VL I (Asia Pacific
Growth, Diversified Income, The George Putnam Fund of Boston, Global Asset
Allocation, Global Growth, Growth and Income, Health Sciences, High Yield,
Income, International Growth, International Growth and Income, International New
Opportunities, Investors, Money Market, New Opportunities, New Value, OTC &
Emerging Growth, Utilities Growth and Income, Vista, and Voyager sub-accounts),
(collectively, the Account) as of December 31, 1999, and the related statements
of operations and the statements of changes in net assets for the periods
presented. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 11, 2000 ARTHUR ANDERSEN LLP
SA-11
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Asia Diversified The George Global Global Growth Health
Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund of Allocation Sub-Account Sub-Account Sub-Account
Sub-Account Boston Sub-Account
Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 59,308
Cost $763,799
.........................................................................................................................
Market Value: $1,025,436 $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 103,161
Cost $1,069,034
.........................................................................................................................
Market Value: -- 1,024,392 -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 63,974
Cost $664,046
.........................................................................................................................
Market Value: -- -- 638,460 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 101,320
Cost $1,850,142
.........................................................................................................................
Market Value: -- -- -- 1,986,878 -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 615,132
Cost $11,862,166
.........................................................................................................................
Market Value: -- -- -- -- 18,755,385 -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 632,560
Cost $17,563,290
.........................................................................................................................
Market Value: -- -- -- -- -- 16,952,615 --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 165,692
Cost $1,702,975
.........................................................................................................................
Market Value: -- -- -- -- -- -- 1,739,761
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 19,991 624 7,259 49 21,718 17,539 20,591
.........................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.........................................................................................................................
TOTAL ASSETS 1,045,427 1,025,016 645,719 1,986,927 18,777,103 16,970,154 1,760,352
.........................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- -- -- -- -- -- --
.........................................................................................................................
Payable for fund shares purchased 20,000 624 7,259 7 21,937 17,831 20,595
.........................................................................................................................
TOTAL LIABILITIES 20,000 624 7,259 7 21,937 17,831 20,595
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $1,025,427 $1,024,392 $638,460 $1,986,920 $18,755,166 $16,952,323 $1,739,757
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 High Yield Income International International International Investors Money
Sub-Account Sub-Account Growth Growth New Sub-Account Market
Sub-Account and Income Opportunities Sub-Account
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 748,099
Cost $8,511,216
.................................................................................................................................
Market Value: $8,296,413 $ -- $ -- $ -- $ -- $ -- $ --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND
Shares 198,313
Cost $2,619,410
.................................................................................................................................
Market Value: -- 2,482,879 -- -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 108,549
Cost $1,710,608
.................................................................................................................................
Market Value: -- -- 2,350,076 -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 53,760
Cost $740,008
.................................................................................................................................
Market Value: -- -- -- 819,842 -- -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 34,944
Cost $587,797
.................................................................................................................................
Market Value: -- -- -- -- 814,548 -- --
----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 276,392
Cost $3,531,197
.................................................................................................................................
Market Value: -- -- -- -- -- 4,190,105 --
.................................................................................................................................
PUTNAM VT MONEY MARKET FUND
Shares 846,307
Cost $846,307
.................................................................................................................................
Market Value: -- -- -- -- -- -- 846,307
----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life
Insurance Company 10,287 3,954 11,266 4,298 1,348 19,034 38
.................................................................................................................................
Receivable from fund shares
sold -- -- -- -- -- -- --
.................................................................................................................................
TOTAL ASSETS 8,306,700 2,486,833 2,361,342 824,140 815,896 4,209,139 846,345
.................................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- -- -- -- -- -- --
.................................................................................................................................
Payable for fund shares
purchased 10,292 3,952 11,252 4,324 1,343 19,023 --
.................................................................................................................................
TOTAL LIABILITIES 10,292 3,952 11,252 4,324 1,343 19,023 --
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $8,296,408 $2,482,881 $ 2,350,090 $ 819,816 $ 814,553 $4,190,116 $ 846,345
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
December 31, 1999 New New OTC & Utilities Vista Voyager
Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
-------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 431,035
Cost $10,846,160
............................................................................................................
Market Value: $18,767,277 $ -- $ -- $ -- $ -- $ --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 68,996
Cost $853,708
............................................................................................................
Market Value: -- 818,297 -- -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 95,840
Cost $1,569,777
............................................................................................................
Market Value: -- -- 2,184,196 -- -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 141,128
Cost $2,365,588
............................................................................................................
Market Value: -- -- -- 2,394,936 -- --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 58,596
Cost $991,514
............................................................................................................
Market Value: -- -- -- -- 1,211,757 --
-------------------------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 505,231
Cost $22,435,679
............................................................................................................
Market Value: -- -- -- -- -- 33,471,541
-------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 40,415 13 3,847 8,011 1,114 492,237
............................................................................................................
Receivable from fund shares sold -- -- -- -- -- --
............................................................................................................
TOTAL ASSETS 18,807,692 818,310 2,188,043 2,402,947 1,212,871 33,963,778
............................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- -- -- -- -- --
............................................................................................................
Payable for fund shares purchased 40,457 11 3,974 7,996 1,382 491,801
............................................................................................................
TOTAL LIABILITIES 40,457 11 3,974 7,996 1,382 491,801
-------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $18,767,235 $818,299 $2,184,069 $2,394,951 $1,211,489 $33,471,977
-------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-14
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
----------------------------------------------------------------------------------
December 31, 1999 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
----------------------------------------------------------------------------------
Variable life contracts:
Asia Pacific Growth Fund 46,200 $22.195177 $ 1,025,427
.................................................................................
Diversified Income Fund 78,785 13.002362 1,024,392
.................................................................................
George Putnam Fund of Boston 60,436 10.564227 638,460
.................................................................................
Global Asset Allocation Fund 85,437 23.255993 1,986,920
.................................................................................
Global Growth Fund 482,134 38.900326 18,755,166
.................................................................................
Growth and Income Fund 653,956 25.922728 16,952,323
.................................................................................
Health Sciences Fund 161,082 10.800460 1,739,757
.................................................................................
High Yield Fund 502,850 16.498765 8,296,408
.................................................................................
Income Fund 172,404 14.401541 2,482,881
.................................................................................
International Growth Fund 149,977 15.669625 2,350,090
.................................................................................
International Growth and Income Fund 67,366 12.169641 819,816
.................................................................................
International New Opportunities Fund 41,148 19.795791 814,553
.................................................................................
Investors Fund 287,885 14.554810 4,190,116
.................................................................................
Money Market Fund 622,997 1.358506 846,345
.................................................................................
New Opportunities Fund 487,277 38.514515 18,767,235
.................................................................................
New Value Fund 76,911 10.639520 818,299
.................................................................................
OTC & Emerging Growth Fund 89,503 24.402281 2,184,069
.................................................................................
Utilities Growth & Income Fund 111,426 21.493623 2,394,951
.................................................................................
Vista Fund 74,657 16.227448 1,211,489
.................................................................................
Voyager Fund 733,633 45.624982 33,471,977
.................................................................................
GRAND TOTAL: $120,770,674
----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-15
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Diversified The George Global Global Growth Health
December 31, 1999 Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund Allocation Sub-Account Sub-Account Sub-Account
Sub-Account of Boston Sub-Account
Sub-Account
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ 53,173 $ 14,180 $ 24,983 $ 38,016 $ 155,610 $ 1,301
.....................................................................................................................
Capital gains income -- -- 523 70,125 791,631 776,527 --
.....................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
.....................................................................................................................
Net realized gain (loss) on
security transactions 17,843 1,938 996 80 (2,383) (33,784) (473)
.....................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 261,527 (37,046) (27,608) 95,549 6,067,598 (1,040,044) 21,618
.....................................................................................................................
Net gain (loss) on investments 279,370 (35,108) (26,612) 95,629 6,065,215 (1,073,828) 21,145
----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $279,370 $ 18,065 $(11,909) $190,737 $6,894,862 $ (141,691) $22,446
----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-16
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield Income International International International Investors
December 31, 1999 Sub-Account Sub-Account* Growth Growth and New Sub-Account
Sub-Account Income Opportunities
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $292,292 $ 110,447 $ -- $ -- $ 19 $ --
......................................................................................................................
Capital gains income -- 32,951 -- -- -- --
......................................................................................................................
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
......................................................................................................................
Net realized gain (loss) on
security transactions 245 3,034 3,599 (330) 39 249
......................................................................................................................
Net unrealized appreciation
(depreciation) of
investments during the
period (59,106) (190,824) 627,287 78,520 224,583 645,354
......................................................................................................................
Net gain (loss) on
investments (58,861) (187,790) 630,886 78,190 224,622 645,603
-----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $233,431 $ (44,392) $ 630,886 $ 78,190 $ 224,641 $ 645,603
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Money
December 31, 1999 Market
Sub-Account
-------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 32,522
.............................
Capital gains income --
.............................
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
.............................
Net realized gain (loss) on
security transactions --
.............................
Net unrealized appreciation
(depreciation) of
investments during the
period --
.............................
Net gain (loss) on
investments --
-------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $ 32,522
-------------------------------------------------------------------------------
</TABLE>
*Formerly Putnam U.S. Government and High Quality Bond Sub-Account, change
effective on April 9, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-17
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended New New OTC & Utilities Vista Voyager
December 31, 1999 Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ 3 $ -- $ 49,760 $ -- $ 15,233
..................................................................................................................
Capital gains income 106,172 690 4,151 52,257 84,505 1,221,590
..................................................................................................................
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
..................................................................................................................
Net realized gain (loss) on
security transactions (6,713) (66) 11,233 (253) 454 (39,914)
..................................................................................................................
Net unrealized appreciation
(depreciation) of
investments during the
period 6,825,628 (35,850) 610,876 (99,311) 212,805 9,581,148
..................................................................................................................
Net gain (loss) on
investments 6,818,915 (35,916) 622,109 (99,564) 213,259 9,541,234
-------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $ 6,925,087 $(35,223) $ 626,260 $ 2,453 $ 297,764 $10,778,057
-------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-18
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Diversified The George Global Asset Global Growth Health
December 31, 1999 Pacific Income Putnam Fund Allocation Growth and Income Sciences
Growth Sub-Account of Boston 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) $ -- $ 53,173 $ 14,180 $ 24,983 $ 38,016 $ 155,610 $ 1,301
.............................................................................................................................
Capital gains income -- -- 523 70,125 791,631 776,527 --
.............................................................................................................................
Net realized gain (loss) on
security transactions 17,843 1,938 996 80 (2,383) (33,784) (473)
.............................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 261,527 (37,046) (27,608) 95,549 6,067,598 (1,040,044) 21,618
.............................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 279,370 18,065 (11,909) 190,737 6,894,862 (141,691) 22,446
.............................................................................................................................
UNIT TRANSACTIONS:
Purchases 108,126 211,349 157,313 347,395 3,481,474 4,231,020 536,671
.............................................................................................................................
Net transfers 666,162 183,678 468,303 541,483 1,913,864 6,270,754 1,133,137
.............................................................................................................................
Surrenders for benefit payments
and fees (7,756) (26,818) (24,713) (33,349) (392,829) (335,856) (22,235)
.............................................................................................................................
Net loan activity (3,445) (133) (16,345) (4,153) (82,403) (65,775) (274)
.............................................................................................................................
Cost of insurance (19,412) (48,582) (30,579) (78,837) (576,892) (857,222) (82,181)
.............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 743,675 319,494 553,979 772,539 4,343,214 9,242,921 1,565,118
.............................................................................................................................
Total increase (decrease) in net
assets 1,023,045 337,559 542,070 963,276 11,238,076 9,101,230 1,587,564
.............................................................................................................................
NET ASSETS:
Beginning of period 2,382 686,833 96,390 1,023,644 7,517,090 7,851,093 152,193
------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,025,427 $1,024,392 $638,460 $1,986,920 $18,755,166 $16,952,323 $1,739,757
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-19
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield Income International International International Investors Money
December 31, 1999 Sub-Account Sub-Account* Growth Growth New Sub-Account Market
Sub-Account and Income Opportunities Sub-Account
Sub-Account Sub-Account
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 292,292 $ 110,447 $ -- $ -- $ 19 $ -- $ 32,522
.............................................................................................................................
Capital gains income -- 32,951 -- -- -- -- --
.............................................................................................................................
Net realized gain (loss) on
security transactions 245 3,034 3,599 (330) 39 249 --
.............................................................................................................................
Net unrealized appreciation
(depreciation) of
investments during the
period (59,106) (190,824) 627,287 78,520 224,583 645,354 --
.............................................................................................................................
Net increase (decrease) in
net assets resulting from
operations 233,431 (44,392) 630,886 78,190 224,641 645,603 32,522
.............................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,491,768 730,356 276,961 141,351 85,042 763,172 180,914
.............................................................................................................................
Net transfers 5,301,286 530,713 1,294,798 459,682 527,339 2,772,882 210,538
.............................................................................................................................
Surrenders for benefit
payments and fees (318,863) (37,656) (12,488) (14,071) (23,805) (25,132) (17,823)
.............................................................................................................................
Net loan activity (316,408) 8,214 (6,702) (159) (32) (1,256) (48,279)
.............................................................................................................................
Cost of insurance (287,610) (184,497) (71,011) (29,033) (15,818) (125,913) (39,490)
.............................................................................................................................
Net increase (decrease) in
net assets resulting from
unit transactions 5,870,173 1,047,130 1,481,558 557,770 572,726 3,383,753 285,860
.............................................................................................................................
Total increase (decrease) in
net assets 6,103,604 1,002,738 2,112,444 635,960 797,367 4,029,356 318,382
.............................................................................................................................
NET ASSETS:
Beginning of period 2,192,804 1,480,143 237,646 183,856 17,186 160,760 527,963
------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $8,296,408 $2,482,881 $2,350,090 $ 819,816 $ 814,553 $4,190,116 $ 846,345
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Formerly Putnam U.S. Government and High Quality Bond Sub-Account, change
effective on April 9, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-20
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended New New OTC & Utilities Vista Voyager
December 31, 1999 Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ -- $ 3 $ -- $ 49,760 $ -- $ 15,233
............................................................................................................
Capital gains income 106,172 690 4,151 52,257 84,505 1,221,590
............................................................................................................
Net realized gain (loss) on
security transactions (6,713) (66) 11,233 (253) 454 (39,914)
............................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 6,825,628 (35,850) 610,876 (99,311) 212,805 9,581,148
............................................................................................................
Net increase (decrease) in net
assets resulting from
operations 6,925,087 (35,223) 626,260 2,453 297,764 10,778,057
............................................................................................................
UNIT TRANSACTIONS:
Purchases 2,811,112 44,339 169,618 536,290 190,448 5,464,827
............................................................................................................
Net transfers 3,554,730 828,850 1,611,612 854,187 707,722 8,863,280
............................................................................................................
Surrenders for benefit payments
and fees (456,839) (5,976) (218,538) (87,831) 9,128 (548,816)
............................................................................................................
Net loan activity (49,216) (376) (114) (23,003) (262) (145,402)
............................................................................................................
Cost of insurance (540,650) (29,965) (34,954) (121,191) (40,396) (1,048,842)
............................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 5,319,137 836,872 1,527,624 1,158,452 866,640 12,585,047
............................................................................................................
Total increase (decrease) in net
assets 12,244,224 801,649 2,153,884 1,160,905 1,164,404 23,363,104
............................................................................................................
NET ASSETS:
Beginning of period 6,523,011 16,650 30,185 1,234,046 47,085 10,108,873
-------------------------------------------------------------------------------------------------------------
END OF PERIOD $18,767,235 $818,299 $2,184,069 $2,394,951 $1,211,489 $33,471,977
-------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-21
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Pacific Diversified The George Global Global Growth Health
December 31, 1998 Growth Income Putnam Fund Asset Growth and Income Sciences
Sub-Account* Sub-Account of Boston Allocation Sub-Account Sub-Account Sub-Account*
Sub-Account* Sub-Account
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ -- $ 2,718 $ 532 $ 9,598 $ 66,009 $ 36,061 $ 126
................................................................................................................................
Capital gains income -- 1,154 -- 41,227 330,045 235,404 --
................................................................................................................................
Net realized gain (loss) on
security transactions -- 15 7 511 3,657 4,991 2
................................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 110 (9,453) 2,022 31,846 799,731 369,952 15,169
................................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 110 (5,566) 2,561 83,182 1,199,442 646,408 15,297
................................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,025 85,364 26,333 197,777 1,777,192 1,520,697 43,812
................................................................................................................................
Net transfers 1,266 584,214 68,878 474,639 3,292,482 4,737,360 95,215
................................................................................................................................
Surrenders for benefit payments
and fees (8) (6,589) (507) (12,784) (99,324) (94,734) (539)
................................................................................................................................
Net loan activity -- (2) (39) (591) (60,658) (99,490) --
................................................................................................................................
Cost of insurance (11) (13,198) (836) (29,489) (227,264) (257,615) (1,592)
................................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 2,272 649,789 93,829 629,552 4,682,428 5,806,218 136,896
................................................................................................................................
Total increase (decrease) in net
assets 2,382 644,223 96,390 712,734 5,881,870 6,452,626 152,193
................................................................................................................................
NET ASSETS:
Beginning of period -- 42,610 -- 310,910 1,635,220 1,398,467 --
---------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 2,382 $686,833 $ 96,390 $1,023,644 $7,517,090 $7,851,093 $ 152,193
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception August 3, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-22
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield Income International International International Investors Money
December 31, 1998 Sub-Account Sub-Account** Growth Growth and New Sub-Account* Market
Sub-Account* Income Opportunities Sub-Account
Sub-Account* Sub-Account*
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 34,276 $ 61,358 $ 631 $ 2,027 $ -- $ 111 $ 10,171
................................................................................................................................
Capital gains income 5,378 1,597 -- 4,882 -- -- --
................................................................................................................................
Net realized gain (loss) on
security transactions 8,112 2,773 (2) (4) 5 (1) --
................................................................................................................................
Net unrealized appreciation
(depreciation) of
investments during the
period (176,046) 12,767 12,182 1,315 2,169 13,554 --
................................................................................................................................
Net increase (decrease) in
net assets resulting from
operations (128,280) 78,495 12,811 8,220 2,174 13,664 10,171
................................................................................................................................
UNIT TRANSACTIONS:
Purchases 465,319 518,167 9,271 17,634 1,092 18,749 111,154
................................................................................................................................
Net transfers 1,652,869 (216,141) 217,210 159,730 14,115 131,102 294,105
................................................................................................................................
Surrenders for benefit
payments and fees (17,686) (23,212) (739) (640) (71) (525) (4,383)
................................................................................................................................
Net loan activity (12,272) (153) -- (1) -- (2) (1,053)
................................................................................................................................
Cost of insurance (51,815) (70,077) (907) (1,087) (124) (2,228) (9,256)
................................................................................................................................
Net increase (decrease) in
net assets resulting from
unit transactions 2,036,415 208,584 224,835 175,636 15,012 147,096 390,567
................................................................................................................................
Total increase (decrease) in
net assets 1,908,135 287,079 237,646 183,856 17,186 160,760 400,738
................................................................................................................................
NET ASSETS:
Beginning of period 284,669 1,193,064 -- -- -- -- 127,225
---------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $2,192,804 $ 1,480,143 $ 237,646 $ 183,856 $ 17,186 $ 160,760 $ 527,963
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception August 3, 1998, to December 31, 1998.
**Formerly Putnam U.S. Government and High Quality Bond Sub-Account, change
effective on April 9, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-23
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
For the Year Ended New New OTC & Utilities Vista Voyager
December 31, 1998 Opportunities Value Emerging Growth Sub-Account* Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account* Sub-Account
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ -- $ 131 $ 10 $ 10,596 $ -- $ 5,550
................................................................................................................
Capital gains income 25,739 25 -- 18,263 -- 135,426
................................................................................................................
Net realized gain (loss) on
security transactions (50,616) 255 769 (609) 4 1,139
................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 967,053 439 3,544 84,719 7,437 1,302,791
................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 942,176 850 4,323 112,969 7,441 1,444,906
................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,695,165 4,212 5,337 269,787 1,667 1,842,714
................................................................................................................
Net transfers 2,990,857 12,066 21,258 641,807 38,890 5,859,152
................................................................................................................
Surrenders for benefit payments
and fees (78,215) (154) (231) (7,600) (259) (104,683)
................................................................................................................
Net loan activity (10,265) -- (1) (8,087) -- (122,704)
................................................................................................................
Cost of insurance (162,662) (324) (501) (34,433) (654) (253,931)
................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 4,434,880 15,800 25,862 861,474 39,644 7,220,548
................................................................................................................
Total increase (decrease) in net
assets 5,377,056 16,650 30,185 974,443 47,085 8,665,454
................................................................................................................
NET ASSETS:
Beginning of period 1,145,955 -- -- 259,603 -- 1,443,419
-----------------------------------------------------------------------------------------------------------------
END OF PERIOD $6,523,011 $ 16,650 $30,185 $1,234,046 $ 47,085 $10,108,873
-----------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception August 3, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-24
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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
policyowners of the Company in the various mutual funds (the Funds) as directed
by the policyowners.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Account,
which are in accordance with generally accepted accounting principles in the
investment company industry:
A) SECURITY TRANSACTIONS -- Security transactions are recorded on the trade date
(date the order to buy or sell is executed). Realized gains and losses on the
sales of securities are computed on the basis of identified cost of the fund
shares sold. 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, 1999.
C) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values
calculated at the close of the business day. All unit transactions are executed
at fair value.
D) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and are
taxed with, the total operations of the Company, which is taxed as an insurance
company under the Internal Revenue Code. Under current law, no federal income
taxes are payable with respect to the operations of the Account.
E) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) COST OF INSURANCE -- In accordance with terms of the policies, the Company
assesses deductions for costs of insurance charges to cover the Company's
anticipated mortality costs. Because a policy's account value and death benefit
may vary from month to month, the cost of insurance charges may also vary.
B) MORTALITY AND EXPENSE RISK CHARGE -- The Company, as issuer of variable life
policies, 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 charges are reflected in surrenders for benefit payments
and fees 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 charges are
reflected in surrenders for benefit payments and fees 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 policyowners' accounts,
in accordance with the terms of the policies. In addition, certain other charges
may apply based on the characteristics of the underlying policy. These charges
are reflected in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
SA-25
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1999 and
1998, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1999. These statutory financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 2 of notes to statutory financial
statements. When financial statements are presented for purposes other than for
filing with a regulatory agency, auditing standards generally accepted in the
United States require that an auditors' report on them state whether they are
presented in conformity with accounting principles generally accepted in the
United States. The accounting practices used by the Company vary from accounting
principles generally accepted in the United States as explained and quantified
in Note 2.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of the Company as of December 31, 1999 and
1998, or the results of its operations or its cash flows for each of the three
years in the period ended December 31, 1999.
In our opinion, the statutory financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with statutory accounting practices as described in Note 2.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BALANCE SHEETS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Bonds $ 1,465,815 $ 1,453,792
Common stocks 42,430 40,650
Mortgage loans 63,784 59,548
Policy loans 59,429 47,212
Cash and short-term investments 267,579 469,955
- ------------------------------------------------------------------------------------------------
Other invested assets 2,892 2,188
- ------------------------------------------------------------------------------------------------
Total cash and invested assets 1,901,929 2,073,345
Investment income due and accrued 21,069 20,126
Other assets 39,576 45,691
Separate account assets 44,865,042 32,876,278
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS $46,827,616 $35,015,440
- ------------------------------------------------------------------------------------------------
LIABILITIES
Aggregate reserves for future benefits $ 591,621 $ 579,140
Policy and contract claim liabilities 7,677 5,667
Liability for premium and other deposit funds 1,969,262 2,011,672
Asset valuation reserve 4,935 21,782
Payable to affiliates 14,084 19,271
Accrued expense allowances and other amounts due from
separate accounts (1,377,927) (1,173,513)
Remittances and items not allocated 111,582 87,449
Other liabilities 118,464 111,182
Separate account liabilities 44,865,042 32,876,278
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 46,304,740 34,538,928
- ------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS
Common stock 2,500 2,500
Gross paid-in and contributed surplus 226,043 226,043
Unassigned funds 294,333 247,969
- ------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 522,876 476,512
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $46,827,616 $35,015,440
- ------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-2
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums and annuity considerations $ 621,789 $ 469,343 $ 296,645
Annuity and other fund deposits 2,991,363 2,051,251 1,981,246
Net investment income 122,322 129,982 102,285
Commissions and expense allowances on reinsurance ceded 379,905 444,241 396,921
Reserve adjustment on reinsurance ceded 1,411,342 3,185,590 3,672,076
Fee income 647,565 448,260 290,675
Other revenues 842 9,930 (2,043)
- -------------------------------------------------------------------------------------------------------
TOTAL REVENUES 6,175,128 6,738,597 6,737,805
- -------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Death and annuity benefits 47,372 43,152 65,961
Disability and other benefits 6,270 6,352 7,532
Surrenders and other fund withdrawals 1,250,813 739,663 454,417
Commissions 467,338 435,994 470,334
Increase (Decrease) in aggregate reserves for future
benefits 12,481 (10,711) 33,213
(Decrease) Increase in liability for premium and other
deposit funds (47,852) 218,642 640,840
General insurance expenses 192,196 190,979 77,237
Net transfers to separate accounts 4,160,501 4,956,007 4,914,980
Other expenses 35,385 22,091 15,671
- -------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 6,124,504 6,602,169 6,680,185
- -------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS
Before federal income tax (benefit) expense 50,624 136,428 57,620
Federal income tax (benefit) expense (10,231) 35,887 (14,878)
- -------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 60,855 100,541 72,498
Net realized capital (losses) gains, after tax (36,428) 2,085 1,544
- -------------------------------------------------------------------------------------------------------
NET INCOME $ 24,427 $ 102,626 $ 74,042
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-3
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Beginning and end of year $ 2,500 $ 2,500 $ 2,500
- -------------------------------------------------------------------------------------------------
GROSS PAID-IN AND CONTRIBUTED SURPLUS
Beginning and end of year 226,043 226,043 226,043
- -------------------------------------------------------------------------------------------------
UNASSIGNED FUNDS
Balance, beginning of year 247,969 143,257 74,570
Net income 24,427 102,626 74,042
Change in net unrealized capital gains on common stocks
and other invested assets 2,258 1,688 2,186
Change in asset valuation reserve 16,847 (8,112) (6,228)
Change in non-admitted assets 6,557 (1,277) (1,313)
Credit on reinsurance ceded (3,725) 9,787 --
- -------------------------------------------------------------------------------------------------
Balance, end of year 294,333 247,969 143,257
- -------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS,
End of year $522,876 $476,512 $371,800
- -------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-4
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums and annuity considerations $3,613,217 $2,520,655 $2,277,874
Net investment income 122,998 127,425 101,991
Fee income 647,565 448,260 290,675
Other income 1,799,323 3,644,704 4,091,043
- -------------------------------------------------------------------------------------------------------
Total income 6,183,103 6,741,044 6,761,583
- -------------------------------------------------------------------------------------------------------
Benefits paid 1,303,801 790,051 529,733
Federal income tax (recoveries) payments (8,815) 25,780 (14,499)
Net transfers to separate accounts 4,364,914 5,222,144 5,199,354
Other expenses 669,525 626,240 547,692
- -------------------------------------------------------------------------------------------------------
Total benefits and expenses 6,329,425 6,664,215 6,262,280
- -------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (146,322) 76,829 499,303
- -------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD
Bonds 753,358 633,926 614,413
Common stocks 939 34,010 11,481
Mortgage loans 53,704 85,275 --
Other 1,490 19,990 152
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT PROCEEDS 809,491 773,201 626,046
- -------------------------------------------------------------------------------------------------------
COST OF INVESTMENTS ACQUIRED
Bonds 804,947 586,913 848,267
Common stocks 464 7,012 28,302
Mortgage loans 57,665 59,702 85,103
Other 14,211 11,847 26,227
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS ACQUIRED 877,287 665,474 987,899
- -------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES $ (67,796) $ 107,727 $ (361,853)
- -------------------------------------------------------------------------------------------------------
FINANCING AND MISCELLANEOUS ACTIVITIES
Net other cash provided (used) 11,742 (24,033) (4,848)
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING
AND MISCELLANEOUS ACTIVITIES 11,742 (24,033) (4,848)
- -------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and short-term investments (202,376) 160,523 132,602
Cash and short-term investments, beginning of year 469,955 309,432 176,830
- -------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 267,579 $ 469,955 $ 309,432
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
Hartford Life and Annuity Insurance Company (the "Company") is a wholly owned
subsidiary of Hartford Life Insurance Company ("HLIC"), which is an indirect
subsidiary of Hartford Life, Inc. ("HLI"). HLI is indirectly majority owned by
The Hartford Financial Services Group, Inc. ("The Hartford"). On February 10,
1997, HLI filed a registration statement, as amended, with the Securities and
Exchange Commission relating to the initial public offering of HLI Class A
Common Stock (the "Offering"). Pursuant to the Offering on May 22, 1997, HLI
sold to the public 26 million shares, representing approximately 18.6% of the
equity ownership of HLI.
In 1998, the Company changed its name to Hartford Life and Annuity Insurance
Company from ITT Hartford Life and Annuity Insurance Company.
The Company offers a complete line of fixed and variable annuities, as well as
variable, universal and traditional individual life insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying statutory basis financial statements of the Company were
prepared in conformity with statutory accounting practices prescribed or
permitted by the National Association of Insurance Commissioners ("NAIC") and
the State of Connecticut Department of Insurance. Certain reclassifications have
been made to prior year financial information to conform to the current year
presentation.
Current prescribed statutory accounting practices include accounting
publications of the NAIC, as well as state laws, regulations and general
administrative rules. Permitted statutory accounting practices encompass
accounting practices approved by state insurance departments. The Company does
not follow any permitted statutory accounting practices that have a material
effect on statutory surplus, statutory net income or risk-based capital.
The preparation of financial statements in conformity with statutory accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported periods. Actual results could
differ from those estimates. The most significant estimates include those used
in determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
STATUTORY ACCOUNTING PRACTICES VERSUS GAAP
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, etc.) which are charged to expense when incurred for statutory
purposes rather than on a pro-rata basis over the expected life and gross
profit stream of the policy for GAAP purposes;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally only consist of charges assessed to policy
account balances for cost of insurance, policy administration and
surrenders. When policy charges received relate to coverage or services to
be provided in the future, the charges are recognized as revenue on a
pro-rata basis over the expected life and gross profit stream of the policy.
Also, for GAAP purposes, premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used under GAAP;
(4) providing for income taxes based on current taxable income only for
statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes or required under GAAP;
(5) excluding certain assets designated as non-admitted assets (e.g., negative
Interest Maintenance Reserve, and past due agents' balances) from the
balance sheet for statutory purposes by directly charging surplus;
(6) the calculation of post retirement benefits obligation which, for statutory
accounting, excludes non-vested employees whereas GAAP liabilities include a
provision for such employees; statutory and GAAP accounting permit either
immediate recognition of the liability or straight-line amortization of the
liability over a period not to exceed 20 years. For GAAP, The Hartford's
obligation was immediately recognized, whereas for statutory accounting, the
obligation is being recognized ratably over a 20 year period;
F-6
<PAGE>
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve) for statutory purposes; as well as the deferral and
amortization of realized gains and losses, caused by changes in interest
rates during the period the asset is held, into income over the remaining
life to maturity of the asset sold (Interest Maintenance Reserve) for
statutory purposes; whereas on a GAAP basis, no such formula reserve is
required and realized gains and losses are recognized in the period the
asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded for
statutory purposes; whereas on a GAAP basis, reserves are reported gross of
reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost for statutory purposes,
whereas GAAP requires that fixed maturities be classified as
"held-to-maturity," "available-for-sale" or "trading," based on the
Company's intentions with respect to the ultimate disposition of the
security and its ability to affect those intentions. The Company's bonds
were classified on a GAAP basis as available-for-sale and accordingly, those
investments and common stocks were reflected at fair value with the
corresponding impact included as a separate component of Stockholder's
Equity; as well as the change in the basis of the Company's other invested
assets, which consist primarily of limited partnership investments, which is
recognized as income under GAAP and as a change in surplus under statutory
accounting; and
(10) statutory accounting calculates separate account liabilities using
prescribed actuarial methodologies, which approximate the market value of
separate account assets less applicable surrender charges. The separate
account surplus generated by these reserving methods is recorded as an
amount due to or from the separate account on the statutory basis balance
sheet, with changes reflected in the statutory basis results of operations.
On a GAAP basis, separate account assets and liabilities are held at fair
value.
As of and for the years ended December 31, the significant differences between
Statutory and GAAP basis net income and capital and surplus for the Company are
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
----------------------------------------
GAAP Net Income $ 75,654 $ 74,525 $ 58,050
Deferral and amortization of policy
acquisition costs, net (272,171) (331,882) (345,657)
Change in unearned revenue reserve (64,915) 23,118 4,058
Deferred taxes 57,833 2,476 47,092
Separate account expense allowance 214,388 259,287 282,818
Asset impairments and write-downs (17,250) 17,250 --
Benefit reserve adjustment 11,491 5,360 24,666
Gain on commutation of reinsurance
(Note 4) -- 52,026 --
Prepaid reinsurance premium (3,524) -- --
Statutory voluntary reserve (6,286) -- --
Other, net 29,207 466 3,015
----------------------------------------
STATUTORY NET INCOME $ 24,427 $ 102,626 $ 74,042
----------------------------------------
GAAP Stockholder's Equity $ 676,428 $ 648,097 $ 570,469
Deferred policy acquisition costs (1,887,824) (1,615,653) (1,283,771)
Unearned revenue reserve 95,965 160,951 134,789
Deferred taxes 122,105 68,936 64,522
Separate account expense allowance 1,398,030 1,183,642 924,355
Asset impairments and write-downs -- 17,250 --
Unrealized losses (gains) on
investments 26,292 (24,955) (21,451)
Benefit reserve adjustment 81,111 69,233 16,378
Asset valuation reserve (4,935) (21,782) (13,670)
Adjustment relating to Lyndon
contribution (Note 4) -- -- (23,671)
Prepaid reinsurance premium (7,728) (4,204) --
Statutory voluntary reserve (6,286) -- --
Other, net 29,718 (5,003) 3,850
----------------------------------------
STATUTORY CAPITAL AND SURPLUS $ 522,876 $ 476,512 $ 371,800
----------------------------------------
</TABLE>
F-7
<PAGE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits were
computed in accordance with applicable actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from
2.5% to 8.75% and using the Commissioners Annuity Reserve Valuation Method
("CARVM").
The Company has established separate accounts to segregate the assets and
liabilities of certain life insurance and annuity contracts that must be
segregated from the Company's general assets under the terms of its contracts.
The assets consist primarily of marketable securities and are reported at market
value. Premiums, benefits and expenses of these contracts are reported in the
statutory basis statements of operations.
An analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1999 (including general and separate account
liabilities) is as follows:
<TABLE>
<CAPTION>
% of
Amount Total
<S> <C> <C>
--------------------
Subject to discretionary withdrawal:
--------------------
With market value adjustment $ 4,564 0.0%
At book value less current surrender charge of 5% or more 1,427,302 3.2%
At market value 42,431,996 95.4%
--------------------
Total with adjustment or at market value 43,863,862 98.6%
At book value without adjustment (minimal or no charge or
adjustment): 573,583 1.3%
Not subject to discretionary withdrawal: 34,816 0.1%
--------------------
Total, gross 44,472,261 100.0%
Reinsurance ceded --
------------
Total, net $44,472,261
------------
</TABLE>
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a reduction in
the value of a security is deemed to be unrecoverable, the decline in value is
reported as a realized loss and the carrying value is adjusted accordingly.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. Common stocks are carried at fair value with the
current year change in the difference from cost reflected in surplus. Mortgage
loans, which are carried at cost and approximate fair value, include investments
in assets backed by mortgage loan pools. Other invested assets are generally
recorded at fair value.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The AVR balances were $4,935 and $21,782
as of December 31, 1999 and 1998, respectively. Additionally, the Interest
Maintenance Reserve ("IMR") captures net realized capital gains and losses, net
of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the life of the bond or
mortgage sold. The IMR balance as of December 31, 1999 is an asset balance of
$981 and is reflected as a component of non-admitted assets in Unassigned Funds
in accordance with statutory accounting practices. The IMR balance as of
December 31, 1998 is a liability balance of $452 and is reflected as an other
liability. The net capital (losses) gains transferred to the IMR in 1999, 1998
and 1997 were $(1,255), $852 and $(719), respectively. The amount of income
(expense) amortized from the IMR in 1999, 1998 and 1997 included in the
Company's Statements of Operations, was $178, $(207), and $(85), respectively.
Realized capital gains and losses, net of taxes, not included in the IMR are
reported in the statutory basis statements of operations. Realized investment
gains and losses are determined on a specific identification basis.
CODIFICATION
The NAIC adopted the Codification of Statutory Accounting Principles in March
1998. The proposed effective date for this statutory accounting guidance is
January 1, 2001. It is expected that Connecticut, the Company's domiciliary
state, will adopt these accounting standards and, therefore, the Company will
make the necessary accounting and reporting changes required for implementation.
The Company has not yet determined the impact that these new accounting
standards will have on its statutory basis financial statements.
F-8
<PAGE>
3. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
-----------------------------
Interest income from bonds and short-term investments $113,646 $123,370 $100,475
Interest income from policy loans 3,494 3,133 1,958
Interest and dividends from other investments 6,371 4,482 1,005
-----------------------------
Gross investment income 123,511 130,985 103,438
Less: investment expenses 1,189 1,003 1,153
-----------------------------
NET INVESTMENT INCOME $122,322 $129,982 $102,285
-----------------------------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
-----------------------------
Gross unrealized capital gains $ 561 $ 10,905 $23,357
Gross unrealized capital losses (6,441) (833) (1,906)
-----------------------------
Net unrealized capital (losses) gains (5,880) 10,072 21,451
Balance, beginning of year 10,072 21,451 7,979
-----------------------------
CHANGE IN NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND
SHORT-TERM INVESTMENTS $(15,952) $(11,379) $13,472
-----------------------------
</TABLE>
(c) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $2,508 $ 2,204 $ 537
Gross unrealized capital losses (24) (1,871) (1,820)
--------------------------
Net unrealized capital gains (losses) 2,484 333 (1,283)
Balance, beginning of year 333 (1,283) (3,447)
--------------------------
CHANGE IN NET UNREALIZED CAPITAL GAINS ON COMMON STOCKS $2,151 $ 1,616 $ 2,164
--------------------------
</TABLE>
(d) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Bonds and short-term investments $(37,959) $1,314 $ (120)
Common stocks 104 1,624 421
Other invested assets 172 (1) (307)
--------------------------
Realized capital (losses) gains (37,683) 2,937 (6)
Capital gains benefit -- -- (831)
--------------------------
Net realized capital (losses) gains (37,683) 2,937 825
Less: amounts transferred to the IMR (1,255) 852 (719)
--------------------------
NET REALIZED CAPITAL (LOSSES) GAINS $(36,428) $2,085 $1,544
--------------------------
</TABLE>
Sales and maturities of investments in bonds and short-term investments for the
years ended December 31, 1999, 1998 and 1997 resulted in proceeds of $1,367,027,
$1,354,563 and $1,435,820, gross realized capital gains of $1,106, $1,705, and
$964 and gross realized capital losses of $39,065, $391, and $1,084,
respectively, before transfers to the IMR. Sale of common stocks for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $939, $33,088,
and $10,168, gross realized capital gains of $115, $1,688, and $421 and gross
realized capital losses of $11, $64, and $0, respectively.
(e) DERIVATIVE INVESTMENTS
The Company had no significant derivative holdings as of December 31, 1999, 1998
or 1997.
(f) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is not
exposed to any significant concentrations of credit risk in fixed maturities of
a single issuer greater than 10% of capital and surplus as of December 31, 1999.
F-9
<PAGE>
(g) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1999
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
----------------------------------------------
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored $ 4,768 $ 1 $ (37) $ 4,732
-- Guaranteed and sponsored -- asset backed 170,746 -- -- 170,746
States, municipalities and political subdivisions 10,401 -- (48) 10,353
International governments 7,351 94 (15) 7,430
Public utilities 18,413 92 (73) 18,432
All other corporate -- excluding asset-backed 592,233 374 (6,194) 586,413
All other corporate -- asset-backed 539,688 -- -- 539,688
Short-term investments 228,105 -- -- 228,105
Certificates of deposit 5,158 -- (74) 5,084
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
----------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,693,920 $561 $(6,441) $1,688,040
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
--------------------------------------------
Common stock -- unaffiliated $ 4,562 $1,105 $ (24) $ 5,643
Common stock -- affiliated 35,384 1,403 -- 36,787
--------------------------------------------
TOTAL COMMON STOCKS $39,946 $2,508 $ (24) $42,430
--------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
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 -- excluding asset-backed 607,679 8,473 (792) 615,360
All other corporate -- asset-backed 505,900 -- -- 505,900
Short-term investments 343,783 -- -- 343,783
Certificates of deposit 130,216 84 -- 130,300
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
----------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,897,575 $10,905 $(833) $1,907,647
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
--------------------------------------------
Common stock -- unaffiliated $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated 35,384 1,914 (1,821) 35,477
--------------------------------------------
TOTAL COMMON STOCKS $40,317 $2,204 $(1,871) $40,650
--------------------------------------------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term investments
as of December 31, 1999 by estimated maturity year are shown below. Asset-backed
securities, including mortgage-backed securities and collaterialized mortgage
obligations, are distributed to maturity year based on the Company's estimates
of the rate of
F-10
<PAGE>
future prepayments of principal over the remaining lives of the securities.
Expected maturities differ from contractual maturities due to call or prepayment
provisions.
<TABLE>
<CAPTION>
Amortized Estimated
Maturity Cost Fair Value
<S> <C> <C>
--------------------------
One year or less $ 545,290 $ 543,397
Over one year through five years 692,881 690,476
Over five years through ten years 370,835 369,548
Over ten years 84,914 84,619
--------------------------
TOTAL $1,693,920 $1,688,040
--------------------------
</TABLE>
Bonds with a carrying value of $10,457 were on deposit as of December 31, 1999
with various regulatory authorities as required.
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS-BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1999 1998
------------------------------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------------
ASSETS
Bonds and short-term investments $1,694 $1,688 $1,898 $1,908
Common stocks 42 42 41 41
Policy loans 59 59 47 47
Mortgage loans 64 64 60 60
Other invested assets 3 3 2 2
LIABILITIES
Deposit funds and other benefits $2,051 $2,017 $2,078 $2,053
</TABLE>
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments: fair value of bonds, short-term
investments, common stock, and other invested assets approximate those
quotations published by the NAIC; policy loans and mortgage loans carrying
amounts approximates fair value; and fair value of liabilities on deposit funds
and other benefits is determined by forecasting future cash flows and
discounting the forecasted cash flows at current market rates.
4. REINSURANCE:
The Company cedes insurance to other insurers in order to limit its maximum
losses. Such transfer does not relieve the Company of its primary liability to
the policyholder. Failure of reinsurers to honor their obligations could result
in losses to the Company. The Company reduces this risk by evaluating the
financial condition of reinsurers and monitoring for possible concentrations of
credit risk.
The Company cedes significant portions of its variable annuity business written
since 1994 to RGA Reinsurance Company ("RGA"). Certain core annuity products
were excluded from this reinsurance arrangement beginning in the second quarter
of 1999 and, as such, the amounts ceded to RGA have declined significantly.
In 1995, The Hartford was "spun-off" from ITT Industries, Inc. and became its
own, autonomous entity. In conjunction with this spin-off, the assets and
liabilities of Lyndon Insurance Company (Lyndon) were merged into the Company.
The statutory net assets contributed to the Company as a result of this
transaction were approximately $112 million and were reflected as an increase in
Gross Paid-In and Contributed Surplus at December 31, 1995. This amount was
approximately $41 million lower than the value of net assets contributed on a
GAAP basis.
The majority of the business written in Lyndon was assumed from an unaffiliated
insurer. In 1998, this unaffiliated insurer recaptured the inforce blocks of
business it had been ceding to the Company through Lyndon. In conjunction with
this commutation transaction, the Company transferred statutory basis reserves
of $26,404. Additionally, the Company received fair value consideration for the
bonds it transferred which exceeded the statutory statement value of these
assets by $25,622. As a result of this activity, the Company recognized a
pre-tax gain from this transaction of $52,026 in its 1998 Statements of
Operations.
There were no material reinsurance recoverables from reinsurers outstanding as
of and for the years ended, December 31, 1999 and 1998.
F-11
<PAGE>
The effect of reinsurance as of and for the years ended December 31, is
summarized as follows:
<TABLE>
<CAPTION>
1999 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Aggregate Reserves for Future
Benefits $ 784,502 $ 53 $ (192,934) $ 591,621
Policy and Contract Claim
Liabilities $ 7,827 $ 203 $ (353) $ 7,677
Premium and Annuity Considerations $ 674,219 $ 1,261 $ (53,691) $ 621,789
Annuity and Other Fund Deposits $6,195,917 $ -- $(3,204,554) $2,991,363
Death, Annuity, Disability and
Other Benefits $ 65,251 $ 1,104 $ (12,713) $ 53,642
Surrenders $2,541,449 $ -- $(1,290,636) $1,250,813
</TABLE>
<TABLE>
<CAPTION>
1998 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Aggregate Reserves for Future
Benefits $ 713,375 $ 50 $ (134,285) $ 579,140
Policy and Contract Claim
Liabilities $ 5,895 $ 85 $ (313) $ 5,667
Premium and Annuity Considerations $ 483,328 $24,954 $ (38,939) $ 469,343
Annuity and Other Fund Deposits $6,461,470 $ -- $(4,410,219) $2,051,251
Death, Annuity, Disability and
Other Benefits $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders $1,481,797 $ -- $ (742,134) $ 739,663
</TABLE>
<TABLE>
<CAPTION>
1997 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Premium and Annuity Considerations $ 266,427 $51,630 $ (21,412) $ 296,645
Annuity and Other Fund Deposits $6,515,347 $ -- $(4,534,101) $1,981,246
Death, Annuity, Disability and
Other Benefits $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders $ 882,094 $ -- $ (427,677) $ 454,417
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates, relate principally to tax
settlements, reinsurance, insurance coverages, rental and service fees, capital
contributions and payments of dividends. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and benefit
plan expenses, are initially paid by The Hartford. Direct expenses are allocated
using specific identification and indirect expenses are allocated using other
applicable methods. Indirect expenses include those for corporate areas which,
depending on type, are allocated based on either a percentage of direct expenses
or on utilization.
The Company has also invested in bonds of its affiliates, Hartford Financial
Services Corporation and HL Investment Advisors, Inc., and common stock of its
subsidiary, Hartford Life, LTD.
For additional information, see Notes 4, 6, and 8.
6. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of HLI, the Company
will be included for Federal income tax purposes in the affiliated group of
which The Hartford is the common parent. The Hartford and its non-life
subsidiaries filed a single consolidated Federal income tax return for 1998 and
1997 and intend to file a separate consolidated Federal income tax return for
1999. The life insurance companies filed a separate consolidated Federal income
tax return for 1998 and 1997 and intend to file a separate consolidated Federal
income tax return for 1999. Federal income taxes (received) paid by the Company
for operations and capital gains (losses) were $(8,815), $25,780, and $(14,499)
in 1999, 1998 and 1997, respectively. The effective tax rate was (73)%, 27%, and
(28)% in 1999, 1998 and 1997, respectively.
F-12
<PAGE>
The following schedule provides a reconciliation of the tax provision (including
realized capital gains(losses)) at the U.S. Federal Statutory rate to Federal
income tax (benefit) expense (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------
Tax provision at U.S. Federal Statutory rate $ 5 $48 $ 20
Tax deferred acquisition costs 31 25 25
Statutory to tax reserve differences (7) 8 1
Investments (31) (60) (61)
Other (8) 15 (1)
------------------
FEDERAL INCOME TAX (BENEFIT) EXPENSE $(10) $36 $(16)
------------------
</TABLE>
7. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid to shareholders by Connecticut
domiciled insurance companies, without prior approval, is generally restricted
to the greater of 10% of surplus as of the preceding December 31st or the net
gain from operations for the previous year. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1999,
1998 or 1997. The amount available for dividend in 2000 is approximately
$60,855.
8. PENSION, RETIREMENT, AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
All employees that work for The Hartford's life insurance companies are included
in The Hartford's non-contributory defined benefit pension plans. These plans
provide pension benefits that are based on years of service and the employee's
compensation during the last ten years of employment. The Hartford's funding
policy is to contribute annually an amount between the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974,
as amended, and the maximum amount that can be deducted for U.S. Federal income
tax purposes. Generally, pension costs are funded through the purchase of group
pension contracts sold by affiliates. The costs that were allocated to the
Company for pension related expenses were $762, $1,045 and $840 for 1999, 1998
and 1997, respectively.
Employees of The Hartford's life insurance companies are also provided, through
The Hartford, certain health care and life insurance benefits for eligible
retired employees. The contribution for health care benefits depends on the
retiree's date of retirement and years of service. In addition, this benefit
plan has a defined dollar cap, which limits average company contributions. The
Hartford has prefunded a portion of the health care and life insurance
obligations through trust funds where such prefunding can be accomplished on a
tax effective basis. Postretirement health care and life insurance benefits
expense allocated to the Company was not material to the results of operations
for 1999, 1998 or 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
the health care trend rates by one percent per year would have an immaterial
impact on the accumulated postretirement benefit obligation and the annual
expense. To the extent that the actual experience differs from the inherent
assumptions, the effect will be amortized over the average future service of
covered employees.
Substantially all of The Hartford's life insurance companies' employees are
eligible to participate in The Hartford's Investment and Savings Plan. Under
this plan, designated contributions, which may be invested in Class A Common
Stock of HLI or certain other investments, are matched to a limit of 3% of
compensation.
9. SEPARATE ACCOUNTS:
The Company maintains separate account assets totaling $44.9 billion and $32.9
billion as of December 31, 1999 and 1998, respectively. Separate account assets
are segregated from other investments and reported at fair value. Separate
account liabilities are determined in accordance with prescribed actuarial
methodologies, which approximate the market value less applicable surrender
charges. The resulting surplus is recorded in the general account statement of
operations as a component of Net Transfers to Separate Accounts. The Company's
separate accounts are non-guaranteed, wherein the policyholder assumes
substantially all the investment risk and rewards. Investment income (including
investment gains and losses) and interest credited to policyholders on separate
account assets are not separately reflected in the statutory statements of
operations.
Separate account management fees, net of minimum guarantees, were $493 million,
$363 million, and $252 million in 1999, 1998 and 1997, respectively, and are
recorded as a component of fee income on the Company's statutory basis
Statements of Operations.
F-13
<PAGE>
10. COMMITMENTS AND CONTINGENT LIABILITIES:
(a) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for alleged economic and punitive damages
have been asserted. Some of these cases have been filed as purported class
actions and some cases have been filed in certain jurisdictions that permit
punitive damage awards disproportionate to the actual damages incurred. Although
there can be no assurances, at the present time, the Company does not anticipate
that the ultimate liability, arising from such pending or threatened litigation,
will have a material adverse effect on the statutory capital and surplus of the
Company.
(b) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred if it would threaten an insurer's solvency and
further provide annual limits on such assessments. Part of the assessments paid
by the Company pursuant to these laws may be used as credits for a portion of
the associated premium taxes. The Company paid guaranty fund assessments of
approximately $523, $1,043 and $1,544 in 1999, 1998, and 1997, respectively, of
which $318, $995, and $548 in 1999, 1998 and 1997, respectively were estimated
to be creditable against premium taxes.
(c) TAX MATTERS
The Company's Federal income tax returns are routinely audited by the Internal
Revenue Service ("IRS"). The Company's 1997 and 1996 Federal income tax returns
are currently under audit by the IRS. As of March 31, 2000, the audit was in its
initial stage and no material issues had been raised.
F-14
<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.(1)
(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 Thomas P. Kalmbach, FSA., MAAA.
(m) Not Applicable.
- ---------------------
(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 to the Registration
Statement on Form S-6, File No. 333-88787, of Hartford Life and
Annuity Insurance Company filed with the Securities and Exchange
Commission on December 21, 1999.
<PAGE>
(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.
(r) Organizational Chart.
Item 28. Officers and Directors.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
<S> <C>
- -------------------------------------------------------------------------------------------------
David A. Carlson Vice President
- -------------------------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- -------------------------------------------------------------------------------------------------
Bruce W. Ferris Vice President
- -------------------------------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
- -------------------------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- -------------------------------------------------------------------------------------------------
David T. Foy Senior Vice President, Chief Financial Officer and Treasurer,
Director*
- -------------------------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and Corporate Secretary,
Director*
- -------------------------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- -------------------------------------------------------------------------------------------------
Stephen T. Joyce Senior Vice President
- -------------------------------------------------------------------------------------------------
Michael D. Keeler Vice President
- -------------------------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- -------------------------------------------------------------------------------------------------
Thomas M. Marra President, Director*
- -------------------------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
- -------------------------------------------------------------------------------------------------
Deanne Osgood Vice President
- -------------------------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- -------------------------------------------------------------------------------------------------
Lowndes A. Smith Chief Executive Officer, Director*
- -------------------------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President and Chief Investment Officer, Director*
- -------------------------------------------------------------------------------------------------
</TABLE>
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
Sections 33-770 to 33-778, inclusive, of the Connecticut General
Statutes ("CGS") provide that a corporation may provide indemnification
of or advance expenses to a director, officer, employee or agent.
Reference is hereby made to Section 33-771(e) of CGS regarding
indemnification of directors and Section 33-776(d) of CGS regarding
indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide, in general, that Connecticut
corporations incorporated prior to January 1, 1997 shall, except to the
extent that their certificate of incorporation expressly provides
otherwise, indemnify their directors, officers, employees and agents
against "liability" (defined as the obligation to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with
respect to an employee benefit plan, or reasonable expenses incurred
with respect to a proceeding) when (1) a determination is made pursuant
to Section 33-775 that the party seeking indemnification has met the
standard of conduct set forth in Section 33-771 or (2) a court has
determined that indemnification is appropriate pursuant to Section
33-774. Under Section 33-775, the determination of and the
authorization for indemnification are made (a) by the disinterested
directors, as defined in Section 33-770(3); (b) by special counsel; (c)
by the shareholders; or (d) in the case of indemnification of an
officer, agent or employee of the corporation, by the general counsel
of the corporation or such other officer(s) as the board of directors
may specify. Also, Section 33-772 provides that a corporation shall
indemnify an individual who was wholly successful on the merits or
otherwise against reasonable expenses incurred by him in connection
with a proceeding to which he was a party because he was a director of
the corporation. In the case of a proceeding by or in the right of the
corporation or with respect to conduct for which the director, officer,
agent or employee was adjudged liable on the basis that he received a
financial benefit to which he was not entitled, indemnification is
limited to reasonable expenses incurred in connection with the
proceeding against the corporation to which the individual was named a
party.
Under the Depositor's bylaws, the Depositor must indemnify both
directors and officers of the Depositor for (1) any claims and
liabilities to which they become subject by reason of being or having
been directors or officers of the Depositor and (2) legal and other
expenses incurred in defending against such claims, in each case, to
the extent such is consistent with statutory provisions.
Section 33-777 of CGS specifically authorizes a corporation to procure
indemnification insurance on behalf of an individual who was a
director, officer, employer or agent of the corporation. Consistent
with the statute, the directors and officers of the Depositor 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.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
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 One
(b) Directors and Officers of HESCO
<TABLE>
<CAPTION>
Positions and Offices
Name With Underwriter
---------------- ------------------
<S> <C>
David A. Carlson Vice President
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
George R. Jay Controller
Robert A. Kerzner Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Donald R. Salama Vice President
Lowndes A. Smith President and Chief Executive Officer, Director
</TABLE>
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 8th day of May, 2000.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY SEPARATE ACCOUNT VL I
(Registrant)
*By: David T. Foy
------------------------------------------------
David T. Foy, Senior Vice President and Treasurer
*By: /s/ Marianne O'Doherty
-------------------------
Marianne O'Doherty
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.
David T. Foy, Senior Vice President, Chief
Financial Officer and Treasurer, Director*
Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary, Director* By: /s/ Marianne O'Doherty
Thomas M. Marra, Vice President, Director* ------------------------
Lowndes A. Smith, Chief Executive Officer, Marianne O'Doherty
Director* Attorney-in-Fact
David M. Znamierowski, Senior Vice President
And Chief Investment Officer, Director* Date: May 8, 2000
<PAGE>
EXHIBIT INDEX
1.1 Opinion and Consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
1.2 Opinion and Consent of Thomas P. Kalmbach, FSA, MAAA.
1.3 Consent of Arthur Andersen LLP, Independent Public Accountants.
1.4 Power of Attorney.
1.5 Organizational Chart.
<PAGE>
[LOGO]
[HARTFORD LIFE]
May 8, 2000
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
File No. 333-88787
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>
[LOGO]
[HARTFORD LIFE]
THOMAS P. KALMBACH, FSA, MAAA
ACTUARY
May 8, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Separate Account VL I
Hartford Life and Annuity Insurance Company
File No. 333-88787
Dear Sir/Madam:
This opinion is furnished in connection with the Form S-6 Registration
Statement under the Securities Act of 1933, as amended ("Securities Act"), of
a certain flexible premium variable life insurance policy (the "Policy") that
will be offered and sold by Hartford Life and Annuity Insurance Company and
certain units of interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy issued in the Form S-6
Registration Statement accurately reflect reasonable estimates of projected
performance of the Policy under the stipulated rates of investment return,
the contractual expense deductions and guaranteed cost-of-insurance rates,
and utilizing a reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Statement of Additional Information included as part of such
Form S-6 Registration Statement.
Very truly yours,
/s/ Thomas P. Kalmbach
Thomas P. Kalmbach
<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. 333-88787 for Hartford Life and Annuity
Insurance Company Separate Account VL I on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
May 2, 2000
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
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 Marta Czekajewski 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 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/ David T. Foy
- -------------------------------- Dated as of January 15, 2000
David T. Foy
/s/ Lynda Godkin
- -------------------------------- Dated as of January 15, 2000
Lynda Godkin
/s/ Thomas M. Marra
- -------------------------------- Dated as of January 15, 2000
Thomas M. Marra
/s/ Lowndes A. Smith
- -------------------------------- Dated as of January 15, 2000
Lowndes A. Smith
/s/ David M. Znamierowski
- -------------------------------- Dated as of January 15, 2000
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 AND ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
HARTFORD LIFE | | | | | | PLANCO PLANCO
INTERNATIONAL, LTD.| | | | | | FINANCIAL INCORPORATED
(CONNECTICUT) | | | | | | SERVICES, (PENNSYLVANIA)
| | | | | | INCORPORATED
| | | | | | (PENNSYLVANIA)
| | | | | |
| HART LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN
| INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE
| COMPANY INSURANCE COMPANY (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY
| (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT)
| | | |
| ------------------------------------- | AML FINANCIAL, INC.
| | | | | (CONNECTICUT)
|SERVUS LIFE HARTFORD HARTFORD |
| INSURANCE INTERNATIONAL LIFE AND |
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE |
|(CONNECTICUT) CORPORATION COMPANY |
| (CONNECTICUT) (CONNECTICUT) |
| | |
| | |
| HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| -----------------------------------------------------------------------
| | | | |
INTERNATIONAL HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD-COMPREHENSIVE
CORPORATE ADVISORS, LLC EQUITY SALES DISTRIBUTION EMPLOYEE
MARKETING GROUP, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. BENEFIT SERVICE
(CONNECTICUT) | (CONNECTICUT) (CONNECTICUT) COMPANY
| | (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)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | Hartford Accident and Indemnity Company
| | (Connecticut)
| | |
| | Hartford Life, Inc
| | (Delaware)
| | |
| | Hartford Life and Accident Insurance Company
| | (Connecticut)
| | |
| | HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | ITT HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |------DE VIDA S.A. DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | HARTFORD
| | HARTFORD | |---SEGUROS DE VIDA S.A.
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) |
| | | |
| | | | 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) |
|
|
|
|--------- U.O.R., S.A.
(ARGENTINA)
</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 -THE HARTFORD |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH INTERNATIONAL |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. FINANCIAL |
|----SCHADEVERZEKERING | | (U.K.) SERVICES |
--------| N.V.----------------------------------- | | | GROUP CIA |
| | (NETHERLANDS) | | | | DE SEGUROS Y |
Z.A. | | | | EXCESS INSURANCE REASEGUROS S.A.|
- --VERZEKERINGEN | | | | COMPANY LTD. (SPAIN) |
| 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>
